Four people have been arrested in a fraud investigation surrounding the Prime Minister's "back to work tsar" Emma Harrison.
Two men and two women were questioned following dawn raids at the homes of former staff of Ms Harrison's employment agency, A4e.
The Berkshire-based agency receives millions each year in Government contracts. Two women, aged 28 and 49, and two men, aged 35 and 41, were arrested last month and bailed until mid-March, Thames Valley Police confirmed yesterday.
Margaret Hodge, who is Labour chairwoman of the Public Accounts Committee, called on the government to suspend its welfare-to-work contracts with A4e until the investigation was complete on Monday.
A4e said the incident occurred two years ago and related to four former employees from its 3,500-strong workforce. All four staff members have left the business, it said. "A4e has zero tolerance towards fraud, and any instance of fraudulent or otherwise illegal activity is completely unacceptable," Andrew Dutton, A4e Group CEO said.
He said: "We take our responsibility very seriously and we are committed to using taxpayer's money effectively and efficiently to deliver the best services to the public.
"The case was referred to Thames Valley Police in May 2011, and the matter now rests with them."