Newcastle College Group loses welfare-to-work contract
The government is to terminate the contract of one of the firms providing their flagship welfare-to-work scheme because of poor performance.
The Newcastle College Group will lose its contract to help long-term unemployed people find work in North East Yorkshire and the Humber.
It is the first time a prime provider of the Work Programme has been sacked.
The company said it was disappointed with the decision, as its performance was improving.
The Department for Work and Pension said that in addition to terminating this contract, the worst performing providers who remained in the scheme had been placed on an enhanced performance management regime.
The Work Programme is the government's main welfare-to-work scheme, aimed at getting long-term unemployed people into a job.
Figures released on Thursday by the Employment Related Services Association, the umbrella group for all providers, show that nearly 500,000 people have been found a job since the Work Programme started in June 2011. The figures do not show how long the jobs lasted.
The latest official figures, up until September 2013, showed the Newcastle College Group getting fewer people into a job and failing to keep them in work as long as G4S, which also administers the Work Programme in the same area.
The company's contract to run the programme in Birmingham, Solihull and the Black Country is unaffected by the latest announcement.
In a written statement to Parliament, Esther McVey, the employment minister, said: "Following the contract termination, no individual on the Work Programme will be left without support.
"Not only do other providers operate as competitors in the area already, but Newcastle College Group are required to operate within the terms of their contract whilst the department appoints a replacement provider within the next 12 months.
What we have initiated here is a continuous process of evaluation and improvement, with rewards for success and consequences for failure. To this end, other providers who deliver low levels of performance and fail to improve will be considered for further action, including the termination of their contract."
Phil Bonell, from the Newcastle College Group, said: "We are extremely disappointed that DWP has taken this decision based on the long-term performance of the contract, especially as we have made significant improvements over the last 12 months thanks to the hard work of our staff and sub-contractors.
"The recent improvements resulted in significantly better performance - in the most recent league tables released in December, this contract was placed 15th out of the 40 contracts nationally."
The group had been judged by auditors and inspection bodies to be providing consistently high-quality advice and training to jobseekers, Mr Bonell said.
"We are continuing to improve levels of people being found work and are confident that this will mean that the incoming provider will inherit a strong performing contract.
"We will work closely with the DWP and the new contractor to ensure a smooth handover for customers, and we remain totally committed to delivering our other Work Programme contract for Birmingham, Solihull and the Black Country."