Welfare to work firms accused of fraud

2 Jul 09
Welfare to work experts are calling for an investigation into fraud by private sector providers in the wake of revelations about malpractice.

By Alex Klaushofer

Welfare to work experts are calling for an investigation into fraud by private sector providers in the wake of revelations about malpractice.

Allegations of fraud highlighted in an investigation by Channel 4 News claimed Working Links had fabricated paperwork, while A4E – one of the preferred bidders for Flexible New Deal contracts announced by the government last month – had claimed payment for placing people in short-lived jobs. 

‘It calls into question the integrity of the organisations,’ Work and Pensions select committee chair Terry Rooney told PF. ‘I’d be amazed if it’s limited to one company.’

The allegations raise questions about whether a similar fate will befall the FND programme when it starts in October. ‘The [same] thing can’t happen, but it questions the management capacity and principles of the organisations concerned,’ Rooney said.

A spokesman for Working Links said staff worked to a strict code of conduct, supplemented by internal and external inspections. ‘This code of conduct is underpinned by robust processes and quality controls, including a whistle-blowing policy and escalation procedure,’ he said. ‘Despite these controls and inspections, we recognise that, as in every organisation, there is a risk that people do not always stick to the rules.’

The Commons committee and the Public and Commercial Services union are calling for a full-scale investigation by the National Audit Office into fraud in the welfare to work sector.

Mark Serwotka, PCS general secretary, said: ‘There is a real danger that this will continue as the government extends the profit motive in the welfare state and outsources the Flexible New Deal. We urge the government to halt outsourcing areas of the welfare state and for the NAO to investigate what appears to be significant amounts of fraud.’

A spokeswoman for the NAO said the watchdog had yet to take a decision about an investigation. ‘No-one has formally asked us yet,’ she said. ‘Once they do, we will look into whether we’re going to do a formal investigation.’

Daniel Johnston, director of Indus Delta, a website for the sector, said it was unlikely the allegations indicated widespread fraud. ‘I don’t think it’s systemic, but what it indicates is that some providers probably didn’t have tight enough processes,’ he said. But other employment programmes were still vulnerable to malpractice, he added.

‘Unfortunately, a lot of projects that will run alongside FND are not following the same commissioning model... They may still be open to abuse, because they're not paying on long term outcomes.’

A Department for Work and Pensions spokeswoman said: ‘Unfortunately our audit processes have uncovered some specific cases of fraud involving particular individuals who have since been sacked and money paid back. Our investigations found no evidence of systematic abuse, although if we found any wider problems we would not hesitate to explore the toughest sanctions, including terminating the contract.’

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