Administrative failings by the government and those in charge of the early stages of the ChangeUp and Futurebuilders programmes – which will together soak up £446m of public cash - have led the National Audit Office to conclude that neither have yet demonstrated value for money.

In a highly critical report (pictured) which was finally published today after a delay of several months, the NAO identified that both programmes “suffered from administrative weaknesses and a lack of initial targets against which their effectiveness could be measured”.

Taxpayers money ‘wasted’

Four of the eight Futurebuilders loan recipients interviewed by NAO investigators were under the impression that Futurebuilders would not insist they repay their loans, and pressure on voluntary organisations to spend three years worth of ChangeUp cash in just 21 months led to taxpayers’ money being “wasted”.

Edward Leigh MP, chairman of the Public Accounts Committee, issued a damning verdict on the findings. He described as “astounding” the fact that ChangeUp was established without setting any outcome targets.

“Its financial administration was a mess from the start. There was an underspend of £8m in the first three years and third sector organisations had to spend £80m in just 21 months, leading to taxpayers’ money being wasted. Furthermore, services that ChangeUp has established will run into difficulties if they do not secure alternative financing.”

Futurebuilders lendees ‘didn’t know they had to repay’

And on Futurebuilders, Leigh said its one basic flaw was that “its own users do not fully understand how it works. About half of organisations that the NAO spoke to did not know that their loans had to be repaid.”

It wasn’t all bad; NAO investigators conceded that the two programmes “have had a positive impact on frontline third sector organisations”, but because no adequate measures were put in place at the outset to measure their effectiveness, they have not yet demonstrated value for money.

Also, doubts remain about the sustainability of some of the support services established by Capacitybuilders.

Management of the first Futurebuilders contract, led by Richard Gutch, did not focus sufficiently on the fund’s objectives, and some loan recipients were slow to take up and apply the funding.

Recent steps taken to solve these problems

However, the NAO said that new measures implemented more recently by the leaders of both programmes have sought to address many of the issues raised.

Tim Burr, head of the NAO, said: “Value for money will depend on whether the steps now being taken successfully address these problems.”

• Read responses from Richard Gutch and Kevin Brennan here.
• See Tania Mason’s blog about this story: ChangeUp…and then change down again