A4e's accounts

The accounts are now available for the year ending March 2014 - and the company is in profit.

If you want to examine all the figures you can download the report from the Companies House website for only £1.  But the salient points are:

• There's an operating profit of £3.2m for the full year (against a loss of £10.3m in 2012 / 2013).  EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) showed a profit of £7.6m (2012 / 2013 loss of £5.8m).  The Chairman, Robin Young, says that, "we have improved our performance on all our contracts".  
• The Work Programme continued to be profitable, and they expected it to remain so for the duration of the contract.
• The A4e office in Spain was closed and they gave up on prospects of business there because the country wasn't moving to outsourcing fast enough.
• As they stated in the previous year's accounts, no dividend was paid in 2013 / 2014.
• Young talks about their "open door policy" with MPs, and says that most of the 140 visitors "have come away impressed".
• The new IT system, Connect4Work, is working well.
• Although the company originally bid for 3 contracts (Community Work Placement, Transforming Rehabilitation i.e. the Probation Service and Job Path in the Rep. of Ireland) they decided not to submit final bids - a matter, say the directors, of "discipline".
• They are optimistic about opportunities in the "market" of people with special needs.

So it seems that the strategy of reining in their ambition has worked for A4e.

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.

Getting ahead of the game

We reported recently that A4e were happy to publicise the fact that they had a presence at all the party conferences this year.  The latest edition of Private Eye reveals that last year, 2012, they were there with a very specific purpose - to lobby on the Transforming Rehabilitation contracts (that's the outsourcing of the probation services).  Remember that lobbying means getting access to the decision-makers to push for the business you want.  And last year what A4e wanted was to change the contracts to reduce the initial risk carried by the private companies and reduce the penalties for missing targets.  Along with other WP providers, they asked for meetings with Ministry of Justice ministers.  A senior civil servant, Jenny Giblett, advised against this meeting.  It wouldn't look good, given the "reputational damage" suffered by A4e over the fraud allegations.  Chris Grayling and two other ministers heeded the advice.  But A4e (or their lobbyist) took advantage of the Lib Dem conference to get at Lord McNally, another minister, who agreed to a meeting.  The civil servants were in a bit of a panic, and wanted to ensure that McNally was told exactly why it was a bad idea.  But the meeting went ahead; A4e gained access ahead of its rivals.
It's not clear whether they got any advantage from this.  But it's revealing that government thought that the company was so tainted that the normal lobbyists' contacts should be avoided.

A new way with figures

I heard an item on the lunchtime news programme which had me laughing in disbelief.  One of the housing associations came up with figures to show that the bedroom tax was not raising the sort of money the DWP insisted it would, because people are moving to the private rented where rents (and therefore housing benefit) are higher, rather than paying the tax and staying where they are.  They got a university department to go through the figures and produce a report.  The university confirmed it.  So today Esther McVey, the new minister, was interviewed about this.  Her response?  To rubbish the report as not true because it was based on figures provided by an organisation which had a financial interest.  The interviewer, clearly gob-smacked, pressed her.  What was not true?  All she could say was that the DWP had modelled all this before it was put in place.  But what was not true?  She repeated the canard that the housing association had a financial interest in providing false figures.  She's obviously settling in fast and absorbing the culture of the DWP.  When the figures come from government, distort them, lie about them or just refuse to publish them; if they come from outside government, say they're lies.  Brilliant!

The Indymedia website carries an article which confirms that A4e is putting in a bid for the Transforming Rehabilitation contracts, effectively privatising the probation service.  It's not a surprise.  They need contracts to survive.  But the model is the same as that of the Work Programme; payment by results with a three-tier structure of primes and sub-contractors.  We'll see whether A4e makes it through the PQQ stage, but there's no reason to think they won't.

PS:  Here's the Independent's take on the housing report and a comment from McVey.  This one is a little different but no more sensible.