MINISTER for Employment Jamie Hepburn has defended the Scottish Government’s employability programme, warning charity critics the scheme is not designed to help them.

“This programme has not been designed to support particular sectors," he said in a thinly veiled rebuke to the critics. "It is designed to help, 38,000 people into employment, they are the people that matter.”

His response came after voluntary sector leaders accused him of shutting charities out of the bidding process for £96 million worth of contracts to help the unemployed find work.

The Scottish Council for Voluntary Organisations (SCVO) has claimed the Scottish Government has reneged on promises of a “brave new world” of employability in which charities would play a fuller role.

But after bids led by private firms such as PeoplePlus (formerly A4E), Start Scotland Ltd, and Maximus dominated the awarding of contracts for its Fair Start Scotland scheme, the Government has been accused of replicating the mistakes of the UK Government’s much criticised Work Programme.

Mr Hepburn insisted the process of tendering for bids covering nine areas of Scotland had been fair:

“If there is any suggestion we don’t value the third sector I would refute that utterly. But we had an open transparent and fair procurement process and the best bids won.”

SCVO claimed many charities were unable to bid because the payment-by-results model meant difficulty getting paid would deter those working with people furthest from the job market.

The up front risk for those working with homeless people, those with addictions or groups who find difficulty getting into work such as disabled people – is too great, SCVO claims.

Meanwhile those who won bids in the private sector will be encouraged to “park and cream”, charities fear – parking the clients facing the most difficulties and creaming off payments for those who are easiest to find employment.

Mr Hepburn said this danger had been factored in to the programme: “It is for that very reason that we have included an up front service fee, with providers getting 30 per cent at the start,” he said.

However he said that the programme needed to be credible, and payment by results was part of that. “The public would expect there to be outcomes. If we didn’t have a model in which we ultimately work towards ensuring people get into employment, they would wonder whether this is an employment programme at all.

Mr Hepburn hit back at suggestions the Scottish Government’s Fair Start programme was too similar to that of the UK Government, claiming the fact that those on benefits can choose whether to participate makes it fundamentally different.

“The overarching difference is that this remains a voluntary programme,” hee said. “The UK Government’s predecessor programme was primarily designed to encourage people out of social security, under the threat of benefit sanctions. That is not the approach we are taking.

“I believe we will get more out of people if they come willingly and voluntarily.”

He claimed those taking part in trial versions of the Scottish Government scheme recognised a change in approach. “If you speak to those taking part in thee transitional programme if it feels different, absolutely, they say it does.”

The Scottish government has also invested £2.5m in work to integrate Fair Start with other areas of social support such as housing, he said, while there will be a role for mental health and disability charities in all contract areas. "I don't disagree that the third sector have real expertise in helping people furthest from the labour market," he said.

He said the progress of those who have won bids will be closely monitored, with firms delivering Fair Start Scotland facing unannounced inspections from Government officials.

Contracts run for an initial three years and the is scope to change the scheme if it is not working, he added. "This it is the first time we’ve awarded these contracts and it won’t be the last time. We will be watching it closely and learning lessons."

He said a meeting this week with key participants in the private and voluntary sector, on Wednesday, would see more detail revealed of how the scheme will work.