Ministers missed key evidence of fraud in welfare-to-work scheme

MPs condemn DWP for lax management of A4e and failure to identify malpractice

A £1-billion-a year scheme to help the unemployed into work was so badly madly managed by ministers that vital evidence of potential fraud never picked up, a damming report concludes today.

Ministers have been condemned by a committee of MPs for failing to investigate properly allegations of fraud in the Government's flagship schemes to get the unemployed back to work.

The Commons Public Accounts Committee said the Department for Work and Pensions (DWP) had missed “vital evidence” of potential fraud at the controversial welfare-to-work provider, A4e.

The department was accused of failing to “exercise sufficient oversight” of the private companies delivering the programme. Cases of alleged fraud were overlooked because officials had not “asked the right questions”.

The committee concluded that the DWP had been remiss in failing to obtain internal audit reports from A4e from 2009 which detailed a “considerable number” of cases of alleged fraud and malpractice. The company has won contracts worth £200million to run welfare-to-work schemes since May 2010 but has been hit by scandal with allegations of fraud and malpractice.

In February, the A4e founder Emma Harrison - who was appointed by David Cameron as the Government's “family champion” - announced that she was quitting the firm amid claims of widespread problems in the organisation.

The DWP, where the Secretary of State is Iain Duncan Smith, launched an inquiry into the company which resulted in it being stripped of one of its contracts to help the jobless find work in May after ministers concluded that continuing would be “too great a risk”.

However, the company still holds 11 contracts with the Government and the committee accused the DWP of failing to address the wider issue of whether A4e was a “fit and proper” company to continue to carry out such work.

“The department's arrangements for overseeing and managing its contractors did not pick up vital evidence about potential frauds,” the report said.

“The investigations of alleged fraud that the department has carried out have not been sufficiently thorough.”

The committee had heard evidence from three whistleblowers who told MPs that they had found evidence of  widespread fraud but their concerns had been ignored.

Their evidence was heard in private after Conservative members of the committee blocked attempts for them to address a public hearing. The transcript of their testimony was omitted from the final report at the request of the whistleblowers themselves, who included auditors from two of the biggest welfare-to-work providers.One of the whistleblowers was Eddie Hutchinson, an accountant of 30 years standing, who was appointed A4e's head of audit in 2010. He alleged that an “unethical culture” had led to “systemic fraud” at the company.

Another whistleblower described serious problems at another welfare to work provider, Working Links, which runs three major contracts on the Coalition's £5 billion jobs scheme and is part-owned by the Government.

A third whistleblower who had worked at A4e told how she had been asked to “fix” files to suggest that people had successfully found work.

Committee chairman Margaret Hodge said that if the Government chose to use private companies to provide public services, it was essential that the proper controls were in place.

“In this instance, the DWP's arrangements for overseeing and inspecting its contractors were so weak that vital evidence on potential fraud and improper practice was not picked up,” she said.

“The department is still investigating allegations brought to its attention by the committee but was not proactive in setting in place systems which root out fraud and malpractice.

“If it had not been for whistleblowers, a range of systemic issues would not have been identified.

“The department might have identified these issues if it had asked the right questions of providers.”

A DWP spokesperson said that the fraud cases related to previous welfare-to-work schemes under the former Labour government: “We have also put in place the toughest anti-fraud measures ever included in a Government back to work scheme. We have made this clear to the committee on several occasions. The examples of fraud mentioned in the report do not relate to the Work Programme.”

She added that the DWP's enquiries into the whistleblower's allegations about Working Links had concluded. “We are satisfied that these cases were investigated thoroughly by Working Links at the time and that appropriate actions were taken. The associated amounts have been repaid.” But she refused to say how much public money had had to be repaid or how many cases it related to.

However the enquiry into A4e is ongoing. She added: “These enquiries are prolonged, reflecting the inevitable challenges in securing evidence from these historic claims. It remains important that we are thorough in reaching a clear and evidence based conclusion in these matters.”

A spokesman for A4e said: “The allegations highlighted in today's report all relate to historical, paper-based contracts. Where we have made mistakes in the past, we have acknowledged them and ensured that all allegations, where evidence was provided, were fully examined. There are no new allegations in this report.

“The current Work Programme eliminates the opportunity for similar issues to arise because it is computer-based and payment is on results - both of which A4e strongly advocated. However, we fully understand public concerns and are working hard to set new standards of openness and responsiveness.”

Arts and Entertainment
books
Voices
Caustic she may be, but Joan Rivers is a feminist hero, whether she likes it or not
voicesShe's an inspiration, whether she likes it or not, says Ellen E Jones
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Sport
Diego Costa
footballEverton 3 Chelsea 6: Diego Costa double has manager purring
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
3D printed bump keys can access almost any lock
techSoftware needs photo of lock and not much more
Arts and Entertainment
The 'three chords and the truth gal' performing at the Cornbury Music Festival, Oxford, earlier this summer
music... so how did she become country music's hottest new star?
Life and Style
The spy mistress-general: A lecturer in nutritional therapy in her modern life, Heather Rosa favours a Byzantine look topped off with a squid and a schooner
fashionEurope's biggest steampunk convention heads to Lincoln
News
Dr Alice Roberts in front of a
peopleAlice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
News
i100
Arts and Entertainment
Star turns: Montacute House
tv
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Arts and Entertainment
Unsettling perspective: Iraq gave Turner a subject and a voice (stock photo)
booksBrian Turner's new book goes back to the bloody battles he fought in Iraq
News
The Digicub app, for young fans
advertisingNSPCC 'extremely concerned'
News
i100
Arts and Entertainment
Some of the key words and phrases to remember
booksA user's guide to weasel words
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Senior Data Scientist (Data Mining, RSPSS, R, AI, CPLEX, SQL)

£60000 - £70000 per annum + Benefits + Bonus: Harrington Starr: Senior Data Sc...

Law Costs

Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

Junior VB.NET Application Developer (ASP.NET, SQL, Graduate)

£28000 - £30000 per annum + Benefits + Bonus: Harrington Starr: Junior VB.NET ...

C# .NET Web Developer (ASP.NET, JavaScript, jQuery, XML, XLST)

£40000 - £50000 per annum + Benefits + Bonus: Harrington Starr: C# .NET Web De...

Day In a Page

The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor
She's dark, sarcastic, and bashes life in Nowheresville ... so how did Kacey Musgraves become country music's hottest new star?

Kacey Musgraves: Nashville's hottest new star

The singer has two Grammys for her first album under her belt and her celebrity fans include Willie Nelson, Ryan Adams and Katy Perry
American soldier-poet Brian Turner reveals the enduring turmoil that inspired his memoir

Soldier-poet Brian Turner on his new memoir

James Kidd meets the prize-winning writer, whose new memoir takes him back to the bloody battles he fought in Iraq
Aston Villa vs Hull match preview: Villa were not surprised that Ron Vlaar was a World Cup star

Villa were not surprised that Vlaar was a World Cup star

Andi Weimann reveals just how good his Dutch teammate really is
Bill Granger recipes: Our chef ekes out his holiday in Italy with divine, simple salads

Bill Granger's simple Italian salads

Our chef presents his own version of Italian dishes, taking in the flavours and produce that inspired him while he was in the country
The Last Word: Tumbleweed through deserted stands and suites at Wembley

The Last Word: Tumbleweed through deserted stands and suites at Wembley

If supporters begin to close bank accounts, switch broadband suppliers or shun satellite sales, their voices will be heard. It’s time for revolution