South Yorkshire Chambers have lost a lucrative contract to help jobseekers start their own business – despite having some of the best figures in the country.
Staff could face redundancy after a £1.55m deal to run the New Enterprise Allowance in Yorkshire and the Humber was won by Swindon firm Pinnacle People. The two-year deal starts in January.
More than 890 companies have launched in Sheffield since the scheme started in April 2011, the third highest number in the country. South Yorkshire has consistently been in the UK top 10.
The NEA provides start-up jobseekers with a business mentor and a weekly allowance, they can also apply for a loan.
About 12 people, including full-time Chamber staff and freelancers, work on the project across the county.
Chamber chiefs fear the decision by the Department for Work and Pensions could ruin a quality programme that is a ‘natural fit’ with their activities.
It is understood Pinnacle’s bid priced each job at about £275 – half the £550 it costs now.
Andrew Denniff, chief executive of Barnsley and Rotherham Chamber, said: “I’m very disappointed to lose this contract, it’s the kind of work we thrive on and that’s borne out by the success rate.
“You get what you pay for and the DWP might end up with an inferior product.
“My Chamber will lose three very experienced and respected consultants who have always given a quality service.”
A Department for Work and Pensions spokesman said: “To build on the success of the scheme, new payment-by-results contracts will ensure people are fully supported through key stages of setting up a business while providing the taxpayer with best value for money.”
A Pinnacle People spokesman said: “We have been delivering services to support customers back to work in Yorkshire since 2011.
“We currently deliver Work Programme, European Social Fund Support for families with multiple problems and Community Work Placements programmes across West and North Yorkshire supporting over 3,000 people.
“We operate from over 15 sites in the county and have a team of local employees providing the best possible support to our customers.
“We are already delivering two NEA contracts in London and Leicestershire.”