Welfare-to-work charities move closer to merger

The Shaw Trust and the Careers Development Group, which together employ 1,300 staff, announced today after several months of talks that they planned to commission a feasibility review into how they might work more closely together. This could lead to a full merger, the organisations said.

Roy O’Shaughnessy, chief executive of CDG, said both boards supported the idea of merger and the charities had signed a memorandum of agreement on the way forward.

He said the two charities were primarily motivated by a desire to help more workless people rather than financial weakness on either party’s side.

He predicted that more charities would merge in order to enhance their prospects of winning substantial government contracts.

"If the third sector is to stay involved in these large contracts, it will need organisations of size and stature to compete," said O’Shaughnessy.

"You have got to be a certain size just to build the systems that are required."

He said informal conversations with the Shaw Trust began six months ago and that a merger was possible by late summer.

CDG is a prime contractor on the Department for Work and Pensions’ main employment initiative, the Work Programme.

It has a payment-by-results contract for east London worth up to £120m over five years and a 30 per cent share of two prime contracts with a private company, Maximus Employment & Training UK, which are worth up to about £35m each for the charity.

Both organisations became charities in 1982. The Shaw Trust is a major provider of the DWP’s Work Choice programme, which helps unemployed disabled people. It employs 1,000 staff; CDG has about 300 employees.

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The Shaw Trust had an income of £112.6m in 2010/11 and CDG’s was £30.8m during the same year, figures on the Charity Commission’s website show.

O’Shaughnessy said it was too early to say what impact a merger would have on staff, but he said his organisation currently had about 50 vacancies for its Work Programme projects.

John Briffitt, chair of the Wiltshire-based Shaw Trust, said merger "may bring about a stronger voice, more innovative services and most importantly, significant benefits for our clients across the UK".

The trust has been without a full-time chief executive since Sally Burton departed last September.