Scottish voluntary sector shut out of UK Govt’s Work programme

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by Stephen Maxwell

Scottish third sector organisations have been shocked by the absence of any Scottish organisation among the successful bidders for the delivery in Scotland of the Work Programme, the UK Government’s main vehicle for supporting the long term unemployed back into work, announced last week.    

The two contracts covering Scotland have been awarded instead to Ingeus Deloitte and Working Links, both large corporate providers of contracted out public services based in England.  This is believed to be the first time since the beginning of Government work programmes for the unemployed in the 1980s that Scottish organisations have not featured among the principal providers of publicly-funded UK job creation and placement schemes for the unemployed.

There has been particular surprise that the Glasgow based social enterprise the Wise Group failed to win a contract.  The Wise Group was one of the pioneers of  ‘intermediate labour market’ measures in the UK and its success rate at getting people into employment in the preceding New Deal programmes makes it the sixth most successful provider in the UK.  In 2010 the Group supported 5353 customers off benefits into jobs, 34% of its total clients, up from 24% in 2009.

In yesterday’s Guardian, recent Wise Group Board member Polly Toynbee suggests that the Group’s failure to win a contract may be down to its refusal to cut its costs below what it believed was necessary to provide an effective service to its clients.  In the scheme devised by Lord Freud, a former adviser to the Labour Government turned Tory Minister, providers will be paid only by successful outcomes putting the balance of risk heavily on providers.  With unemployment still rising in most areas of the United Kingdom this gives the advantage to large companies able to absorb losses on the Work Programme in the expectation of getting access to other more lucrative contracting opportunities in the Government pipeline.

Ironically,  Scotland’s recent modestly superior labour market performance might well have given the Wise group scope to defeat the punitive payment terms, an opportunity which will now go to the corporate raiders from south of the border.

While congratulating the successful bidders, Wise group chief executive Laurie Russell, said:  “The Wise Group is sorely disappointed we did not win a prime contract in Scotland.  We have established a track record of high performance on the welfare to work programme which the DWP has recognised.”

He added: “In reality there is only one third sector provider and no social enterprise among the 18 principal contractors.  This is a missed opportunity to develop the role of social enterprise and the wider third sector as major providers of welfare to work.”

The Government claims that the successful bidders will sub-contract with voluntary organisations.  However, there is a fear that the principal contractors will try to offload part of their risk by ‘creaming’ the most capable clients and directing the most disadvantaged clients to voluntary organisations.  John Downie, public affairs director at the Scottish Council for Voluntary Organisations, said:  “The danger is that the government sees this scheme solely as about getting people into any type of work experience  when it should be about creating sustainable jobs for a range of people, especially those at the hardest to reach end of the labour market.”

While the Deloitte half of Igneus Deloitte is part of the global accountancy firm, Working Links is a public/private sector/voluntary hybrid in which UK Government and private companies Capgemini and Manpower share control with Australian charity Mission Australia.

This further privatisation of Scottish public services follows the DWP’s contracting out of the medical assessment of claimants for Incapacity Benefit to the private ATOS Healthcare.  As well as generating a wave of successful tribunal appeals ATOS has been the target of repeated complaints by Citizens Advice Scotland and disability organisations.

Last year the Commons Public Accounts Committee condemned the private sector’s record in the Labour Government’s Pathways to Work scheme:

“The performance by the mainly private sector providers was universally poor … their success rates are worse than Jobcentre Plus even though private contractors work in easier areas.”  

Downie said: “The Government has missed an excellent opportunity to increase capital and investment in the third sector.  Instead profits will go to private shareholders when the third sector groups would have reinvested them in Scottish people and communities.”

Faced with the private sector bias of the DWP’s Work Programme, Scottish voluntary organisations may look to the Scottish Government’s Community Jobs Programme offering unemployed Scots in the 16-24 age group six month training and job placements on work of community benefit at not less than the minimum wage.  But the budget for this is only £10million a year.  The big money in Scotland – around £100million a year – lies with the UK Government’s work programme with all its ideological baggage.