Tuesday, 1 June 2010

"Providers of New Deal to voice concerns"

There's to be a meeting tomorrow, 2 June, between the "minister for work", Chris Grayling, and the body which represents the New Deal providers. That body, the Employment Related Services Association (ERSA) is chaired by Rob Murdoch, who is an executive director of A4e. The Financial Times reports on this today, and says that the providers "have spent millions bidding for the second wave of Labour's Flexible New Deal contracts". It goes on: "Those contracts were put on hold just as they were about to be awarded when the general election was called. But the existing providers also hold contracts under the first wave of Flexible New Deal that run to 2014." Current stop-gap contracts are due to stop taking on new clients next month, and the government wants the Work Programme up and running by April next year. Given that the government wants to roll up all the various existing contracts into one provision and put people on it much earlier, it "implies larger scale contracts", says Murdoch. He points out that if providers are only going to get paid for outcomes, it "has big implications for cashflows". If an organisation has to wait longer for payment, only the biggest companies can afford to bid for the contracts and stump up the money. Murdoch also has a threat for the government. "If they breach contracts, that would be very negative for how the provider market looks at the changes."
This is something which, presumably, the government has thought about. They have suggested in the past that they want to get smaller organisations and the "third sector" involved, but that will only happen if they act as sub-contractors to the big companies.


  1. Slightly edited comment from Mr Benn: "Rob Murdoch: Cash flow, business model, profit margin. Forgive my ignorance, but I don't see why the third-sector needs the likes of A4e to bid on their behalf. Seems like a more costly way of doing it."
    It's not the big companies bidding on behalf of the third sector. The smaller organisations can't afford to bid at all. They "partner" with the big outfits, which means that once the contracts are awarded, they sub-contract with A4e or Serco or the others to deliver specific bits of the contract.

  2. Employment Related Services Association (ERSA) is chaired by Rob Murdoch, who is an executive director of A4e

    isnt that a conflict of interest?

  3. No, I can't see why it should be. It's how all trade associations are run. It's not pretending to be independent.

  4. Interesting. No mentions about the lack of service fee being a problem for the reason of mediocre job outcomes in their industry.

    I thought the Con-servatives wanted the Work Programme in by late 2010 and not April 2011; although I never felt they could implement it so soon (as they hoped), isn't the intention to begin the WfYB pilots for those on FND rather than requiring more time to renamed FND and tweak a few aspects of it?

  5. I don't know about the WfYB pilots going ahead. I would assume that that they would continue with FND until the contracts could be converted. But that means that existing providers get the new contracts (if they want them) and no new providers get a look in - hardly competitive. They might have to buy out the existing contractors who don't want to go with the Work Programme - expensive.

  6. I can see the whole process taking months, with the threat of legal action on the part of some providers - which could mean it dragging on till next year.


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