The Challenge, a charity which had been involved in delivering National Citizen Service since the start, has appointed an administrator and criticised the royal charter body running the scheme for “nothing short of a national scandal”.
The NCS programme was formally launched by the government in 2010, and The Challenge has been heavily involved in delivering the programme since then.
In 2017, 45,000 young people took part in NCS programmes run by The Challenge or its sub-contractors. The Challenge's income for the financial year to 31 October 2017 was £69.8m, and its contract to deliver NCS was its principal source of income. It has nearly 1,300 employees.
The Charity Commission's online register says that The Challenge's documents are 27 days overdue as it has failed to provide information on its finances within ten months of its financial year end.
'We made this difficult decision with great sadness and considerable anger'
Bill Ronald, chair of The Challenge Network, said: “The board of The Challenge Network has today appointed Philip Sykes of RSM as administrator to the organisation.
“The appointment of an administrator follows over five months of discussions with NCS Trust and DCMS, throughout which The Challenge and its team have sought to resolve certain significant issues created by NCS Trust that were having a materially negative impact upon The Challenge’s ability to deliver NCS provision to young people across the UK.
“The decision to appoint an administrator was not taken lightly, but after every possible avenue had been exhausted. We made this difficult decision with great sadness and considerable anger at the manner in which The Challenge has been forced into it.
“It has been a testing time for everyone at The Challenge. I would like to confirm how extremely grateful I am to each and every member of the team who has worked tirelessly to bring about our vision: an integrated society where there is an understanding and appreciation of each other’s differences.
“Those charged with oversight of NCS provision have failed many hundreds of dedicated colleagues and jeopardised many thousands of opportunities for young people. It is nothing short of a national scandal.”
NCS Trust: 'To suggest there is a failure of oversight in NCS provision is utter nonsense'
The NCS Trust said: “Although a very sad day, NCS Trust is simply not responsible for The Challenge entering administration.
“The fact remains The Challenge decided it would not sign contracts to deliver NCS from 2020 and that was the main catalyst for the resulting problems it has faced.
“NCS Trust has been working tirelessly right up until today to negotiate a way forward with The Challenge including the offer of a board-to-board meeting that was refused.
“All money has been paid to The Challenge for the delivery of its places this summer and autumn even though we understand The Challenge has not subsequently paid all its suppliers. It also entered into an expensive and misguided High Court action against NCS Trust rather than taking up our offer of independent mediation.
“To suggest there is a failure of oversight in NCS provision is utter nonsense. What has happened here is The Challenge has worked to try and force other bodies to come to its aid when there is no rationale for anyone doing so.
“Rather than a lack of oversight, it is more accurate to say, this has been the failure of The Challenge, and The Challenge alone, to recognise it was one of a number of suppliers to NCS Trust in a competitive public procurement process, and it is the job of NCS Trust to deliver its programme safely and at the best possible cost to the taxpayer.
“This is what we now intend to do to make NCS even better than ever in 2020. Our immediate priority is to ensure the continued success of the NCS programme, we have alternative world-class partners and no young people will miss out. In addition, we will do what we can to assist staff and suppliers of The Challenge. Challenge staff eligible for transfer to other suppliers have done so under the TUPE process.”
Dispute over payment
In a specific response to the NCS Trust's statement, The Challenge has said that “significant payments remain outstanding”.
It said: “The statement from NCS Trust exposes exactly the high-handed, disdainful, arrogant behaviour and wilful misrepresentation of the truth that we and many others have encountered in our dealings with them. They believe that they are beyond reproach.
"Our lawyers will attest that significant payments remain outstanding and that far from withdrawing from the contracts, we sought legitimate assurances on their safety and viability.
"The contracts - which we had fairly won and been awarded - were unilaterally withdrawn on 31 July 2019, 16 days after we registered our concerns with DCMS.”
The Challenge had previously begun a legal battle against the NCS Trust, for an alleged breach of contract in seven areas.
A spokesperson for the NCS Trust had said at the time: “It’s unfortunate The Challenge feels it needs to make these allegations in such a public way - we reject their assertions and we are challenging the legal claim we received after we let the charity know we will not be contracting with them from next year.
“We made the decision not to contract with The Challenge as we were unable to reach an agreement with the charity over a contractual requirement to use a shared IT system that ensures value for money, improves customer experience and protects young people’s data.”