The PAC's report

The Public Accounts Committee has published its report into the Work Programme, and there's a lot of disapproval in it of the way the DWP fails to oversee and manage its contractors properly.  The Press Association has the basic press release.  In the case of A4e, they say, the DWP didn't obtain the 2009 internal audit report which showed alleged fraud and malpractice.  The subsequent enquiry into A4e resulted in one cancelled contract but did not address the wider question of whether A4e was a fit and proper company to have any such contracts.  If it hadn't been for whistle blowers, says committee chair Margaret Hodge, a range of issues would not have been addressed at all.

As we reported last night, the report does not include the evidence of those whistle blowers, who asked for it to be pulled at the last minute.  We don't know why, but we can guess.  The Independent publishes some of Eddie Hutchinson's evidence which was leaked after the committee meeting.  In another article on the report itself, the Independent reminds us that one of those whistle blowers "who had worked at A4e told how she had been asked to 'fix' files to suggest that people had successfully found work".  The DWP repeats the mantra that it all happened under Labour's programmes and couldn't happen now.  She also says the the enquiry into A4e is on-going.

The BBC news website has an unusually long piece.  It includes Hodge's concern that "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".  It also includes an attack by Iain Duncan Smith; he had asked senior Labour figures, including Hodge, "to reveal advice they received about fraud during their time in office".  Some hadn't even replied.  Like the Independent, the BBC reports, though briefly, Andrew Dutton's response.  They have strengthened their controls, etc., and "we are now openly calling on MPs, business leaders and employers to come and see for themselves the work we are doing".  Interestingly, the BBC uses as a graphic an old clip from A4e's website which still describes it as a "social purpose company".

For the whole of Dutton's response see the WallStreetonline site.  This begins with the central message that A4e wants to get across:  "A4e is a different company from the one it was two years ago".  Many of us are yet to be convinced.

Round-up of an interesting week

It began on Monday when the Guardian leaked details of the evidence due to be given to the Public Accounts Committee the following day.  They got it slightly wrong.  There were not two whistle-blowers, just the one.

On Tuesday the PAC met.  The Tory members of the committee insisted that the whistle-blower's evidence be held in private.  Somebody went straight to the Telegraph afterwards and gave an account of what had transpired.  This was published on 23 May.  The next day the Telegraph put the whole document containing the evidence given by Eddie Hutchinson on line.

The media used words like "damning" and "shocking" to describe what Mr Hutchinson said, and focussed on A4e.  Essentially, the culture at the company was such that fraud was inevitable and not dealt with properly.  

The government's reaction was confused but angry.  Chris Grayling appeared immediately to accept A4e's line that the allegations were "unfounded and untrue" and that Hutchinson was not a credible witness.  We were left to assume that he was an embittered sacked employee - the usual characterisation of whistle-blowers.  But Grayling's response always skated over the internal A4e report, produced before Hutchinson ever joined the company, which told a similar story.  In any case, it all happened under the old contracts and couldn't happen now.  He even demanded that former Labour ministers release secret papers showing what they knew about fraud at A4e.  But, "We have audited our current contracts with A4e and found no evidence of fraud."  Interestingly, he threw in that it was Ernst and Young which did the audit.  As one of our correspondents pointed out, Ernst and Young part owns Working Links.  Might as well keep it in the family.
I was reminded of an investigation for which I was responsible a few years ago.  The person drafting the report wanted to put, "There was no evidence ...."  I changed it to, "We found no evidence ..."  Quite different.
So where are we now?  The government wants to say that it never happened but if it did it was Labour's fault.  And Hutchinson isn't tellling the truth.  Whatever the PAC says has been rubbished in advance.  The other primes can be relieved that all the attention is on A4e.  The current contracts are fraud-proof, so that's all right.  But now we hear that Meg Hillier MP (left) is calling for "greater openness and transparency" over all such contracts.  The SundayTelegraph today reports the MP, who sits on the PAC, as saying: "A4e is one of a number of companies receiving its only income from the public sector, but we can't follow the public tax pound. It's public money paying for a public service commissioned by the Government. Why would you want to hide anything?"  She added that a good organisation would have nothing to hide.  Public companies are accountable to their investors, so taxpayers should have a right "to know how publicly-funded firms made a profit and should have a say over how companies operate, including how much executives are paid."  We agree.

None of that can change the fact that the Work Programme is floundering.  The best that the government can do is expand its work-for-free programme (see the Observer).   When in a hole stop digging, they say.  But the DWP keeps on digging.

Grayling on Newsnight

Okay, I take it back.  The BBC did tackle the A4e fraud question on Newsnight last night.  If you missed it (as I did) you can catch up on iplayer here 25 minutes in.  Paul Mason summarised Eddie Hutchinson's evidence, picking out all the juicy bits.  He then showed the 2009 internal A4e report which, he said, they had handed to the DWP only to be told that they weren't interested because they were concentrating on current programmes.  Mason said that Hutchinson had been surprised to learn of this report.  (He joined the company the following year.)
Emily Maitliss then interviewed Chris Grayling.  She wasn't sufficiently clued up about the contracts, but the main points got across.  Grayling insisted that the allegations were not about the Work Programme, and that the detailed investigation done by the DWP's audit team and Ernst & Young had found no evidence of systemic fraud.
Maitliss tried the obvious questions.  Is A4e a fit and proper company?  If this was a fraudulent benefits claimant he would be "down on them like a ton of bricks".  Grayling stonewalled, but said that there were "significant doubts" about the evidence and "significant doubts" about Eddie Hutchinson.
So the strategy is clear.  Suggest that Hutchinson is a liar.

Grayling virtually calls Hutchinson a liar

There is no doubt whatever over which side Chris Grayling is on.  On Channel 4 News tonight he said that there are "serious question marks about how substantial and how correct the evidence ... is; serious potential misunderstandings."  The evidence, of course, is that which Eddie Hutchinson gave to the Public Accounts Committee about what he'd found at A4e.  But Grayling insists, "We haven't found fraud at A4e," after the investigation by Ernst & Young.  And now he's attacking the PAC, accusing them of not disclosing this evidence until the meeting, when it should have gone to those conducting the audit for the DWP.  Says Channel 4 News, "Mr Duncan Smith's letter continued: 'I can only reach the conclusion that the committee has held back details from the DWP in order to generate media coverage.'"  

Margaret Hodge says that she's very upset about the leak to the Telegraph and will launch an enquiry.  The initial Telegraph story suggested that the paper had simply spoken to someone who was there at the meeting.  The subsequent publication of the document containing his evidence must have a similar source; it's annotated, as if it's one of those copies handed out to committee members.  


With Grayling's colours pinned firmly to the mast, Hutchinson is now being portrayed as a liar.  Perhaps A4e will try to paint him as an embitterd ex-employee who failed in his job.  How can the rest of us know who's right?  There's one point which might clarify matters.  Hutchinson didn't join A4e until 2010.  It was a year before that when A4e compiled its own internal report which showed serious fraud and potential fraud.  So was that seriously incorrect as well?

If you get all your news from the BBC you wouldn't know anything about this.  As usual, they are pretending it hasn't happened.

The secret evidence disclosed

Thanks to the Telegraph, we now know some of what Matthew Hancock MP and his Tory colleagues wanted to keep private at the Public Accounts Committee meeting yesterday.  The whistle blower is Eddie Hutchinson, an accountant who was appointed head of internal audit at A4e in 2010.  The paper has put the whole of his evidence online here.
Hutchinson had previously worked for Working Links, where he uncovered a level of fraud which he described as "farcical" and which was ignored by management.  As later with A4e, he said that the bonus system was to blame.  Hutchinson was made redundant by Working Links and then went to work for A4e.  He found a similar situation there.  By February 2011 he was dealing with the Slough case, which, he said, should have been referred to the police earlier.  "He claimed he also became aware of a fraud on the New Deal for Disabled People contract from A4e’s Glasgow office. In this case, he said, an employee resigned, saying she had falsified evidence and misappropriated cash. At the time, he made a note it was a 'regular occurrence' that no action was taken against people admitting to fraud."  There were numerous other cases in different contracts.  He was supposed to be helping A4e to develop watertight risk controls, but noticed no "significant enhancements".  His advice was not heeded.  "After seven months at A4e, Mr Hutchinson said in evidence that he was convinced he had seen 'unethical behaviour, mismanagement, inadequate corporate governance, and risk management, and excessive payments in the form of salaries and bonuses'. He has told MPs: 'In my professional view, it was systemic.'"  A4e denies this, of course.  It's all in the past.
Surely this sort of evidence can't be brushed under the carpet.


The Exaro website has published the 2009 internal A4e report.  It can be downloaded from the site here (you will have to register with the site).   We'll be examining that soon.