Ipswich Unemployed Action.

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Public Accounts Committee on Welfare-To-Work Fraud Today.

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Public Accounts Committee 22nd May.

Subject: Fraud within welfare to work providers.

Witness(es): (at 3.15pm) Witnesses to be confirmed (at 4.00pm) Robert Devereux, Permanent Secretary, Alan Cave, Delivery Director, Department for Work and Pensions
Location: Room 15
The Guardian Reports,
“Auditors asked to identify financial discrepancies at two of Britain’s biggest welfare-to-work firms will tell parliament they found evidence of widespread fraud but their concerns were ignored.

The investigators employed by Working Links and A4e, which hold government contracts worth more than £100m, will tell MPs they requested formal inquiries into possible abuses of public money but their requests were not followed through.

The claims will form part of a session of the public accounts committee, which is hearing evidence from witnesses involved in the welfare-to-work sector. Committee members say they have received hundreds of claims of fraudulent activity within the sector that pays private contractors to put millions of people back to work.

One witness, the head of a forensic services department in an accountancy firm, alleges that he was asked in 2008 by Working Links to investigate allegations by whistleblowers and employees who were concerned about fraud.

He claims that, following his inquiries, he asked senior Working Links executives to ask police to launch a criminal inquiry into some allegations. This, he claims, was not followed through by the company.

A spokesman for Working Links said the company took allegations of impropriety seriously and would examine them as a matter of urgency once they had appeared before the committee.

Another witness, a senior figure in A4e’s risk and audit department in 2011, claims there was evidence of fraudulent activity in many of the firm’s offices.

He says that, in two of A4e’s offices, staff were caught with company stamps that could be used on paperwork to claim public money for placing people in jobs. Despite a formal investigation, A4e took no action, the witness claims.

A4e denies any fraudulent activity. It says that the stamps were only used with the employers’ full knowledge and consent, and that a stamp alone could not be used to validate claims.

A4e has responded by criticising the committee for failing to call it to give evidence to the meeting.

Working Links and A4e are two of 18 main providers, including Serco, and Ingeus Deloitte, commissioned to deliver 40 contracts to get the long-term unemployed into work at a cost of up to £5bn.

Working Links was founded in 2000 as a public-private partnership. In 2010, its turnover was £123m. A Department for Work and Pensions (DWP) investigation into A4e this year found no evidence of fraud and said there were only problems with one of the 12 contracts with A4e. But there is an ongoing police inquiry involving employees of the company.

Chris Grayling, minister for employment, announced that the department had cancelled a £1m work contract with A4e.

Emma Harrison, the head of the company, quit her role as David Cameron’s “family champion” this year after one of the investigations was launched, a move that was highly embarrassing for the prime minister.

In a report published last week, the National Audit Office said the DWP did “not do enough” to stem hundreds of thousands of pounds worth of fraud among private companies administering back-to-work schemes, even though it knew of the risks.

More than half of all documented fraudulent activity had occurred under Labour’s New Deal programmes, which ended in June 2011, according to the report. The newer flagship scheme called the Work Programme had “largely addressed the main weaknesses” in previous programmes, the report said.

But it warned that “risks still remain” for smaller current programmes such as Mandatory Work Activity because it had no means for “systematic independent checks”.

An A4e spokeswoman criticised the committee for failing to allow the company to respond to witnesses who will give evidence on Tuesday and denied allegations of fraudulent activity.

“The committee has called witnesses to give evidence against A4e at the last minute, without calling a representative of A4e, or allowing us the opportunity to respond directly to any concerns or evidence they have relating to our delivery of welfare-to-work,” she said.

“Wherever we have been given facts to support any previous allegations, we have looked into them and we have not found a single allegation of fraud that stands up.

“All allegations which have been made to us are related to historic, paper-based contracts, where an unsubstantiated claim can be the result of any number of things in a vast, paper-based system and certainly not evidence of fraud.”


Written by Andrew Coates

May 22, 2012 at 10:13 am

6 Responses

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  1. 22 per cent of the first 300,000 people on the scheme are employed after spending nine months to a year on the programme.

    But officials predict that around 28 per cent of unemployed people put through the Work Programme would have got long-term jobs without any help from the Government.” People on this scheme are LESS likely to get a job,by 6%. So in fact it causes more unemployment than solves it.

    Eric Greenwood (scared)

    May 22, 2012 at 10:58 am

  2. Leaked audit report exposes ‘potential fraud’ at A4e
    Company’s auditors raised questions over one in four ‘welfare-to-work’ placements
    By David Hencke | 22 May 2012 | 1 Related piece
    Pic: Exaro

    Potential systematic failure: A4eAuditors for a troubled company running government welfare-to-work programmes discovered that more than a quarter of its placements was potentially fraudulent, irregular or unverifiable.

    The company, A4e, placed one job-seeker at a lap-dancing club. A4e has huge contracts as one of the five main contractors on the government’s £5 billion work programme.


    Ecarco News

    May 22, 2012 at 11:59 am

    • Apparently the Public Committee evidence was heard in secrecy.

      Andrew Coates

      May 23, 2012 at 12:23 pm

      • Some of it was and I think the reason given was so that any future criminal prosecution would not be prejudiced.


        May 23, 2012 at 1:24 pm

      • Indeed, and this has come out: http://www.telegraph.co.uk/news/politics/9286323/Welfare-to-work-fraud-scandal.html

        Written evidence submitted to Parliament by a former chief auditor at A4e shows how an “unethical culture” led to “systemic fraud” at the company, which holds major government contracts. When concerns were raised about wrongdoing with senior managers, little was done to address the widespread abuse of taxpayers’ money, the whistleblower alleged.

        A document put to MPs also described serious problems at another welfare to work provider, Working Links, which runs three major contracts on the Coalition’s £5 billion jobs scheme and is part-owned by the Government.

        The evidence was submitted by Eddie Hutchinson, the former head of audit at A4e, who attended a meeting of the Commons public accounts committee on Tuesday from which the public was excluded.

        The Daily Telegraph has seen a copy of the documents submitted.

        Mr Hutchinson made the allegations a week after the Government said it had seen no evidence of fraud in contracts held by A4e.

        A4e and Working Links work on government contracts that pay them up to £2,000 for placing an unemployed person into a long-term job. A4E is majority-owned by Emma Harrison, who stepped down in February as an unpaid adviser on family issues to the Government. The company, which holds government contracts worth hundreds of millions of pounds, has faced several allegations about its conduct in recent months.

        Eight of its employees have been arrested by police investigating allegations of fraud. The Department for Work and Pensions last week ended one of its contracts as “too great a risk”.

        Both companies on Wednesday night denied any wrongdoing. The auditor’s evidence will leave the Government facing political questions over its employment programmes, since Mr Hutchinson suggests that many of the jobs the companies claim to have created are fictitious.

        In his evidence, Mr Hutchinson claimed that the leaders of both companies oversaw a “disgraceful misuse of government and taxpayer funding”, characterised by unethical behaviour, mismanagement, inadequate corporate governance and risk management and excessive payments in salaries.

        An auditor with 30 years’ experience, Mr Hutchinson’s statement discloses that despite his discovery of an “ever-increasing volume of frauds”, with two or three new allegations arising on some days, the company failed to act. It cultivated a culture that discouraged employees from revealing improper practices, the document states.

        “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,” he wrote.

        The repeated incidents of malpractice in the sector have led to a “multi-billion pound scandal”, he claimed in his statement. In his evidence, Mr Hutchinson, who worked at A4e from October 2010 until May last year, alleges:

        • A bonus scheme for employers “drove inappropriate behaviour” by staff willing to commit fraud.

        • Staff acted in the belief that if their irregularity was discovered, they could resign in the knowledge no further action would be taken.

        • Two years on from a 2009 audit report warning fraud was not confined to one part of the country, fraud was still “systemic”.

        In his evidence, Mr Hutchinson described workers faking documents supposed to confirm successful placements of the unemployed. In one case, Mr Hutchinson said, an investigation into fraud at the Newcastle office of A4e in October 2010 revealed staff had used a stamp from an employer to wrongly show that people had been given jobs.

        Emma Harrison quit her executive role at the company in February after the launch of a police inquiry into some of its work. She also quit her role of families tsar for the Government.

        Two other whistleblowers have also submitted evidence. After protests from Conservative members, the select committee discussed the evidence in private. The committee said on Wednesday: “We will insist that the allegations are fully investigated and results of the investigation published.” A4e rejected Mr Hutchinson’s evidence, saying: “None of these allegations stand up.” It added: “A4e has adhered to established procedure by ensuring relevant issues are referred to the relevant funder authority. None of the issues raised here prove there is systemic fraud at A4e and all of them relate to historic contracts.”

        Working Links said: “We firmly reject any assertion of widespread fraud within our business.”

        The company said it has “a zero-tolerance” approach to fraud and has rigorous processes in place to handle any suspected incidents of fraud or other misconduct. The incidents described by Mr Hutchinson were “thoroughly investigated by the head of internal audit and resolved”.

        A DWP spokesman said: “We have changed the way we run our welfare to work programmes to safeguard taxpayers’ money. We only pay by results and under the Work Programme claims are verified against benefit and employment records to make sure fraudulent claims are not processed. No one should mistake unproven allegations about past welfare-to-work schemes with strong controls we have in place on current programmes. We have audited our current contracts with A4e and found no evidence of fraud.”

        Andrew Coates

        May 24, 2012 at 11:44 am

  3. Slightly off-topic. From Channel 4 News FactCheck blog:

    “…Mr Beecroft, chair of Dawn Capital which includes Wonga in its portfolio….”



    May 22, 2012 at 6:31 pm

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