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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

New employment programme will lead to private sector profits feast

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£76.6m worth of employment contracts going to companies based outside of Scotland or working in partnership with international bodies

Private companies based outside Scotland are set to clean-up through the Scottish Government's new employability programme.

Despite Holyrood promising a fresh start, it was more a case of same old, same old as a TFN investigation shows that organisations which played a key role in delivering the UK government’s Work Programme look set to dominate the new Fair Start Scotland initiative.

The Scottish Government pledged to create a work programme which will help deliver a fairer Scotland after the power to design its own employability services for the disabled and those at risk of long term unemployment was devolved.

However there was criticism of the new programme from third sector representatives when Fair Start was unveiled last week, with the majority of the contracts for specialist employment services set to be managed by private sector providers, many of which are based outside Scotland.

Despite promises, the third sector has been effectively pushed out of the process, it was claimed.

When it was announced, Cyrenians chief executive Ewan Aitken described it as a "scandal" and blasted: "Once again the most excluded have been sacrificed on the altar of profit".

TFN has crunched the numbers and found that of the £96 million worth of contracts awarded across Scotland, £76.6m will go to PeoplePlus, Start Scotland Ltd and Remploy.

PeoplePlus was named as the successful bidder in Glasgow (£19.1m) and Highlands & Islands (£6.2m).

The firm has been heavily involved in the UK government’s work programme and for the year ended 31 December 2016 posted a gross profit of £46.8m from a turnover of £92.8m.

In 2015, it acquired A4e – also known as Action for Employment – which was rocked by six former employees being jailed for falsifying details to inflate the numbers they said they had helped into work. Former A4e chair Emma Harrison faced criticism in 2012 when it was revealed that she had paid an £8.6m dividend on shares the previous year, despite the company’s £180m turnover coming from state contracts.

Start Scotland Ltd was founded in March of last year, and previously known as Randotte WLS Ltd.

The group won contracts in the East (£21.3m) and Southwest (£10.1m) regions. It is described as a private and third sector partnership, however three of the four listed board members also serve as directors of Working Links, one of the main providers of the Work Programme initiative.

Joanna Laxton (secretary), Brian Bell and Stephen Moon are all named on Companies House as directors for Working Links (Employment Ltd). The sole member of the board who is not a Working Links representative is Blyth Deans – chief executive of The Lennox Partnership – who joined the Start Scotland board on 30 August.

Last year, the company was acquired by Aurelius Investments, a European investment group which has its headquarters near Munich and posted annual consolidated revenues of €3 billion for 2016.

After acquiring several companies last year - including Working Links - Aurelius said it was hopeful of further profit. A statement said: “We expect further growth for 2017 as a result of the acquisition of interesting and promising companies that will further strengthen our portfolio.

“We will continue to hold ourselves to our strict investment criteria in future acquisitions, and as they arise will take advantage of opportunities with manageable investment totals and high growth potential to generate profits.”

In response, the Scottish Government said that Start Scotland is a joint venture between Working Links and The Lennox Partnership, with the contract issued to Start Scotland as the legal entity of the organisation.

Remploy Limited – described as a supported business – will deliver contracts in Lanarkshire and Tayside worth a combined £19.9m. Remploy was established to provide training and employment after the Second World War for injured and disabled ex-service personnel and miners but left government ownership in May 2015.

It now works in partnership with Maximus People Services – which has "the principal activity of delivering the Work Programme" and had a turnover of £22,374,000 for the year ended September 2016. The wider Maximus group operates in the US, Australia, Canada and Saudi Arabia, and handles annual revenues of around $2.4bn.

John Downie, director of public affairs at the Scottish Council for Voluntary Organisations (SCVO), said that much of the profits from Fair Start would be going to non-Scottish firms.

He said: “As expected these findings support our initial response to the Scottish Government’s announcement last week – the third sector is being cut out of the employability landscape in Scotland and the bulk of the profit is going toward private companies based outwith the country.

“This is simply an unsustainable and unacceptable position – the Scottish Government must urgently open up discussions on the future of employability, to ensure people who are unemployed are getting the support they need.”

The government has highlighted that third sector groups will be engaged in partnership with those who have been awarded the contracts, but Third Force News understands that those involved are still awaiting full details.

A Scottish Government spokesperson said that the third sector played a key role in informing the approach to Fair Start Scotland, and will play a critical role in its delivery, with "over 50% of the provision to be delivered by public and third sector organisations and supported businesses."

“We have made it clear from the very beginning of this process that there is real strength in a mixed economy of public, private and third sector suppliers working collaboratively to deliver better outcomes for participants. Contracts have been awarded following a rigorous, open and competitive procurement process.

“The Scottish Government provided the third sector with a core budget of £24.5m this year, and look forward to working closely with the sector on Fair Start Scotland, and across our other programmes, such as Community Jobs Scotland - in which the Scottish Government has invested more than £50m since its inception.”

The tendering process began in October of last year, with events taking place throughout the country in the run-up to the submission date.