A4e sale - the reactions

Some more reactions have appeared on the sell-off of A4e.  Of the mainstream media, only the Financial Times reports it.  They say that Emma Harrison owned 87% of the company, whereas others say 85% and City AM says 85.5%.  All agree that she gets £20m out of the deal.  All the reports point out that Staffline already owns EOS and Avanta, and will now control a large chunk of the market; City AM says 23%.  The FT says: "The 16 private sector suppliers of the government’s welfare-to-work programme have been engaged in a wave of consolidation as they seek to bolster their position ahead of the next round of contracts in March 2017".  It also says that A4e employs 3,000 people, but the Yorkshire Post says the figure is 2,200.  The newly enlarged company will hold 9 WP contracts, two more than Ingeus (which is now owned by an American company).  No one seems to think this is a problem.
The financial websites naturally focus on the money.  Investor Interactive reports that Staffline's shares "shot up by 18%" on the announcement and is very chirpy about its future profitability.  The Yorkshire Post looks wider.  They do call Harrison an entrepreneur, which I have always maintained is untrue; and they quote the boss of Staffline on why the name A4e will not be retained, unlike that of Avanta.  He says that the A4e brand is "unfortunately too tarnished".  The paper also tries to get a comment from Emma Harrison herself; but when contacted all she would say was "I’m sure you’ve had all the press releases. Thanks for calling, bye."  Charmingly, they add "It is thought that she will devote her time to charity work."  

Everything must go

The government is in a desperate hurry to sell off whatever it can of the remaining shreds of the public sector.  Yesterday it announced the winning bidders for the Transforming Rehabilitation contracts, that hugely dangerous outsourcing of probation services.  As we can see from the Guardian's report on this, two companies get more than half the business.  Sodexo gets six areas, Interserve five; of the rest of the 21 areas, Working Links gets three and Ingeus two.  All have signed up charities to do the work.  Between them they will handle more than half of the probation service work, with supposedly medium and low risk offenders.  Their profits will be on a payment by results basis, albeit under a more complicated system than that of the Work Programme.  G4S and Serco had to withdraw their bids because they are still under investigation for fraud.  A4e, we understand, also withdrew from the process.
It's bad enough that such we have to watch this vital work flogged off for private profit.  Worse is the fact that the companies' profits have been insured against a new government pulling the plug on these contracts.  They are guaranteed their expected profits for 10 years!  So it would be ruinously expensive to cancel them.

We also heard yesterday of the company replacing Atos in the WCA contracts.  It's Maximus, an American company with as dreadful a record in the US as G4S and Serco have here.  For details, look at this piece on the Disability News Service site.  We can't know the financial arrangements that brought Maximus into this, but we should.

We learn from the Guardian that the government is pressing ahead with another disturbing outsourcing scheme; that of child protection services, currently the responsibility of local councils.  A lot of people are not aware that private companies already run children's homes, looking after the most vulnerable children for profit.  Now the government wants to take child protection out of the councils' hands altogether.  It might be thought that, given the stream of news recently of councils' failings in this area, it couldn't be any worse.  But councils are accountable for what they do.  Private companies just want to make a profit.

You will have read today that the government has considered cutting ESA to only pennies above JSA level.  It denies that it's actually going to do it, and the cries of protest will probably stop it this side of an election.

News round-up

With so much going on in the world the media, particularly the BBC, can happily ignore the issues which concern the poorest in Britain.  They managed - just - to report the fact that the government lost a vote on the bedroom tax.  It was a private member's bill, introduced by a Lib Dem (!) to water down the current rules by exempting disabled people who need the extra room or have adapted homes, as well as those who can't be found a smaller home to move to.  Labour backed it and the government lost by 306 votes to 231.  It will now go to committee stage and is unlikely to get through its third reading and into law.  But it's a start.  Unfortunately the BBC managed to spread misinformation.  The website piece says that the original changes "were designed to ensure social tenants get the same treatment as private tenants, who do not get any rent support".  I don't know what he means by "rent support", but this suggests that private tenants don't get housing benefit, which is untrue.  The piece also quotes Iain Duncan Smith as claiming that the changes would cost the Treasury £1 billion, a figure which is as accurate as all IDS's numbers.  

Then we read about the "attitude to work" assessments which the gormless Esther McVey is now going to impose on the unemployed.  It's an idea borrowed from Ingeus, apparently.  You can read the Daily Mail version if you really want to, or the less hysterical version in the Independent.  Although she's presenting it as voluntary, and as a way of not putting people on courses they don't need, there are obviously fears that it will be another way of catching people out and sanctioning them.

On the outsourcing front, there was an interesting article in the Independent about the race to, in effect, privatise the probation service.  It suggests that there are 5 companies involved - Capita, Sodexo, Amey, Interserve and Carillion - and that they would be well advised to have nothing to do with it.  They are very unlikely to make a profit.

Finally, please read the Guardian piece by John Lanchester about poverty and inequality.

Another buy-out in "Welfare to Work" industry

It's only a few weeks since Ingeus was bought by the American company Providence.  Now another w2w provider has been bought out, this time by a British company.  Staffline has bought Avanta for £45m.  It says that Avanta generates £70m, and all of this is in the w2w sector.  The Financial Times says that the providers are "braced for a wave of consolidation as they seek to bolster their position ahead of the next round of contracts in 2016".
So is A4e going to be next?  They were hopeful of going into profit a year ago, and if both Ingeus and Avanta are worth buying because they're making money, why not A4e?  Is the brand too toxic?  Is Emma Harrison too attached to her company to let it go?
All of this could be a problem for the government.  Staffline reckons that the DWP is happy because "they want fewer bigger providers who are easier to manage".  But, as the FT points out, it could well mean that these companies become "too big to fail".

Workfare - the government must come clean

The DWP refused Freedom of Information requests to reveal the organisations which were using free labour under the various schemes dubbed "workfare".  The Information Commissioner said they had to.  The DWP refused again, on the grounds that it would cause "damage to commercial interests", and charities would suffer from the "adverse publicity".  Now a tribunal led by three judges has ruled that the DWP must comply and publish the list.  (See the Guardian)
While the Boycott Workfare group is justifiably triumphant, I don't think they should rejoice too soon.  This government doesn't regard such legal rulings as binding.  As the Guardian says, they could appeal to the high court or use a ministerial veto to ban publication.  My bet would be that the list never will be published.
The DWP seems to assume that if they have to reveal the organisations taking part in these schemes it will effectively bring them to an end.  And that means, they say, that the firms paid to organise them would have to sack staff and lose money.  Ingeus said it would lose £1m in revenue, and Seetec said they would have to sack 53 people.  (A4e don't seem to have been asked.)  So the taxpayer is paying millions to force people into working for their benefits.  Crazy, isn't it?  There's another interesting fact in the Guardian piece.  The current Chief Executive of Ingeus is Dean James, who is a former senior DWP civil servant.  How very cosy.

Financially viable?

Nobody seems to be asking at the moment whether the Work Programme is financially viable for the providers.  The Work and Pensions Committee has taken evidence from "users" and there is a focus on the voluntary sector and small organisations which have found that the programme is not working for them or for anyone else.  Charities which help the homeless are particularly concerned about the specific problems of their clients being ignored; WP providers not even asking whether someone is homeless.  Yet the charity Crisis says that it got two people into work separately from the WP but was contacted by a provider asking for details so that it could claim the outcomes.  Meanwhile the media are focussing on other groups such as the disabled.  I missed the Panorama programme, but I gather that A4e was just one of the providers that didn't come out of it very well.  The response of A4e, as usual, is to point to a success story.  Next Sunday morning at 11.00 Radio 5 Live is looking at self-employment and the WP.
But, as I said, nobody is asking whether the whole thing could founder on the fact that the providers can't afford to run it.  The government insisted from the outset that only the largest and most financially secure companies could be prime providers, and that drove some companies, such as Ingeus, to partner with companies which could guarantee their financial security.  A4e didn't do that.  Nonetheless, the DWP was surprised that some potential primes put in bids that even the government didn't think were viable.  It now appears that the attachment fee income was sufficient to keep the companies ticking over.  Maximus, for instance, said that it had broken even on the first year.  But A4e's accounts to March 2012 showed them in deep trouble, and apparently without the expectation that things would improve much.
So what would happen if a prime decided that it just couldn't afford to go on?  Would the business be transferred to another company - assuming anybody wanted it?  Would they have to pay a penalty for breach of contract?  Is the government busy renegotiating terms in order to save the skins of these companies?  If that happens, I suspect it will be slipped through without publicity.

Someone put a petition on the government's e-petition website asking for the abolition of "work for your benefit/workfare schemes in the UK".  The rest of it was eminently sensible, but unfortunately the DWP was able to seize on the description and deny that there was any such thing as workfare in this country (it's American) and equally no such thing as "work for your benefit" - it's all about support.  How lucky that they changed the title of Labour's pilot scheme from "Work for your Benefit" to "Mandatory Work Activity".  

PR or results?

A4e has been on a PR offensive, described on its website.  They have invited local MPs into their offices to show them "the real work that goes on behind the headlines".  Six have so far taken up the offer.  Niki Freeman, who is described as Local Business Leader for A4e, is quoted as saying: "Some of the comments that have been made against A4e have been incredibly frustrating and hurtful for my staff and the many partners we work with, who, day in, day out, have simply been doing their jobs."  I sympathise with that.  But the piece goes on: "Over the last year, A4e has been working hard to establish an excellent team of professional staff with a range of specialist skills to support individuals across the UK. The Work Programme’s ‘black box’ approach gives service providers the freedom to create innovative ways of working, allowing A4e to tailor its service to individuals."  This is where many clients would take issue with the company.  The reactions of three of the MPs are quoted.  Two of them, Helen Wheeler of South Derbyshire and John Stevenson of Carlisle, are Conservatives and effusive.  The third, Labour's Vernon Coaker, is more guarded.  But no doubt all of them were happy to be quoted.

It makes sense to get MPs on side.  But on the Work Programme A4e, like all the other providers, will be judged on results.  After the leaked document showing very poor results, and Private Eye's publication of the letter showing that Working Links is in the same position, the Telegraph now has an email to Ingeus staff from its director Jack Sawyer.  He says that the firm is not meeting its "contractual minimums" and its performance is not good enough.  Chris Grayling's reaction is simple.  It's all getting better and anyway, "any providers which were failing to deliver could see more unemployed people referred to other welfare to work companies under the programme."  He doesn't say what will happen if they're all doing equally badly.  

Narrowing choice

A couple of things came together yesterday to set me thinking about how the Work Programme is impacting on people's basic freedoms.

The first came in an email from a contact.  He is not with A4e, and I won't mention the provider.  He has come up against the generic CV, imposed on him by his "adviser".  Given his qualifications and experience the client is far better qualified to design a document than this employee, but the company has given out a template and has to stick to it.  The client is afraid that it will damage his prospects of getting a job.  Of course, when he sends out applications off his own bat he can enclose his own CV.  But the problem now is that the companies appear to be sending out CVs to employers without the knowledge or consent of the clients.  And we know that these generic CVs end up in the bin.

That leads me to an article I found on the People Management website.  It starts by saying that it's too early to judge the success of the Work Programme.  But it goes on to describe what it sees as a success story.  The provider is Ingeus.  They have a contract with TNT Post, which has taken on 90 staff through the WP.  The TNT chap says, "We've found that they have developed a work ethic because they have attended the welfare-to-work courses to get them to a job-ready state.”  Think about what that implies.  They didn't have a "work ethic" before.  It gets worse.  "Development continues once they are in post because the Ingeus 'work adviser' – who sits within TNT’s recruitment team – maintains the personal relationship. 'She supports each person throughout their training and continues to have one-to-ones with them once they have got the job. It’s like a life-coaching service for that person.'" 

What could possibly be wrong with that?  People who didn't have a job now have one.  The company which will make money by keeping them in work is on hand to support them.  So why am I uneasy?  Ingeus isn't the only company to have contracts of this kind with employers.  So it depends which provider you're sent to what job opportunities you'll get.  And the amount of control you can exercise over your life shrinks inexorably.  You would be right to feel that you're just a commodity, to be bought and sold.

Could this be the start?

Patrick Butler of the Guardian reports an interesting development in the outsourcing business - A4e's failure to get a contract.  The contracts are for assessing people's eligibility for Personal Independence Payments, which will replace DLA.  Ten companies have been shortlisted, including all the usual suspects - G4S, Serco, Atos, Ingeus etc.  But not A4e, who did put in a bid.  To have shortlisted A4e would have meant provoking howls of protest, because they are still under investigation.  We are still waiting to hear about that contract for the EHRC helpline.  Exaro broke the story that A4e had got the contract; the government denied it.  But we still haven't heard who has got it.  Not including A4e in the latest contracts sets a significant precedent.  When they are exonerated will they be back in the mix?  Or is this the start of the decline of the company?


It must be galling for Emma Harrison to see her former employee Hayley Taylor continuing to pull in the dosh.  She has a new American series on More4 tonight.  The Liverpool Echo sounds less than thrilled at the prospect. 

More stuff in more places

A "national celebration of enterprise" has been held in Sheffield, with Peter Jones of "Dragons' Den" as the chief attraction. It's a big annual event apparently. There were government ministers there and - you guessed it - A4e's Emma Harrison, who "was introduced by Sheffield MP David Blunkett, the former Home Secretary". She "told the audience about her schooldays as 'the naughty girl' who failed her A-levels She set an ambition to become the world’s largest organisation that improves people’s lives with a business plan focusing on scope and geography – or 'more stuff in more places'. This year, her company is set to turn over £250m." (Yorkshire Post) I'm sure it was inspiring.

Most of the Work Programme prime contractors have, in the past, been content to let A4e do all the publicity-seeking. But it's a competitive business, and some of them are now honing their own PR. Ingeus (Australian) isn't shy. And now we have Maximus (American) putting out PR stuff about how they got the best results in Flexible New Deal. They were "top-ranked provider" - but nowhere in the piece are there any figures. I suspect that the figures for FND were so bad all round that no one wants to boast about them.

Emma Harrison once said that she had wanted to convert A4e into a mutual organisation but had found that the obstacles were too great. Perhaps she should talk to the people from Prospects, which has been doing welfare-to-work and similar stuff for 16 years and now has a WP contract. It started out as a company limited by guarantee (no shareholders) and has now turned itself into an employee-owned mutual.

In the run-up to the WP contracts, CDG was arguing, and organising conferences, for an army of volunteers to mentor the unemployed. It's now a sub-contractor of Maximus in West London, and is advertising for a "volunteer co-ordinator". It will be interesting to see how volunteers will be enticed to help make profits for business.

The Work Programme proceeds

The publicity surrounding Emma Harrison and her project is over, and attention turns back to the Work Programme. A4e continues to generate PR for itself, helped by the government. The Oxford Mail published a touching story about Chris Grayling's visit to A4e in Oxford and how he heard how "Furniture maker Shane Clarke got a new job four hours after visiting a 'giant employment dating service' in Oxford." The article details several other people who found work quickly; but the manager at Oxford wouldn't give figures for just how many people had found jobs since June, because that was "commercially sensitive". And the government doesn't have to give those figures until next year. It's not all plain sailing. In Runcorn and Widnes, where the WP is run by Ingeus and A4e, there have been delays caused by "data security issues" with A4e and a higher number of starts than expected. The article concludes with the statement that "So far 31 jobseekers have been seen (by A4e) but only 22% are considered ready for the workplace." This notion of "job-ready" appears to be common to all the providers, and up to a point it's sensible. But it does brand a huge number of people as not job-ready without detailing why.

Much has been made of the position of the voluntary sector (or Third Sector as some organisations prefer to be known) in the WP. Their involvement was guaranteed. Many were not enthusiastic, but needed the funding that sub-contracts could give them, and didn't want to see their work taken over by someone else. Now, various groups are feeling let down, with the work not materialising. One charity, Crisis, is particularly unhappy. Its Welfare Network Manager writes that "The reality of the Work Programme is proving to be quite different from what the government promised." He (or she) doesn't specify which prime they've been dealing with, but as well as getting much less than they believe is necessary to support a homeless person into employment but, "In addition, one contracter would only pay us for engaging with a client and job entry (the hard and expensive bit) whilst they would then themselves support the client for the year in work (the easy bit with the highest payment from DWP). There were also requests that we work with their clients using our own funding streams - with no financial reward for doing so."

The BBC is running a programme on Radio 4 next Thursday at 8.00 pm on the Work Programme. There's no indication of what line they're going to take. It can only be anecdotal. Let's hope it's fair.

Libel and an appeal

If I was still a jobseeker (and thank God I'm not) I would be trying to instigate legal action against the Daily Express for libel. Yesterday they had to tone down a vicious piece about "workshy Britain". Today they've come back with two vile little pieces instead of one. One headed "4m Scrounging Families in Britain" reports the latest figures, with nothing whatever to justify the "scroungers" label. They quote their pals the Taxpayers' Alliance (which is simply a Tory-funded lobby group) on the subject of "over-generous benefits". Not content with that, there's an equally nasty piece headed "400 jobs up for grabs .... but nobody wants them". Apparently it's in Penzance. "A spokesman at the town’s Jobcentre blamed our soft-touch welfare state which has taken away the incentive to find work." This chap is not named, unsurprisingly. There's no analysis of what these vacancies are actually for - how many are not real jobs, for instance, or whether they require skills or experience which no one in the area has. No, it's just another way to traduce the unemployed. Just what is the editor's motive in this maniacal campaign?

I've been contacted by a Radio 4 journalist who is working on a programme about the government’s Work Programme, and wants to hear from people who are currently doing courses run by private providers such as A4E, Ingeus, Reed in Partnership, Seetec etc., or have recently been on FND. She would be interested to hear about the experiences of both clients and current or former staff of all the providers. Her email address is anna.meisel@bbc.co.uk and her telephone number is 07706154283. She assures me that all contacts will be treated in strict confidence.

Not entirely unrelated is a request from me to a few people who have posted comments on this blog in April, May and July this year which I have not published. Doncaster and Nottingham were mentioned. Please get in touch with me via a comment I will NOT publish.

Round-up, 22 April 2011

There is a group in Edinburgh called the Edinburgh Coalition Against Poverty which reports victories in what it calls its war against A4e. This is obviously not an impartial account, and I haven't seen any other reporting of it, so I can't vouch for its accuracy. How many people does the group represent, for example? But it's an interesting development.

I was amused by the title of an article in an Australian journal - "Therese Rein the $1.4bn queen of British welfare". Sounds like there's been a coup! Rein is the wife of a former Australian Prime Minister. The article reports that, as owner of Ingeus, she stands to make a great deal of money. The firm won all seven contracts that it bid for, giving it 23% of the market, while A4e only has 13%. Concerns are reported: "Two failed bidders shown details of the winning bids said they believed Ingeus had discounted its prices by up to 50 per cent in some areas. Perhaps the company was banking on the economies of scale that would come from being the largest provider, or maybe even hoping that the government would later be forced to raise the promised payments."

The big story of the last few days has been the announcement, as part of the election campaign, of figures purporting to show that more than 80,000 people are claiming incapacity benefits for being addicts, alcoholics or obese. No mention was made of addicts who are not on IB but on the smaller JSA. And, of course, the reporting played into the hands of the Tories who want to appeal to the Mail and Express readership. Instead of sensible discussion we had the usual chat from experts.

Meanwhile, Emma Harrison has been in discussions at the Swedish Embassy and Mark Lovell has been to a meeting with the Local Government Association about crisis loans, debt and public service reform.

Pathways results

Pathways to Work is the programme aimed at getting people on incapacity benefits back to work. The results, published today, are well below target. The average of all the providers is 12% job outcomes. A4e actually did better than its main rivals (Ingeus and Shaw Trust, which had similar numbers of clients) with 14% outcomes. The totals include both those who volunteered for the programme, and those who were "mandated" onto it; and, not surprisingly, the volunteers did much better then the coerced. But the overall results show once again that these contracts are not value for money.

ESF Phase 2 - nothing for A4e

The announcement of the successful bidders for ESF phase 2 has been made. (For some background on the European Social Fund see this website.)

Now, when the PQQ stage shortlist was announced, A4e had succeeded in 8 of the 12 areas in making the shortlist. But they haven't won a single contract. The biggest winner is Seetec, with 4 areas. Ingeus and Intraining each have 2, and ESG, Reed and Working Links have one each (Cornwall is still to be decided).

Interesting.