The Daily Mail's take on the sentencing

Daily Mail readers apparently need pictures.  So the paper's report on the sentencing in the A4e fraud case comes with lots of pictures, including two of Emma Harrison.  But accuracy, not a quality conspicuous in the Mail at any time, has deserted it today.  Harrison is called "David Cameron’s millionaire former jobs tsar".  Er .... no.  She was "family champion", which meant little.  They do acknowledge this later, but it doesn't excuse the initial lazy mistake.  Then, after an accurate account of the sentencing - they couldn't really get that wrong - there's a box entitled "How the Mail exposed fraud against taxpayers".  "The scandal of the massive taxpayer fraud at A4e was exposed by the Daily Mail three years ago," they say.  They do talk about the whistle-blowers, but the claim that it was the Mail which exposed the fraud is ludicrous.  The whole story of Harrison's downfall is re-told.
Let's not allow the Mail to re-write history.  Yes, it was their story which brought the £8.6m payout to the attention of many more people than had read this blog, Private Eye, the Guardian or the Telegraph.  The reports they ran for nearly a week were probably responsible for Harrison's humiliation.  But the Mail didn't "expose" anything. 

Sentencing in the fraud case

The sentences have now been handed down on the 10 A4e employees convicted of fraud, forgery and conspiracy.  The longest sentence is on Charles McDonald - 40 months imprisonment for 6 counts of fraud and one of conspiracy.  Five other people got prison sentences; the rest got suspended sentences, various lengths of "unpaid work" and costs.  You can read the full list on the Thames Valley Police website here.  
A4e has issued a media statement on its own website.  They say :"We note that the judge in her sentencing remarks dismissed claims that a culture of dishonesty existed within our business.  We also note that those who made these claims raised no concerns about workplace practices or culture until they were confronted with the proof of their own dishonest behaviour."  (Well, they wouldn't, would they?)  However, they still claim that "we uncovered" the "irregularities", despite the fact that it was a whistle-blower who drew their attention to what was going on.
So that's over.  I can't summon up much sympathy for these people, but for all of them it's a huge price to pay.

A4e fraud case gets publicity at last

Sentencing has begun this week on the 10 A4e employees who were convicted of fraud last year.  And, at last, the mainstream media have decided to take notice.  The Guardian's report is restrained.  The Independent goes into more detail, and reports a defendant's barrister as accusing the company of fostering "a culture of dishonesty".  Perhaps the writer, Emily Dugan, has been reading this blog.  She ends with a list of "previous A4e scandals", including a contract it lost in Teeside after forging signatures; the laptop containing personal data of clients stolen from an employee's home; and the Edinburgh case where a tribunal ruled that A4e were wrong to sanction a client who wanted to be accompanied by a representative.  
The Mail, as we might expect, goes to town on the story, bringing Emma Harrison into it.  Unfortunately, they get it wrong, saying that Harrison "was forced to step down from her role after fraud allegations first came to light in 2012".  As we know, Harrison's downfall was nothing to do with the fraud.  
Sentencing continues this week, and perhaps the papers won't bother to report the outcomes.  But this is a bad way to get a decent price for the company as Harrison tries to sell it.

More on that A4e fraud case

I've been waiting to see whether Private Eye would cover the A4e fraud case.  It has.  But it's a short piece which adds little or nothing to our understanding of the case.  It does say: "The fraud was blatant; the prosecution described, for example, 'a completely false file showing the individual's contact and training sessions with A4e'.  After a new employee blew the whistle, audits uncovered the scale of the fraud, which had also involved people being offered 'shopping vouchers' to pretend they had got jobs through A4e."

We can expand on that.  One employee (we'll call her AB) was training another, transferred from another office, on the particular Inspire contract.  This employee told AB that fraud was widespread among her former colleagues.  AB reported this to management and this put in train the internal audit by A4e.  Which one of these two employees should be described as the whistle-blower is not really important.  The investigation subsequently uncovered the scale of the fraud.  The irony is that AB ended up as one of the convicted - for falsifying her own file.  She had been taken on by A4e after applying for a job with them through Inspire, and a file was then created to show, falsely, that she had been on a programme with A4e so that a job outcome payment could be claimed.  AB (not knowing any better, she later claimed) signed the paperwork which had been compiled by another of the convicted.  Having read some of the evidence presented in this case, I have to say that it would confuse anyone who isn't au fait with the way these paper-based contracts worked.

That there was a climate of fraudulent activity in this contract is clear.  That the incentive to do this was the financial rewards offered by the company is also clear.  And one does wonder why A4e didn't acknowledge that the investigation was triggered by a whistle blower.  If the A4e media relations person who gave me her phone number the other day and invited me to contact her (not something I would ever do) would like to comment openly here she will be welcome.  A4e has dropped the system of individual bonuses, but confirms that they offer team bonuses.  Quite how that would prevent this type of fraud isn't clear.

PS: There is a great deal to say about benefit sanctions at the moment, but I'll deal with that in a separate post.

Guilty of fraud

We've waited a long time for the outcome of this trial, but it finished today with a guilty verdict on ten A4e employees in Slough (three more were acquitted).  There's a brief write-up on the BBC news website and a better one on the Slough Express site.  
They were working on a lone parent mentoring programme called Aspire to Inspire (I kid you not) which paid A4e for job outcomes in much the same way as the Work Programme.  The convictions are for fraud and forgery, with two of them also guilty of conspiracy.  The local paper says that "The fake claims were discovered though a whistleblower report, which led to an investigation by the department of Work and Pensions and Thames Valley Police," whereas Andrew Dutton, A4e's boss, has always claimed that A4e found the fraud themselves.  Whichever, as we suspected, the motive was to claim the bonuses the company offered for successful job outcomes.  "Financial rewards had been introduced," said the police spokesman, and pointed out that, "The money they fraudulently claimed came from the taxpayer and just over £1.3m was paid to A4e between 2008 and 2010 for their implementation of this contract."
A4e announced some time back that they no longer offer individual bonuses.  A couple of years ago they seriously annoyed many manager-level staff by withdrawing all bonuses, which meant something like a 20% pay cut.  It also has to be remembered that this was a paper-based claims system, which was wide open to fraud without rigorous auditing.  All you had to do was fill in the claims form with a fictitious job and put a false signature on it.  Clearly, this A4e office didn't do it occasionally; they thought they could get away with it on a grand scale.
Sentencing has been deferred until 30 March.
This isn't on the scale of the fraud by G4S and Serco.  But it's bad enough.

Question to the Prime Minister

Well done to Fiona Mactaggart MP (sorry if that sounds patronising) for raising the subject of the A4e fraud case at Prime Minister's Questions today.  She linked it to the fraud in other outsourcing companies like Serco and G4S.  She got a vague non-answer, of course, but it was good that she raised it.  Nowhere in the media has it been reported at all, apart from in the Daily Mail.

A4e fraud - first four plead guilty

The Daily Mail reports that the first four ex-A4e staff in the long drawn out fraud case pleaded guilty at court in Reading yesterday.  They admitted a total of 32 offences of fraud and forgery while working on a scheme called Inspire to Aspire, which ended in 2011.  (There's a fifth person who couldn't get to the court and will plead guilty later.)  The Mail claims credit for this case, but it was a whistle-blower who brought it all to light, and A4e has always claimed that it was their own audit processes which revealed the fraud, and they notified the police.  However it was revealed, it is embarrassing, to say the least.  Money was claimed for job outcomes which were fictitious.  The fact that this first batch has pleaded guilty means we won't get to hear the details, but it appears to have involved forging outcome forms or signatures.
Sentencing hasn't happened yet.  Eight more people are due for trial in October (!) so this drags on.

Nine charged with fraud

It's all over the media by now.  The Slough fraud allegations have dragged on a long time, but now nine A4e former employees have been charged with a total of 60 counts of forgery and conspiracy to defraud.  According to the BBC they were working on a programme called "Inspire to Aspire", a local initiative very much like the Work Programme.  They will appear in court on 14 October.
Both the Guardian and the Independent front their pieces with a photo of Emma Harrison.  Curiously, the Independent says that "prosecutors have not been asked to consider charges" against her personally.  It also quotes the head of fraud at the Crown Prosecution Service, who describes A4e as "a social purpose company"; we thought that particular label had been buried.
The company did discover and report the fraudulent activity themselves - they had to.  And they will be glad to get the case out of the way and say it couldn't happen again.

It's not fair

A4e have a page on their website headed "The Facts Behind the Coverage" and they've recently updated it.  It's a valiant attempt to deal with what they see as misinformation, and some of it, we would have to concede, is justified.  Some of it, however, is open to debate.


They talk about their performance.  They have "outperformed the market average on meeting performance targets" on previous programmes.  Yes, but they nowhere near met those targets. The fact that nobody else did either doesn't help much.  As for the Work Programme, they are "operating in line with our expectations".  But we don't know what those expectations are.  On value for money they say, "For every £1 spent by the Government on our Work Programme services, we deliver back £1.95 in revenue to the taxpayer."  It's very difficult to see how they justify that statement, especially as they point to the payment by results model and say "we don’t get paid if we don’t succeed".  They actually get paid £400 for every starter, regardless of outcome.
 
Turning to the fraud allegations, they point out the "positive findings" of the investigation by the DWP and the SFA.  This is something which the public are not allowed to know about.  All those many people who put in FoI requests to see the results of this investigation were told that there were excellent reasons for refusing.  In talking about the Public Accounts Committee meeting in May they say that there were 6 whistle blowers.  They reiterate that "the majority of allegations made by Mr Hutchinson are unfounded and untrue", which is convenient since he's the only one who has been identified.  And I don't think they are taking him to court.  What about the other 5?  Were they lying too?

A4e, like all the providers, are keen to focus on the Work Programme and put the past behind them.  The WP has raised major issues about how clients (I refuse to call them "customers", as if they had purchasing options) are treated, but the black box model, and lack of inspection, mean that the companies are not held to account for this.  It's all hanging on the numbers - and we're not allowed to know about them yet.

Round-up of an interesting week

It began on Monday when the Guardian leaked details of the evidence due to be given to the Public Accounts Committee the following day.  They got it slightly wrong.  There were not two whistle-blowers, just the one.

On Tuesday the PAC met.  The Tory members of the committee insisted that the whistle-blower's evidence be held in private.  Somebody went straight to the Telegraph afterwards and gave an account of what had transpired.  This was published on 23 May.  The next day the Telegraph put the whole document containing the evidence given by Eddie Hutchinson on line.

The media used words like "damning" and "shocking" to describe what Mr Hutchinson said, and focussed on A4e.  Essentially, the culture at the company was such that fraud was inevitable and not dealt with properly.  

The government's reaction was confused but angry.  Chris Grayling appeared immediately to accept A4e's line that the allegations were "unfounded and untrue" and that Hutchinson was not a credible witness.  We were left to assume that he was an embittered sacked employee - the usual characterisation of whistle-blowers.  But Grayling's response always skated over the internal A4e report, produced before Hutchinson ever joined the company, which told a similar story.  In any case, it all happened under the old contracts and couldn't happen now.  He even demanded that former Labour ministers release secret papers showing what they knew about fraud at A4e.  But, "We have audited our current contracts with A4e and found no evidence of fraud."  Interestingly, he threw in that it was Ernst and Young which did the audit.  As one of our correspondents pointed out, Ernst and Young part owns Working Links.  Might as well keep it in the family.
I was reminded of an investigation for which I was responsible a few years ago.  The person drafting the report wanted to put, "There was no evidence ...."  I changed it to, "We found no evidence ..."  Quite different.
So where are we now?  The government wants to say that it never happened but if it did it was Labour's fault.  And Hutchinson isn't tellling the truth.  Whatever the PAC says has been rubbished in advance.  The other primes can be relieved that all the attention is on A4e.  The current contracts are fraud-proof, so that's all right.  But now we hear that Meg Hillier MP (left) is calling for "greater openness and transparency" over all such contracts.  The SundayTelegraph today reports the MP, who sits on the PAC, as saying: "A4e is one of a number of companies receiving its only income from the public sector, but we can't follow the public tax pound. It's public money paying for a public service commissioned by the Government. Why would you want to hide anything?"  She added that a good organisation would have nothing to hide.  Public companies are accountable to their investors, so taxpayers should have a right "to know how publicly-funded firms made a profit and should have a say over how companies operate, including how much executives are paid."  We agree.

None of that can change the fact that the Work Programme is floundering.  The best that the government can do is expand its work-for-free programme (see the Observer).   When in a hole stop digging, they say.  But the DWP keeps on digging.

The secret evidence disclosed

Thanks to the Telegraph, we now know some of what Matthew Hancock MP and his Tory colleagues wanted to keep private at the Public Accounts Committee meeting yesterday.  The whistle blower is Eddie Hutchinson, an accountant who was appointed head of internal audit at A4e in 2010.  The paper has put the whole of his evidence online here.
Hutchinson had previously worked for Working Links, where he uncovered a level of fraud which he described as "farcical" and which was ignored by management.  As later with A4e, he said that the bonus system was to blame.  Hutchinson was made redundant by Working Links and then went to work for A4e.  He found a similar situation there.  By February 2011 he was dealing with the Slough case, which, he said, should have been referred to the police earlier.  "He claimed he also became aware of a fraud on the New Deal for Disabled People contract from A4e’s Glasgow office. In this case, he said, an employee resigned, saying she had falsified evidence and misappropriated cash. At the time, he made a note it was a 'regular occurrence' that no action was taken against people admitting to fraud."  There were numerous other cases in different contracts.  He was supposed to be helping A4e to develop watertight risk controls, but noticed no "significant enhancements".  His advice was not heeded.  "After seven months at A4e, Mr Hutchinson said in evidence that he was convinced he had seen 'unethical behaviour, mismanagement, inadequate corporate governance, and risk management, and excessive payments in the form of salaries and bonuses'. He has told MPs: 'In my professional view, it was systemic.'"  A4e denies this, of course.  It's all in the past.
Surely this sort of evidence can't be brushed under the carpet.


The Exaro website has published the 2009 internal A4e report.  It can be downloaded from the site here (you will have to register with the site).   We'll be examining that soon.

Gagged

This is Matthew Hancock, the Conservative MP and member of the Public Accounts Committee, who insisted that the whistle-blowers' evidence on fraud in A4e and Working Links was not made public.  (On the same day Hancock appeared on BBC's The Daily Politics.  He was not asked about this, but did manage to quote the party line on how wonderful the Work Programme is.)  The whistle-blowers worked with or for the two private companies.  According to the Guardian, "One of the whistleblowers said: 'It has taken a lot for us to come and speak in public about what we see as fraud. We have been silenced.'"  Two of the witnesses' evidence was previewed in the Guardian on Monday.  One of them was "a senior figure in A4e's risk and audit department in 2011" and "claims there was evidence of fraudulent activity in many of the firm's offices."  The paper reports, "During the public session held later, Labour MP Austin Mitchell called for an investigation into the claims made in private. He said: 'We have just sat through a long closed session which produced some fairly damning indictments of the structures and the practices in A4e and in Working Links and gave several indications of possible fraud.'"
The Independent also reports the story:  "Another [whistle-blower] said they believed that pressure had been applied to the Tory MPs by the Government to ensure that more damaging evidence about the fraud on the programmes was not placed in the public domain."
So is this evidence going to be made public?  Or do Hancock and his mates have a vested interest in making sure that it's kept secret?

Evidence in private - a "damning dossier"

The Public Accounts Committee heard evidence of fraud at A4e today - but in private.  According to the Daily Mail, this followed a row between Labour and Conservative members of the committee.  Three whistle-blowers handed over a "damning dossier".  The Mail doesn't say whether the whistle-blowers were A4e staff.  Apparently the secrecy was so that the evidence didn't interfere with a possible police investigation.  Robert Devereux was back giving evidence; he's the permanent secretary at the DWP.  He conceded that the evidence sounded damning, but much of it was to do with old programmes and couldn't happen now.  That's all right then.  We must wait for a fuller account of events (come on, Guardian) to find out the rest of what went on.

The Mail, naturally, has picked up the story about an A4e client in Bootle getting a job in a lap-dancing club.  It's the perfect excuse for the Mail to publish a large picture of what looks to me more like pole-dancing (but what do I know?).  And I begin to feel a little bit sorry for A4e.  The Exaro account, picked up by the mainstream media, assumes that the client was sent to the club by A4e for a job.  But it's more likely, surely, that a client found a job there off his or her own bat.  And in that case, why shouldn't A4e claim the job outcome?

Are we going to see more prosecutions?  Or was the point of the secret hearings that the government would prefer to just bury this?

Fraud and lap-dancing

The Exaro website has got hold of the leaked internal A4e report of 2009 which demonstrated that the company knew that more than a quarter of its job outcome claims were potentially fraudulent.  This has already been publicised by the BBC's Paul Mason, but it's salutary to remind ourselves that Grayling claims that there was "no evidence of fraud" in A4e contracts.  Exaro also has what it calls a "shock discovery" - an instance of this potential fraud in the report.  "The Bootle office of A4e sent the job-seeker to work at ‘X In The City’, a Liverpool lap-dance club favoured by football stars."  If you're not acquainted with what goes on in such places, we read that, "The bar advertises lap dances at £5 a time, and offers a ‘VIP’ deal in private rooms where a half-hour lap dance with champagne costs £50."  The auditors found that "a jobseeker was working at the club for more than 16 hours a week for 13 weeks in 2009."  But they couldn't verify the job placement because the club wasn't open during working hours!
There will be some of you thinking, why not?  It's a job.  And actually, at the time no rules were being broken.  But they wouldn't be allowed to do it now.  Said the DWP, "The secretary of state, Chris Grayling, issued a ban on job centres carrying advertisements for jobs in sex clubs and sex shops. Therefore, we are hardly likely to sanction a job provider placing a person in a sex or lap-dance club. It would be banned."

Fraud at A4e and Working Links ignored

The Guardian has revealed what is going to be told to the Public Accounts Committe tomorrow (Tuesday).  Both A4e and Working Links employed investigators to look into financial discrepancies, and then refused to hold formal enquiries.  "A senior figure in A4e's risk and audit department in 2011, claims there was evidence of fraudulent activity in many of the firm's offices.  He says that, in two of A4e's offices, staff were caught with company stamps that could be used on paperwork to claim public money for placing people in jobs. Despite a formal investigation, A4e took no action, the witness claims."  A4e has responded by saying that "the stamps were only used with the employers' full knowledge and consent, and that a stamp alone could not be used to validate claims."  I'd like to know the details of that.  But A4e is not going to be invited to the meeting to give evidence themselves, and they are very cross about that.  "Wherever we have been given facts to support any previous allegations, we have looked into them and we have not found a single allegation of fraud that stands up."  Can we mention their own 2009 internal report?

Police investigation into A4e

The news couldn't be much worse for A4e.  The MailOnline, which has savaged Emma Harrison and A4e in the last few days, now reports that A4e iis at the centre of a fraud investigation.  "The Department for Work and Pensions confirmed last night that a probe into A4e – headed by Mrs Harrison – was under way.  A source at the company told The Mail on Sunday that on Friday afternoon, officers from Thames Valley Police visited the  company’s offices in Slough, Berkshire.  The source said they stayed for up to four hours and demanded staff hand over documents and computer files dating back two years."  Apparently what's being investigated is the allegation that "the company had put some  people in jobs for just one day, but claimed the funding nonetheless."




Anyone connected with the industry will be scratching their heads at this.  Under the 2006 contracts (I don't know about subsequent ones) it was perfectly possible to do this in certain circumstances.  A client gets a job, to start on Monday morning; so the provider fills in the paperwork on the Friday afternoon and sends it back to the Jobcentre, which signs the client off benefits.  The client turns up to work but decides at the end of the day that he doesn't want to do this and walks out.  This is still claimable as a job outcome if the employer signs that the job was intended to last for 13 weeks.  They won't get the other half of the money, which is payable only when the client has stayed in the job for 13 weeks.  If this is what's being investigated, then A4e will probably be in the clear.  But we'll wait and see. 

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)