Widening the debate

I thought we might get a day off, that the furore would be dying down.  But no.

First, A4e put out a press release yesterday.  Two things are really exercising them.  The first is that continual reference to 9% outcomes on Pathways to Work.  That wasn't the figure.  They don't actually say what the true figure was, but we've seen low twenties percent mentioned.  The target, however, was 30%.  The figure isn't some aspiration, it's what the bidders promise in order to get the contract.  The best performer on this contract was Jobcentre Plus!  A4e has consistently underperformed, promising 50% outcomes on the 2006 privatised New Deal contracts and delivering around 25%.  Flexible New Deal was even worse.  So while it must be galling to see the error repeated, the fact of poor performance is inescapable.
The second factor is the reporting of the fraud investigation.  A4e states again that the disclosure was the result of their own internal processes and they reported it to the police.  Today that becomes somewhat irrelevant as we learn that four people have been arrested.  (See the BBC report.)  Now, I know nothing about what went on in Slough.  But A4e is one of a number of contractors which pay commission to staff for getting someone into work.  The temptation to fiddle must be that much stronger.
Yesterday the Guardian published a long article by John Harris.  Most of it rehashes what has already been published, but he has spoken to Margaret Hodge MP, chair of the PAC.  She became annoyed, she said, when she found that A4e had the contract in her own area but sub-contracted it to a local charity while taking 12.5% of the attachment fee.  Harris points out that this all began under Labour, and she accepts that.  It was a mistake.  Harris is one of the first journalists to see this fuss as part of a wider problem.  "The rise of A4e also highlights a very modern fact of public life: handing over large swaths of what the state used to do to the private sector has become so mundane as to barely attract comment, and some people have been doing very well out of it indeed."  Now we read on the BBC news site that a London charity, London Citizens, is claiming to be doing much better at getting people into work than the big contractors, and doing it much more cheaply.  And the article says: "There has been increasing scrutiny of work-to-welfare schemes."
That's what we need, of course.  The current targeting of A4e should be the start of a much wider debate on the role of private profit in public service delivery.

A4e's "abysmal" record

The Public Accounts Committee yesterday launched a blistering attack on A4e during a session on the introduction of the Work Programme.  (See the Guardian)  Why, the committee wanted to know, did a company with such an "abysmal" record get contracts.  Andrew Dutton, A4e's CEO, had to respond to questioning about the company's UK turnover last year of £160m - £180m, all of it from government contracts, and the £11m it paid out in dividends, 87% of which went to Emma Harrison.  The committee chair, Margaret Hodge (a hero of mine despite her politics) ensured that they "spent some time trying to establish where money paid to A4e to deliver government contracts ended up."  She told Dutton, "You're one of the first examples we have had of a company which is entirely dependent on public contracts for your existence. We, in terms of looking for value for money, have an interest in following the pound. All your business is public contracts. You and Emma Harrison have to accept that there will be a different interest in the remuneration and profits made because the profits you make come from the taxes that ordinary, hard-working people pay."   The example of abysmal performance cited was the Pathways to Work programme, with 9% of clients got into work.


Several members of the committee expressed amazement that companies with such a poor record could get new contracts.  But the DWP's permanent secretary, Robert Devereux, confirmed what we have pointed out before - that they can't take past performance into account.  Lots of them had poor records (!)  And since some of the companies bidding were new entrants it wouldn't have been possible.


Fiona MacTaggart MP raised an interesting point about "job substitution" - "companies delivering the Work Programme, getting paid for pushing their clients into jobs that would otherwise have been filled by other jobseekers without the need for a third-party payment."  "In my constituency," she said, "a lot of people are being given work experience, unpaid, in retail, and then the retailers, I think, are being directly encouraged to employ people who have been given this one-month or two-, three-month interview process … and when they're offering jobs, a company like A4e, which operates in Slough, can say to Primark, if you want more of our free workers, I hope you are going to give our people 20-hour-week jobs. I'm sure it's not quite as overt as that, but I believe there is a risk of that happening."  All that Devereux could say to that was that a job was a good thing.  Another civil servant had a more wordy response but didn't answer the question.

Dispatches and redundancy

I didn't have the chance to watch the Channel 4 Dispatches programme tonight, but I will when it's on 4OD. The comments on the channel's website suggest that it got to the heart of the matter. If anyone saw it, tell us what you thought.

A4e, like other providers, has been sending out redundancy notices. Although the FND contracts have been extended until the WP starts, Pathways hasn't (and no wonder, given its abysmal results). One can feel genuinely sorry for those who have lost their jobs. But it's an inevitable aspect of privatisation. People are employed only for the length of the contracts. It's one of the reasons why outsourcing is cheaper.

Pathways, Work Programme and Hayley

In a piece headed "Pathway to nowhere" the latest edition of Private Eye again highlights the failure of Pathways to Work. The Eye has got hold of Ofsted reports on the 6 Pathways contracts. Reed comes out worst, and is slammed, but A4e in West Yorkshire is also criticised: "action to resolve staff underperformance has been slow". The Eye points out, again, that A4e employs David Blunkett, and indeed the latest Register of Members' Interests shows that he was paid £25k - £30k by the company.

The Indus Delta site carries a piece by Richard Judge, Finance Director of Serco's Welfare to Work arm. He's again questioning the viability of the Work Programme model. After saying that it's "an exciting opportunity to address long-term worklessness in all benefit groups, rather than a focus on Jobseeker’s Allowance" he goes on to point out that cutting the funding while increasing the number of clients is a backward step. The AME/DEL switch - paying providers what the government has saved in benefits etc. when someone gets a job - sounds good but leaves questions. "If we do not know how much money we can earn, then how can we possibly know how much we can spend getting the outcome that delivers the savings in the first place?" He recognises that it's not likely that the providers will get enough of the money to give them confidence to spend big sums at the outset. Is Judge speaking for all the providers? Are they still haggling with the DWP over this?

Meanwhile, Hayley Taylor of Benefit Busters and Fairy Jobmother fame is about to star in the US version of Jobmother. They're giving it 8 episodes there, amazingly. None of the previews mentions her former life with A4e, probably because the company isn't known there, but Hayley has become an "international career specialist". If one website, Deadline Hollywood is anything to go by, there will be the same sort of mixed reaction over there as here.

Round-up, 25 September 2010

Knowing that PR pieces are more effective than news, A4e are still plugging the failed Pathways scheme. Typical is an article on Guildford People citing the success of one man in getting back into work, thanks to A4e. It ends with the standard advert for the company. We're happy for the man who is back in a job - let's hope there a few more such successes.

Another piece of marketing is A4e's involvement with the Homeless World Cup. It's a tournament taking place in Brazil. Like all such events, it's a vehicle for sponsoring companies to advertise their wares, and A4e are making the most of it.

All the outsourcing companies will be watching events in Suffolk, as the County Council plans to flog off all its services. They are following Barnet, which was dubbed "easycouncil" after its plans to do the same (although Barnet's auditors have now warned that the council doesn't have a credible business plan). In Suffolk, "Services would be offloaded in stages. While some 'early adopter' services could be outsourced as early as this autumn, the rest would be divested in three phases from April 2011. Libraries, youth clubs, highway services, independent living centres, careers advice, children's centres, registrars, country parks and a records office are among the first services that could be divested." This is supposed to save 30% of the council's budget, and it's an attractive model for Tory-controlled councils around the country. But, as Chrus Huhne has pointed out, unless the contracts are very well designed the councils can get stuck with failing delivery which they can do nothing about. As the bids go in from the likes of A4e, Serco and the rest, residents will have no say in which company ends up running, for profit, the public services that are vital to them.

A4e have submitted a memorandum to the government on Local Enterprise Partnerships. These LEPs are going to replace the Regional Development Agencies which were a lucrative source of contracts for private companies, not least A4e, so you would expect to find them eager to have a role in the new set-up. Sure enough, the memo proclaims A4e's credentials; it "has close, practical experience of the past and current approaches to local economic development, understands the issues intimately and is well placed to contribute to the debate on their future led by the new LEPs." There is much more in that vein. They want to ensure that the Work Programme is "joined up" to the rest of the LEPs' activities; and they want more of the "Total Place" concept, "joining up locally provided services". A4e wants to be one of the "managing agents" which, they recommend, will be commissioned by the LEPs. You can't blame them for trying, and perhaps they'll succeed. LEPs could be a bigger source of profit than the RDAs.

For a political take on New Deal read an article on Progressonline by Alison McGovern, a new Labour MP.

More oddments

I hear that one of the regional news programmes, Look North, did a pre-election debate in which Emma Harrison of A4e joined three politicians on the panel. It's not available on iplayer. Did anyone see it?

The Halifax and Calderdale Evening Courier has published an interesting piece about Pathways, the scheme to get people off Incapacity Benefit and into work. So keen is A4e to encourage people onto this programme that they are offering "£100 shopping vouchers to anyone who signs up voluntarily with A4e until September 30".

In the new government it appears that Chris Grayling is the minister who will be to Iain Duncan Smith what Jim Knight was to Yvette Cooper (if you see what I mean).

Pathways - why it's not working

When delivering a public service such as helping the unemployed to find work there will be some crucial differences between public servants and private contractors. These differences are highlighted in a report on Pathways to Work, which looks at the "impact of outcome-based contracting". Pathways is a programme to help people with health or disability problems. The report, done by the Policy Studies Institute for the DWP, says that the programme is failing for a number of reasons. The Jobcentre Plus website says: "The help is tailored specifically for each person taking part in the programme." But instead what's happening is "creaming and parking". Inevitably, if you pay by results, i.e. job outcomes, contractors will cream off the clients most likely to get jobs and park the ones who have little motivation or who have serious problems. The economic situation has meant serious financial problems for the contractors. "As providers were not meeting their performance targets and service fees were not sufficient to cover running costs, it was widely reported that prime and partner delivery organisations were experiencing financial strain as a result of the contractual agreements." It has also meant that the prime contractors are leaving it to their sub-contractors to deal with those clients with specialist needs. "Service innovation on the part of prime providers was largely focused on reducing operational costs and achieving performance efficiencies." The conclusions of the report are polite but pretty damning. But they don't include the scrapping of these contracts and returning the service to people who are resourced over the long term and are motivated by the desire to do a good job and deliver a service to the public.

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.

Pathways doesn't pay

You'll remember that the third episode of Benefit Busters focussed on the Pathways programme, getting people off incapacity and disability benefits and, hopefully, into work. The prime contractor shown was the Shaw Trust, but other providers like A4e also have the Pathways to Work and New Deal for Disabled People contracts, and they subcontract them to some specialist organisations. Now we learn that several of these specialists, including the RNIB, the RNID and Action for Blind People, have withdrawn from these contracts because they say they are not financially viable. They blame the recession and the complex needs of their clients for their inability to make them pay. So presumably A4e isn't making them pay either. Jim Knight MP, who always has to answer in these circumstances (where is Yvette?), said it was up to the prime contractors to manage things. "Providers may have underestimated challenges and set high targets but we are working to improve performance," he said. "Many of the contracts run for three years and, due to start-up costs, providers would not be expected to make a profit immediately." That's all right then.

Welfare to Work

A4e's core business has always been in contracts to deliver "welfare to work" programmes, and these have enabled the company to sell itself around the world as "Britain's leading provider. Contracts existed before Labour's election victory in 1997, but the gravy train started with NEW DEAL. A4e's success in winning these contracts baffled competitors and led to suspicions that they were being helped by people in high places (suspicions fuelled by their venture into Israel, and by the paid involvement of David Blunkett when he had ceased to be a minister).

In 2006 the government decided to sack a lot of the Jobcentre staff who had been responsible for organising the back-to-work schemes and contract out this organisation region by region. A4e won many regions, mainly by promising a 55% success rate. Everyone in the sector knew that this was ridiculously optimistic. Given the numbers of people forced onto the schemes who are, for various reasons, unemployable a good rate would be around 30%. And the results for the year to March 2009 show that the highest rate that A4e achieved was 33% (with the FTET group). With older clients the job outcome rate was 22%. There have been no moves to sue for breach of contract.

There are several New Deal programmes, but they boil down to two types. One is Gateway, a two-week course for under-26s, aimed at providing an intensive programme of support and encouragement. All other programmes last for 13 weeks, and preclude the kind of genuine skills training that was integral to the old New Deal. Only very short training courses can be undertaken, and the costs of these have to come out of the provider's budget, so there is little incentive to fund them. Clients are supposed to be placed with employers for work experience, but there is a severe shortage of employers willing to take them on, so increasingly the placements are with the voluntary sector. A4e developed the practice of paying voluntary organisations small sums to take these clients. As unemployment increased rapidly in 2009, the pressures became severe, with higher numbers of clients being referred for "training" which they increasingly saw as pointless. A piece on Radio 5 Live in 2009 exposed the discontent of many clients at the poor service they believed A4e to be offering, and Ofsted's poor opinion of the company. In June 2009 BBC's Look North programme in Hull reported on criticisms by two A4e clients of the waste of time and money of the programme.

The New Deal contracts encourage providers to maximise profits by minimising costs, and the costs are principally staffing and facilities. The effects of cost-cutting were exposed in March 2008 when the Manchester Evening News reported Jobseekers treated "like cattle" Similar scenes were reported in Sheffield and in Newport, South Wales, usually on local forums or private blogs. Such complaints must be treated with a degree of caution; most of the people on the schemes don't want to be there. But a picture emerged of clients kicking their heels in poor facilities with inadequate (and under-skilled) staff. There is a maximum payment to the provider for each client, and it is paid in two ways. "On programme payments" are made for each week, or part-week, that the client is with the provider. Job outcome payments are made when the client gets employment which is certified to be of 16 or more hours per week and expected to last for 13 weeks or more. If the client leaves the programme for a job before the 13 weeks are up, and stays in the job for 13 weeks, the provider can claim the "rolled-up weeks", the on-programme payments for the remaining weeks.

Pathways to Work is a new variant aimed specifically at those who are on incapacity benefit.

Increasingly A4e is entering into small scale contracts, such as that with Manchester University in June 2009.

BY SPRING 2009 A4e HOLD A TOTAL OF 46 CONTRACTS FOR WELFARE-TO-WORK PROGRAMMES ALL OVER THE COUNTRY. THESE INCLUDE 7 ESF CONTRACTS, FUNDED BY THE EUROPEAN SOCIAL FUND TO A TOTAL VALUE OF £23,086,770.

Flexible New Deal (FND) A4e have secured contracts in 5 areas for this revamp of New Deal. It will be more difficult to make profits under the new system. Payments depend much more heavily on job outcomes.

FRAUD In June 2009 it was disclosed that the DWP had investigated fraud charges against A4e and money had been clawed back. Paperwork was being fiddled to claim payments for non-existent job outcomes.

OFSTED Until 2007 inspections of training providers were carried out by the Adult Learning Inspectorate. The function was then transferred to Ofsted. The inspectors award grades on up to 7 aspects of the office's work, and an overall grade can be arrived at. So an organisation is rated 1) Outstanding, 2) Good, 3) Satisfactory or 4) Inadequate. Six A4e New Deal offices have been inspected since 2007. Bear in mind that offices have notice of the inspection and so have time to get their paperwork in order and plan what to do on the day, or days, of the inspection. All of the 6 were awarded a grade 3 - satisfactory; the best is Cumbria with grade 2 in a couple of areas; the worst is Northumbria with a grade 4 for equality and diversity. Note that none of A4e's New Deal offices have achieved an overall Good grade.

The inspection reports detail strengths and weaknesses. Many of the weaknesses are common to sveral of A4e's offices:

• Low job outcomes (4)
• Insufficient identification of participants' needs or barriers to employment (2)
• Weak target-setting (4)
• Inadequate or slow approach to quality improvement (6)
• Insufficient use of data and monitoring (3)
• Inadequate use of teaching or resources (3)