Shaw Trust accounts show crippling cost of DWP contracts
By John Plummer, Third Sector Online, 10 August 2009
Charity blames Pathways to Work programme for huge deficit
The Shaw Trust made a £2.8m loss in 2008/09 compared with a surplus of £7.4m the previous year, according to its
The charity, which is the largest voluntary sector provider of employment services for disabled people, blamed the loss on
the huge start-up costs involved in delivering Pathways to Work programmes on behalf of the Department for Work and
"The DWP funding structure is making it more difficult for charities to deliver services," said Catherine A'Bear, chief
officer for corporate affairs at the trust.
"We are one of the few charities still in the business of providing services for disabled people under DWP contracts, and
when you see how heavily we have had to invest in it you can see why."
She said the start-up costs involved in setting up services and recruiting staff for Pathways to Work were so high that
private companies were increasingly the only ones that could afford to bid. "The voluntary sector is seen as a sub-
The trust's annual income increased by £8.48m to £81.39m during the same period, of which £45.8m came from the DWP.
But this was offset by rising costs. Wages and salaries rose from £37m to £43m.
John Briffitt, chairman of the trust, says in the annual report: "There's no denying that the Shaw Trust's financial
performance, like that of many other organisations in our field, has been adversely affected by the challenging economic
He said "past prudence" had built up sufficient cash resources to help it cope.
The 2008/09 financial year was a turbulent one for the trust, with chief executive Ian Charlesworth put on gardening leave
pending dismissal in July 2008. The annual accounts say he resigned on 12 December.
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Welfare-to-work charity paves the way for international expansion
The Shaw Trust merged yesterday with an Australian charity, 14 months after former chief executive Ian Charlesworth resigned because he thought its overseas expansion plans were too risky.
The Wiltshire-based organisation announced it had joined forces with Interwork, a specialist disability employment organisation based in Adelaide, south Australia, with an annual turnover of £5m.
Bernie Jones, international director at the Shaw Trust, said the move would enable it to enter the Australian welfare-to-work market and share experience and best practice.
"This merger will help strengthen the third sector's position as a prime provider of welfare-to-work programmes on an international scale," he said.
Charlesworth and chief finance officer Julie Currin, who had also voiced concerns about plans to expand into Australia, left the Shaw Trust in quick succession last year.
Shortly afterwards the charity, which is the largest voluntary sector provider of employment services for disabled people, announced it had put its overseas expansion plans on hold because of the economic downturn.
Jones said the merger presented different opportunities from the ones that were considered last year. "We don't believe it is a risky venture," he said.
"The board and the senior management team at the Shaw Trust have always been interested in entering the Australian welfare-to-work market, and Interwork has provided us with a great chance of doing this."
He said the two organisations had started merger talks this year but informal contact had existed for some years. The organisation will continue to use its existing names in the respective countries.
Last month the trust blamed the start-up costs of welfare-to-work programmes in the UK for its £2.8m loss in 2008/09.
http://www.thirdsector.co.uk/News/DailyBulletin/940250/Shaw-Trust-merges...
Charities abandon DWP's 'unsustainable' contracts
By John Plummer, Third Sector, 8 September 2009
Job cuts at major charities including the RNID
Several large charities have withdrawn from key government welfare-to-work programmes because they are not proving
financially viable.
The RNID has pulled out of eight New Deal for Disabled People programmes and three Pathways to Work programmes,
worth £500,000, following a review of sustainability. Fourteen staff have been laid off.
The Department for Work and Pensions established the initiatives to help people on incapacity and disability benefits find
work. But rising unemployment has made targets difficult, the charities said.
Michael Adamson, executive director of individual services at the RNID, which had subcontracted work from prime
providers, said the problem was compounded for charities because they dealt with the most hard-to-reach groups.
"We could not sustain the contracts at the prices available," said Adamson. "We need to get a fair price for what we do
and recognition of the distance from the labour market of some of our clients."
Action for Blind People shed nine staff last week after ending Pathways subcontracts with private providers A4e and
Work Directions and employment charity the Shaw Trust.
Elizabeth Percy, acting head of regional services at Action for Blind People, said the contracts could have generated
£121,000, but the recession and the complex needs of its beneficiaries left it with no choice.
"It's a fair blow," she said. "It's income that we rely on but it just wasn't achievable."
The RNIB, which passed on Pathways contracts in England to Action when the two charities formed an associate
agreement, has abandoned one Pathways subcontract in Wales.
Last month the Shaw Trust, the largest voluntary sector provider of employment services for disabled people, blamed the
DWP funding structure for its £2.8m annual loss.
Employment minister Jim Knight said prime providers were responsible for managing subcontractors.
"Providers may have underestimated challenges and set high targets but we are working to improve performance," he
said. "Many of the contracts run for three years and, due to start-up costs, providers would not be expected to make a
profit immediately."