Organisations winning major contracts under the government’s new Work Programme will have to use smaller voluntary sector providers and face losing their contracts if they do not treat them reasonably, the Department for Work and Pensions has confirmed.
Employment minister Chris Grayling opened the tender process yesterday for the Work Programme, which will replace existing welfare to work programmes in England, Scotland and Wales.
The documents say that prime, or first-tier contractors, will be expected to follow the already announced Merlin standard, which the department has set up to ensure subcontractors, including third sector organisations, are treated fairly.
It is the first time such conditions have been written into a contracting process and gives voluntary sector organisations a proper chance to engage in the process, a DWP spokeswoman said.
She said it would be written into the contracts that prime contractors would have to use smaller voluntary sector organisations as subcontractors. They would also have to ensure they treat them fairly, for example paying them on time and at a reasonable rate, she said.
"Failure to do either will lead to contracts being terminated," she said.
Organisations delivering the contracts will be paid by results. The amounts payable will depend on the individual circumstances of those placed in employment and on how long they remain in the job.
Stephen Bubb, head of the chief executives body Acevo, which was involved in developing the Merlin standard, said the government had given two positive signals to the third sector.
"Firstly, differentiated payments to providers means there is no excuse for exclusion of the hardest to help, and, secondly, the government has signalled strongly to prime providers that it expects them to involve the third sector in delivering the Work Programme, especially at local and community level," he said.
"We now need those primes to deliver on those priorities, and the government to hold them to account for doing so."
Tender information can be found here.