A4E Fraud: Questions Left Unanswered.
Welfare-to-work fraud detection inadequate, say MPs (From the BBC today)
Margaret Hodge: ‘You don’t pay a company if they have not done the work
The government failed to be rigorous enough in detecting fraud among its welfare-to-work providers, a committee of MPs has said.
The public accounts committee said the Department for Work and Pensions (DWP) had missed “vital evidence” of possible fraud, particularly at the firm A4e.
Committee chair Margaret Hodge said the DWP had “not been proactive in setting in place systems which root out fraud”.
A4e said a recent audit of the firm had found no evidence of fraud.
MPs accepted that financial checks on welfare-to-work schemes had been improved under the current government.
But Labour MP Ms Hodge said that “risks remain, especially to value for taxpayers’ money”, with the Work Programme, which launched in 2011.
The department failed, for example, to obtain from A4e damning internal audit reports produced in 2009 which pointed to instances of potential fraud and malpractice across the country.”
End Quote Margaret Hodge Labour MP and public accounts committee chair
She explained: “The design of the programme still allows for the possibility of providers being paid for finding work for people who found the jobs on their own.”
She told the BBC’s Daily Politics that her “real concern” was whether A4e was a “fit and proper company” for the DWP to do business with.
According to the report, the DWP spends about £900m each year on programmes designed to help unemployed people find, and keep, jobs, with both private companies and charities securing contracts.
But A4e – the government’s largest provider – is currently the subject of a police investigation into allegations of fraud relating to its multi-million-pound welfare-to-work activities.
In February, entrepreneur Emma Harrison stepped down as the head of A4e and quit her role as the government’s “family champion”.
The DWP launched its own investigation in March, following a new allegation of attempted fraud in connection with A4e’s provision of services for the government’s Mandatory Work Activity scheme.
Ms Hodge said: “Where the government chooses to use private companies to deliver public services it is essential that proper arrangements are in place to prevent and detect fraud and malpractice.
“In this instance, the DWP’s arrangements for overseeing and inspecting its contractors were so weak that vital evidence on potential fraud and improper practice was not picked up.
“The department failed, for example, to obtain from A4e damning internal audit reports produced in 2009 which pointed to instances of potential fraud and malpractice across the country.”
There is “still a cloud” hanging over the firm A4e that had a government contract to help people into work, said the chair of the Commons Public Accounts Committee.
Her committee has criticised the government’s ability to detect fraud among welfare to work providers, and said arrangements for inspecting contractors were so weak that evidence of potential fraud was not picked up.
Labour MP Margaret Hodge told Carole Walker: “You don’t pay a company if they have not done the work.”
The UK Press Association adds:
n the case of A4e, the committee said that the DWP failed to obtain internal audit reports from 2009 which referred to a “considerable number” of cases of alleged fraud and malpractice.
In February, A4e founder Emma Harrison – who was appointed by David Cameron as the Government’s “family champion” – announced she was quitting the firm amid claims of widespread problems in the organisation.
Although the DWP launched an inquiry into controls at A4e – resulting in one contract being cancelled – the committee said it had not addressed the wider issue of whether it was a “fit and proper” company to carry out such work.
“The department’s arrangements for overseeing and managing its contractors did not pick up vital evidence about potential frauds,” it said. “The investigations of alleged fraud that the department has carried out have not been sufficiently thorough.”
The Independent publishes this:
My name is Eddie Hutchinson and I was employed by two companies, Working Links from 2007-10, and A4e from 2010-11. Within each company there were occasions on which I encountered unethical behaviour or wrongdoing that fell way below standards that should be expected of organisations funded by significant sums from the public purse.
I was appointed head of audit of A4e in October 2010. It quickly became evident that the incidence of frauds and irregularities was a major problem for the company. An ever-increasing volume of frauds came to my attention.
The type of frauds perpetrated by operational staff at A4e usually related specifically to the falsification of job outcome evidence on a number of legacy welfare-to-work contracts.
Such contracts from memory attracted a payment of around £1,300 for A4e for each jobseeker placed into work and this was followed by a payment of £3,000 to A4e once this placement became a sustained job.
The fraud carried out was usually that job outcome evidence required to be completed under the contract would be fabricated by the falsification of employers’ signatures by some A4e staff involved, which meant that erroneous jobs were recorded and targets for job outcomes apparently met.
This whistleblower’s account was submitted as evidence to the select committee, and subsequently leaked.
What is not answered:
- Is there evidence of these practices in other welfare-to-work companies?
- What are the profits A4E made out of its fraudulent activity?
- What is the potential – in principle massive – for fraud in Workfare schemes, above all the one due to be introduced in the work-for-benefits ‘Community Action Programme?