The Sunday interview: A4e chief Andrew Dutton
Andrew Dutton sits in a drab, small office at A4e’s central London headquarters – known locally as the “grey towers” – and recalls one by one the events of the past few months, which have led to eight staff arrests and five official inquiries.
He eventually concludes: “We haven’t got it right all of the time.”
In his first interview since the crisis engulfed A4e, the chief executive of the welfare-to-work provider is naturally relieved that the Department for Work and Pensions (DWP) and other agencies cleared the company of fraud last week.
But he is also nervous that significant challenges remain in rebuilding A4e’s tarnished reputation and getting the firm back on track following a torrent of allegations and complaints against it.
On the same day as getting a “clean bill of health” from the Government, ministers axed a key contract with the firm after they found its work to be “seriously inadequate”. Last Monday an eighth person was arrested in connection with a fraud investigation at the company’s Slough office.
The controversy surrounding A4e is unlikely to go away any time soon.
Tomorrow, a group of MPs is due to question DWP ministers on their handling of fraud allegations across the welfare-to-work industry, not just at A4e, suggesting the problem runs deeper than one firm.
There have been 126 investigations of potential fraud at different providers since 2006, 10 of which were A4e-related.
Tomorrow’s inquiry, which stems from the A4e whirlwind, is almost certain to cast doubt over the Coalition’s flagship £5bn back-to-work scheme, the Work Programme, with serious questions raised over whether the system is still open to abuse.
Problems at A4e escalated when it emerged that its former chairman, Emma Harrison, who was also the Government’s “jobs tsar”, paid herself an £8.6m dividend, when the company is funded entirely by the taxpayer and had missed key performance targets.
She quit the group in February but the controversy that engulfed the firm has not only remained, it has also threatened to undermine its future and that of the entire welfare-to-work system.
“It’s sad we’re known for the wrong reasons,” the 40-year-old Yorkshireman says, as he makes clear that his priority is to repair A4e’s damaged reputation.
Dutton backs calls for the Government to disclose the full details of all cases investigated, something it has so far refused to do.
“If it’s not going to prejudice a case, I can understand why people would want transparency,” he says. “There’s a recognition that the issues we’ve faced are genuinely market issues – there’s been 126 investigations into the whole market. We’re not alone,” he says.
His words echo those of Margaret Hodge, chair of the Public Accounts Committee (PAC), and Jackie Doyle-Price, a Conservative member of the PAC, who last month told The Sunday Telegraph that other providers investigated for wrongdoing should be named.
Unless details are disclosed, a “cloak of secrecy” inevitably leads to a feeling of distrust in the system, the MPs said.
However, Dutton says the investigations have to be placed in “context”. Of the 126 reported cases of potential fraud investigated by the DWP since 2006, 24 had evidence of “false representation” and 22 non-compliance. Five are still under investigation.
The total estimated loss of the cases investigated over the period is £773,000, an average of £129,000 a year. Last year, total expenditure on employment schemes reached £829m, official figures show.
Nevertheless, A4e accounted for just £68,000 of the total money lost over the period – 9pc – meaning the vast majority of cash lost stems from companies that are not yet known to the public but are still potentially winning lucrative contracts.
The Government is currently weighing up whether it is in the public interest to reveal details. The silver lining, Dutton says, is that A4e now has a competitive advantage.
“My business has been completely audited. The other organisations can’t say that,” he says.
He hopes the findings of the inquiry will help his 3,500 staff – who, he says, have been demoralised by the controversy – to move on and refocus on finding jobs for the long-term unemployed.
Dutton, who is not a shareholder of A4e and whose pay packet is undisclosed, called crisis meetings with 200 of the company’s top managers over the past three weeks. He expressed his confidence that A4e has a rosy future.
The company is considering launching into private-sector work, he says, meaning not all of its £215m annual turnover would come from the public purse.
Dutton is preparing to invite local MPs and “opinion formers” into A4e’s 200 offices to help outsiders understand the work of the organisation and rid it of its current sour image.
A4e obtained jobs for 310,000 people last year and it clearly wants to promote the figure, although Dutton does not say how many of those are still in work.
The Government’s new Work Programme has changed the rules. The scheme, which last summer replaced all back-to-work plans put in place by Labour, uniquely pays providers “by results”, which in this case means once an individual has been in work lasting at least three or six months.
“Ultimately, the best way of building our reputation is to perform,” Dutton says.
But official job figures last week showed the number of vacancies in the UK is dwindling. A record number of people are being forced to work part-time because they cannot find full-time jobs, while employers are reducing the number of full-timers they hire.
How can A4e triumph via the Work Programme when there are so few jobs out there? “The innovation of the Work Programme is that we’re incentivised as a provider to continue to support job-hunters for two years,” says Dutton. “We’re incentivised, if they do fall out of work for any reason, to find them another job. It’s a virtuous circle.”
But it has already become clear that the Work Programme is dealing with a fifth more candidates than it thought it would have to, with the majority of referrals to the scheme being those claiming unemployment benefits rather than the tens of thousands of people on health-related benefits who have been told they are fit for work.
This has led some subcontractors, such as charities with specific skills in helping those with mental health and sickness problems, to complain that they haven’t received the volume of work they thought they would. The organisations face real financial hardship as a result.
Dutton dismisses claims that prime contractors such as A4e were “cherry-picking” easy-to-help candidates and failing to pass on job-hunters to subcontractors.
“Referrals have been lower to those organisations than any of us anticipated,” he said. “That’s not because, in A4e’s terms, we’re holding on to those customers and having them for ourselves.”
Dutton refutes claims that providers “went in too low” when bidding for the Work Programme, and insists the new scheme does not allow for fraud or encourage short cuts.
He also insists A4e has implemented rigorous controls to help prevent wrongdoing in future.
The new scheme is already outperforming the previous Flexible New Deal scheme in terms of supporting people into work, he says.
“The Work Programme is globally right at the vanguard of the largest programme that is effectively looking at payment by results,” he says. “It is what it says on the tin. We get paid when we get a result.”.
Still, a damning report from the spending watchdog last week showed up to £1bn of taxpayers’ money was being spent on finding jobs for people who would have found work without help.
One of the worries is that companies, including A4e, get £400 just to assess each candidate. Dutton, however, insists the contract “doesn’t work like that”, adding that providers needed some up-front fees to cover infrastructure costs.
“The more successful we are, the more revenue we will generate, and the more people are in work and contributing to society. It should be a virtuous circle,” he says.
The Government is unlikely ever to suggest that A4e or any other provider caps its profit because of the crisis that has hit the industry, Dutton argues, as it knows that would put off private providers.
Nor will the company change the way it bids for contracts, such as offering new sweeteners or deals, as a result of the crisis surrounding the firm.
As far as is possible, it is business as usual for A4e.
On a wall outside the office where Dutton sits is a staff noticeboard, titled “Wall of Fame”, which showcases A4e’s more positive press cuttings. It has been kept up-to-date during the crisis, with one headline screaming: “How A4e has hit back at fraud allegations.”
It serves as a simple reminder that transparency and accountability really are the best policies if A4e, and the industry, is ever to recover from the jobs scandal.
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