The structure of Work Programme market is now clear to see: at the top are the big companies that won the prime contracts, firms such as A4e and G4S; they in turn have contracted work to mid-size organisations such as S3C; in many cases these sub contract the work to the small fry such as local charities.
According to the Guardian columnist, Polly Toynbee, the contract money gets divided as follows: the big firms take 50 to 30%, the next rung down getting 12% with the rest going to the people who actually do the work.
The way the payments are structured is that the companies get the bulk of the money only after a person has been in paid work for six month. This means that cash flow is a problem as shown by the number of the lower rung organisations going bust.
Of course this pattern of payments forces organisations to concentrate on those who are likely to find a job and stay in it for six months; it discourages helping those who would have difficulty in finding a job in the first place, let alone keeping one for six months. If you do want to help those with the greatest difficulties then you go the way of a small charity like Eco-Actif which according to 3SC, the contractor above them “Their trouble was they cared more about the hard cases than the easy ones. But you can only get income from the low-hanging fruit.”
When the Work Programme was conceived the UK economy was expanding and unemployment falling; thus the job tree had lots of low-hanging fruit. That is not the case now thus companies/orgainsations are not making the money planned for.
Taking all the above together it is clear that something has to give as the market does not seem sustainable in its present form. The easiest and best thing would be to give the work to the DWP. An internal evaluation by that department showed that civil servants would deliver the Work Programme more effectively and cheaper. Of course this won’t happen, so look out for more charities and companies going bust, a crisis and then no doubt more public money being thrown at the problem.