Some Work Programme prime contractors are referring clients to voluntary sector agencies without telling the agencies, and then claiming payment for helping the client find a job.

The practice was exposed by Bernadette Benn, chief executive of east London employment charity Barnabas Workshops, at yesterday's NCVO annual conference.

In the workshop on policy and politics, Benn queried why welfare-to-work schemes are not commissioned locally, as opposed to the national behemoth that is the Work Programme.

“If we are talking about localism, why isn’t employability support offered at a local level?” she said. “It’s local people, local jobs, local environments. Why is it still with prime contractors who don’t even know the area?”

She went on: “Unbeknown to us, primes are sending clients to us for us to provide a service, but we only find out later on. So we get them into work, or find a volunteer position or they attend our training, yet we don’t realise that they’re signed up to the Work Programme. The primes then claim the outcome and get the funding and we get nothing.

“Unfortunately now we’re upsetting people by saying to them ‘oh you’re on the Work Programme, we can no longer support you’, which is very sad because that’s not who we are,” she said.

James Allen, the NCVO’s policy manager, said the umbrella body was aware of the practice in different parts of the country but had so far been unable to convince any charity to go on the record and say that it was happening.

Benn told him she had already provided evidence of the practice to the local MP and the leader of the local council, and would forward it to the NCVO too.