DWP ‘must tighten up fraud controls in work schemes’

28 Sep 12
MPs have criticised the Department for Work and Pensions for ‘weak’ arrangements to detect fraud by welfare-to-work providers.
By Richard Johnstone | 1 October 2012

MPs have criticised the Department for Work and Pensions for ‘weak’ arrangements to detect fraud by welfare-to-work providers.

The department spends around £900m annually on programmes to help unemployed people find and stay in work, the Public Accounts Committee said in a report published today. Contracts are agreed with a range of companies and some charities under the Work Programme, the payment-by-results initiative launched across the UK last year, and the New Deal scheme run by the previous Labour government.

These programmes need effective controls to prevent and detect contractors committing fraud, such as taking payments for placing people in jobs that did not last as long as claimed, the MPs concluded in their report.

But the DWP’s management of the programmes could have missed evidence of fraud, the committee said.

For example, the department failed to obtain internal audit reports produced by one contracted firm, A4E, in 2009 that highlighted cases of alleged fraud and malpractice across the country.

These are now being investigated, but previous investigations into 126 reported cases of possible fraud between April 2006 and March 2012 had not been ‘sufficiently thorough’, the report added.

Controls against financial fraud in the Work Programme, which include checks on each contractor’s claims for payment, are a significant improvement, the MPs stated. However, risks remain on other programmes, such as the Mandatory Work Activity, that do not have the same level of oversight.

Committee chair Margaret Hodge added that the design of the Work Programme ‘still allows for the possibility of providers being paid for finding work for people who found the jobs on their own’.

She said: ‘Where the government chooses to use private companies to deliver public services it is essential that proper arrangements are in place to prevent and detect fraud and malpractice. 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.’  

Responding to the report, a DWP spokeswoman said: ‘The cases of fraud referred to relate to previous government schemes. The fact is that we have learned from that experience to ensure that the taxpayer is no longer exposed for a bill of thousands of pounds with no guaranteed result.

‘As the Work Programme is based on payment on result, the risk is now taken on by the provider. Providers are paid on the basis that not only do they get someone into work, but that they stay in work. 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.’

The PAC first warned of risks in the Work Programme in May, when MPs raised concerns about its speedy introduction.


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