Charities are urging the Department for Work and Pensions (DWP) to remove “gagging clauses” forbidding subcontractors working on the Government’s flagship Work Programme doing anything to “attract adverse publicity” for the department.
The National Council for Voluntary Organisations (NCVO) – which today warned that seven out of 10 charity subcontractors felt their contacts were at risk of failure – says subcontractors are also prohibited from making press statements or publicising their contracts without approval from the department.
The report said: "Transparency, advocacy and holding government public services to account are at the heart of the VCS. DWP should clarify its guidance around 'gagging clauses' to ensure that they are being interpreted correctly and to tackle the perception that they prevent the sharing of good practice."
Launched last year, the Work Programme replaced the popular Future Jobs Fund, and sees nearly 20 prime contractors, mainly private firms, sub-contract to specialist providers, including housing associations and charities, to provide the unemployed with job skills training.
The £5bn programme sees the government pay contractors by results in three stages – through an initial attachment fee, a main outcomes fee and cash for sustained employment.
One of the criticisms has been that the prime contractors have been passing on the tough payment terms to smaller charities and housing associations who might not be able to carry out the employment support and wait for months, even years, before they are paid.
The NCVO report – which details the survey responses of nearly 100 voluntary organisations –reveals that 71 respondents claim their contracts are at risk of failure.
Its report found that 47% of respondents felt that their contacts were at risk of failure within the next six months and 26% thought they were at risk of failure before the end of the contract.
Other issues identified in the report include a “considerable mismatch” between anticipated referral flows and Work Programme customers received, subcontractors dissatisfied with the relationship with their prime contractor and the majority of prime contractors not sharing supply chain performance data with their subcontractor partner.
Sir Stuart Etherington, CEO of NCVO, said: "The sustainability of these contracts is a major cause for concern. This programme is clearly not working for many charities involved in its delivery. More worryingly, this will have a damaging knock on effect to the many job-seekers who desperately need the specialist support that charities can deliver.
"Despite concerns about contract viability, charities are still working hard to provide a quality service and are dipping into their own reserves rather than neglect people that need their help. It’s still early days and 2013 will prove critical to the overall success or failure of the Work Programme - we have a small window of opportunity to get this right and ensure that this scheme delivers for job-seekers.
"We are calling on the Government to investigate the current funding arrangements to determine why so many contracts under the Work Programme are at risk of failure and why some charities are subsidising this work."
A separate investigation by the BBC revealed that several charities that have closed recently, have cited their Work Programme contracts as a major reason in their collapse.
The DWP told the BBC the financial arrangements between providers and their subcontractors were a matter for them and no organisation should negotiate a deal they could not afford.
A spokesperson said: "Payment by results is working. It is right and fair to the taxpayer that we only pay organisations that get people into work and keep them there, unlike the last government which paid out money to schemes upfront regardless of results.
"There are hundreds of organisations playing a part in the Work Programme, all working closely with us with the aim of making this a success and getting people into long term employment."
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