employedThe government is at risk of failing to meet its target to halve the disability employment gap unless charities and social enterprises are given an even playing field to deliver public service contracts, according to a new report.

‘Improving Employment Outcomes: Empowering the Social Sector Through Social Investment’, published by 8 social investors and supported by the Employment Related Services Association (ERSA), outlines a number of key recommendations for the Government to meet its manifesto commitment.

The report says that a number of market design principles and changes to the procurement process could unlock the capability of charities and social enterprises in supporting disabled people and those with complex needs into work. These include:

Making contracts investable by adopting payment mechanisms that reflect the true cost of supporting those furthest from the labour market into employment. Also incentivising movements towards work as well as entry and progress in work

Reconsidering the size and focus of contracts. The capacity of charities and social enterprises to deliver would benefit from smaller contract sizes, specific to people with more complex needs

Reducing the barrier of the ‘parent company guarantee’, which can stop charities being awarded contracts, as charities and social enterprises tend to have smaller reserves.

The report draws upon the experience of the social investment market in relation to a number of recent Government programmes, including the Work Programme, DWP Innovation Funds and transformation of the probation service. The report was produced by Bates Wells Braithwaite, Big Society Capital, Bridges Ventures, Charity Bank, Impetus PEF, Social and Sustainable Capital, Social Finance and Triodos Bank. 

In its manifesto, the Conservative Party committed to halving the disability employment gap, equating to one million more disabled people in work. At present, the majority of employment provision supporting jobseekers with disabilities is provided by charities and social enterprises. The report has been produced in advance of expected government decision-making on the shape and scale of future employment support programmes in England and Wales.

Vicky McDermott, CEO of charity Papworth Trust, said: “The third sector has got a lot to give in terms of specialist knowledge, innovation and working closely together. This report highlights the fact that the current contracts are having a real adverse impact on the cash flow of the organisations that support disabled people. I welcome the report and urge the Government to consider carefully the key recommendations outlined in it.”

Nick O'Donohoe, chief executive of Big Society Capital, added: “Social sector organisations are well placed to help achieve DWP’s goal of halving the disability employment gap. However, the Work Programme market design and procurement process made it difficult for social sector organisations to participate at the prime level. Social investors and social finance intermediaries are prepared to help unlock the capability of the sector with our capital, if DWP acts on our recommendations.”

Kirsty McHugh, chief executive of ERSA, said: “There is some exceptional work taking place in the disability employment sphere but the sector is aware how much work remains to be done. To meet the challenge of halving the disability employment gap we need to see involvement from across the spectrum, so that the strengths of different organisations can be brought together to tackle this issue.”