Red Kite Learning, a 25-year-old London-based education and employment charity, is closing at the end of July because it says government policies such as the Work Programme has made its future untenable.

Founder and CEO Brendan Tarring says the government’s fixation on cost over quality is “destroying” the welfare-to-work sector, particularly those mid-sized charities in the “squeezed middle”.  Thirty-two jobs will be lost.

Since 1988 Red Kite Learning has supported more than 130,000 unemployed people, providing training, finding them work experience and helping them find jobs. A recent impact assessment of five years’ work with drug and alcohol users suggested that the charity delivers just under £2 worth of benefit to the Exchequer for every £1 it receives in funding.

But now Tarring says that the Work Programme, where contracted organisations are only paid once people are placed in jobs, cannot sustain medium-sized charities. In 2010 the charity had income of £2.8m, but in its current financial year, which was due to end in September, income was projected to be £1.3m.

Tarring doubts that the Work Programme will meet its targets for getting long-term unemployed people back to work, and that the one-size-fits-all model will ultimately fail.

He said: “The government’s fixation on cuts and awarding contracts on cost rather than quality is destroying the most sophisticated not-for-profit sector in the world.

“Our model has always been to work with as many funders as possible. We had a whole series of smaller contracts with local authorities and Jobcentre Plus and that would have worked if we had been able to pick up a couple of larger contracts, say with the Skills Funding Agency and the Work Programme.”

But despite the charity’s successful track record, it cannot bid for larger contracts such as these because of the minimum contract values and the time lag between starting work and receiving payment.

Six months before payment is received

Last autumn Red Kite was offered the chance to manage a Families Programme, which is linked to the Work Programme, in north London, but it has found that it can’t sustain it.

Tarring said: “Because of the funding arrangements, where we don’t pick up income until six months after we’ve begun work with any individual, it became part of the overall consideration of our prospects for the future.

“That’s a level of credit that I don’t think many charities are equipped to handle.

“Our conclusion has been there is no place for Red Kite Learning in this environment.”

Monoculture of support

He went on: “It’s very sad as I think a charity like mine has a great deal to offer the back-to-work sector.  The policies in place at the moment suggest the government is deliberately trying to whittle down the number of providers to a handful of very large, long-term providers and I don’t think it is going to leave the sector with enough diversity to meet the needs of all the individuals who find themselves unemployed.

“We’re in danger of producing a monoculture of support for the unemployed when what they need is a diversity of options.”

Red Kite Learning is now planning to hand back its contracts with London Councils and DWP, as well as its pre-existing contracts for local learning and employment work.

The decision to wind up was taken in May.