Joe Irvin, chief executive of the local infrastructure body Navca, has called on the government to undertake an urgent review of the Work Programme to stop the large contractors "abusing local charities".
Irvin made the comments after the Cabinet Office today published a progress report about what it is doing to enable voluntary sector organisations to have a larger role in running public services.
In his foreword to the report, Nick Hurd, the Minister for Civil Society, says the government is "at an early stage of a very challenging journey".
Hurd acknowledges the challenges faced by civil society organisations in becoming more competitive with the private sector organisations that have "dominated the outsourced public services market".
"Some big new central opportunities, such as the Work Programme, have presented significant difficulties for the sector," writes Hurd. "At a local level there is a very mixed picture of engagement with the sector and widespread concern that the small and local will lose out. Whatever the difficulties, we should not lose sight of the scale of the opportunity and that some real progress has been made."
The report points to the initiatives the coalition government are working on to enable more charities to run public services, such as the Social Investment Bank and the Commissioning Academy, which is being piloted and will train public sector commissioners to commission services in a way that considers the needs of voluntary sector organisations.
Irvin welcomed some of the government’s initiatives, including the commissioning academy, but said there were "issues that need addressing further".
"The paper acknowledges difficulties with the Work Programme for civil society organisations," he said. "We believe urgent action is needed to stop some of the large companies who are prime contractors from abusing local charities and short- changing unemployed people."
Some charities have pulled out of working as subcontractors to the back-to-work programme, citing a lack of referrals.
Irvin also said Navca would press the government on how it will follow up work done under the £30m Transforming Local Infrastructure Fund, which was set up to help infrastructure bodies to work together more closely and awarded grants to 72 partnerships in February.
Irvin said the government "should also acknowledge that cuts to local government funding have a direct impact on the funding of local charities and community groups".