It's hard to be fluffy and efficient

The government has to decide whether it outsources for ruthless efficiency or its fluffy "big societ

Ben Phillips writes for Left Foot Forward:

One of the big ideas behind the government’s welfare reforms is that local charities would be better at getting the unemployed into work than government.

It just so happened that there would be a middleman – often a big contractor like A4e that. . . carries £200 million of public sector contracts.

Once the contractor takes on the case, they then find a subcontractor – the small local organisation – who will actually help secure employment for the jobseeker.

Except that specialist trade magazine Third Sector have reported the majority of welfare-to-work subcontractors in one survey have had precisely no client referrals.

This seems to be a pattern in initiatives aimed at harnessing the power of the "big society". It's fundamentally a mismatch between two competing – and contradictory – aims of outsourcing. Normally, the state outsources because it thinks the private sector can do a better job; if there's an element of publicity in it, its that governments sometimes like to be seen to be reducing the burden of the public sector.

Under the Conservatives, a second aim has been grafted on to that: make the government look fluffy. The rhetoric of the big society isn't just about removing the government, but also about putting power back in the hands of the people. Unfortunately, transferring control of, in this instance, the welfare-to-work schemes from a government to a massive outsourcing firm doesn't achieve that goal particularly well.

Hence this strange split-level structure. The government can't afford to deal with charities directly (literally can't afford – the administrative overheads for dealing with the hundreds of local operations would be prohibitive), so it contracts out the role to middlemen.

Unfortunately, it appears from Third Sector's report that the middlemen aren't particularly interested in boosting the big society agenda.

David Cameron launches Big Society Capital in April. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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George Osborne's surplus target is under threat without greater austerity

The IFS exposes the Chancellor's lack of breathing space.

At the end of the last year, I noted how George Osborne's stock, which rose dramatically after the general election, had begun to plummet. His ratings among Tory members and the electorate fell after the tax credits imbroglio and he was booed at the Star Wars premiere (a moment which recalled his past humbling at the Paralympics opening ceremony). 

Matters have improved little since. The Chancellor was isolated by No.10 and cabinet colleagues after describing the Google tax deal, under which the company paid £130m, as a "major success". Today, he is returning from the Super Bowl to a grim prognosis from the IFS. In its Green Budget, the economic oracle warns that Osborne's defining ambition of a budget surplus by 2019-20 may be unachievable without further spending cuts and tax rises. 

Though the OBR's most recent forecast gave him a £10.1bn cushion, reduced earnings growth and lower equity prices could eat up most of that. In addition, the government has pledged to make £8bn of currently unfunded tax cuts by raising the personal allowance and the 40p rate threshold. The problem for Osborne, as his tax credits defeat demonstrated, is that there are few easy cuts left to make. 

Having committed to achieving a surplus by the fixed date of 2019-20, the Chancellor's new fiscal mandate gives him less flexibility than in the past. Indeed, it has been enshrined in law. Osborne's hope is that the UK will achieve its first surplus since 2000-01 just at the moment that he is set to succeed (or has succeeded) David Cameron as prime minister: his political fortunes are aligned with those of the economy. 

There is just one get-out clause. Should GDP growth fall below 1 per cent, the target is suspended. An anaemic economy would hardly be welcome for the Chancellor but it would at least provide him with an alibi for continued borrowing. Osborne may be forced to once more recite his own version of Keynes's maxim: "When the facts change, I change my mind. What do you do, sir?" 

George Eaton is political editor of the New Statesman.