A4e's accounts for 2011 - 2012 published

The accounts for the year to March 2012 have been published.  Company accounts are not easy reading unless you're an accountant, but there are some interesting facts to be extracted.

Emma Harrison was paid £1.5 million in dividends when she stepped down as Chair in February.  There were no dividends paid after that, and no more will be paid up to March 2013, because they need to invest in the Work Programme.  It was an expensive year.  The parent company made a loss of £1,007,000 after dividends were paid, compared to a profit of £15,158,000 in the previous year.  Actual revenue was significantly down.  In the UK it was £127,126,000 compared to £215,616,000 in the year.  Revenue from Australia was up a lot because of the acquisition of a company there.

The preamble declares that they pay the Living Wage and intend to raise pay according to new recommendations in April 2013.  They have chosen to follow the Hutton Review of Fair Pay and pay the Chief Exec no more than 10x median adult full time salary.  Directors' emoluments (pay etc.) for the year total £2,327,000, less than last year.  The highest paid director got £416,000.

There are some bits and pieces of money spent on services, including:

• £188,000 to Andromeda Park, a conference management company owned by the Harrisons; 
• £816,000 to Thornbridge Ltd for lease of property (more than the previous year); 
• £81,000 to Elite Pension Scheme, of which the Harrisons are beneficiaries.

A small note tells us that on 24 April 2012 Medex Training Ltd was "struck off".  This was a company acquired by A4e in 2006 - see my post from October 2009.  It's been dormant for some time.  I wonder what happened.

If you want to examine the full accounts, go to the Companies House website.  You can download it for only £1.

Back to the future?

On many forums, including the comments on newspaper articles, it has become commonplace for people to forecast a return to the workhouse.  As a historian, in an amateur sort of way, I have begun to see genuine parallels between the plans and attitudes of the current governing classes and the climate of opinion which brought about the Poor Laws of 1834.
 

Let's start with the early 20th century.  It was a time of development of a sense that society had a responsibility to look after all its members.  The Old Age Pensions Act of 1908 saw many old people saved from the fear of destitution and the workhouse.  The following year Labour Exchanges were set up to help the unemployed find work.  This was followed in 1911 by the National Insurance Act which enforced contributions for sickness and unemployment pay.  Two world wars brought a sense that the people who had suffered for the nation should be cared for by the nation, and the growth of socialism meant the growth of a social conscience.  Labour MPs brought a different perspective to the House of Commons and to government.  In 1948 we had the birth of the Welfare State.  The logic was simple.  It was a form of insurance; one paid in when one was able, and drew out when in need.  There was recognition that some people would never be able to contribute, but they would be supported.  This is the system under which most of us have grown up and lived our lives.  We now see it seriously under threat.  Was this just a century-long blip in our history, and we're going back to normal?

I want to go back to the early 19th century.  For those of you willing to read a quite long and very erudite article, I recommend a piece on the  "Looking at History" blog by Richard Brown.  If that's too much for you, here's my less erudite summary.  In the early 1800s Britain had nothing even vaguely resembling democracy.  The country was governed by an elite which was getting increasingly nervous.  The French Revolution had shown what could happen if the ordinary people rose in rebellion, and there were plenty of rumblings in this country.  Low wages in the rural areas; the poverty in the towns to which people flocked for work; a savage penal code; all caused growing unrest and civil disorder.  The dissent was suppressed by the military.  Added to this, the welfare system, known as "relief", was inadequate and patchy.  There was a need for reform, and a report was produced in 1832 (the same year in which a few tentative steps were taken towards reforming the electoral system).  In a free market economy there was no excuse for not being able to find work if you were physically capable of working.  Relief, financial support, should only be available as a very last resort, as something which the lower orders would have to be truly desperate to seek.  This was to be provided only in workhouses, where the regime would be punitive.  (Later, "outdoor relief", payments to enable paupers to stay in their own homes, was allowed.)  The word "pauper" became an official designation.  Children growing up in the workhouse were hired out to local employers without wages.  All this was enacted in the Poor Law of 1834.  The system was to last through the century and into the next.

Does any of that sound familiar?  It should.  I don't believe that we're heading for the revival of workhouses, at least not in the foreseeable future, but the prevailing attitudes are much the same.  Among all the nonsense in the media at the moment I cite two pieces.  The first is on the excellent Spinwatch site, which examines an article by Sean Worth of one of those nasty think tanks.  The call it "The compassionate Conservatives go to war".  The second is in the Express, reporting a row in York.  A Conservative local councillor is critical of food banks.  "We have lots of poor people, but living standards have surged over the years. There is certainly no need for food banks; no-one in the UK is starving and I think food banks insult the one billion in the world that go to bed hungry every day and ignore the fact a child dies of hunger every three seconds.  The fact some give food to food banks, merely enables people who can't budget (an issue where schools should do much more and I have said the council should) or don't want to, to have more money to spend on alcohol, cigarettes etc."  The man would have been entirely at home in 1834.

Keeping up the attack

For the government, the holiday period is clearly a time to carry on the assault on benefits claimants.  David Cameron started it in his New Year message, covered in the Telegraph, which headlines it "We'll help the strivers, not welfare claimants".  Well, that's everyone who is elderly or disabled branded, as well as those trying to find work.  There's an extraordinary passage which shows just how clueless he is about the reality of unemployment:  “When people say we've got to stop our welfare reforms because somehow it is cruel to expect people to work, we are saying no. Getting people into good jobs is absolutely vital, not just for them, but for all of us."  Sorry?  Did someone say it was cruel to expect people to work?  What are you talking about?  The article points out that the message echoes that put out recently by Tories in marginal constituencies "demanding whether the Government should offer more help to 'hard working families' or 'people who don’t work'. The advertisements have been criticised by Labour as taking the Conservatives back to being the 'nasty party'."  Yes, and I would think they've alienated all the pensioners and disabled, too.
Iain Duncan Smith has been busy too.  Since it was pointed out that around 60% of those claiming benefits are actually working, he has turned his wrath on the tax credits system.  Several papers cover his attack, but the best version, perhaps, is in the Independent.  Now, I have to say that I was never entirely happy with the tax credits system.  It seemed to be subsidising bad employers.  And it goes too far up the income scale.  I knew a man with a young family who was on a good salary (I knew exactly what it was since it was partly my responsibility to pay it) who was eligible for the credits, while a single person under 50 wasn't.  I also knew someone who was offered a job with variable hours who panicked at the thought that he would face the money being clawed back.  But I wasn't aware that "after 2008 HMRC did not attempt to reclaim overpayments of less than £25,000. That is set to be reduced to £5,000 under the coalition, alongside moves to require proof of payments from those claiming for childcare or that children aged between 16 and 19 are in full-time education."  Reform is obviously necessary.
But, as usual, IDS goes over the top.  The Factcheck blog has shown that his figures are either wrong or just made up.  It seems that he will claim anything to justify his hostility to people on benefits.
Happy New Year, folks.

Writing - or respect?

Those who don't read the Observer should read this article.
Now, I start out by loathing the very notion of the "nudge unit" as a sinister way of manipulating people's thinking to suit the government.  However, the exercise described here appears to be based on sensible psychological insights (otherwise known as common sense) and designed to help and support rather than manipulate.  Notice that the trial was with people who hadn't been out of work very long, and that the emphasis in the article is on getting people to write down their commitments and express themselves about a traumatic event.  But the real benefits (which the comments under the article pick up) are summed up as, "The unit made three changes to the way jobseekers in Loughton were treated: the amount of paperwork was reduced at the first meeting so that the claimant could talk about getting back to work from day one; the conversation was focused on what jobseekers would do for the next fortnight and they were encouraged to make written commitments; and advisers at the centre were told to build the confidence and wellbeing of those still claiming after eight weeks, rather than treating them as failures."  (My italics)
I can remember a time when schemes like New Deal were promoted as being about helping to build people's confidence.  The Work Programme put paid to any such soft-headed notions.  Mark Hoban thinks the trial describes an "innovative approach".  No, Mr Hoban, it's a very old-fashioned approach which your department seems to have forgotten.

Mystery unemployment figures

There's a bit of a mystery surrounding the fall in the unemployment figures.  The economy is flat-lining; so why is the number of jobless predicted to continue to fall.  Several papers have addressed this.  The Independent points to the "flexible" labour market but says, "Privately ...... some ministers wonder whether there is another reason: that more people are working in the black economy because it has become harder to draw state benefits without being “hassled” by Jobcentres and having to make more effort to find work."  And, "One Whitehall estimate is that one in three people who stop claiming Jobseeker’s Allowance (JSA) switches to working in the “informal economy”.
There are some startling figures about MWA.  "... almost two thirds of claimants placed on mandatory work activity (MWA) do not start it because they find a job, stop claiming benefits or simply do not turn up. Of the 90,000 people referred to the scheme, only 33,000 started. More than 6,200 have lost their benefits for not taking part."
The website Totaljobs has a different slant on this, according to the Express.  The number of applicants for every job vacancy is growing.  "The reality is that a great deal of the jobs created have been part-time and low paid, and many of those that have been taken off the unemployment roll have in fact just gone into government training schemes rather than paid work."
So what is going on?  Is the black economy growing?  Or are there more people simply disappearing from the figures because they are being shuffled onto different programmes or "sanctioned"?

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.

Universal Jobmatch to be compulsory

You weren't paranoid, you were right.  It's just been announced that registration with the Universal Jobmatch site is to be compulsory for those on JSA, so that activity can be monitored.  In a very brief piece on Radio 4's The World at One, it was announced that it will be "mandatory" soon, and those who refuse to register or then don't do what their advisers tell them can be punished.  Iain Duncan Smith says it will enable advisers to ensure that claimants are applying for the right jobs.  There was a brief mention by the reporter of the recent problems with fake vacancies on the site, but not of the possibilities of harvesting people's personal data.
There was also mention of the proposal to pay benefits via a card with restrictions on it.  IDS said that they have been looking for some time at whether it would be feasible.  There are no plans at the moment, but they are thinking about it for such groups as drug addicts.
Just when you thought it couldn't get any worse .....