Over the past few years New Labour has targeted the employment service for privatisation and outsourcing as part of its drive to get people off benefits.
In the process it has helped a new generation of private companies to get rich off the back of government contracts and transformed some charities into major businesses, according to a damning 2006 report for the PCS civil service workers’ union.
The report highlights several examples of individuals and companies that have made millions from the government contracts to run training disabled or unemployed people and young offenders.
For example A4e is one of the biggest providers of training services for the government’s New Deal programme to get claimants into work. It also runs welfare reform services in Poland and Israel, and has a turnover of £75 million a year.
It claims to be “championing the disadvantaged and underprivileged”.
Its founder, who set up the company in 1991, is now estimated to be worth £55 million.
One of the major charities featured in the report is the Shaw Trust, which provides training for disabled people and is most funded by contracts from Jobcentre Plus.
It saw its income rise from £18.36 million to £63.98 million between 2005 and 2006.
This is one the organisations that John Hutton has recently been promoting abroad as a model for outsourcing public services.
Steve Davies, the author of the report, said “Far from the third sector being portrayed as a cuddly voluntary sector, it is rapidly becoming another arm of big business, whether directly through new private companies or through connections with big business.”