Watching A4e - the highlights (3)

Let's go back to an extraordinary week just over 3 years ago.  In January 2012 the Telegraph looked at A4e's published accounts for the year to March 2011 and reported two facts, in separate sentences.  Emma Harrison owned 85% of the shares; and the company had paid out £11m in dividends.  I reached for my calculator and did the sums; £8.6m for Harrison.  With her salary as Chair it came to a pay-out of £9.5m.  I dashed off a blog post.  Re-reading that, I didn't write the startling headline I thought I did.  But it was enough.  A writer for Private Eye who reads the blog saw the post and checked the figures (this isn't guesswork - he confirmed it).  His deadline for copy for the magazine was close, and he went with what became the killer fact - Harrison had paid herself £8.6m out of public funds.  It was early in February and the timing was excellent.  The Public Accounts Committee was about to grill people from the welfare-to-work industry, including A4e.  We know that members of the committee read the Eye (and I believe at least one follows this blog).  So that was the stick with which to beat the hapless chap from A4e - £8.6m.
What was the reaction in the media?  At first, they were not very interested.  The Guardian covered it, in sober fashion, as did the Telegraph.  And then, nothing.  It was all very disappointing.  What more did they want?  But then the Daily Mail decided to wade in, all guns blazing.  Let's be clear, I am not a fan of the Mail.  Just the opposite.  But this time they had done their research and decided to trash Emma Harrison, comprehensively.  The article was devastating, tearing into her lifestyle, her history and her company.  It was horribly personal.  And they didn't stop there; there were several more articles through what must have been a dreadful week for Harrison.  The BBC stayed silent on the matter and one could only wonder if there was some sort of political censorship going on.  At last, after several days, Paul Mason was allowed to make a brief report on Newsnight.
It all made Harrison's position untenable.  She announced that she had resigned from her role as the government's "family champion"; and 24 hours later came the news that she was standing down as Chair of A4e.

Sanctions and lies

The Work & Pensions Select Committee has launched its inquiry into benefit sanctions, something which owes a lot to the tireless pressure of Debbie Abrahams MP.  But if you read its terms of reference (here) you notice some important things missing.  First there's the actual process of sanctioning; the automatic stoppage of money which can't be reversed if it's found to be a mistake.  This is crucial to expose the lie that sanctions are only ever used as a last resort.  And then there's the question of arbitrary sanctions applied by JC or WP staff just because they feel like it or have targets to meet.  The inquiry must hear from victims and whistle-blowers or it's pointless.  The page makes it clear that they can't investigate individual cases, but don't let that stop you if you want to submit evidence.

It gets wearisome to report on Iain Duncan Smith's character and lies.  He knows that he is untouchable and his arrogance has grown to monstrous proportions - as has his rudeness.  There was an incident this week in the House of Commons which demonstrated what one MP called his boorishness.  He had remarked that Rachel Reeves MP, his Labour shadow, "couldn't be bothered" to turn up to vote in a particular debate.  She raised a point of order demanding an apology; he had no knowledge, she said, of why she wasn't there.  IDS showed his contempt by saying something about her being in Rochester (for the by-election).  Reeves denied this and repeated her demand for an apology.  She didn't get one, of course.  This wretched man just smirked.

Then there were the "angry scenes" described in the Mirror at the Work & Pensions Select Committee's hearing yesterday.  Now, I missed this part of IDS's "evidence".  I'd stuck it out for an hour, but couldn't bear any more.  So I didn't hear Debbie Abrahams' ask him about the numbers not included in the unemployment figures because they were sanctioned.  According to an Oxford University study this figure could be as high as 500,000.  IDS's response was that this was "ludicrous".  Ms Abrahams said, "People have died after being sanctioned, Minister."  The response?  "No, I don't agree with that."  The last line of the Mirror's story is, "A DWP spokesman dismissed the study, saying 'It looks to be partially based on unreliable data.'"

This disgusting man and his disgusting department put out a press release today which claims: "More than 12,000 households have made the choice to move into work or stop claiming Housing Benefit because of the benefit cap".  He's been warned about this before; it's a complete falsification of the data.  But the London Evening Standard allows him space to amplify this claim, with the arrogance of the seriously deluded.

Ironically, the Public Accounts Committee reported today on the "scandalous" failure of the Work Programme to help ESA claimants.  The Independent covers this.  It also ends with a meaningless quote from "a DWP spokesman".  I do wish papers would stop giving space to this person.

Nothing is going to change.  And if there is a Conservative majority next May it will get much, much worse.

The outsourcing scandal revealed

When it was revealed that G4S and Serco had been overcharging by millions on the offender tagging contracts we were assured by Chris Grayling that they would be barred from bidding for any more contracts until a thorough investigation had been carried out (including an investigation by the Serious Fraud Office).  But then, a few days after G4S were pronounced "cleared" (though not be the SFO)
they were included in the list of bidders for the probation contracts - so they must have been tendering while supposedly barred.  Well, it's now clear; they were never barred in the first place.  That's just one of the revelations to come out of the latest hearings of the Public Accounts Committee.  As the Guardian reported on Monday, the chair of the PAC, Margaret Hodge, was shocked.  The hearings continued today, and the shambles which outsourcing has become was laid bare.  Two of the top civil servants in the procurement area are fairly new in the job, and have bags of experience.  They were interviewed today, and said they had found that the people doing the work didn't have the skills, experience or competence for the job.  There was no contract management.  Applications to vary the contracts were numerous, and with one particular contract there had been so many that no one could now remember what the original contract specified.  Basically (although they didn't put it like this) the companies have been running rings round the government.
There is obviously a lot more to come out about specific contracts.  Right at the end Margaret Hodge reduced the G4S chap to quivering silence when she demanded to know if it was true that in the probation contracts it was specified that if the contract was terminated by either side before it was completed, the company would get the full amount of the contract.  Apparently it is true - and she didn't like it.
The last Labour government started this outsourcing bonanza.  When the coalition got in they didn't stop to find out whether the competence was there to do it; they just went ahead and outsourced everything that hadn't already been flogged off.  And we have been paying the price.

Work Programme puzzle

It started with a statement from the redoubtable Margaret Hodge MP, chair of the Public Accounts Committee.  She is angry at the failure of the Work Programme to help the people it was supposed to help, especially those on ESA.  There has been no improvement, she said, since the PAC examined it in 2012, and providers are spending only 46% of what they were meant to spend supporting each client.  Then comes the puzzling bit: "It beggars belief that the Department expects to pay at least £31 million in bonuses to all of its contractors despite their poor performance - even the Newcastle College Group whose contract has been terminated will receive a bonus."
I confess to never having heard of these bonus payments.  There was little enlightenment from an article by Rajeev Syal in the Guardian.  He adds some more figures, but gives the bonus as £25m (and then £31m), while calling it "incentive payments", and saying that the National Audit Office "has discovered that flaws in the work programme contracts meant that the [DWP] is obliged to make incentive payments to even the worst performing providers."  The figure isn't dependent on results.
Still confused, I looked at a piece from Sky News.  It's clearer.  And there's an interesting paragraph: "Figures for the most recent group to have gone through the scheme showed just 32% of participants found jobs - still below the DWP's minimum performance level of 33% and well below its original forecast of 39% and the 42% predicted by the contractors themselves."
Newcastle's local Journal tells us that NCG's contract in North East Yorkshire and the Humber had a success rate of 7.4% - but they're going to get a bonus anyway.
Okay, I must have missed the bit about bonuses when these contracts came out.  Perhaps they were negotiated at the same time as the "attachment fees" which meant that the providers would have a steady income and wouldn't be dependent on PbR.  But they are certainly a comfort to A4e and the rest.

Welfare week

The subject of welfare (which I will stubbornly continue to call social security) has been prominent this week.  It wasn't only Labour's announcement of its policy, although that may well have sparked it off.  The BBC belatedly discovered the scandal of ESA, the delays and the failure of the Work Programme to help those supposedly able to work.  Of course, being the BBC, it headed the story with the speculation that the cost would mean that the government breaches its self-imposed cap on total welfare spend.
Then the Public Accounts Committee reported on the even bigger mess of PIPs.  An embarrassed Mike Penning was allowed to get away with blaming Labour, and insisting that it was now fixed.  But it all added to the impression of government that "something must be done".
Where was Iain Duncan Smith?  He was proudly announcing that Universal Credit is being "rolled out" to 90 Jobcentres in the North West.  But it will still only apply to single unemployed people with no complications, and there are no predictions beyond that.  It was unfortunate timing; another major failure was added to the list.  The Economist, normally Tory-supporting, published a devastating article headed "Universal discredit" rubbishing everything this government has done on "welfare reform".
Last night BBC's Newsnight had a discussion on the subject between Owen Jones and Nadhim Zahawi.  The former is a socialist and columnist who is often critical of Labour.  The latter is an ultra-loyal Tory whose expenses claims caused a furore and who will trot out the party line.  The innate bias of the BBC was evident in the use, several times, of the term "welfare dependency" and in using a clip from Benefits Street as if it was an appropriate illustration.  And IDS's lackey Christian Guy from the Centre for Social Justice was presented on the film as he was an independent expert.  Who "won" the argument depends on who you agree with.  These discussions rarely change opinions.  But at least the subject is now being discussed.

Work Programme stats, and the PAC

We used to complain that no data was being released on the effectiveness of the Work Programme.  Now we have all the data we could wish for, it seems, in the figures put out yesterday.  You can see the document here.  Some key figures are on the first page, but you'll need to get your calculator out.  If we look at the "by all referrals" June 2011 to Dec 2013, we see that just under 19% of those on the programme long enough got an outcome.  (The Factcheck blog says 17%.)  But then look at how that tapers off, so that only 48,000 people were in work long enough for the provider to claim the full payments.  In other words, the jobs tend to be temporary.  24,000 got 3-6 months of work, but then were back on the programme, and in all 352,000 have finished the WP and been referred back to the jobcentre.  The other key fact from all of this is that while the figures for JSA claimants are considered satisfactory, they are terrible for those on ESA.  For a good summary, read Channel 4's Factcheck blog.  Looking at the breakdown by provider, we see that A4e isn't the worst-performing, but it's a long way from being the best.
Is it worth it?  That's the really important question.  Millions have been paid out to companies like A4e to achieve only a little above what would be expected with no intervention at all (and below that with ESA).  The likelihood is that the vast majority of the jobs are down to the improving economy.  So what's the point?

Other news takes us back to ATOS.  The Public Accounts Committee had a go at the civil servants in the DWP and one of the bosses of Atos over the failure of the new PIPs assessment contract.  The Guardian reported Margaret Hodge's interrogation of Robert Devereux, the Permanent Secretary.  They have crossed swords before, and her questions revolved around the same issues as she has fumed over with the Work Programme.  How can you give a new contract to a company which is in the process of bodging a similar contract?  (My phrasing, not hers.)  He said, "We are making a decision on the bids in front of us."  As he has said before, the procurement process deliberately doesn't look at past performance.  And they did not check that what Atos had put in its bid document was true.  On the PIPs bid, Atos had claimed to have agreements with a large number of hospital trusts and physiotherapy practices, but far fewer actually signed up in the end.  That meant that another claim, that everyone facing assessment would have a centre within an hour's travel time, has gone by the board.  Huge backlogs are building up.  Hodge had a go at the Atos person for misleading the DWP.  But this sort of thing is common with the procurement process which the DWP has shaped.  The big companies must form "partnerships" with smaller outfits, and can then list on their bid documents a number of sub-contractors who have, in fact, signed nothing and can duck out once they see the small print.
It's obvious to everybody that there has to be a better way.

The PAC agrees with us

The Public Accounts Committee has published its report on Contracting out public services to the private sector.  It's not a long document, particularly the section on recommendations, and you can read it here.  It supports all the things which I and others have been saying for a long time about the perils of outsourcing.
As usual it was not reported in the Tory press.  The Guardian and the Independent covered it well, and the BBC mentioned it.  The Guardian spoke to Margaret Hodge, chairman of the committee, ahead of the publication.  She called the report "damning" and said the DWP was "on the verge of meltdown" with its contracts.  There has to be an end to the secrecy surrounding the contracts on the grounds of commercial confidentiality.  Even the CBI supports that one.  And there must be much better management of contracts.  The DWP is allowed its usual paragraph of self-justification, and government minister Francis Maude was invited onto the BBC's Today programme to waffle unchallenged about how things were improving.  
The Independent's Nigel Morris had a scathing piece much like the Guardian's.  The report, he said, "accused ministers of trying to cover up mistakes by refusing to divulge details of contracts."  He quotes Margaret Hodge as saying that the absence of competition meant that we have "privately-owned public monopolies which have become too big to fail."  The article mentions the A4e fraud case, along with G4S and Serco.  
There's another piece on the Guardian's website which puzzles me a bit.  It's by Jane Dudman, and it focuses on A4e's part in the PAC's verdict.  I'm puzzled because I can't find the opinions she attributes to Margaret Hodge in the report (if you can, let me know).  Mrs Hodge wants to know why "scandal-hit" A4e are still in the running for contracts.  Dudman goes on: "Last month, four former employees of A4e pleaded guilty in Reading Crown Court to 30 acts of fraud and forgery. But even Hodge was forced to acknowledge this was not a case of individuals trying to enrich themselves. None of the former staff benefited personally, she noted."  Now, if Mrs Hodge did say that, we need to tell her that she could well be mistaken.  She may be assuming that the profits from this forgery, the false outcome claims, went only to the company.  But A4e had the practice, until recently, of paying particular individuals in an office a "commission" for each outcome, and rewarding whole teams for achieving for good outcome figures.  Under that system, individuals had every incentive to push up their earnings by pushing up the figures.
One would love to think that the Public Accounts Committee's excellent work would change things, but I suspect it won't.

It wasn't me, it was him

The Public Accounts Committee has published its report on Universal Credit.  It's pretty damning.  There's a comprehensive account in the Guardian.  Since then, there has been a concerted attempt by Conservative MPs to place the blame squarely on Robert Devereux, the Permanent Secretary at the DWP and the accounting officer for the project.
The Times said this morning that Iain Duncan Smith had tried to get Tory members of the committee to blame Devereux.  That's been denied.  The report doesn't blame individuals, but Margaret Hodge said this morning that the responsibility was from the top down.  Since then I've heard three different Tories blame the civil servants.  Francis Maude was driven to explicitly exonerating IDS.  He commissioned the review in 2012, says Maude, which identified the problems; and he described him as "visionary".
Whatever happened to ministerial accountability?  Younger readers won't be aware that there was a time when the ministers took responsibility and resigned even when the disaster clearly wasn't their fault.  Not now.  But if Devereux does go, he will be free to speak.  That might worry Duncan Smith.
Many people have asked why IDS is still in his job.  Surely his track record should have got him reshuffled to the back benches ages ago.  My feeling is that IDS is so hated, so much the focus of people's anger at the cruelty of the welfare "reforms", that it's better for Cameron to leave him in place and let him soak it all up than to put someone else in the firing line.

The failing Work Programme - the PAC report

It's all over the papers this morning; the report of the Public Accounts Committee into the Work Programme.  We already knew its conclusions, but the various newspaper articles highlight different aspects of it (when they can be bothered to go beyond the press release).  The Telegraph, for instance, reports that some of the companies are in danger of being stripped of their contracts and even of going out of business.  The Guardian points out that all 18 organisations involved have been put on "performance improvement plans", with 7 of them being sent formal warning letters.  Margaret Hodge was also angry that the DWP had published unvalidated data from the ERSA.  We do learn that the next set of performance data is due to be published in March.
It would appear that Richard Johnson, formerly of Serco, is now the go-to person for an opinion on all this.  He was the man who was in charge of WP stuff for Serco, but now that he no longer works for them he's free to criticise.  He said, on the BBC Today Programme this morning, that the design of the contracts made "creaming and parking" inevitable.  I notice that the BBC is asking for experiences of the Work Programme, so perhaps they are planning a proper investigation of the subject.  Let's hope so.

Scaremongering?

That was Mark Hoban's response to the Public Accounts Committee's roasting of the DWP for the misery caused by Atos.  The BBC reports it straightforwardly.  Margaret Hodge put the blame on the DWP rather than on the company, saying that it regarded the appeals process as an inherent part of the system, when it was actually damaging vulnerable people.  Hoban replied that they'd failed to recognise that changes had been made and that independent reports said that the whole thing was fundamentally sound.  Mind you, according to a tweet by Jonty Olliff-Cooper, Hoban has described Jobcentres as "the last vestige of the command and control economy", so are we to expect that they will soon be handed over for private profit?  (JOC calls this comment "pretty fruity from a minister", which must be public school speak for something I don't understand.)

There's an excellent article by Zoe Williams in the Guardian yesterday, in which she describes the "shadow state" created by the outsourcing of public services.  I won't quote from it because you need to read the whole of it.  Last week another Guardian article by Toby Lowe described payment by results as "a dangerous idiocy that makes staff tell lies".  Again, spot on.  And if we needed any more practical examples of how things can go spectacularly wrong, there's the report from the Commons Justice Committee on the "shambolic" situation with court translation services (something Private Eye has been going on about for ages) and the Care Quality Commission's report into Serco's out-of-hours doctor service in Cornwall, which failed the sick by not having enough staff to answer calls.

But all of this is presumably just scaremongering.

Private and public

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.

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.

The evidence won't be published

The Exaro site has just reported that the Public Accounts Committee won't be including the evidence from whistle-blowers when they publish the report into the welfare-to-work programme tomorrow.  You'll remember that the committee heard evidence from several whistle blowers in May.  One of them, Eddie Hutchinson, had his evidence leaked, and pretty damning it was.  But the PAC wanted to publish the rest of it and won't now because the people concerned have made last-minute requests to block it.  This was the evidence about A4e and Working Links.  It's a pity, but it shows the fear felt by people who go public in this industry.
We'll have a good look at the report when it comes out.

Openness

Two bits of news which could, loosely, come under the heading of openness.

The Guardian reports more "chaos" around an outsourcing company which could have a bearing on the behaviour of companies like A4e.  The story is about Atos and its fitness-for-work tests.  I hadn't realised that last year claimants were given the right to record their assessments so that they could ensure that their details were correctly registered.  Thinking to save on the costs of all those appeals, the government told Atos to equip themselves with recorders.  The firm has complied by buying just 11 (that's eleven).  And most of those are broken.  Chris Grayling thinks that's okay.  However, if it's officially permitted (if very difficult) to record Atos assessments, maybe that opens the door to recording encounters with other companies which can have a very damaging impact on clients' lives.

The Exaro site reports that the Public Accounts Committee is demanding greater openness in outsourced public services contracts.  They want "all data" disclosing, and for the companies (and charities) to be subject to the Freedom of Information Act.  At the moment all the stuff we should know is covered by "commercial confidentiality".  The PAC's Chair, Margaret Hodge, cites the current G4S fiasco, and the fact that we don't know what penalty clauses were in the contract.  While some MPs and civil servants like the idea, I'm doubtful whether this will get anywhere.  There are simply too many vested interests.

Morale at an all-time low

It may be a holiday weekend, but for many A4e staff it's a gloomy one.  Some left work on Friday in the knowledge that the bonuses they expected to be paid this month have been cancelled.  Managers have been receiving up to 20% of their pay as financial performance bonuses for the previous year.  Last year's would have included 6 months of dual WP / FND work, and since FND was described by one employee as a "cash cow", the cancellation of the bonuses represents a significant loss.  They've also been told that anyone earning £26k pa or more will not be getting a pay increase.  Those earning less than £26k will get a 1% rise.  This comes on top of the news that Emma Harrison took £8.6 million out of the company last year.
Many staff report that they are unhappy for other reasons.  They were supposed to be dealing with caseloads of no more than 80, but some have upwards of 200 clients, so the amount of "tailored support" they can give is limited.  Tensions are high in some offices.  The system of referring people for "sanctions" (taking away their income) results in mistakes, and staff are having to confront some very angry clients.  
Staff turnover has always been high in A4e, and some say that it is only limited now by the lack of opportunity to move elsewhere.  But morale is reported to be at an all-time low.
(Don't bother posting comments attacking staff - they won't be published.)


This comes at a time when, as the Telegraph reports, the DWP has told Margaret Hodge, chair of the Public Accounts Committee, that it won't be publishing details of the 115 cases of potential fraud which don't involve A4e.  The "public interest" argument isn't strong enough, they say.

That PAC meeting

You can read the transcript of the Public Accounts Committee meeting on Tuesday here.  Not the bit that was held in secret.  But we did learn that there was another witness besides Eddie Hutchinson whose evidence was heard in private.  She was a whistle-blower who was complaining about what had happened.  For those who don't want to plough through the entire piece I have made notes below.  The characters involved are, on the committee, Margaret Hodge, Fiona Mctaggart, Austin Mitchell, Matthew Hancock and Richard Bacon and, as witnesses, Robert Devereux, Permanent Secretary, Department for Work and Pensions, and Alan Cave, Delivery Director, Department for Work and Pensions, along with Amyas Morse, head of the National Audit Office.

MH not happy with RD.  She sent him the A4e internal report and some emails.  He said there wasn't enough specific information in them to do a proper investigation.  She says he should have come back to her for that info.  He says that Grayling announced his enquiry.  She persists, he is infuriating.  What about the internal report?  He accepted A4e's word that of the 9 cases only 3 were actually fraud, and they related to one person.  But they are going to investigate all the cases.  He says they can't investigate where a company has gone out of business.  R Bacon points out that you can.  MH asks about the audit Grayling asked for.  RD says that it won't be published.  "This is a whole lot of good chaps-I understand that the Chairman is an ex-Permanent Secretary, whom, no doubt, you have conversations with. It is a big company with an expensive PR machine, which we have seen in operation over the past few weeks. They are bound to be good citizens, so we don’t need to have open and transparent oversight of them." - MH.  RD gives the official answer about possible litigation.  Lot of discussion with committee members about this.  RD says all the evidence is that A4e is not fraudulent.  Hillier keen to link value for money to the service her constituents are getting.  RD says the WP is not about the service - if they don't provide the service they won't get paid.  FM wants the evidence that A4e " has in place a system for staff to report improper behaviour or performance management systems that avoid perverse incentives".  

AM: "You have just sat through a long closed session, which produced some fairly damning indictments of both the structures and the practices in A4e and Working Links and which gave several indications of possible fraud. Some evidence has been submitted to us as well-to the Chair-by the people who gave evidence in that closed session. Will those allegations be investigated?"  He is keen to talk about what they do to avoid fraud - mentions Private Eye, about which RD is sarcastic.  He describes controls now in place to ensure claims are correct.  MH: "So is A4e fit and proper to undertake the Work Programme ?"  RD says yes.  

RD goes through all the checking process in detail.  Matthew Hancock asks him the questions which allow him to show how watertight the WP is.  Hodge raises issue of bonuses.  RD says it's not an incentive to fraud because they can't now commit fraud.  Hodge describes the case of a woman who already had a job lined up but was persuaded to sign the forms for A4e in return for £50 for herself.  She thinks this is wrong because A4e did nothing for the money.  RD says the £50 was A4e's and it's within the rules.  Some argument about this.  How can you measure what help was given?  They get on to complaints and argue about that.  

Hillier wants a single hotline for complaints and whistleblowers.  RD says he wants people to go to the provider first then the JC.  FM says: "The reason that I first wrote to the Comptroller and Auditor General about how A4e were behaving was that there was no process where the concerns of my constituents, who were referred to A4e, could properly be dealt with. I just got brush-off letters and there was no process where I could advocate on their behalf. Now that was not always about fraud, but there is a lack of a process."  RD bats that aside.  

Cave admits that they didn't ask for the 2009 report and should have done.  Conversation shows that there were two earlier witnesses, not just Hutchinson.  He later admits that he doesn't know who the other 4 shareholders of A4e are.  FM presses the point about controls needing to be not just financial.  She returns to this.  "What struck me from my contact with people is that a large proportion of those customers are very often not reluctant, but are very keen on getting into work, very keen that the public’s money is properly spent and feel that what they see is not spending the public’s money properly."  (Hancock again feeds RD nice questions.)    RM: "We keep hearing from people that they do not know how they can complain and that they have bullying managers who prevent complaints. I accept that you have not been able to investigate all these cases, but one of the things that I have learned as an MP is that while you get green ink complainers, when you get the same complaint from all ends of the constituency, there is something that you should be alert to, and one of the things that I am very struck by is the number of people who have worked for these companies and say that bullying management means that there isn’t a way in which they feel that they can safely make complaints when they are asked to do things. We have had evidence from people who have been asked to do things that include making up evidence and telling lies. We have not been able to test that evidence in a court of law. Nevertheless, it is quite perturbing that people feel that that is what they have been asked to do and that there is no way they can whistleblow about it."  She refers to a previous witness: "She was talking about a different programme, but it was in this period, and therefore she did not know how to complain. While you are right that the programme that she was asked to lie about was not the Work Programme , if she had known of a safe way of passing it up, that would have equally applied to people who worked on other programmes at that time in that company."  

Mitchell:  " I think Mr Devereux has said that one of these companies could go bankrupt. That is about equivalent to the Governor of the Bank of England saying moral hazard could discipline the banks because they might go bankrupt, too. They are already too big to fail. It is so unlikely. Here is a new category of capitalism that was set up to milk the state. It is not facing the competition of the market; it’s got a safe contract, which just goes on, so the threat of bankruptcy is really hypothetical."

Argument about what "systemic" means.  Then Hodge: " Finally, a public sector contract to build houses, hospitals or schools is pretty straightforward. I am thinking of payment by results-the school is there-and you can keep a little bit of money back to make sure that if anything has gone wrong, you can get it back. Would you accept that a contract that provides human services is qualitatively different? It will work only if you build trust. I think that that is the key thing-there has to be trust in the system. It is partly about the outcome but also about-this is the Fiona point, really-how well the customers are treated. That has to be part of the mix in these sorts of contracts. So it is about the how as well as the how much-I hope that you accept that. If I put it to you that I think that trust has broken down here, in particular in relation to A4e, how can you rebuild it?" Just stonewalling from RD, helped by Hancock.

 

Several points stand out for me.  There is Devereux's determination that anything before the Work Programme doesn't really matter; and the WP is fraud-proof.  Hodge and Mctaggart in particular want to focus on the service customers get, but Devereux thinks that's irrelevant because the companies only get paid if they deliver a service which gets results.  

It's frustrating to read, but not as frustrating as it must have been for the committee members.

 

Meanwhile, Chris Grayling is assuring us that the Work Programme is doing splendidly.  In the Express he says that 100,000 people have found work through it.    

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 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.

Gagged

This is Matthew Hancock, the Conservative MP and member of the Public Accounts Committee, who insisted that the whistle-blowers' evidence on fraud in A4e and Working Links was not made public.  (On the same day Hancock appeared on BBC's The Daily Politics.  He was not asked about this, but did manage to quote the party line on how wonderful the Work Programme is.)  The whistle-blowers worked with or for the two private companies.  According to the Guardian, "One of the whistleblowers said: 'It has taken a lot for us to come and speak in public about what we see as fraud. We have been silenced.'"  Two of the witnesses' evidence was previewed in the Guardian on Monday.  One of them was "a senior figure in A4e's risk and audit department in 2011" and "claims there was evidence of fraudulent activity in many of the firm's offices."  The paper reports, "During the public session held later, Labour MP Austin Mitchell called for an investigation into the claims made in private. He said: 'We have just sat through a long closed session which produced some fairly damning indictments of the structures and the practices in A4e and in Working Links and gave several indications of possible fraud.'"
The Independent also reports the story:  "Another [whistle-blower] said they believed that pressure had been applied to the Tory MPs by the Government to ensure that more damaging evidence about the fraud on the programmes was not placed in the public domain."
So is this evidence going to be made public?  Or do Hancock and his mates have a vested interest in making sure that it's kept secret?