Everything about Atos and its contract to carry out medical assessments is controversial. Now there's a situation that strikes some MPs as ridiculous. The Guardian reports that Atos has sub-contracted to an arm of the NHS in Scotland to carry out its new contract, to assess people for the new disability benefits. The obvious question asked by the MPs is why contract to the private sector only for the business to sub-contract back to the public sector? Why not go straight to the public sector?
But this is not new. In the Work Programme there are a number of local councils acting as sub-contractors to the primes. The contracts were deliberately designed to make it impossible for a public sector body to bid as a prime, so however well the councils do they will not get the full reward for their efforts. To understand this we need to go back to the New Deal contracts prior to 2006. Jobcentre Plus regionally contracted with many different organisations, including local councils, to deliver training. When David Blunkett outsourced the whole thing, such organisations were relegated to sub-contractor status, losing 10% of their earnings to the likes of A4e (which secured a large chunk of the contracts). Public sector involvement fell away. The current payment-by-results model doesn't encourage such involvement.
Of course it's nuts to have a private company sub-contracting to a public sector body. But the aim is to make money for the private sector.
The Public Accounts Committee has published the National Audit Office's report on its investigations into A4e. It just fills out what we had already read. Problems with one Mandatory Work Activity contract, so it was terminated. No evidence of fraud in the Work Programme, but some ineffective validation checks. The need for some remedial action to "improve levels of awareness amongst A4e staff of their Whistleblower policiyand procedures". This was the report which angered Margaret Hodge and the committee because it was done without looking at A4e's own internal report on the fraud risks in the company.