The Public Accounts Committee yesterday launched a blistering attack on A4e during a session on the introduction of the Work Programme. (See the Guardian) Why, the committee wanted to know, did a company with such an "abysmal" record get contracts. Andrew Dutton, A4e's CEO, had to respond to questioning about the company's UK turnover last year of £160m - £180m, all of it from government contracts, and the £11m it paid out in dividends, 87% of which went to Emma Harrison. The committee chair, Margaret Hodge (a hero of mine despite her politics) ensured that they "spent some time trying to establish where money paid to A4e to deliver government contracts ended up." She told Dutton, "You're one of the first examples we have had of a company which is entirely dependent on public contracts for your existence. We, in terms of looking for value for money, have an interest in following the pound. All your business is public contracts. You and Emma Harrison have to accept that there will be a different interest in the remuneration and profits made because the profits you make come from the taxes that ordinary, hard-working people pay." The example of abysmal performance cited was the Pathways to Work programme, with 9% of clients got into work.
Several members of the committee expressed amazement that companies with such a poor record could get new contracts. But the DWP's permanent secretary, Robert Devereux, confirmed what we have pointed out before - that they can't take past performance into account. Lots of them had poor records (!) And since some of the companies bidding were new entrants it wouldn't have been possible.
Fiona MacTaggart MP raised an interesting point about "job substitution" - "companies delivering the Work Programme, getting paid for pushing their clients into jobs that would otherwise have been filled by other jobseekers without the need for a third-party payment." "In my constituency," she said, "a lot of people are being given work experience, unpaid, in retail, and then the retailers, I think, are being directly encouraged to employ people who have been given this one-month or two-, three-month interview process … and when they're offering jobs, a company like A4e, which operates in Slough, can say to Primark, if you want more of our free workers, I hope you are going to give our people 20-hour-week jobs. I'm sure it's not quite as overt as that, but I believe there is a risk of that happening." All that Devereux could say to that was that a job was a good thing. Another civil servant had a more wordy response but didn't answer the question.