A4e's year

2012 has been an eventful year for A4e.

 

There have been changes at boardroom level.  Roy Newey went early in the year; he was the director who travelled round the world selling the company's services.  He remains an advisor to the group board, and a small shareholder in the company.  Also gone is Jo Blundell, the director who was, briefly, the face of A4e for Flexible New Deal.  She has formed something called "futurepublic" (capital letters for proper nouns are unfashionable), advising outsourcing companies.  Matt Stevens came in as Chief Financial Officer.  David Blunkett MP ceased to be an advisor at the end of October.  The biggest change, of course, was the departure of Emma Harrison as Chair of the company.  She still owns 85.1% of the shares, but her role on the Board has been filled by Sir Robin Young as Non Executive Chairman.  Mark Lovell is Executive Chairman (and owns 6.5% of the shares) and Andrew Dutton is CEO.  Jonty Olliff-Cooper is Director of Policy and Strategy but not a board member.

The year seemed to start well, with Harrison riding high as the government's "families champion", rolling out her scheme to pilot local authorities and put forward by Cameron as the solution to all our social problems.  That all came crashing down with the revelation that she had received £8.6m in dividends in the previous year.  When the Daily Mail in particular got its teeth into that, tearing into her for days on end, she was forced to stand down from her government role and from the Chairmanship of A4e.  Drawn into all this terrible publicity were the allegations of fraudulent activity along with persistent failure to meet targets.  A4e's reputation could hardly get any worse.  Expensive PR consultants were brought in to repair the damage.

It didn't help when A4e was told by the Advertising Standards Authority that it could not describe itself as a "social purpose company" since this could mislead people into thinking that it was not a profit-making business.  The response was somewhat petulant.

The focus for the media was always on the Work Programme and its predecessors.  A leak of A4e's performance data to Channel 4 News showed that, after about 8 months, the results were terrible.  Another leak of the full first year figures confirmed the worst, but the leak was also the occasion of Emma Harrison's re-emergence for what was to prove a disastrous interview, for her and for the company.  It was a set-back for the rehabilitation process.

What about business?  It has been a lean year for new contracts.  The OLASS prison contract was delayed by concerns over A4e's record but started in November.  And that's it.  International business seems to have shrunk.  There was a point when A4e bragged about operating in 11 countries.  Now it's 5, not counting the UK, and of those one, Spain, hasn't actually yielded any contracts yet.  We will have to wait a long time to see how all this has impacted on profits.  The Work Programme hasn't contributed anything to profits in its first 14 months, but doesn't appear to have caused losses.

Perhaps it's a sign of wanting to create a new image, but A4e has a new website.  It's a lot cleaner and less fussy than the old one.  The slogan - "Improving people's lives" - is still there, but less stridently.  All those blogs are gone, and the grammar is a lot better.  Maybe it's an indication that A4e will become just another outsourcing company in 2013.  Personally, I'd like to see the whole business of outsourcing shrink drastically.

 

My thanks to all those who have followed this blog in 2012 and contributed to the debate.  I wish everyone, whatever their circumstances, a good Christmas.

"It's who you know" - networking and A4e

The unemployed are increasingly being lectured about the benefits of networking.  For most people this is irrelevant.  Our networks don't include anyone who could give us a job.  But for outsourcing companies like A4e networks are vital to the business.

This is a simplified version of the A4e network.  Top left, David Blunkett, Secretary of State for Work and Pensions when the w2w contracts were privatised; after ceasing to be a minister he became a paid "advisor" to A4e (and still is).  But with Labour out of power it was useful to get a Tory on board; Jonty Oliff Cooper used to be an aide to David Cameron's strategy director Steve Hilton and was taken on by A4e as their director of policy and strategy.  He is not now listed as part of A4e's senior team.  Moving clockwise, we get to David Cameron.  He was sufficiently persuaded of Emma Harrison's capacities that he made her his "family champion".  And then there's Chancellor George Osborne who brings us to George Bridges of Quiller Consultants.  Bridges is a personal friend of Osborne and helped him run the Tories' election campaign in 2010.  So the network helped in the appointment of Bridges and his firm to help A4e revamp its image after the meltdown.  Private Eye points out that the firm, Quiller Consultants, is owned by Lord Chadlington, the Tory peer who is also Cameron's constituency chairman.
The new chairman of A4e is Sir Robin Young, a retired career civil servant whose last government job was as a Permanent Secretary.  The link between him and Robert Devereux,  Permanent Secretary at the DWP, was referred to by Margaret Hodge last week when she described them both as, "A whole lot of good chaps - I understand that the Chairman is an ex-Permanent Secretary, whom, no doubt, you have conversations with."
It's a network that has made millions for Emma Harrison.  What a pity that we can't all do it.

"All relationships" - and new contracts

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