THE House of Commons Public Accounts Committee yesterday warned of the dangers of widespread fraud in the £1bn ‘Welfare to Work’ programme.
Margaret Hodge MP, its chair 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.
‘The Department failed, for example, to obtain from A4e damning internal audit reports produced in 2009 which pointed to instances of potential fraud and malpractice across the country.
‘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.
‘The recent investigation into A4e looked at particular allegations of fraud but not at the more fundamental question of whether the company was a “fit and proper” contractor.
‘Whether companies are fit and proper is an issue for all departments and the government needs urgently to address this question.
‘The Department has said on the public record that it would terminate its commercial relationship with a provider if there was evidence of systemic fraud in either current or past contracts. However, it has not yet provided a clear definition of what it means by “systemic”.’
She continued: ‘The Department should act to allay suspicion about, and improve public confidence in, the main providers. It needs to publicise its whistleblowing arrangements and analyse information about complaints against providers.
‘Finally, it is vital that the government urgently publishes full data on outcomes, so that we and others can assess the value for money of this programme costing £900 million a year.’
The Committee found that The Department failed to obtain internal audit reports produced by A4e in 2009 referring to a considerable number of cases of alleged fraud and malpractice across the country which are only now being investigated.
‘The investigations of alleged fraud that the Department has carried out have not been sufficiently thorough.
‘For example, the Department appears not to have pursued cases where employers have gone into administration and was not proactive in asking for additional information on the allegations of fraud supplied by the Committee before concluding that there was insufficient evidence to investigate further.’
The government terminated A4e’s Mandatory Work Activity contract in May after finding significant weaknesses in its internal controls.
Its founder Emma Harrison, who was appointed by David Cameron as the government’s ‘family champion’, announced she was quitting the firm.