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Tories may offer smaller Flexible New Deal contracts

By John Plummer, Third Sector Online, 22 June 2009

Plan would give charities a better chance of winning, says Theresa May

Shadow Work and Pensions Secretary Theresa May has said the Conservatives will consider offering smaller Flexible New Deal contracts to give third sector organisations a better chance of winning them.

Last month the Department for Work and Pensions announced that only one sector organisation, The Wise Group, had been named as a preferred bidder for the 24 contracts awarded in phase one of Flexible New Deal, which aims to get long-term unemployed people back to work. Large private companies, such as Serco and A4e, dominated.

May told Third Sector that the size of the contracts, which are worth millions of pounds, was one of the main barriers to third sector organisations.

"We have to find a balance between not having too many contracts that it makes it difficult for the DWP to deal with and not having too few so that there are hardly any third sector players in the market," she said.

May said the Tories would also consider introducing payment by results, which she said would help voluntary organisations win contracts because they excelled at delivering results. She said setting up a social investment bank could help charities overcome any delays in payment this might cause.

However, May admitted there could be legal problems amending the five-year contracts, which could all be awarded by the time of the next general election.

"Our scope for doing anything quickly could be limited," she said.