A deal to help unemployed people find jobs across Brighton and Hove has fallen through at the final hurdle.
Latest figures suggest that 1,500 young people are claiming jobseeker’s allowance in Brighton and Hove.
Avanta, which specialises in helping the unemployed to find work, would have paid the council to act as a sub-contractor under the deal.
The council would have been paid by results in an area where it says that it already has a reasonable track record.
Success was to be measured by each month that a young person stayed in a job, with payments made every month up to 13 months.
Each failure – each young person leaving a job in which the council had placed them – would have cost the council a sum of money up to a figure just short of £3,000.
And this would come on top of the cost of employing a team of staff to run the scheme.
Avanta’s role was to refer unemployed young people to the council so the council could place them in work but the contract did not set out a viable minimum number.
This increased the financial risk to the council.
Once officers became aware of the extent of the financial risk, they asked for permission to call off the deal.
This evening (Wednesday 3 August) they were given permission by Councillor Amy Kennedy, the council’s cabinet member for planning, employment, economy and regeneration.
She was told that there was a risk of the council losing more than the £100,000 contingency money that it had set aside for the scheme.
A report recommending that the council calls off its talks with Avanta can be found here.
The proposed five-year contract with Avanta was tied to a two-year deal relying on European Union (EU) funds.
Councillor Kennedy, the Green deputy leader of the council, this evening asked officers to work urgently towards finding alternative ways of keeping hold of the EU funding.
Even more money – £2 million – is at stake with the EU project.
But officers advised Councillor Kennedy that the contracts with the other local authorities taking part in the scheme made it less likely that the council would be landed with a hefty bill.
The project could help cut graduate unemployment over two years and, at the same time, earn revenue for the council.
The ending of talks with Avanta and the risk to the EU funding was criticised by the Conservatives’ finance spokesman Councillor Ann Norman.
She said that the Avanta deal could have helped almost 400 young people find sustainable long-term employment.
And she added that the risk of losing the EU funding could cost 100 graduate jobs in the area.
Councillor Norman said: “This whole episode smacks of incompetence on the part of the new Green administration.
“It appears that they failed to gain answers from Avanta on such basic questions as what the council would be expected to deliver as a sub-contractor and what the arrangements would be for pulling out of the contract.
“Our partners in the city, who have put a lot of their own time and effort into this project, must be wondering what on earth is going on.
“Are they likely to want to work with us in the future if they think they will be left high and dry again?”
She said that the Greens had also failed to spell out exactly how these work and apprenticeship opportunities would now be provided, merely stating that “alternative arrangements” would need to be put in place.
She added: “We have a number of excellent community and voluntary sector organisations in the city who help young unemployed people back into work.
“I would like to see a much greater role for them as part of the government’s Work Programme.
“It is a great shame that these vulnerable young people now face even greater uncertainty and stress as a result of the way the Green administration has handled this whole episode.”