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Deloitte To Sell Stake In Government Work Programme

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A key investor is selling its stake in the government's flagship Work Programme.

Deloitte, the corporate finance and consultancy firm, owns a 50% share in Ingeus, one of the private companies operating the scheme.

Deloitte's decision to sell its share has prompted claims the government has failed to create a viable market in the welfare-to-work industry.

Employment Minister Esther McVey said she saw the move as a positive sign.

Ms McVey denied companies were losing confidence in the Work Programme, adding Deloitte was exiting the market while its business was performing well.

The Work Programme has contracted 18 prime provider companies to help the long-term unemployed find work.

Claimants spend a maximum of two years on the scheme. Companies receive a fee with each referral and a further, much larger, payment when someone finds and stays in a job.

Richard Johnson, a former industry insider and parliamentary consultant to the Work and Pensions Committee, said he was not surprised Deloitte was looking to leave the market at this point.

According to Mr Johnson, some of the companies that bid for contracts offered discounts of 30% and more on the Department for Work and Pensions' (DWP) suggested price.

Those discounts take effect next financial year at the same time as the government is withdrawing up-front referral fees, leaving companies paid by results alone.

"Deloitte joined Ingeus in order to bid for and secure these contracts. And if I were Deloitte I would see this as a very good time to exit that market," he told the BBC.

"I would expect them to understand precisely what the financial implications are of those discounts that start to kick in next year.

"At this price, these contracts are not viable."

Another analyst, Alastair Grimes from the consultancy Rocket Science, said the sale of the shares raised the question of how effective the DWP had been at creating a functioning market in welfare-to-work.

"I'm not aware of people who are making money out of the Work Programme," he said.

"At one level you can say, 'Well that's fine, they're not supposed to be making money out of it.' On the other hand, if you want private-sector investors to stay in there, there's got to be some return on their capital and it's difficult to see in the current climate where that's going to come from over the long term."

The BBC understands that Deloitte went into closed negotiations with Serco during the summer. No sale was agreed but it is believed there are now a handful of potential bidders looking at the purchase, some from outside the UK industry.

Deloitte and Serco declined to comment.

Employment Minister Esther McVey said that the government had created "a marketplace that never existed before".

"We have brought people into this market place," she said.

Ms McVey added that she did not agree Deloitte's decision should be seen in a negative light.

"Usually when a business sells its business it would be at the peak rather than at the bottom - especially a company like Deloitte," she said.

You can hear more on this story on File on 4, BBC Radio 4, Tuesday 5 November at 20:00 GMT.

http://www.bbc.co.uk/news/business-24806973?utm_source=twitterfeed&utm_medium=twitter

http://www.bbc.co.uk/programmes/b03gbxn8

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The Government cannot find work for people, when there are no jobs! They can't even make them up properly! :blink:

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When Labour introduced the work programme the economy was growing and it was easy for these workfare companies to claim it was themselves and the work programme getting people into jobs (in fact more people not on the work programme found work).

In other words they got paid for people getting jobs who would of got them anyway.

Now that the schemes cut back on up front fees and only pay on results (no more fees for people who would of got work anyway) the gravy train isn't there.

Now they need to get people jobs rather than simply take the up front fees,do nothing and get paid for people getting jobs themselves they want out.

Plus under the new schemes if workfare providers cant place the unemployed in no pay workfare they don't get paid but as part of the contract must instead provide full time jobsearch etc without getting paid.

There never was any money in finding people jobs,,the big money was made by getting people onto workfare and getting the money for people who found their own jobs.Now that the contracts are different the gravy train is over.

The welfare to work sector was always a huge con,and didn't do anything to help the unemployed find work.Deloitte are simply getting out because they have sucked all the free dosh and they know its time to leave.

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The welfare to work sector was always a huge con,and didn't do anything to help the unemployed find work.Deloitte are simply getting out because they have sucked all the free dosh and they know its time to leave.

Agreed! :blink:

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Agreed! :blink:

what Sooty said

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