Wednesday, 13 October 2010
Good business
A4e was the 6th biggest supplier to the Department of Work and Pensions in 2009 / 10, according to a table you can find on the Indus Delta site. The company got £150,835,957.26 for its services, making it the biggest of the welfare-to-work contractors. £151m is a lot of money; but remember it's income, not profit. Working on the basis that A4e takes 4% in profit (the figure Emma Harrison gave not long ago) that's £6,033,440 profit for the year, just on services to the DWP. Not bad.
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4% profit margin. Does that not strike anyone else as a tad low? Especially considering that A4e has a less than stellar record in providing the necessary materials required by 'clients' such as IT support, jobsearch materials, one-to-one support and so on.
ReplyDeleteI know wages, building rents and other costs have to be paid. However, it would be intersting to see what the money is actually spent on!
£151M is indeed a lot of money to provide "services" that the JCP should be providing. Wasn't there a report recently that suggested that the JCP performed considerably better than A4e over the Pathways programme ?
ReplyDeleteLooking at a standard purchase order I have in front of me, for each short term outcome A4e provides (under the FND programme), they get £1237. For a sustained outcome, they get an additional £693 - A great incentive to encourage short term placements so that there is a steady repeat business.
That initial payment would, if targeted correctly, would fund real training that could result in a decent job. Instead, it is squandered on ESOL "courses" for everyone, enforced supervised "job searches", and badly written booklets (one of which is so bad it has to be withdrawn). On balance, that £151M would have been better spent investing in JCP, Adult Education, and local initiatives that provide real help.
[Note for Historian: Waiting on a F.o.I. request, and will email response and P.O. shortly.]
Your argument about repeat business doesn't hold. If someone gets a short-term job (longer than the odd week) they don't go back on New Deal. There is incentive to keep someone in a job, and that's going to be reinforced in the Work Programme. Your point about real skills training is something many of us have been going on about for ages, but the fault is in the design of the contracts.
ReplyDeleteSomeone needs to go back to maths classes...
ReplyDelete4% profit would be just over £6 million
ReplyDeletei think the 'steady repeat business' comment may refer to reusing placements with new clients?
ReplyDeleteI think a figure has mistakenly been left from the figures. It should read £6,033,438 if it's 4% of £150,835,957, not £603,344.
ReplyDeleteWell, aren't we all forgetting something here?
ReplyDelete4% profit margin - doesn't mean its the only way to get money back from company activities. Businesses can distribute some or all of such profit via dividends or dispose of it how they wish (perhaps reinvest it for next year).
You can also get money out via salaries (although is heavily taxed) so generally not a good idea - although is a big one for charities (the few dodgy ones).
You can also buy services from another business of yours and get profit that way. You can buy an order for say £50,000 but in the accounts state £100,000 and keep £50,000. (Or more to the point for each £19,000 order, make it £20,000 and keep £1k - or something smaller but very frequent).
You can buy shares in a company for investment purposes or invest in stock market hoping to make a greater profit in later years etc.
Well, I am not saying A4e does any of that, and £7,000,000 (not your figure but I think its more around that case... 4% I assume is rounded down from a slightly higher percentage - and I worked it out as 10 times more than you) I would say is about right. We cant forget that salaries eat into this a lot and other overheads only adds to this. They do not have the management direction to increase their profit margins.
Thanks for correcting my maths, folks. £6m it is. (Please note that politeness works better than sarcasm.)
ReplyDeleteI'm sure we'd all like to know what Emma and the other directors pay themselves. Wonder if it's 20 x what the lowest paid staff get.
ReplyDeleteDespite A4e's claims to be a social buiness, what ever that means, I can't see A4e restructuring along the lines of a John Lewis Partnership where every member of staff has an equal number of shares.
Im long term unemployed" but quite happy i spend my time walking, camping, the thought of a full time job job would spoil my lifestyle, money is not important to me, enough to eat is enough. i laugh when i hear people like a4e say i need "a wellness center"! i am happier, free, know myself, a job is meaningless to me i am not a job i am me and ill do what i please i hurt no one so, sobe it.
ReplyDeleteOkay, Anon, you're happy. You know what others would say, though, I'm sure. Even the basics of existence have to be paid for, and that means out of the taxes of others, so the state reckons that you ought to be in work.
ReplyDeleteI know from my own experience that you can adjust to unemployment, and you're fortunate if you can see yourself as a person, not a job title. But earning money is better. And as Marx said, "From each according to his ability, to each according to his need."
Point taken, historian that the "basics" of life need to be paid for. But paying for the "basics" requires only 7% of a workers "output". Yes, a few hours work a week is all that it takes to pay for the "basics" i.e food, shelter and warmth - think about it. Even slaves worked for only a few hours a day. The rest of a worker's "output" goes on "surplus". As Marx said: "You cannot become wealthy without labour".
ReplyDeleteCan i fish in rivers, can i camp anywere i choose, can i hunt, can i plant crops on land i find, no its "illegal" so i have a right to my "jobseekers allowance" to eat. earning money/ money is debt its lent to goverments via private banks at interest guess who pays back the interest!? you the mug workers of this country!
ReplyDeleteAn interesting philosophical discussion. But unfortunately (or not) we live in a capitalist system. The last comment is illogical. And I am now making an arbitrary rule that anyone who can't be bothered to use the shift key doesn't get their comment published!
ReplyDeleteWhy is the persons comment illogical? its true.
ReplyDeleteYes, unfortunately we do live in a capitalist system and as such are unable to/ prevented from / not given the option to provide for our own basic needs. Instead, we are "forced" into using this thing called "money". Money is an abstract concept and be anything: paper, gold, sea-shells, porcupine quills. Unfortunately, once you introduce "money" into a system human nature takes over and greed and exploitation takes over. And why should a rich person sit on their backside doing nothing all day growing wealthier by the minute and having their basic needs and beyond provided for by the enforced servitude of others - is this fair?
ReplyDeleteSteve Marsland said when giving evidence to the Public Accounts Committee of the House of Commons that they made just over 5% profit
ReplyDeleteand Steve Marsland said to Public Accounts Committee that they made 146 mill not 150 hmmmmmmmm the maths dont add up
ReplyDelete