Shaw Trust accounts show crippling cost of DWP contracts

Charity blames Pathways to Work programme for huge deficit

The Shaw Trust made a £2.8m loss in 2008/09 compared with a surplus of £7.4m the previous year, according to its annual report.

The charity, which is the largest voluntary sector provider of employment services for disabled people, blamed the loss on the huge start-up costs involved in delivering Pathways to Work programmes on behalf of the Department for Work and Pensions.

"The DWP funding structure is making it more difficult for charities to deliver services," said Catherine A'Bear, chief officer for corporate affairs at the trust.

"We are one of the few charities still in the business of providing services for disabled people under DWP contracts, and when you see how heavily we have had to invest in it you can see why."

She said the start-up costs involved in setting up services and recruiting staff for Pathways to Work were so high that private companies were increasingly the only ones that could afford to bid. "The voluntary sector is seen as a sub-contractor," said A'Bear.

The trust's annual income increased by £8.48m to £81.39m during the same period, of which £45.8m came from the DWP. But this was offset by rising costs. Wages and salaries rose from £37m to £43m.

John Briffitt, chairman of the trust, says in the annual report: "There's no denying that the Shaw Trust's financial performance, like that of many other organisations in our field, has been adversely affected by the challenging economic environment."

He said "past prudence" had built up sufficient cash resources to help it cope.

The 2008/09 financial year was a turbulent one for the trust, with chief executive Ian Charlesworth put on gardening leave pending dismissal in July 2008. The annual accounts say he resigned on 12 December.

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