The shock collapse of the UK’s leading drug and alcohol charity, Lifeline, which was heavily reliant on income from public sector contracts, should set alarm bells ringing, Unite, Britain’s biggest union, has warned, as it calls for an urgent review of the government’s payment-by-results (PBR) commissioning model for procuring pubic services.

The call comes on the eve of Lifeline officially collapsing into administration (Thursday 1 June). Unite has warned that outcome-based, (PBR) contracts are fundamentally flawed due to the serious cash flow problems that they can cause to charities, which have to wait months for full payment after a service has been delivered. The union is calling for more funding and a return to collaborative funding models through a consortia of providers and sustainable grants. Members of Unite, who provide support to 80,000 service users a year, have been plunged into uncertainty by the charity’s collapse. Some fear that they could be out of a job by next week.

Unite welcomes the move by Change, Grow Live (CGL) – the UK’s biggest not-for-profit provider of treatment services – which has stepped in to rescue a ‘significant proportion’ of Lifeline’s projects. However, serious concerns remain around some other local contracts, the union is calling on new providers to commit to retaining the current level of service and for a ‘no redundancy policy’ to be adopted for Lifeline staff and agency workers.

Unite national officer for the not-for-profit sector Siobhan Endean said: “The collapse of Lifeline should set alarm bells ringing, which is why we have launched an email campaign, urging members of the public to contact their local Prospective Parliamentary Candidates (PPCs) ahead of next week’s general election. They are being asked to protect the future of drugs and alcohol services in their local communities and the jobs of the people who currently work for Lifeline.

“Drug and alcohol services are chronically underfunded as a result of the government’s savage cuts. We believe that the payment by results model of commissioning is placing the services at risk. Unite members in the sector report that they are under pressure to focus on unattainable measures and targets. Organisations can be tempted to bid for contracts where they are at risk of operating at a loss.

“Unite will make every effort to ensure that all Lifeline projects remain open and that they are taken over by providers committed to keeping the same level of service, and that staff and agency workers who work for Lifeline do not face redundancy. The underlying principle of payment by results is that providers are paid according to the outcomes which they can demonstrate they have achieved, as opposed to the activities they undertake.”