Most Pathways to Work subcontractors 'will make a loss'

National Audit Office report says targets have not been met

Most third sector subcontractors for the Department for Work and Pensions' Pathways to Work programme are expected to lose money, according to a National Audit Office evaluation.

The report says nearly three-quarters of subcontractors on the programme, which was introduced by the Labour government in 2007 to help incapacity benefit claimants find work, are from the third sector.

It says two-thirds of the 80 subcontractors are expected to make a financial loss on the programme, compared with a third of the 34 prime contractors.

The subcontractors "are sharing a greater proportion of risk" in delivering the programme, the report says.

Contractors have not met targets in their contracts, even taking into account the impact of the recession, the report says. Therefore they "have not received payment in line with what they expected", it concludes.

The Pathways to Work programme "turned out to provide poor value for money", the NAO concludes.

Stephen Bubb, head of chief executives body Acevo, said: "As it is, the system is clearly unsustainable."

Last week, work and pensions secretary Iain Duncan Smith said the government would create a new work programme for the unemployed and that all incapacity benefit claimants would be reassessed for their ability to work.

The Conservative-Liberal Democrat administration's programme for government also contains a commitment to alter contracts with welfare-to-work providers to "reflect more closely the results they achieve in getting people back to work".

"The new work programme is going to need to make significant changes if it is going to be effective," said Bubb.

 

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