Further No 10 link to A4e

One of Steve Hilton's legacies is one he would not want to advertise to his new US friends: how he was personally involved in appointing Emma Harrison as the Prime Minister's back-to-work tsar. She resigned as No 10 adviser and chairman of A4e just over a week ago over allegations of fraud at the company. It is understood that Mr Hilton recommended her to Mr Cameron.

And in more evidence of the links between Ms Harrison and David Cameron, The Independent on Sunday has learnt that A4e is advising No 10 on the next wave of privatisation. It will offer advice on "value for money" in contracting out, including writing guidelines on future privatisations. The firm will hold a seminar in Whitehall explaining how to design welfare contracts with private firms. The contract, worth £250,000 was agreed last September.

The Cabinet Office hired A4e to advise on four experimental schemes to help families with unemployed parents. All are in Conservative-led authorities: Hammersmith & Fulham, Westminster, Birmingham and Leicestershire.

A4e is not running the schemes, but is helping the Government write the rules on how they should work. They are based on social impact bonds, the Government's "big idea" for privatising welfare. Investors and banks will pay private companies to help poor families. The taxpayer will then pay them back over years for the supposed "savings".

A4e is being asked to advise how to stop welfare firms taking money for poor performance. Yet A4e has often been found to be a poor performer itself.

A spokesman for A4e said: "A4e has performed consistently at or above industry average across all major employability programmes."