Pathways companies go bust

26 March 2008

One of the companies paid by the government to get disabled people into work has gone bankrupt. A second, unsuccessful, Pathways bidder has also gone into receivership.

Instant Muscle, a charitable company set up in 1981, called in the administrators on 5th March. The company won an £11 million contract in November last year to provide Pathways interviews in Surrey and Sussex and would have been carrying out compulsory interviews on claimants under the new Employment and Support Allowance (ESA) from October of this year.

Instant Muscle made unsuccessful approaches for help to other Pathways providers before calling in the administrators. Other providers, including the Shaw Trust, are now, however, bidding to take over Instant Muscle’s contract.

The company had 250 employees and went into administration owing them a month’s wages.

Meanwhile, another would be Pathways provider, Carter and Carter had debts of over £129 million when it called in the administrators. It failed to win any of the Pathways to Work contracts and had to put out a profit warning last summer as a result. (See: Profits fall as Pathways mystery deepens). Its government funded Train to gain programme was also attracting few customers. Nonetheless it had around 25,000 people on training courses whose futures are now in doubt.