Showing posts with label G4S. Show all posts
Showing posts with label G4S. Show all posts
Wednesday, 13 May 2015
Postscript
Perhaps Emma Harrison should have waited before selling A4e. The Tory victory in the election sent the price of shares in outsourcing companies skywards. G4S's rose by 7.35%, Serco's by 5.95% and Capita's by 6.72%. Ah well, £20m will have to do.
Wednesday, 10 September 2014
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.
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.
Saturday, 30 August 2014
Down the drain
With all that's going on, who is taking any notice of outsourcing? Even the galloping privatisation of the NHS receives no attention from the mainstream media. It's down to the "left-wing" papers to bring the occasional bit of news to our attention, but unless you read Polly Toynbee's excellent article in the Guardian back in May you would have little idea that anything significant was happening.
We don't know the situation with A4e, but the chances are that its finances haven't improved much, if at all, since March 2013, the date of the last published accounts. And they're not the only ones in trouble. Both Serco and G4S have gone into the red, and the publicity is all negative. Quite right too; think of those electronic tagging contracts which both companies used to rake in money they weren't entitled to. They've had to pay it back, but there have been no prosecutions. Why? For two reasons, I think. One, that a court case would have exposed the fact that it was government processes which allowed them to overcharge by millions. And two, that they have become indispensable to government.
Let's go back a bit, to the heyday of the last government when outsourcing became all the rage. Some companies, like A4e, chose to concentrate on particular areas of business, in their case where the commodity was people. Others, like Capita, specialised in "back-office" functions, focussing on IT systems and processes. Serco and G4S both started life as security firms, and cashed in on the bonanza that was outsourcing in that field. But they soon branched out into anything that was going. They learned that there are a number of rules to the game:
We don't know the situation with A4e, but the chances are that its finances haven't improved much, if at all, since March 2013, the date of the last published accounts. And they're not the only ones in trouble. Both Serco and G4S have gone into the red, and the publicity is all negative. Quite right too; think of those electronic tagging contracts which both companies used to rake in money they weren't entitled to. They've had to pay it back, but there have been no prosecutions. Why? For two reasons, I think. One, that a court case would have exposed the fact that it was government processes which allowed them to overcharge by millions. And two, that they have become indispensable to government.
Let's go back a bit, to the heyday of the last government when outsourcing became all the rage. Some companies, like A4e, chose to concentrate on particular areas of business, in their case where the commodity was people. Others, like Capita, specialised in "back-office" functions, focussing on IT systems and processes. Serco and G4S both started life as security firms, and cashed in on the bonanza that was outsourcing in that field. But they soon branched out into anything that was going. They learned that there are a number of rules to the game:
- Bid for everything. That means employing a large number of bid-writers who know exactly how to write the tender.
- Bid low. Offer to do the job for so little that not only can you not make a profit but you can't fulfil the contract either. It doesn't matter. Just get the contract.
- Renegotiate. Having embarked on the job, announce that you need more money to complete it.
So Serco in particular have scooped up contracts for everything from prisons to council call-centres, trains to welfare-to-work, electronic tagging to forensic science laboratories. How can they possibly know enough about any of these specialist areas? Simple. They take over a service that's already being run by someone else and employ their staff (not all of them, of course, got to keep the costs down).
But now they are coming unstuck. Serco announced a little while ago that it was pulling out of the healthcare market altogether. This comes after it made a mess of the GP out-of-hours contract in Cornwall and had to hand it back; and now we learn, from the Independent, that it has been overcharging the NHS by millions for pathology services through a firm it set up in partnership with two London hospitals.
But healthcare is just one area. There are plenty of companies ready to step into that market. Meanwhile Serco, along with G4S, Capita and the others move on to the next contract. Sometimes they don't even have to go through the tedious bidding process; contracts are just handed to them. Often now the whole outsourcing procedure is tailored to the demands of these few companies, making the idea of competitive tendering a nonsense.
If some companies go under, others will step in. The competition comes now not from UK firms but from overseas companies like Atos, who've discovered just how easy it is here if you know the rules. And we, who pay for it all, can do nothing about it; we can't even know what's happening because of "commercial confidentiality". All we know is that it's money down the drain.
But now they are coming unstuck. Serco announced a little while ago that it was pulling out of the healthcare market altogether. This comes after it made a mess of the GP out-of-hours contract in Cornwall and had to hand it back; and now we learn, from the Independent, that it has been overcharging the NHS by millions for pathology services through a firm it set up in partnership with two London hospitals.
But healthcare is just one area. There are plenty of companies ready to step into that market. Meanwhile Serco, along with G4S, Capita and the others move on to the next contract. Sometimes they don't even have to go through the tedious bidding process; contracts are just handed to them. Often now the whole outsourcing procedure is tailored to the demands of these few companies, making the idea of competitive tendering a nonsense.
If some companies go under, others will step in. The competition comes now not from UK firms but from overseas companies like Atos, who've discovered just how easy it is here if you know the rules. And we, who pay for it all, can do nothing about it; we can't even know what's happening because of "commercial confidentiality". All we know is that it's money down the drain.
Thursday, 17 July 2014
Carrying on
On the day of the reshuffle the DWP put out its independent report into the way the bedroom tax is working. It's a process known as burying bad news. But it was noticed, particularly by the Liberal Democrats, who decided that it was just too bad to defend any longer. And it's that, unfortunately, which has been the news story, rather than the contents of the report itself. Let's skip the politics and look at the facts.
You can read it all here - "Evaluation of Removal of Spare Room Subsidy". There's a lot of it, so you might like to copy most of the media and just look at the Key Findings from page 15. Crucial is the fact that only 4.5% of affected claimants have moved "within the social sector" in the first 6 months of the reduction, with another 1.4% moving to the private rented sector. There's nowhere to move to. Most people said that they had done more to find work or better-paid work (well, they would, wouldn't they?) but hardly anybody had taken in a lodger. 41% of tenants have paid the full shortfall, 39% have paid some, and 20% have paid none. Where have people got the money to pay the extra? 57% say they have had to cut back on essentials (like food) and 26% had had to borrow money.
And on it goes. The RSRS (as the report calls it) is a massive failure, as everyone except IDS and Freud predicted, and all it has achieved is to plunge poor people into greater penury. The BBC got a quote from Iain Duncan Smith: "This department is delivering some of the biggest welfare reforms in over 60 years, designed to return fairness to the system and we are on track to make the £6bn savings we had previously set out. At the same time we are helping to make sure our housing benefit reforms have a transformative effect on the lives of those who in the past were faced with a system which trapped people into cycles of workless and welfare dependency. The scaremongering by those opposed to our welfare reforms - in particular our housing benefit reforms - has been proven to be without substance, and we are already seeing the effects of people moving into work." The risible DWP Press Office chaps tweeted desperately in similar vein. But the Lib Dems decided that they couldn't defend it.
There was some barely-noticed news on the outsourcing front. The contract for electronic tagging of offenders, previously held by G4S and Serco (both of which were found to have defrauded the taxpayer of millions) has gone to - wait for it - Capita! Some asked why Capita; why does it always have to be these three? But it's an inevitable part of the outsourcing business. If you create huge contracts only the big firms can bid, and it was these three which were prepared to bid for everything.
One lot of contracts of interest to many is Community Work Placements. But CWP doesn't seem to be going well. The Boycott Workfare team is doing a great job of publicising companies and organisations which agree to take part by taking free labour. One was recently claimed by the government as a success, providing a photo-op for Osborne. It quickly decided to withdraw when it discovered the trouble it was attracting. It looks like the CWP contractors are targeting councils and housing associations for placements, if Seetec is anything to go by. They say, "Examples of such projects include estate maintenance and local renovation, groundswork, horticulture, recycling as well as administration, customer service and sales, warehousing, distribution and cleaning services. The list of potential projects is almost endless." Sadly, it will be tempting for cash-strapped councils to go for this. Presumably they can adapt the hi-viz jackets they use for Community Payback offenders on similar projects.
You can read it all here - "Evaluation of Removal of Spare Room Subsidy". There's a lot of it, so you might like to copy most of the media and just look at the Key Findings from page 15. Crucial is the fact that only 4.5% of affected claimants have moved "within the social sector" in the first 6 months of the reduction, with another 1.4% moving to the private rented sector. There's nowhere to move to. Most people said that they had done more to find work or better-paid work (well, they would, wouldn't they?) but hardly anybody had taken in a lodger. 41% of tenants have paid the full shortfall, 39% have paid some, and 20% have paid none. Where have people got the money to pay the extra? 57% say they have had to cut back on essentials (like food) and 26% had had to borrow money.
And on it goes. The RSRS (as the report calls it) is a massive failure, as everyone except IDS and Freud predicted, and all it has achieved is to plunge poor people into greater penury. The BBC got a quote from Iain Duncan Smith: "This department is delivering some of the biggest welfare reforms in over 60 years, designed to return fairness to the system and we are on track to make the £6bn savings we had previously set out. At the same time we are helping to make sure our housing benefit reforms have a transformative effect on the lives of those who in the past were faced with a system which trapped people into cycles of workless and welfare dependency. The scaremongering by those opposed to our welfare reforms - in particular our housing benefit reforms - has been proven to be without substance, and we are already seeing the effects of people moving into work." The risible DWP Press Office chaps tweeted desperately in similar vein. But the Lib Dems decided that they couldn't defend it.
There was some barely-noticed news on the outsourcing front. The contract for electronic tagging of offenders, previously held by G4S and Serco (both of which were found to have defrauded the taxpayer of millions) has gone to - wait for it - Capita! Some asked why Capita; why does it always have to be these three? But it's an inevitable part of the outsourcing business. If you create huge contracts only the big firms can bid, and it was these three which were prepared to bid for everything.
One lot of contracts of interest to many is Community Work Placements. But CWP doesn't seem to be going well. The Boycott Workfare team is doing a great job of publicising companies and organisations which agree to take part by taking free labour. One was recently claimed by the government as a success, providing a photo-op for Osborne. It quickly decided to withdraw when it discovered the trouble it was attracting. It looks like the CWP contractors are targeting councils and housing associations for placements, if Seetec is anything to go by. They say, "Examples of such projects include estate maintenance and local renovation, groundswork, horticulture, recycling as well as administration, customer service and sales, warehousing, distribution and cleaning services. The list of potential projects is almost endless." Sadly, it will be tempting for cash-strapped councils to go for this. Presumably they can adapt the hi-viz jackets they use for Community Payback offenders on similar projects.
Monday, 5 May 2014
Back to work?
It's back to work tomorrow - assuming you have any work to return to. So what has been going on over this rather disjointed few weeks?
On the outsourcing front, I would have said until an hour ago not very much. A4e set up a new website, reminding us of one of the less well known aspects of their business - "Independent Living Services". This all began 9 years ago when local councils had to offer direct payments for social care, so that users could shape their own care packages and employ people directly. A4e were quick to see an opportunity here and scooped up contracts. It didn't always work out well; Middlesborough council was not happy with how the contract was delivered and brought it back in-house. But the company is now running the show in 15 areas. Let's hope the website doesn't herald the regrowth of all those websites A4e used to have before the makeover.
There's now a new privatisation in the pipeline (although A4e won't be involved in this one). The Guardian has the story that the land registry is to be flogged off. That may not mean much to many people, but it's the body which keeps all the records of who owns what land and property in this country. The paper says: "Former executives from the body ....... say that a sell-off 'beggars belief' because it will allow the private sector to adjudicate on what can be conflicting interests between sellers, buyers, lenders and neighbours."
George Monbiot, writing in the Comment is Free section of the Guardian, may have been reading this blog. If not, he's one of the few who has picked up on the fact that G4S must have been bidding for contracts while it was supposedly banned. He says: "Was it ever banned at all? Six days after the moratorium was lifted G4S won a contract to run HMRC services. A fortnight later it was chosen as one of the companies that will run the government's Help to Work scheme. How did it win these contracts if in the preceding months it wasn't allowed to bid?" Quite right. But why have so few journalists picked up on this?
A story doing the rounds in the press tonight seems shocking to some, but unsurprising to many. Labour MP Sheila Gilmore asked the wretched Esther McVey a question about sanctions and got a worrying answer. At the moment JSA claimants are not required to apply for zero hours jobs. Under Universal Credit they will be. Jobcentre "coaches" will be able to force people to take such work, on pain of having their benefit stopped. (See the Guardian.) The DWP confirmed this. Gilmore pointed out that this would stop people taking training courses to improve their prospects. Others have said that people will be caught in a trap; told to increase their hours or be sanctioned while unable to increase their hours. But this was always part of the point of UC, in the wonderful world of Iain Duncan Smith.
On the outsourcing front, I would have said until an hour ago not very much. A4e set up a new website, reminding us of one of the less well known aspects of their business - "Independent Living Services". This all began 9 years ago when local councils had to offer direct payments for social care, so that users could shape their own care packages and employ people directly. A4e were quick to see an opportunity here and scooped up contracts. It didn't always work out well; Middlesborough council was not happy with how the contract was delivered and brought it back in-house. But the company is now running the show in 15 areas. Let's hope the website doesn't herald the regrowth of all those websites A4e used to have before the makeover.
There's now a new privatisation in the pipeline (although A4e won't be involved in this one). The Guardian has the story that the land registry is to be flogged off. That may not mean much to many people, but it's the body which keeps all the records of who owns what land and property in this country. The paper says: "Former executives from the body ....... say that a sell-off 'beggars belief' because it will allow the private sector to adjudicate on what can be conflicting interests between sellers, buyers, lenders and neighbours."
George Monbiot, writing in the Comment is Free section of the Guardian, may have been reading this blog. If not, he's one of the few who has picked up on the fact that G4S must have been bidding for contracts while it was supposedly banned. He says: "Was it ever banned at all? Six days after the moratorium was lifted G4S won a contract to run HMRC services. A fortnight later it was chosen as one of the companies that will run the government's Help to Work scheme. How did it win these contracts if in the preceding months it wasn't allowed to bid?" Quite right. But why have so few journalists picked up on this?
A story doing the rounds in the press tonight seems shocking to some, but unsurprising to many. Labour MP Sheila Gilmore asked the wretched Esther McVey a question about sanctions and got a worrying answer. At the moment JSA claimants are not required to apply for zero hours jobs. Under Universal Credit they will be. Jobcentre "coaches" will be able to force people to take such work, on pain of having their benefit stopped. (See the Guardian.) The DWP confirmed this. Gilmore pointed out that this would stop people taking training courses to improve their prospects. Others have said that people will be caught in a trap; told to increase their hours or be sanctioned while unable to increase their hours. But this was always part of the point of UC, in the wonderful world of Iain Duncan Smith.
Wednesday, 30 April 2014
CWP contractors - the full list
Thanks to a site called TWPSolutions, we have the full list of Community Work Placements providers, after the Financial Times gave us 4 of them.
There are 18 regions. Of these, G4S have 6; Seetec 5; Pertemps and Interserve 2 each; and Learn Direct, Working Links and Rehab one each.
Did A4e put in a bid? It would be very unusual if they didn't, and this must be a major blow for them. All that's left in the pipeline are the Transforming Rehabilitation contracts, and the government wants to get on with them before the election, despite Labour's pleas to postpone the decision.
There are 18 regions. Of these, G4S have 6; Seetec 5; Pertemps and Interserve 2 each; and Learn Direct, Working Links and Rehab one each.
Did A4e put in a bid? It would be very unusual if they didn't, and this must be a major blow for them. All that's left in the pipeline are the Transforming Rehabilitation contracts, and the government wants to get on with them before the election, despite Labour's pleas to postpone the decision.
Monday, 28 April 2014
Help to Work - at least for G4S
At last, we know four of the companies which have won the contracts to deliver the inappropriately named "Help to Work" programme. The Financial Times reveals that they are G4S, Seetec, Interserve and Pertemps. Why it hasn't named the other two, I have no idea, but A4e hasn't said anything, and Serco has launched a rescue rights issue, so perhaps they both lost out. The FT says that G4S is the biggest winner. It also says: "It
comes less than three weeks after the British government lifted a ban
on G4S bidding for public sector work and suggests that Whitehall is
taking a favourable view towards one of its largest contractors,
despite insisting that the company remains under close scrutiny."
But hang on a minute. The bidding must have taken place during the time in which that ban was supposed to be in place. And the company was "cleared" just in time for the announcement of its success. Who is the government trying to kid?
The whole "Help to Work" story today has been utterly depressing. This morning, on Radio 4's Today programme, Evan Davies had the dubious pleasure of trying to interview the appalling Esther McVey. I bet he didn't want to. When he tried to pose questions to her boss, Iain Duncan Smith, recently he ended up being complained about by ignorant listeners. McVey did the same trick this morning - spouting utter twaddle and not answering questions. The reaction to the new scheme in the media has been predictable. The Guardian and the Independent get it right, while the Express salivates at the prospect of bludgeoning the poor even harder. The BBC interviewed Kirsty McHugh of the ERSA, who said what you would expect since she's paid by the outsourcing companies, and Richard Johnson who used to work for Serco and talked sense.
So let's spell it out. This scheme is largely about IDS's temper at the failure of the Work Programme, which he interprets as the failure of the unemployed. So they must be punished. And it will have the advantage of taking loads of people out of the unemployment figures. They will be sanctioned en masse, or driven into the black economy, or forced onto workfare and so counted as employed.
Newsnight is doing something on the scheme. I don't think I'll watch.
But hang on a minute. The bidding must have taken place during the time in which that ban was supposed to be in place. And the company was "cleared" just in time for the announcement of its success. Who is the government trying to kid?
The whole "Help to Work" story today has been utterly depressing. This morning, on Radio 4's Today programme, Evan Davies had the dubious pleasure of trying to interview the appalling Esther McVey. I bet he didn't want to. When he tried to pose questions to her boss, Iain Duncan Smith, recently he ended up being complained about by ignorant listeners. McVey did the same trick this morning - spouting utter twaddle and not answering questions. The reaction to the new scheme in the media has been predictable. The Guardian and the Independent get it right, while the Express salivates at the prospect of bludgeoning the poor even harder. The BBC interviewed Kirsty McHugh of the ERSA, who said what you would expect since she's paid by the outsourcing companies, and Richard Johnson who used to work for Serco and talked sense.
So let's spell it out. This scheme is largely about IDS's temper at the failure of the Work Programme, which he interprets as the failure of the unemployed. So they must be punished. And it will have the advantage of taking loads of people out of the unemployment figures. They will be sanctioned en masse, or driven into the black economy, or forced onto workfare and so counted as employed.
Newsnight is doing something on the scheme. I don't think I'll watch.
Thursday, 24 April 2014
CWP - is it a secret?
Community Work Placements are supposed to start next week. That's the "help" for the long-term unemployed who have been failed by the Work Programme; months of unpaid work "in the community". But there has been no announcement about which companies have won the contracts to organise this. It seems certain that the contracts have been awarded. G4S is advertising dozens of posts to do with CWP on the Indus Delta site. So why are the public not being told?
Could it be that the DWP wants to avoid the inevitable media outburst which would follow an announcement that those lucrative contracts had been given to G4S? After all, this is the company which defrauded the government (which means you and me) of millions over the tagging contracts. It is obvious that the tendering process for CWP was going on while G4S was still supposedly under investigation and suspended from bidding. Yet it was "cleared" just in time to be given another opportunity for oodles of dosh. Perhaps Serco, with a similar record, is also on the gravy train.
Community Work Placements could come to grief not just on the incompetence of its providers, but also on the lack of actual placements. We know that lots of voluntary organisations want nothing to do with it. CWP is a popular concept with the right, but even the commercial sector could find it attracting too much bad publicity for comfort.
We will just have to wait and see. Those of our readers who are referred to the programme will no doubt keep us informed.
Could it be that the DWP wants to avoid the inevitable media outburst which would follow an announcement that those lucrative contracts had been given to G4S? After all, this is the company which defrauded the government (which means you and me) of millions over the tagging contracts. It is obvious that the tendering process for CWP was going on while G4S was still supposedly under investigation and suspended from bidding. Yet it was "cleared" just in time to be given another opportunity for oodles of dosh. Perhaps Serco, with a similar record, is also on the gravy train.
Community Work Placements could come to grief not just on the incompetence of its providers, but also on the lack of actual placements. We know that lots of voluntary organisations want nothing to do with it. CWP is a popular concept with the right, but even the commercial sector could find it attracting too much bad publicity for comfort.
We will just have to wait and see. Those of our readers who are referred to the programme will no doubt keep us informed.
Thursday, 10 April 2014
G4S "cleared"
The news slipped through. The Telegraph reported it briefly, the BBC website more fully. But, apart from Paul Lewis on Twitter, no one else has noticed, or thinks it's important. G4S can again bid for government contracts. Yes, after bodging contracts and then, along with Serco, defrauding the government over the tagging contract to the tune of £109m, the company was temporarily barred from bidding for its slice of public money. But now, "The Cabinet Office said G4S had taken steps to address weakness in its operations and its 'corporate renewal plan represented the right direction of travel to meet our expectations as a customer'." And this comes while the Serious Fraud Office is still investigating. So keen is the government to get G4S back into the fold that they are not even waiting for the outcome of that.
What's the urgency? Well, there were those prisons which Grayling wanted to privatise but couldn't because Serco and G4S, the only bidders, had been banished. And there are more contracts coming up. We still haven't heard who the providers are to be for Community Work Placements. And another nice little earner is up for grabs, barely noticed. This is the Health and Work Service (HWS), contracts to "intervene" in the lives of people who are off work sick and get them back to work. Read about it here. It won't be payment by results, and it needs the consent of employees. One can expect the usual suspects, including A4e and, of course, G4S, to be bidding.
It makes no sense at all to people outside the weird world of government procurement and outsourcing that providers which have failed to deliver and have ripped you off should be welcome to bid again. The Public Accounts Committee was astonished that previous performance couldn't be taken into account.
What's the urgency? Well, there were those prisons which Grayling wanted to privatise but couldn't because Serco and G4S, the only bidders, had been banished. And there are more contracts coming up. We still haven't heard who the providers are to be for Community Work Placements. And another nice little earner is up for grabs, barely noticed. This is the Health and Work Service (HWS), contracts to "intervene" in the lives of people who are off work sick and get them back to work. Read about it here. It won't be payment by results, and it needs the consent of employees. One can expect the usual suspects, including A4e and, of course, G4S, to be bidding.
It makes no sense at all to people outside the weird world of government procurement and outsourcing that providers which have failed to deliver and have ripped you off should be welcome to bid again. The Public Accounts Committee was astonished that previous performance couldn't be taken into account.
Thursday, 13 March 2014
Secrets and lies
G4S is in the news again. The outsourcing company has agreed to pay back almost £109m to the government as a settlement for its overcharging hugely on its contract to tag offenders. It had offered £24m. Serco, which shared the contract, has given back £70.5m. Both companies, we're told, still face investigation by the Serious Fraud Office, and neither can bid for the flogged-off probation contracts currently out for tender. G4S is in deep financial trouble. But, you may say, is that it? Is no one going to be charged with criminal offences? After all, benefits cheats are in court very quickly. I doubt it.
There are several reasons why the government would not want a court case. The relationship between people in government and those running these outsourcing companies is not the standard one of purchaser and provider; there is a much greater degree of mutual self-interest. You don't want to put your mates in court. These two companies in particular have been crucial to the government's exercise in creating private wealth out of public services. And suppose there were charges. They could plead guilty, and that would save embarrassment. We've seen what happened, on a very, very much smaller scale with A4e. The employees who pleaded guilty have not yet been sentenced. That may not happen until the second batch have been tried in October. If they plead guilty as well, we will never know the details of what they did, and what pressures or incentives they were under. The G4S and Serco cases could follow that route, sparing the public the details of their contracts. It wouldn't do for us to know how those contracts, and the monitoring of them, allowed the firms to overcharge on this massive scale. If they pleaded not guilty, all that would have to come out. The government wants this out of the way as soon as possible, and the companies back in the ring bidding for more juicy contracts. Grayling had to cancel altogether the privatisation of a batch of prisons because the only bidders were G4S and Serco.
More secrets. We are used to this government suppressing information if it goes against its narrative of great success in "welfare reform". So it's no surprise to learn from Channel 4 News that it sat on a report which showed, according to independent experts appointed by the DWP, that the Work Programme isn't working. That's hardly news, you might say. But this report came out last September and a decision was taken to suppress it "at a ministerial level", and we know what that means. All the things which critics said would happen, particularly "creaming and parking", are still going on. Sanctions are not helping anything, says the report. And the providers themselves, or 58% of them, think the WP is not helping or worse. The DWP apparently said, "The reality is that the Work Programme is working." That's the point at which the secrets turn into lies.
For a straightforward untruth we turn to the narrative on food banks. The DWP has always insisted that it doesn't refer people to food banks. There's a good reason for that. It needs to deny that food banks have become part of the welfare state, or, indeed, that they are needed at all. But now we have the evidence, thanks to the Guardian, that there is official guidance to jobcentres on how to give out vouchers, and one of the documents is entitled "Foodbank Referral Service". That has now been modified; "referral" has become "signposting". And they mustn't refer to the vouchers as vouchers. (Orwellian newspeak is thriving at the DWP.) There's a significant paragraph in the article: "The documents show each jobcentre is told to write down how many people have been sent to food banks on a 'slip record sheet', even though the DWP has said: 'Food banks are not part of government policy and, as such, the Department for Work and Pensions does not hold or collect information on their usage.'"
What was it David Cameron once said about being the "most transparent government ever"?
There are several reasons why the government would not want a court case. The relationship between people in government and those running these outsourcing companies is not the standard one of purchaser and provider; there is a much greater degree of mutual self-interest. You don't want to put your mates in court. These two companies in particular have been crucial to the government's exercise in creating private wealth out of public services. And suppose there were charges. They could plead guilty, and that would save embarrassment. We've seen what happened, on a very, very much smaller scale with A4e. The employees who pleaded guilty have not yet been sentenced. That may not happen until the second batch have been tried in October. If they plead guilty as well, we will never know the details of what they did, and what pressures or incentives they were under. The G4S and Serco cases could follow that route, sparing the public the details of their contracts. It wouldn't do for us to know how those contracts, and the monitoring of them, allowed the firms to overcharge on this massive scale. If they pleaded not guilty, all that would have to come out. The government wants this out of the way as soon as possible, and the companies back in the ring bidding for more juicy contracts. Grayling had to cancel altogether the privatisation of a batch of prisons because the only bidders were G4S and Serco.
More secrets. We are used to this government suppressing information if it goes against its narrative of great success in "welfare reform". So it's no surprise to learn from Channel 4 News that it sat on a report which showed, according to independent experts appointed by the DWP, that the Work Programme isn't working. That's hardly news, you might say. But this report came out last September and a decision was taken to suppress it "at a ministerial level", and we know what that means. All the things which critics said would happen, particularly "creaming and parking", are still going on. Sanctions are not helping anything, says the report. And the providers themselves, or 58% of them, think the WP is not helping or worse. The DWP apparently said, "The reality is that the Work Programme is working." That's the point at which the secrets turn into lies.
For a straightforward untruth we turn to the narrative on food banks. The DWP has always insisted that it doesn't refer people to food banks. There's a good reason for that. It needs to deny that food banks have become part of the welfare state, or, indeed, that they are needed at all. But now we have the evidence, thanks to the Guardian, that there is official guidance to jobcentres on how to give out vouchers, and one of the documents is entitled "Foodbank Referral Service". That has now been modified; "referral" has become "signposting". And they mustn't refer to the vouchers as vouchers. (Orwellian newspeak is thriving at the DWP.) There's a significant paragraph in the article: "The documents show each jobcentre is told to write down how many people have been sent to food banks on a 'slip record sheet', even though the DWP has said: 'Food banks are not part of government policy and, as such, the Department for Work and Pensions does not hold or collect information on their usage.'"
What was it David Cameron once said about being the "most transparent government ever"?
Tuesday, 12 November 2013
The outsourcing argument
The National Audit Office has come up with some facts about the profits of the outsourcing companies, and the risks of contracting out our public services. There's a brief summary in the Independent and a longer analysis in the same paper. The focus is on the profit margins of G4S, Serco and Capita, but the second piece also says that Atos and G4S pay no corporation tax. The NAO is making a number of important points, which Margaret Hodge MP summarises: " These
reports together raise some big concerns: the quasi-monopolies that
have sprung up in some parts of the public sector; the lack of
transparency over profits, performance and tax paid; the inhibiting
of whistleblowers; the length of contracts that taxpayers are being
tied into, and the number of contracts that are not subject to proper
competition. The
recent fraud allegations surrounding the Ministry of Justice's
electronic tagging contracts with G4S and Serco are also a reminder
of how important it is that government properly scrutinises and
monitors its contracts with private providers.”
In an interesting piece by the BBC's Robert Peston the journalist points out that much of the information in the report was given voluntarily by the companies because they don't have to disclose any of it, despite representing 15% of public spending. He looks closely at the profit margins, and says that the balance of risk is changing.
Last week the Cabinet Office chief procurement officer, Bill Crothers, said that the government spent too little time making firms "deliver what they said they would do" for the price, and needed qualified, experienced people to do that. Although he didn't say so, the Work Programme is an example of that failure. The DWP has relied on the incentive of profit and explicitly promised the contractors that it wouldn't ask questions about what they were doing.
A4e doesn't figure in these discussions by name, because it's not one of the big four. But that doesn't mean that A4e is out of the game. The big cake on the table at the moment is the Transforming Rehabilitation contracts (they'll have to come up with a better name than that) and A4e wants a slice. There's an interview here with Jen Byrne, their "Development Director for Justice". Will the bidders offer suicidal discounts, as they did with the Work Programme? Probably not. But at least now attention is being paid to some of the shortcomings of flogging off public services.
In an interesting piece by the BBC's Robert Peston the journalist points out that much of the information in the report was given voluntarily by the companies because they don't have to disclose any of it, despite representing 15% of public spending. He looks closely at the profit margins, and says that the balance of risk is changing.
Last week the Cabinet Office chief procurement officer, Bill Crothers, said that the government spent too little time making firms "deliver what they said they would do" for the price, and needed qualified, experienced people to do that. Although he didn't say so, the Work Programme is an example of that failure. The DWP has relied on the incentive of profit and explicitly promised the contractors that it wouldn't ask questions about what they were doing.
A4e doesn't figure in these discussions by name, because it's not one of the big four. But that doesn't mean that A4e is out of the game. The big cake on the table at the moment is the Transforming Rehabilitation contracts (they'll have to come up with a better name than that) and A4e wants a slice. There's an interview here with Jen Byrne, their "Development Director for Justice". Will the bidders offer suicidal discounts, as they did with the Work Programme? Probably not. But at least now attention is being paid to some of the shortcomings of flogging off public services.
Wednesday, 6 November 2013
"I don't believe it"
There are two big stories to look at today. First let's look at:
SANCTIONS FIGURES
The latest sanctions figures have, at last, been published. Between October 2012 and June 2013 they show a rise of 6% on the same period a year before, to 580,000. Think about that - more than half a million. The BBC website explains the new rules, and says that 53% of the decisions were at the lowest level, up to 13 weeks, for such failures as not attending an appointment. Then it says that about 1 in 5 were for failing to keep an appointment with an adviser. Esther McVey is trotted out to speak for the DWP, saying that sanctions were only used against those who were "wilfully rejecting support for no good reason".
In another piece the BBC's Sean Clare looks at "Life when the Jobcentre says you broke the rules". It brings out some of the absurdities and injustices of the system, with several horror stories. The CAB is quoted as saying that they've seen a 64% rise in people coming to them because of sanctions. The PCS union, whose members have to administer the regime, says, "There's no question that there is an overarching pressure to enforce the sanctions regime as strictly as possible." The DWP, of course "flatly denies" this. But the article has stories which cannot be brushed aside in this way.
"UP TO THE JOB?"
BBC Radio 4 did a "File on 4" programme yesterday on the Work Programme, which gives me my title for this post. It seems that Esther McVey has rapidly absorbed her boss's approach to uncomfortable facts; three times her response was to say that she didn't believe it.
The programme started in Eastbourne, where unemployment is a lot lower than the national average, but the local MP Stephen Lloyd (a Lib Dem) is angry at the number of people who have done their 2-year stint on the WP and been failed by it. One 47-year-old man said that there was no respect and he was treated like a child. A woman said she'd seen her advisor only once a month.
The WP providers there are Avanta and G4S. One older woman who had a good experience (and found a job) through a sub-contractor of G4S was interviewed. But the programme then turned to Richard Johnson, formerly of Ingeus (didn't he work for Serco too?). He said that the quality of the contract was deteriorating because case-loads were now up to 240 per adviser. McVey said she didn't believe it. The official figure is 80 - 140. And, she said, people can make a complaint.
The point which emerged was that of the just under 2.5 million who are unemployed, 900,000 have been out of work for a year or more and these, along with those with medical problems, are not being helped. A consultant, a chap called Grimes, said that the sanctions against the worst-performing providers (the 5% "market shift") are inadequate. The DWP should remove their contracts altogether, but the providers know that this is not going to happen.
The attachment fees are due to end in April 2014. Johnson spoke about the discounts of 30% or more offered by some of the providers when they bid. These are back-loaded to years 4 and 5 (i.e. at this point the providers will get 30% less for outcomes) on the assumption by the providers that the government would never let this happen. The contracts, he said, are not viable at this price. Deloitte's, who partnered with Ingeus, are now trying to sell their shares, and Johnson thinks it's because they understand the implications of the discounts. "I don't believe that", said McVey. She thinks Deloitte's want out because they are doing very well.
Turning to those on ESA, the programme highlighted a man who had been sent to Triage Central. In 7 visits he saw an advisor only once and got no help at all. He said that the emphasis was on what he was doing wrong. Disability Rights UK said that the Work Programme isn't working for disabled people, and a 90% failure rate is not acceptable. Once again, McVey said, "I don't believe it."
More or less the last word came from Grimes, who said that the long-term unemployed were at the back of the queue and moving backwards.
Lots to comment on, I think.
SANCTIONS FIGURES
The latest sanctions figures have, at last, been published. Between October 2012 and June 2013 they show a rise of 6% on the same period a year before, to 580,000. Think about that - more than half a million. The BBC website explains the new rules, and says that 53% of the decisions were at the lowest level, up to 13 weeks, for such failures as not attending an appointment. Then it says that about 1 in 5 were for failing to keep an appointment with an adviser. Esther McVey is trotted out to speak for the DWP, saying that sanctions were only used against those who were "wilfully rejecting support for no good reason".
In another piece the BBC's Sean Clare looks at "Life when the Jobcentre says you broke the rules". It brings out some of the absurdities and injustices of the system, with several horror stories. The CAB is quoted as saying that they've seen a 64% rise in people coming to them because of sanctions. The PCS union, whose members have to administer the regime, says, "There's no question that there is an overarching pressure to enforce the sanctions regime as strictly as possible." The DWP, of course "flatly denies" this. But the article has stories which cannot be brushed aside in this way.
"UP TO THE JOB?"
BBC Radio 4 did a "File on 4" programme yesterday on the Work Programme, which gives me my title for this post. It seems that Esther McVey has rapidly absorbed her boss's approach to uncomfortable facts; three times her response was to say that she didn't believe it.
The programme started in Eastbourne, where unemployment is a lot lower than the national average, but the local MP Stephen Lloyd (a Lib Dem) is angry at the number of people who have done their 2-year stint on the WP and been failed by it. One 47-year-old man said that there was no respect and he was treated like a child. A woman said she'd seen her advisor only once a month.
The WP providers there are Avanta and G4S. One older woman who had a good experience (and found a job) through a sub-contractor of G4S was interviewed. But the programme then turned to Richard Johnson, formerly of Ingeus (didn't he work for Serco too?). He said that the quality of the contract was deteriorating because case-loads were now up to 240 per adviser. McVey said she didn't believe it. The official figure is 80 - 140. And, she said, people can make a complaint.
The point which emerged was that of the just under 2.5 million who are unemployed, 900,000 have been out of work for a year or more and these, along with those with medical problems, are not being helped. A consultant, a chap called Grimes, said that the sanctions against the worst-performing providers (the 5% "market shift") are inadequate. The DWP should remove their contracts altogether, but the providers know that this is not going to happen.
The attachment fees are due to end in April 2014. Johnson spoke about the discounts of 30% or more offered by some of the providers when they bid. These are back-loaded to years 4 and 5 (i.e. at this point the providers will get 30% less for outcomes) on the assumption by the providers that the government would never let this happen. The contracts, he said, are not viable at this price. Deloitte's, who partnered with Ingeus, are now trying to sell their shares, and Johnson thinks it's because they understand the implications of the discounts. "I don't believe that", said McVey. She thinks Deloitte's want out because they are doing very well.
Turning to those on ESA, the programme highlighted a man who had been sent to Triage Central. In 7 visits he saw an advisor only once and got no help at all. He said that the emphasis was on what he was doing wrong. Disability Rights UK said that the Work Programme isn't working for disabled people, and a 90% failure rate is not acceptable. Once again, McVey said, "I don't believe it."
More or less the last word came from Grimes, who said that the long-term unemployed were at the back of the queue and moving backwards.
Lots to comment on, I think.
Sunday, 15 September 2013
"Contractorisation"
"Contractorisation" - a hideous word coined by David Cameron when he was questioned recently by a parliamentary committee. He was asked about Chris Grayling's statement that companies which are guilty of malpractice or gross failure could be ruled out of future contracts. (Think Serco and G4S.) Would this happen? Cameron was vague, but said he was in favour of more "contractorisation". Of course he was vague. Because it won't happen. For one thing it would be a legal minefield, and for another, who else is there? He was also asked about the timetable for bringing in Universal Credit, and was equally vague, leading people to conclude that he and the government know it's not remotely on schedule, and only Iain Duncan Smith thinks it is.
With the start of the party conference season, we can see very clearly that there is consensus among the main parties about welfare and outsourcing. Clegg waffled this morning about "making work pay" and dodged a question about the deepening poverty of those on benefits. This is the Tory attitude as well; they believe that they have won the argument. Tales of hardship can be brushed aside, because a majority of the electorate have accepted the propaganda. Michael Gove caused a bit of a fuss by saying that he thought people who used food banks were just bad at managing their money. Various Labour MPs are willing to put a different point of view, but their party would not alter anything the Tories have done. Nor would they call a halt to the outsourcing.
Cameron, Gove, Clegg et al are not necessarily bad people. They have good intentions towards people whose lives they cannot begin to understand. When they are confronted with the truth they can't accept it. And now that the economic figures aren't quite as bad as they were, they can proclaim that they were right. It's grim.
With the start of the party conference season, we can see very clearly that there is consensus among the main parties about welfare and outsourcing. Clegg waffled this morning about "making work pay" and dodged a question about the deepening poverty of those on benefits. This is the Tory attitude as well; they believe that they have won the argument. Tales of hardship can be brushed aside, because a majority of the electorate have accepted the propaganda. Michael Gove caused a bit of a fuss by saying that he thought people who used food banks were just bad at managing their money. Various Labour MPs are willing to put a different point of view, but their party would not alter anything the Tories have done. Nor would they call a halt to the outsourcing.
Cameron, Gove, Clegg et al are not necessarily bad people. They have good intentions towards people whose lives they cannot begin to understand. When they are confronted with the truth they can't accept it. And now that the economic figures aren't quite as bad as they were, they can proclaim that they were right. It's grim.
Monday, 9 September 2013
Not working enough
It is fundamental to the government's approach to welfare to believe that claiming benefits is a choice people make. They call it "languishing on benefits" and describe it as a "lifestyle choice". When it dawned on them that most people on benefits were actually in work, and were able to claim tax credits because their pay was so abysmally low, or because they were working part-time - well, that must be a choice, too. Little noticed some time ago was the announcement that in order to claim working tax credits people would have to be working 30 hours a week. Clearly, and explicitly, the delusion was that people working fewer hours than that could find some more somewhere. And now comes the plan to deal with those "not working enough". Last Saturday's Guardian had a chilling article about it. "People earning between £330 and £950 a month - just under the rate of the national minimum wage for a 35-hour week - could be mandated to attend jobcentre meetings where their working habits will be examined as part of the universal credit programme." This makes perfect sense in the government's thinking. UC will ensure that "work pays"; so people must be pressured into working more. And if you're not making enough effort, you can be stripped of your benefits. There will be seven categories of claimants, apparently, including those "too sick to work" and those "too committed to work" (which would include lone parents), as well as those "not working enough". The language of the documents seen by the Guardian includes horrible phrases like "the claimant journey". The TUC has responded with the obvious objections, including forcing people to live in constant fear and insecurity.
All of this is called "in-work conditionality", and the Resolution Foundation has published a report on the implications. It's well worth reading. One point which has been raised by many people is that the resources simply aren't there to implement this. More contracts, perhaps? The private sector is already cashing in. A system called Worktrack is set to replace Universal Jobmatch. It's a much more sophisticated system - take the tour on their website. But then look at the pricing - between £500 and £600 per adviser license, with discounts for multiple advisers. And consider that it is extremely unlikely that it will be voluntary for the client to sign up for this.
One company's opinion on how to make the Work Programme better has been published. G4S, like all the providers, has been invited to submit ideas for the "next generation" of the WP. It's not encouraging for anyone who wants to see an end to this useless scheme. Naturally, the providers want to "reform" it in their own financial interests.
All of this is called "in-work conditionality", and the Resolution Foundation has published a report on the implications. It's well worth reading. One point which has been raised by many people is that the resources simply aren't there to implement this. More contracts, perhaps? The private sector is already cashing in. A system called Worktrack is set to replace Universal Jobmatch. It's a much more sophisticated system - take the tour on their website. But then look at the pricing - between £500 and £600 per adviser license, with discounts for multiple advisers. And consider that it is extremely unlikely that it will be voluntary for the client to sign up for this.
One company's opinion on how to make the Work Programme better has been published. G4S, like all the providers, has been invited to submit ideas for the "next generation" of the WP. It's not encouraging for anyone who wants to see an end to this useless scheme. Naturally, the providers want to "reform" it in their own financial interests.
Monday, 26 August 2013
Still watching
I was taken to task recently for not writing about A4e on a blog devoted to A4e. As I said at the time, there is no news about A4e. But, when you think about it, that in itself is noteworthy.
I started the original website (which A4e got closed down) and then this blog because A4e had a very high profile, and I believed, drawing on my own experience, that the reality didn't match the hype. And the reality needed to be out there. Others obviously agreed. But the tide of publicity rolled on, as did the number of contracts scooped up by the company. Allegations of fraud had little impact, except to raise the profile even higher. Emma Harrison revelled in all the publicity, basking in the glow of her own celebrity, collecting her CBE and being appointed adviser to government. Her fall from grace came suddenly and unexpectedly, and the new bosses had to pick up the pieces. That meant seeking as little publicity as possible, a strategy that was common sense as well as, surely, the advice of the PR person brought in to help, George Bridges of Quiller.
It worked for a while. But then Harrison was lured back into the limelight by Channel 4 News, and gave that car crash of an interview. Less spectacular, but of no help at all, was the behaviour of Jonty Olliff-Cooper, with his offensive tweets. But the publicity dies down, and no one apparently cares any more.
But it's a different world out there for A4e. The competition is much fiercer in those sectors they used to find most profitable. The contracts aren't just handed to them any more. Companies have come in from overseas, and the really big guns here - Serco, G4S, Capita - have spread their tentacles into what was once A4e's core business. The smaller-scale stuff from local councils has dried up. The last financial results available, as of March 2012, showed A4e in trouble.
So we carry on watching A4e, wondering if the company will even survive.
I started the original website (which A4e got closed down) and then this blog because A4e had a very high profile, and I believed, drawing on my own experience, that the reality didn't match the hype. And the reality needed to be out there. Others obviously agreed. But the tide of publicity rolled on, as did the number of contracts scooped up by the company. Allegations of fraud had little impact, except to raise the profile even higher. Emma Harrison revelled in all the publicity, basking in the glow of her own celebrity, collecting her CBE and being appointed adviser to government. Her fall from grace came suddenly and unexpectedly, and the new bosses had to pick up the pieces. That meant seeking as little publicity as possible, a strategy that was common sense as well as, surely, the advice of the PR person brought in to help, George Bridges of Quiller.
It worked for a while. But then Harrison was lured back into the limelight by Channel 4 News, and gave that car crash of an interview. Less spectacular, but of no help at all, was the behaviour of Jonty Olliff-Cooper, with his offensive tweets. But the publicity dies down, and no one apparently cares any more.
But it's a different world out there for A4e. The competition is much fiercer in those sectors they used to find most profitable. The contracts aren't just handed to them any more. Companies have come in from overseas, and the really big guns here - Serco, G4S, Capita - have spread their tentacles into what was once A4e's core business. The smaller-scale stuff from local councils has dried up. The last financial results available, as of March 2012, showed A4e in trouble.
So we carry on watching A4e, wondering if the company will even survive.
Friday, 12 July 2013
As I was saying ......
Last week I speculated about the future of outsourcing, and pointed out some of its perils. Now comes vindication with the story of G4S and Serco having overcharged the government massively on their contracts to tag offenders. Because G4S is apparently not co-operating fully with the government's investigation, Chris Grayling is calling in the cops. With new contracts in the pipeline, Serco have said they won't bid for them - but Capita plans to do so. Unless a foreign company throws its hat in the ring, that's it. There are no other companies in a position to bid.
We learned today that, between them, Serco and G4S get £1.5 billion a year from the may contracts like this that they have. And in total outsourcing is worth more than £80 billion a year. That's our money. Some are now putting the blame for messes like the tagging contracts on the poor skills of those civil servants who are supposed to manage and monitor them. Well, maybe, but that's inevitable. They are hugely outgunned by the companies.
We learned today that, between them, Serco and G4S get £1.5 billion a year from the may contracts like this that they have. And in total outsourcing is worth more than £80 billion a year. That's our money. Some are now putting the blame for messes like the tagging contracts on the poor skills of those civil servants who are supposed to manage and monitor them. Well, maybe, but that's inevitable. They are hugely outgunned by the companies.
Thursday, 4 July 2013
The future of outsourcing: can A4e survive?
Many people may have wondered how the dismal failure of the Work Programme to achieve its targets for the second year in a row has been hailed as a great success by the government which is paying for it (with our money). But in fact the lies have shown the flaw at the heart of outsourcing.
Public sector bad, private sector good: that's one of the basic tenets of a free market system. The private sector, with profit as its driver, will always be more efficient and innovative than the public sector. Evidence for this assumption is hard to come by. The real rationale is actually much closer to what Thatcher believed - that an industry or service should always be making money for someone. The last Conservative government privatised everything for which the public paid directly; transport, for instance, and the utilities, most of which are now owned by foreign companies. The Blair government followed by outsourcing those services which were paid for out of the public purse, whether locally or nationally. In theory it makes sense, at least initially. You don't have to have an army of staff, with all the attendant costs and hassle. You specify what you want and contract with the cheapest company to provide it. If they don't deliver, you don't pay.
When this bonanza started, A4e were well placed to benefit. But in a few short years the problems with the model started to appear. In their chosen sector the company was soon scooping up contracts, to the bemusement of their competitors. Was A4e simply undercutting its rivals? Or did they have some sort of favoured status with government? In other sectors, similar things were happening with companies like Capita, G4S and Serco. It costs a lot of money to put a bid together; if a company can't see a possibility of ever getting a contract, it will cease to compete. The success of the big players meant the demise of competitors. The supposed free market was rapidly becoming an illusion. When the government recently announced that it was to outsource most of the functions of the Probation Service, everyone assumed that the only bidders would be G4S and Serco. All the outsourcing companies left standing have diversified into fields in which they have no previous experience, including welfare-to-work, where they have been joined by foreign companies. A4e is no longer the top player.
The targets written into the contracts, and promised by the private companies, became notional at best. The strange procurement process meant that previous performance couldn't be taken into account, so companies could fail and fail again, but still get new contracts. There was no risk. A good example of this was G4S's incompetence over the Olympics security contracts. Their reputation took a temporary knock, and their profits stumbled, but it did no lasting damage. Fortunately, on that occasion there were the police and the army to step in. The G4S event was also an example of how dangerous the private sector practices can be. The company had to recruit a lot of temporary staff, and did so in good time; but they didn't want to pay them until they absolutely had to, and so by the time they called in their recruits many of them had made other plans and weren't available.
Occasionally a contract would prove to be such a bad deal for the company (usually because it had made a bad bet) that it had to cut its losses and give up the contract. A4e did that with a number of prison education contracts, after badly miscalculating the costs and incurring big losses. More recently we've seen NHS Direct pull out of two of its 11 medical helpline contracts because they are "financially unsustainable". Other companies must step in and pick up the pieces. But what happens when there are no other companies? When you have closed down the public sector departments and got rid of the staff, you can't bring a service back in-house except at enormous expense.
The power should lie with those commissioning the services; with government departments or local authorities. But as the number of players shrinks, the power shifts. The design of contracts is negotiated with the providers, who have the upper hand, as we saw with the Work Programme. We've even seen A4e being paid to tell government how to design contracts!
The answer, from this government, is Payment by Results. But that has simply made matters worse. It automatically limits the numbers of companies which can bid to the largest and most financially well-endowed; those able to sustain a period without any profits. From the outset, it wasn't quite what it was supposed to be. An upfront "attachment fee" was negotiated, which kept the companies ticking over without any results whatever. However, PbR satisfies the free marketeers, who disregard the fact that if a service is not being delivered, it's the service users who suffer.
It is very much in the interests of government that outsourcing should succeed. They don't want to have to admit that they got the whole process wrong and have spent our money to no good purpose. That was what made Emma Harrison such an embarrassment when it was revealed just how much money she had pocketed in profits. She had to go. And it's why the Work Programme data has been so misrepresented. So the private companies and the government have a mutual interest in pretending that black is white, if necessary. It's also why the companies employ people who have a direct line to government (think Blunkett and Olliff-Cooper at A4e).
A4e's last published accounts showed their business shrinking, and perhaps struggling. The accounts for the year to March 2013 won't be published until the end of the year. Will it survive? Outsourcing isn't going away, so much will depend on whether the company can adapt to the changing environment.
Public sector bad, private sector good: that's one of the basic tenets of a free market system. The private sector, with profit as its driver, will always be more efficient and innovative than the public sector. Evidence for this assumption is hard to come by. The real rationale is actually much closer to what Thatcher believed - that an industry or service should always be making money for someone. The last Conservative government privatised everything for which the public paid directly; transport, for instance, and the utilities, most of which are now owned by foreign companies. The Blair government followed by outsourcing those services which were paid for out of the public purse, whether locally or nationally. In theory it makes sense, at least initially. You don't have to have an army of staff, with all the attendant costs and hassle. You specify what you want and contract with the cheapest company to provide it. If they don't deliver, you don't pay.
When this bonanza started, A4e were well placed to benefit. But in a few short years the problems with the model started to appear. In their chosen sector the company was soon scooping up contracts, to the bemusement of their competitors. Was A4e simply undercutting its rivals? Or did they have some sort of favoured status with government? In other sectors, similar things were happening with companies like Capita, G4S and Serco. It costs a lot of money to put a bid together; if a company can't see a possibility of ever getting a contract, it will cease to compete. The success of the big players meant the demise of competitors. The supposed free market was rapidly becoming an illusion. When the government recently announced that it was to outsource most of the functions of the Probation Service, everyone assumed that the only bidders would be G4S and Serco. All the outsourcing companies left standing have diversified into fields in which they have no previous experience, including welfare-to-work, where they have been joined by foreign companies. A4e is no longer the top player.
The targets written into the contracts, and promised by the private companies, became notional at best. The strange procurement process meant that previous performance couldn't be taken into account, so companies could fail and fail again, but still get new contracts. There was no risk. A good example of this was G4S's incompetence over the Olympics security contracts. Their reputation took a temporary knock, and their profits stumbled, but it did no lasting damage. Fortunately, on that occasion there were the police and the army to step in. The G4S event was also an example of how dangerous the private sector practices can be. The company had to recruit a lot of temporary staff, and did so in good time; but they didn't want to pay them until they absolutely had to, and so by the time they called in their recruits many of them had made other plans and weren't available.
Occasionally a contract would prove to be such a bad deal for the company (usually because it had made a bad bet) that it had to cut its losses and give up the contract. A4e did that with a number of prison education contracts, after badly miscalculating the costs and incurring big losses. More recently we've seen NHS Direct pull out of two of its 11 medical helpline contracts because they are "financially unsustainable". Other companies must step in and pick up the pieces. But what happens when there are no other companies? When you have closed down the public sector departments and got rid of the staff, you can't bring a service back in-house except at enormous expense.
The power should lie with those commissioning the services; with government departments or local authorities. But as the number of players shrinks, the power shifts. The design of contracts is negotiated with the providers, who have the upper hand, as we saw with the Work Programme. We've even seen A4e being paid to tell government how to design contracts!
The answer, from this government, is Payment by Results. But that has simply made matters worse. It automatically limits the numbers of companies which can bid to the largest and most financially well-endowed; those able to sustain a period without any profits. From the outset, it wasn't quite what it was supposed to be. An upfront "attachment fee" was negotiated, which kept the companies ticking over without any results whatever. However, PbR satisfies the free marketeers, who disregard the fact that if a service is not being delivered, it's the service users who suffer.
It is very much in the interests of government that outsourcing should succeed. They don't want to have to admit that they got the whole process wrong and have spent our money to no good purpose. That was what made Emma Harrison such an embarrassment when it was revealed just how much money she had pocketed in profits. She had to go. And it's why the Work Programme data has been so misrepresented. So the private companies and the government have a mutual interest in pretending that black is white, if necessary. It's also why the companies employ people who have a direct line to government (think Blunkett and Olliff-Cooper at A4e).
A4e's last published accounts showed their business shrinking, and perhaps struggling. The accounts for the year to March 2013 won't be published until the end of the year. Will it survive? Outsourcing isn't going away, so much will depend on whether the company can adapt to the changing environment.
Friday, 24 May 2013
What's happened to A4e?
That was a question a friend asked me recently. And then a rather rude anonymous commenter said more or less the same thing. The answer is, I don't know because it's all gone very quiet. There were two recent ads for jobs with A4e in the prison education service in the south of England. They're using the agency Randstad to advertise these jobs, which means, unusually for A4e, that the salaries are given. But that's about it. Nothing more has been heard about the Slough fraud case. Over the course of a year, from February 2012 to February this year, a total of 11 people from the Slough A4e office have been arrested over allegations of fraud that were apparently brought to light by A4e itself. The legal process in this country can grind very slowly, but this is getting a bit silly. No more financial information is available; accounts and returns are only published once a year. The last lot showed the company in deep trouble. And A4e is definitely not courting publicity at the moment.
There are contracts out there. G4S have just got the contract to run two support centres for rape and sex attack victims in the West Midlands. But most of the action is in areas of activity where A4e doesn't have a track record, and the pickings are slim.
There's a lot riding on the Work Programme for the company. Unless they have started making a reasonable profit they're really in trouble. We'll have some indication of this next month.
There are contracts out there. G4S have just got the contract to run two support centres for rape and sex attack victims in the West Midlands. But most of the action is in areas of activity where A4e doesn't have a track record, and the pickings are slim.
There's a lot riding on the Work Programme for the company. Unless they have started making a reasonable profit they're really in trouble. We'll have some indication of this next month.
Thursday, 8 November 2012
Image
Jonty Olliff-Cooper seems to believe that A4e's problem is its image. If only people knew the company better, and understood what it does, they would see how wonderful it is. This is, essentially, the mistake made by Emma Harrison.
It's not a good idea to try to psychoanalyse someone you've never met. But it always seemed to me that Harrison's image of herself was bound up with her image of the company. "Improving people's lives" and being "passionate" about everything was how she saw herself, and A4e was supposed to reflect that. She cannot have been unaware that the reality was rather different. There was plenty of publicity over the years; the reported bad conditions in the Manchester office in 2008; the Benefit Busters programme showing bullying and time-wasting in the Hull office; the Radio 5 Live programme; and so on. But none of that altered her perception. She was the charismatic leader of a company that was doing good, and both government and the media encouraged her in that belief.
Olliff-Cooper seems to have a similar outlook. If A4e had more "exposure" people would see how valuable its work is. If critics would only talk to him, and come and see for themselves, they would stop criticising. It's not surprising, given his background in Tory politics, that he doesn't see any fundamental objections to the outsourcing business, and his job, in part, is to promote it. But he ought to realise that shedding light on the companies involved is dangerous. G4S has just lost a prison contract and has not made the shortlist for a number of others.
Over the years A4e has spent millions on marketing and PR. Was it money well spent? It won't count for anything when the performance data for the Work Programme comes out.
It's not a good idea to try to psychoanalyse someone you've never met. But it always seemed to me that Harrison's image of herself was bound up with her image of the company. "Improving people's lives" and being "passionate" about everything was how she saw herself, and A4e was supposed to reflect that. She cannot have been unaware that the reality was rather different. There was plenty of publicity over the years; the reported bad conditions in the Manchester office in 2008; the Benefit Busters programme showing bullying and time-wasting in the Hull office; the Radio 5 Live programme; and so on. But none of that altered her perception. She was the charismatic leader of a company that was doing good, and both government and the media encouraged her in that belief.
Olliff-Cooper seems to have a similar outlook. If A4e had more "exposure" people would see how valuable its work is. If critics would only talk to him, and come and see for themselves, they would stop criticising. It's not surprising, given his background in Tory politics, that he doesn't see any fundamental objections to the outsourcing business, and his job, in part, is to promote it. But he ought to realise that shedding light on the companies involved is dangerous. G4S has just lost a prison contract and has not made the shortlist for a number of others.
Over the years A4e has spent millions on marketing and PR. Was it money well spent? It won't count for anything when the performance data for the Work Programme comes out.
Tuesday, 9 October 2012
£10bn cuts
If you are unemployed you will be aware by now that it's your fault. You lounge about at home in the lap of luxury while your neighbours go out early every morning to work for their living. You need to be forced to work. Ridiculous, isn't it? But instead of having a rational debate about the reform of welfare, the Conservatives have decided to cut benefits piecemeal. Having spent at least a decade in collusion with the right-wing press to demonise benefits claimants, they can now conduct polls and focus groups to show how popular it is to cut benefits. Surprise, surprise. There's no point in debating the rights and wrongs of this, because it's going to happen. What is worth talking about is a radical rethink of the whole basis of welfare. If you have any thoughts on this, please comment.
There have been a number of interesting reports in the last few days, both factual and speculative. A piece in the Telegraph tells of the views of a group of Tory MPs. They want to cut JSA by 10% after 6 months of unemployment and by another 10% after 12 months. Another far right group, the think tank Policy Exchange, has come up with a report that shows that nearly a third of people leaving JSA are back "on the dole" (their words) within eight months. Now, the conclusions they draw from this are bizarre. Jobcentre Plus should have the same incentives as WP providers (despite the fact that there are as yet no published results for the WP). Nasty things should happen to claimants of top-up benefits who are not doing all they can to find higher-paid or full-time work. It seems to be about penalising people for the economic reality they can do nothing about.
Another interesting snippet comes from a BBC news piece about a disability rights campaigner at the Tory conference. G4S has raised concerns about the number of referrals they are getting. They have halved in recent months. This is not contradicted by a DWP spokesman, who says that the number of referrals was always predicted to fall after the first year. This is puzzling because it doesn't square with what we've heard about at least one A4e office, where the first appointment for someone referred was 7 weeks after the first phone call, and staff said they were overwhelmed by the numbers. Was that unusual?
There have been a number of interesting reports in the last few days, both factual and speculative. A piece in the Telegraph tells of the views of a group of Tory MPs. They want to cut JSA by 10% after 6 months of unemployment and by another 10% after 12 months. Another far right group, the think tank Policy Exchange, has come up with a report that shows that nearly a third of people leaving JSA are back "on the dole" (their words) within eight months. Now, the conclusions they draw from this are bizarre. Jobcentre Plus should have the same incentives as WP providers (despite the fact that there are as yet no published results for the WP). Nasty things should happen to claimants of top-up benefits who are not doing all they can to find higher-paid or full-time work. It seems to be about penalising people for the economic reality they can do nothing about.
Another interesting snippet comes from a BBC news piece about a disability rights campaigner at the Tory conference. G4S has raised concerns about the number of referrals they are getting. They have halved in recent months. This is not contradicted by a DWP spokesman, who says that the number of referrals was always predicted to fall after the first year. This is puzzling because it doesn't square with what we've heard about at least one A4e office, where the first appointment for someone referred was 7 weeks after the first phone call, and staff said they were overwhelmed by the numbers. Was that unusual?
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