'Radical' proposals on work and welfare polarise sector opinion

Voluntary sector leaders are expecting a revolution in the contracting out of employment and welfare services when the Department for Work and Pensions publishes its welfare review in the next few months.

David Freud, the independent consultant leading the review, is expected to recommend six or seven-year contracts for charities seeking to help the most socially excluded gain employment.

Some charities are likely to welcome the move, but others have expressed fears that it could align them too closely with the state.

Stephen Bubb, chief executive of Acevo, who met Freud last week, said the report was likely to be the most significant document to come out of government in recent years.

"It'll be very radical," said Bubb, who also leads the Acevo special interest group the Employment-Related Services Alliance, a coalition of charities keen to take over services from the state.

He expects Freud to recommend that Jobcentre Plus should provide employment and welfare services for up to 12 months, after which voluntary and private sector providers would take over.

An entirely new set of services aimed at people who aren't addressed by the current system, such as the profoundly deaf, could also be up for tender, Bubb said.

But some organisations are concerned about the extent of the sector's involvement in the welfare system.

Leonard Cheshire is against voluntary providers taking decisions to reduce or withdraw people's benefits, which could happen if the Welfare Reform Bill goes through in its current form.

It is supporting an amendment tabled by Tory peer Lord Skelmersdale to make sure responsibility for welfare decisions remains with the state.

"We have real concerns about whether that's what charities should be doing," said Guy Parckar, public policy manager at Leonard Cheshire. "Can it be within the charitable purpose of a disability charity to cut benefits to a disabled person?"

Kate Green, chief executive of the Child Poverty Action Group, said: "An organisation cannot deliver benefits and provide welfare advice at the same time."

The DWP, however, would not be drawn on the details of the review. A spokesman said: "We are awaiting the review from David Freud and will not be speculating on its contents."

John Hutton, the work and pensions secretary, hinted at the overhaul when he endorsed the heavy use of private and voluntary sector providers in Australia.

He said: "The Australian welfare system has delivered tremendous benefits."

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