Preventing fraud and improper practices in contracted employment programmes : fifteenth report of session 2012-13, report, together with formal minutes, oral and written evidence

The Department spends around GBP900 million annually on programmes to help unemployed people find and sustain work through its contracts with a range of companies and some charities.

Following a hearing on the Work Programme in February 2012, allegations of potential fraud and poor service from employment programme clients and whistleblowers were passed to the Department.

The Department has initiated an investigation of the adequacy of controls at A4e, one of its major contractors, and is investigating individual allegations.

The Department has not defined what standards a company must meet to be a 'fit and proper' organisation with which the Department is willing to contract.

The Department's controls against financial fraud for the Work Programme are a significant improvement on previous schemes, although allegations that some providers give a poor service have already begun.

Furthermore, risks also remain in the Department's other programmes.

The Department's 'black box' approach to contracting for the Work Programme allows providers to innovate but without sufficient auditing and neither is there a mechanism in the contract for improving service standards over time. The Department lacks sufficient information on the nature and number of complaints made directly to contractors to identify trends and learn lessons.

There is also no obvious mechanism through which participants, contractors' employees or MPs can raise issues of concern relating to fraud and poor service.

While it may be tempting to define an acceptable level of fraud it the committee's view that this is the wrong approach.

Rather the department should take all reasonable and affordable steps to drive out fraud