The debate which isn't happening

A story that made the mainstream media the other day is about a company called ALS and the contract it has to provide interpreting services to courts.  Nothing to do with A4e, you might say, but bear with me.  ALS has made a pig's ear of the contract.  Interpreters are refusing to work for them and people like judges and magistrates are very cross about it.  The minister responsible, Crispin Blunt, was interviewed on the Today programme, and Evan Davies asked him, several times, "Did you pick the cheapest bidder?"  Blunt was reluctant to answer, but eventually muttered that ALS had been the only company which could bid.

Blunt's admission is confirmation, if we needed it, that privatisation has been conducted as a cosy arrangement between governments and a very small number of private businesses.  Some years ago a Labour minister was questioned about another failed IT project.  Why had it been given to a company which had messed up several previous such contracts?  He admitted that it was the only company in a position to bid.

When the government decides to hand a service over to the private sector it often does so in discussion with the businesses likely to profit.  Initially there may be several companies and organisations willing to bid.  But it's an expensive process.  And when they see that one company is the chosen one, getting all the contracts for reasons they can't fathom, they drop out, and may well go out of business.  When A4e started scooping up all the contracts, the competition fell by the wayside, so that A4e, with its army of bid-writers, reigned supreme.  We heard recently about a council, Devon, which is outsourcing its core children's health services.  Local charities including Barnardo's, along with the local NHS trust have put in bids, but the contract is likely to go to either Serco or another private company, Virgin Health.

It soon becomes obvious that contracts are being designed in collaboration with the companies which will benefit from them.  Whether this happened with privatised New Deal we can't be sure, but it was certainly the case with FND.  The Work Programme shows how helpless government then becomes to oppose the companies.  Only the big companies could bid.  It was supposed to be strictly payment by results but isn't; an "attachment fee" was negotiated by the companies.  But you won't hear about that from ministers.  The extreme case is that of A4e getting the contract to design future contracts for which A4e can bid.  A single company can secure a monopoly in a particular niche.  A4e's involvement with direct payments for social care quickly became such a monopoly.  If a local council decides to outsource this service there is nowhere else to go.  A procurement process which states that past performance can't be taken into account enables the companies to bodge one contract after another.

Those business leaders who are making the most money from outsourcing are very close to government.  Most of the time the public know nothing about this, so Emma Harrison has done us a service by showing just how dangerous this can be.  

Naturally this view is not shared by everyone.  It has been difficult in recent weeks to find apologists for A4e, but one shows how a narrow perspective ignores the bigger picture.  It comes from an organisation called Arrival Education, a social enterprise which is sub-contracted to A4e on the Work Programme.  The author accuses the rest of us of "binary thinking", seeing the world only in black and white.  He (if it is a "he") is clever enough to see the nuances.  And so we have been grossly unfair to A4e, guilty of hatred and bile and making A4e into a pantomime villain.  It gets even more sanctimonious thereafter.  He defends A4e because the allegations relate to individuals, not to the company.  He's not that keen on Harrison herself but tells us all to grow up.  This is clearly someone who has no knowledge of the history which underlies the current situation.

A more thoughtful contribution comes from the Institute of Economic Affairs, one of those "think tanks" which provide cover for politicians.  It argues that the scandal surrounding A4e does not in any way invalidate the marketisation of public services.  And A4e is not, in welfare-to-work, a "market actor" because it is commissioned and paid by government.  The piece concludes that local commissioning and funding would be better.

There is no sign of the debate which really needs to take place.  Do we want the country run by a combination of Serco, Capita and G4S, with A4e a junior partner? 

Counting the cost

Yesterday John McDonnell MP asked a very pertinent question of the Secretary of State for Work and Pensions - and got an answer!  McDonnell asked "what the value was of contracts given by his Department to A4e in each year from 2007 to 2011."  Chris Grayling told him that details of the contracts awarded to A4e during 2007 and 2008 were not held centrally (why not?) and it would cost too much to get the information.  But he listed the value from 2009.  (You can see it on TheyWorkforYou) 

Flexible New Deal contracts added up to £157,500,000.  MWA comes to £2,656,013.  Jobcentre Plus Support contracts (6 of them) add up to £66,470,115.  All of which adds up to £226,626,128.  And that's without the Work Programme contracts, which "depend on company performance".  It's also just contracts from the DWP.
Did we get our money's worth?

PMQs again

Fiona Mactaggart MP had another go at A4e today, raising at Prime Minister's Questions the subject of A4e's two new contracts.  She said that she has received "40 or 50" emails from members of the public alleging fraud by the company, so why had they been given these contracts.  Nick Clegg (it was the deputies doing PMQs today) said the only thing he could say, that an audit has been launched and any evidence of systematic fraud would put an end to all the contracts.
I wonder what Ms Mactaggart has done with all those emails.  Have they been passed to the DWP?

Those two new contracts

The Mail has reacted to the news of the two prison education contracts awarded to A4e ("worth up to £30m") with its usual stridency.  How can they do that when the company is being investigated for fraud and the DWP has launched its own enquiry?  They choose to ignore the SFA's decision to conduct an audit before the contracts are finalised.  But I suppose that would complicate the story.  The decision has "provoked anger"; from Margaret Hodge, who said it was astounding, and from an unnamed, and possibly apocryphal, rival bidder who said: "It seems deeply ironic that offenders are to be given lessons in getting back on the straight and narrow by a firm that is being investigated for fraud."
The article doesn't go into how any government department or agency could legally block A4e from getting contracts at this stage.  The bids for OLASS went in and were accepted before the storm broke.  The procurement process, ridiculously, doesn't allow a company's past record to be taken into account.  The only way A4e, or any company, could be barred would be if "systemic" fraud was found - and most of us are agreed that it won't be.  
PS.  Yesterday, we read on the TheyWorkForYou website, an MP, Andy Slaughter, asked the Secretary of State for Business Innovation and Skills " whether the tendering process for the OLASS4 contract was undertaken while A4e were under investigation by (a) the Department of Work and Pensions, (b) the Serious Fraud Office, (c) the police and (d) other public bodies."  John Hayes MP replied: "Under the Apprenticeships, Skills, Children and Learning Act 2009, decisions about the awarding of contracts are for the chief executive of Skills Funding to make.  In respect of the OLASS4 procurement process, the chief executive is undertaking a procurement process in line with the EU Procurement and EU Remedies Directives. That process is still under way and will not conclude until May 2012 at the earliest.  As part of this procurement, the chief executive of Skills Funding has made clear to A4e that he must have the results of the independent review of audit and control procedures A4e is undertaking into its own operations, and the results of the Department for Work and Pensions' investigation, before any formal contract with A4e is entered into." 

Where do we go from here?

Last Thursday Liam Byrne asked Chris Grayling "if he will publish all (a) internal correspondence of his Department and (b) correspondence with other Departments relating to the allegations of fraud at A4e."  The answer was: "The Department cannot publish information relating to the current allegations of fraud as this is a police matter and investigations are ongoing. "  Which is very convenient.  The police investigation into one local incident, along with the DWP's investigation into "all relationships" with A4e would appear to close down all discussion of the subject for the foreseeable future.  And now we learn that the Skills Funding Agency is conducting its own review of contracts with A4e for prison education.  The SFA said: "The Agency has decided that Agency auditors will work alongside A4e’s auditors to complete this exercise and provide additional assurance to the Agency that contracts are being delivered in accordance with our requirements.  In the current context the Skills Funding Agency is vigilant and continues to monitor the situation very closely.”  Good.  But again, this seems to put on hold the airing of concerns.  All those MPs who received evidence and complaints from clients and staff of the company will have handed their dossiers to the DWP.  And what of the journalists who were eagerly soliciting stories?  Has the official investigation closed down their interest?  Are editors afraid that publication could be seen to prejudice the process?  Or have they just got bored with the subject?

Maybe they are right.  Critics of A4e could scarcely have asked for more than has happened lately.  So should we take a step back, shut up for a bit, and wait for the results of the investigations?  There shouldn't be too long to wait.  The SFA needs to get the new contracts up and running.  And the DWP can't afford to let this drag on until the WP figures have to be published.  For the government this is about damage limitation, and we would be very surprised if any drastic action resulted.  So what now?

"All relationships" - and new contracts

It must be serious, it was covered by the BBC.  The new fraud allegations and the DWP's investigation were reported, albeit briefly, on Newsnight.  Paul Mason put a slightly different spin on it.  As the Guardian reported, the government has launched an audit of 10 other A4e contracts.  Mason takes that to mean that it will ask why A4e was given so many contracts; but I doubt that.  It would have to go back ten years to be credible.
Most of the media add little to the press releases of the DWP and A4e.  The Huffington Post carries the reaction of union leader Mark Serwotka.  The Guardian gets someone to explain how the MWA fraud might have come about.  The Mail is remarkably restrained.
At the same time as all this bad publicity, there is good news for A4e.  As reported on FE Week, it is the "preferred bidder" for 2 of the 9 prison education contracts announced by the Skills Funding Agency.  The SFA is keen to make clear that this doesn't mean that the contracts are signed.  There's a "due diligence" stage to go through before they are finalised in the early summer.  But this will be the acid test of the government's seriousness.  I have had to delete comments from people who know, and are concerned about, A4e's role in OLASS, but some of them may now make themselves known to journalists.
A4e has announced that its new non-executive Chairman is Sir Robin Young.  He was a career civil servant before retiring to directorships, and became a member of A4e's board in 2007.  He begins his statement with the words "A4e's role is to improve people's lives".
Back to the investigation.  The government has said that A4e could have its contracts suspended if it is found guilty of "systemic fraud".  It's that word "systemic" which could prove the get-out for A4e.  It seems likely that the instances of fraud are the result of two factors; the intense pressure in the company to meet targets and make the money, with bonuses for outcomes, team prizes etc.; and a large proportion of inexperienced, minimally trained staff.  But if that is the case, should it let A4e off the hook?

New investigation

The Guardian has just reported that A4e faces a new fraud investigation.  It relates to a Mandatory Work Activity contract.  "A statement said: 'As a result of this new allegation, DWP has immediately commenced its own independent audit of all our commercial relationships with A4e.  We have required A4e to make available all documentation which our auditors may require and provide full access to interview any A4e employees. This is separate from the independent review of internal controls which A4e has previously announced.  The chief executive of A4e was informed of this at a meeting with a senior DWP official earlier today.  We have made it absolutely clear to A4e that we take this matter very seriously, and that if, at any point during the audit or thereafter, we find evidence of systemic fraud in DWP's contracts with A4e, we will not hesitate to immediately terminate our commercial relationship.' "
Serious stuff.