Mark Lovell on finance

On an obscure website called myfinances.co.uk A4e's Mark Lovell gets the chance to expound his ideas about "Tackling the challenges of supporting public services". It's not so much an interview, more of an essay, and it makes interesting reading. A4e has long had the ambition to own a bank, and while that may seem an unlikely proposition, the piece shows that there are ways of getting into it sideways, as it were. He addresses the question: "In the current financial climate, what are the three most important initiatives your company is undertaking?" He talks about their debt advice services, and then: "Developing a fund with finance partners from which the people we work with who start their own business, or a social enterprise, can secure capital to help them get going. Access to capital and microcredit / finance is more important than ever in the current economic climate and self-employment or business start up is really important. - Working with likeminded organisations – banks, charities, credit unions, intermediaries, lenders, utilities – to change the way financial products and services are designed and reach low income consumers. Biting off a big challenge on that one!"

Think about the first part of that. It means that A4e clients who want to start their own businesses will borrow money from A4e (or an A4e partnership). Sounds fine, at a time when banks won't lend to start-ups with no security to offer. But a client can only make a profit for A4e if s/he is in work, or self-employment for two years. Getting the start-up loan from A4e would bind him or her into a relationship with the company which could be uncomfortable, to say the least.

The other part of the interview which worries me is: "We want to join up as many services as possible. We deal with around 400,000 consumers per year at the moment. Most of them are either out of work or on low incomes. They access a range of public services from multiple agencies and we contract with nearly 40 different organisations to deliver these services. We can provide better, joined up services at more marginal cost by bringing some of these activities together." Again, this is a long-held ambition of A4e, the "super-contract" which would see A4e having the right to be the gateway for all services to its clients. Am I overstating it to say that, in effect, a local authority would sell people to A4e? We can certainly see Emma Harrison's "working families everywhere" venture as part of this campaign to roll up access to all public services into one contract and direct people's lives.

Incentives

"It's not about maximising profits," said A4e's Mark Lovell, in that strange little piece on the BBC news. That's not a statement that any of the big players - Serco, Capita and G4S, as shown on "Britain's Secret Fat Cats" - would dream of making. It would be ludicrous. They are companies with shareholders, and maximising profits is their entire raison d'etre. They might express the intention to improve people's lives in the context of bidding for contracts; they could hardly do otherwise. But that is incidental. It's a business. And the government obviously acknowledges that. Grayling talked recently about providers being able to make "shedloads" of money. And now Freud has spelled out the scale of those payments. Providers will get between £4,000 and £14,000 for each client who secures work. The higher amounts are for outcomes for people who have been out of work for longest and are regarded as "hardest to help" - and who stay in work for two years. Freud is explicit that it's these incentives which will make the Work Programme successful. The profit motive rules.

So is A4e any different from its competitors?

One obvious point of difference is in the amount of publicity the firms seek. In the case of Serco et al that's nil. They don't need it, and don't get it. That's why their dominance has crept up on people. But for A4e, or at least for its boss, publicity is an essential strategy. There are a few signs, however, that this hunger for the limelight may be counter-productive. The words, "Anybody but A4e" have been uttered by people in local councils.

Mark Lovell on BBC news

Tonight's 6.00 pm news on BBC1 was, of course, nearly all devoted to Japan and Libya. So it was a surprise to hear an item at the end about training for young people and the involvement of private companies. I'm sure that this was intended to be a much longer item. But it displayed the usual amnesia of the media. You wouldn't think there had ever been anything on TV about A4e. There was Mark Lovell, fielding an innocuous question about the profit motive with an oleaginous assurance that maximising profit is not what they're about. This will no doubt come as a surprise to many A4e staff. There was another, small company in the item too. Perhaps the original intention was to draw a contrast between the large and the small. But what emerged was a severely truncated piece which gave a bit a free, if brief, publicity to A4e.

Britain's Secret Fat Cats

I managed to watch this Channel 4 Dispatches programme on 4OD - or rather, the first two thirds of it. It seems that if you pause a programme on 4OD you can't restart it, but have to go back to the beginning. I saw enough to applaud this exposure of the reality of outsourcing.

It focussed on the three biggest companies, Serco, Capita and G4S. We were reminded that David Cameron called in these and other companies to renegotiate some contracts, but the big 3 are totally unconcerned about taking a small hit now, because there's so much business in the pipeline. They are all buoyant about the vast amounts they will make in the near future. Capita's Paul Pindar reckoned they had 30 contract opportunities, worth £4.7bn, and Serco has a £16.5bn order book. The reporter tried to get at the details of these contracts but was told by the government that they were commercially confidential - giving the lie to Cameron's promise of "transparency" in government contracts. Bear in mind in what follows that A4e are in a rather different category to these 3; it isn't a publicly listed company with shareholders, so we can't get at figures for executive pay. Last year Chris Hyman of Serco got £5m, Nick Buckles of G4S got £4m and, in 2008, Paul Pindar of Capita got £10m. And half or more of their business comes from the privatisation of the public sector. We were treated to a fascinating explanation of the self-serving system which results in obscene levels of executive pay. The tax-payer who provides the dosh for the pay of the execs of the outsourcing companies has no say in how much they should get.

The programme then turned to the Work Programme. It looked at Liverpool, where a small local outfit had used the Future Jobs Fund to secure work and / or training fpr more than 400 people. Despite Cameron's talk of the Big Society, power devolving to local people, this organisation and all those like it will not be in the running for contracts under the WP; but in the North West both Serco and G4S are on the shortlist. It was clear, we were told, that even if small, local organisations start out as players in the Big Society, they will soon be swallowed up by the big fish.

The Financial Times has maintained its interest in the finances of the Work Programme. On 8 March they reported that some of the larger providers were privately dubious about whether the payment by results system was going to stack up. They can't afford not to be in it, but they are banking on the fact that the government can't let it fall over and will bail them out if necessary. Yesterday they quoted Chris Grayling's response. No provider will have more than "a limited number of contracts", in order to spread the load if anyone goes bust. And, he said, the providers can make "shedloads" of money if they get the hardest to help into work.

All in all, quite depressing.

PS. Emma Harrison was speaking at a meeting of the Policy Exchange, a Tory think tank, today about Working Families Everywhere.

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.

Probation

Jen Byrne of A4e yesterday gave evidence to the House of Commons Justice Select Committee on the role of the Probation Service. No details are available* yet of what was said, but A4e was one of seven organisations or individuals contributing evidence. Byrne is A4e's "Strategic Director for Justice" and was recently in the US looking at the way they do things there. She appears to have joined A4e straight from university, where her MSc dissertation was on "Levels of Self-Esteem and Motivation in Long-Term Unemployed Jobseekers". The criminal justice system is yet another area of our national life into which A4e, amoeba-like, is spreading.

* Here's the link to a video of the meeting.

You couldn't make it up

When I first saw this I thought it was a mickey-take by one of Emma Harrison's critics. But no, it's on her own website. An Emma Harrison video widget! Come on now, you know you want one.

The hunger for publicity can slide into self-parody. But the real drive for contracts and profits is going on behind the scenes.