The Association of Learning Providers, which represents almost three quarters of the organisations awarded contracts to deliver the coalition government's Work Programme, has now called for the nation's jobcentres to be privatised.
The payment-by-results contracts, which are worth up to £5bn over the next seven years and are intended to try and get the long-term jobless back into work, have been handed to 16 large private and two voluntary sector organisations by the Department of Work and Pensions.
The contracts have been arranged geographically across 18 regions, with at least two deals awarded per region and the scheme is due to start this summer. Contractors have been tasked with finding work for the country's 850,000 long-term unemployed, who will be referred to them from Jobcentre Plus, and could be paid up to £14,000 for getting someone off incapacity benefit and into work for at least two years, for example.
But the ALP has now called on the government to go further and give it the right to find jobs for the 1.7 million who have currently been unemployed for less than a year. Graham Hoyle, the organisation's chief executive, said: "In keeping with the overall reform of public services, the next logical step is to privatise Jobcentre Plus and to allow it to compete with other providers in assisting people who have been out of work for a short or long period."
The move comes despite the fact that the body had previously raised concerns that the way Work Programme contracts were structured could put small firms out of business as they were based on a "high-risk financial model and unrealistic targets".
The problem arose because, while the first part of the contracts offered providers a "workable cashflow", such support was drastically reduced in the second half. This meant that those providers that failed to meet the stringent targets could find themselves in severe financial difficulties.
While the DWP had made it clear that only providers with turnover of more than £20m should submit bids, many sub-contracted work out to smaller providers, which would be subject to the same financial risk, the ALP had warned.
But Hoyle now said that the organisation recognised that the Work Programme "should be given the chance to succeed" and had taken on board recent assurances that the Employment Minister Chris Grayling had given to a Commons Select Committee should contractors drop out of the scheme.
Preferred providers under the DWP's Framework for the Provision of Employment Related Support Services include A4e, which was awarded five contracts, Serco, which was awarded seven, and Ingeus, which is 50% owned by Deloitte and the Ingeus Group of Companies and also won seven.
