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More (and more) rumblings of fraud
Edit 29/6 - Updated with details of the Channel 4 News story
An article in last Sunday's Observer picked up on a previously unknown fraud probe at A4e in Hull, and drew comparisons with the Individual Learning Accounts fiasco to make the whole thing sound rather bigger than it was. Here's the article content, boiled down for easy digestion:
- Two A4e recruiters have left the company after a fraud investigation which started in May 2008
- The total number of fraudulent claims was apparently 20, with repayment of £15,000. Another company was asked to repay £48,000, but hasn't been identified
- There's no evidence of anything deeper, or as the DWP said, "Our investigations found no evidence of systematic abuse"
There have been a few discussions about fraud on this site before, and at times it seems to be the only thing anyone in the wider world hears about the welfare to work industry. Not only that, but some of the reporting that goes on seems a bit patchy even from the limited angle it chooses to follow.
This story, for example, gives a clear intimation that the two recruiters were the tip of an iceberg. But it does this through misdirection and innuendo. Even the headline 'Fraud inquiry into new government jobs scheme' is wrong. The inquiry started over a year ago and has nothing to do with Flexible New Deal, despite the weaselish inference that it 'comes weeks after A4e was earmarked for £100m of contracts for the government's Flexible New Deal'.
So, how could the reporters have done a better job?
Not being a trained journalist, it seems a tad presumptuous to try and tell them their job. That's never stopped me before though, so here goes.
1. Show a pattern
Even a brief scan of this website would have produced reports on medium scale fraud up in Glasgow, large scale fraud at the ill-fated Maatwerk in Manchester, dubious goings-on at the defunct Cee-Mac, an internal investigation down in Brighton, and a rather curious allegation about claiming free laptops for family members. That's to say nothing of the fraud discussions to be found in Select Committee minutes, NAO reports and the like.
Looking further back they would have found a fraud investigation into the Reed in Partnership PSL in Hackney back in 2002, and an illegal immigrant fraud investigation into the same organisation's Liverpool office in 2003.
Almost all of these are larger in scale than the sums involved in the Hull case. Even with these, though, there isn't a pattern of fraud, something that is transmitted across offices and embedded in organisational culture and practice. There are a few of them, but there's never been evidence of transmission, and are there really that many compared to the size of the industry?
2. Look at how FND will affect the chances of fraud
The FND payments model has been explained in some detail. The first outcome payment is for 13 weeks of sustained employment. This is verified using off-benefit checks and tax records. These instantly cut off the possibility of paying customers to sign off benefit briefly, or giving them a job sweeping the floor for a day. They'll be back on benefits again long before they would count as an outcome. The checks also remove the possibility of claiming a job outcome for someone who hasn't found a job, since they'll still be on benefits. Finally, the performance of an entire contract can potentially be verified against tax records, ensuring that the number of job outcomes and people paying tax match up.
3. Realise they're looking at the wrong story
Fraud is big. Fraud is emotive. It smacks of theft and waste and ineptitude and gravy trains. It's also, in and of itself, not relevant if what you're looking at is how to get the best welfare to work support for your money. The reason we think about fraud is because it wastes this money and stops people from focusing on their actual job of helping people to get work. It is, however, not the only thing that does this:
- Process-driven delivery forces providers to deliver unsuitable or poor quality services to customers, including sticking them in a room for thirty hours a week for no reason
- Paperwork (including the very paperwork that is supposed to prevent fraud) results in battalions of people transferring data between different forms instead of helping customers
- Perverse incentives reward providers for mis-delivering or gaming provision, or for ignoring harder-to-help customers
- Poor performance management, and the ignoring of past performance when awarding new contracts, makes high quality delivery unrewarding
I would suggest that, from what I've seen and heard in the industry over the years, every single one of the issues listed above wastes more money and hurts customers more than contract fraud. In this sense, the traditional journalistic model is failing to hold the system to account, and may in fact harm delivery in the long term by leading to more process-driven approaches, unnecessary paperwork burden, and new perverse incentives.
Update - Did the Channel 4 News story do any better?
A Channel 4 report on Monday worked far harder than the Observer report, and focused mainly on Working Links rather than A4e. Here's how it performed on the three points above:
- Show a pattern - The report went into considerable depth on the fraud stories mentioned above, plus a fraud-related sacking in Wales, and an internal email raising the prospect of medium scale fraud in Hackney. There was evidence of a number of small and medium scale incidents, albeit still no transmission between centres. There do seem to have been some ructions in Working Links around the time that all of these apparently came to light, back in 2007.
- What about FND? - The methods of fraud that were shown - forging customer attendance signatures and placing people in 'fake' permanent jobs - will both be rendered obsolete by Flexible New Deal. This was not discussed
- The bigger picture - The relative impact of process-driven approaches, paperwork burden, perverse incentives and performance blindness are not examined in any way
Based on these, it still has some way to go before it can be seen as entirely non-sensationalistic. Where it could have an impact is in giving greater impetus to opening up information about DWP contracting, including fraud. It's worth noting that the DWP won't even tell MPs which providers have been investigated or have repaid monies to the department. Little wonder that Select Committee Chair Terry Rooney was shown looking a bit grumpy and wants an inquiry led by him or the National Audit Office.
Further reading
I've already covered fraud in a previous article, which went into considerable detail about how it can happen, why it's limited in nature, and why providers really don't want it.
Comments
Funnily enough, I put the idea that only sensationalist fraud stories ever made the news to a journalist a while back. He responded that actually, the vast majority of news stories were positive, and he'd trawled through the press databases to prove it. The positive stories he was referring to were of course the ones that appear in the local press, saying 'Joe found a job thanks to provider X'. I'm not convinced they actually count as news, but maybe that's just me. At any rate, they don't appear on the front page of the Guardian website.
Okay, it's small-scale stuff and probably inevitable with the current contracts - although there are many providers who haven't indulged in it at all. And there's almost certainly a lot more of it going on with a few contractors than has been uncovered. But there's a perverse incentive for the government to keep it quiet because it damages the whole notion of the worthwhileness of these contracts. When fraud is discovered it has no effect on whether the culprit gets future contracts, so why worry about getting stung for a few thousand quid? Now we're supposed to put all this behind us and concentrate on FND, which, we're told, will be so much better. I doubt it. When the incentive is profit there will always be scope for fraud.
Fraud.....horrible word and about the only one that nationals often feel noteworthy of a Front Page headline. It's sad as we know it has happened large scale in the past and a shame it still goes on but, and I in no way condone fraudulent practice, the DWP has to take some blame for the payments culture.
Many companies who are struggling in the current climate will do all they can to survive....as I said not condoning it but cashflow and all that involves is integral to survival nowadays. Bear in mind DWP were expecting companies to survive in FND with job only funding which has already proved to be a BIG mistake when we look at the providers who are struggling to maintain P2W contracts. It is still quite a shock to find out that A4E have been found wanting and have admitted their part in it which is a shame at this crucial time for our industry. Personally I am looking forward to getting to grips with FND it will make improvements and is better for the clients/customers and will help providers to really develop new delivery models and practices it is sad that the odd 'HACK'has to try and put the mockers on it before it starts because they just can't find anything that is more newsworthy and clearly don't put much stock into researching the stories either.....Like the name suggests....sameolsameol....
For those who didn't see it...
http://tinyurl.com/ntsbc7
Small time, my back end, i only know where some of the bodies are buried, but to come forward would be career suicide, nepatism within the w2w providers is rife. Sad on both counts me thinks
I can only speak from my own experience and knowledge. If you have something solid and want to take it somewhere, it's possible the National Audit Office or Select Committee might start some digging in a bit. I still think it's more a case of rotten apples than rotten barrel, although the barrel does need a lick of paint occasionally.
One of the many good consequences of the Commissioning Strategy is that fraud becomes much, much harder. Unfortunately, many of the non-FND provisions in the pipeline don't seem to be following the parts of the Commissioning Strategy that make fraud less likely. Bah.
I'm with a4e on this one - it's a real non-story. Every provider I've ever had anything to do with has probably had some twit in their ranks like these two dimwits in Hull. The point really is that the audit procedures picked the problem up and dealt with it, and failed to find evidence of anything more sytematic. £15,000 payback given how much a4e have earnt from New Deals seems like a pretty good result to me.
I can't speak for A4e as i have never worked for them, but i can say that sadly i have witnessed other National Welfare to Work Provider managers either pressuring members of their team to commit fraud or turning a blind eye when they know such things are going on but they are more intersted in meeting profiles, targets etc...
The irony is that if the same amout of time and effort was put in to job evidence collection along with the right signitures on the right paperwork as there is in backtracking and covering up fraudulant activity...there would be no such issue as fraud raising it's ugly head.
As for the innappropriate use of client purchasing cards....who wants to start the discussion....?
I'm interested in knowing whether you're talking about outcomes fraud, attendance fraud, or paperwork fraud?
I've said it before, but it's really worth paying attention to this. Flexible New Deal will make virtually all of these kinds of fraud obsolete, at least on the DWP side. The only attendance requirement in the entire year is four weeks of work experience, the paperwork requirements are virtually nonexistent thanks to PRaP, and the outcome measurement is long enough to preclude job cycling.
This is not necessarily true for other DWP procurements currently being procured which do not follow the black-box, outcome payments model. However, there's a fundamental tension between these principles and the 'more people than jobs' issue that hits providers in a recession, that may make it useful to look at a secondary target of keeping people active and job ready until the economy picks up.
[Edit 2/7 - I've noticed that I'm using a separate list of types of fraud here to the ones in the original fraud article I wrote a year ago. The difference is, the fraud types identified in last year's article represent the opportunities for directly defrauding money from the DWP. The ones identified in this comment are from the Channel 4 report, and include fraudulent behaviours that aren't directly aimed at making money without doing the job that's being paid for]
It's interesting that you think that paperwork fraud is common and benign. The provider I worked for (a sub-contractor of A4e) never, ever did that. Outcomes fraud is far from simple. What was being done in Hull, at least as related in the Channel 4 piece, was getting agencies to sign off jobs as permanent when they were actually temporary. I'm sure this is quite common, in areas where the only jobs available are with agencies, generally in factories. What you describe as attendance fraud is generally the result of the Jobcentres failing to penalise people who go AWOL, so the provider might as well try to keep them on the programme as take them off, with the damaging effect on their stats.
You seem convinced that FND will end all this. But I bet they find other ways of defrauding the system.
A small interjection here - reference Anonymous above ...
...was getting agencies to sign off jobs as permanent when they were actually temporary...
The FO54 (old one) has the line "do you expect the job to last 13 weeks" and this needed to be ticked to claim the full outcome, if the job didnt last 13 weeks, because the employer and employee both thought it would (????) then the outcome would still be paid - regardless. The FO74 (rolled up weeks) would then be paid for the time when the client would have still been on course. But this will not get paid if the client returned to JSA / W2W.
Now then, to me and many others, 13 weeks is a temporary contract, however, DWP/JCP regard this as a permanent job outcome. Hopefully, with the fND coming into force in October, this will now be amended to 26 weeks - lets face it, 6 months is a lot more permanent than 3 months.
And for the record - I fully agree with Daniel, in his 1st post on this subject.
Windsor: In FND the outcome is claimed after a customer has been in work for the sustainment period. This can be checked against income tax and benefit claim records en masse, as well as with the employer on a customer-by-customer basis. I agree that this makes outcomes fraud much harder, but outcomes fraud generally gets discovered sooner or later anyway in the present system - you can't keep pretending that you're getting people into permanent jobs when they keep turning up back at the Jobcentre.
Anonymous: If anything, I suspect the big name providers are cleaner on paperwork fraud than most other organisations, including ones in the public sector. I would stand by my belief that most paperwork fraud is not fundamentally malicious. It's a natural result of introducing too much complexity and too much administrative burden into a system, especially when every second spent on administration means one second less spent helping someone. Humans aren't machines, and sometimes the only way to make the system work is to correct errors when they emerge.
Having worked on EZ in [somewhere or other] for over three years now I have lost count of the amount of clients I have met who "found work" through one provider in particular, only to find themselves back on JSA 13wks later. The provider in question is also a large recruitment agency & former staff have reliably informed me that they would cycle EZ clients through their ringfenced vacancies, claiming a start & sustain payment before dropping the client & putting someone else in the role. This is entirely within the rules but morally reprehensible.
When not placing clients into temporary vacancies they control they have another novel trick. I once spat my muesli out over a "News" story on BBC [local television] featuring the fantastic work done by this provider at their "training" centre in [a local area]. An unemplyment gentleman with no office experience was given the fantastic opportunity to undertake a 13wk work placement as an admin asst at said training centre(THEY ACTUALLY HIGHLIGHTED THE TIMESCALE IN THE STORY!!)
Hmmmmm........16hrs at min wage for 13wks vs. Start fee, 26wk subsistence payments, outcome fee, sustain fee?????
I'm gutted that we didn't win [our area] but there is some justice as neither did they.
FYI. Suprisingly I'm not talking about a4e or Links.
[Moderation - I've removed identifying details]
some further examples....having company stamps made for the specific purpose of claiming job outcomes that are fabricated, paying agencies £50 per job start knowing full well that the client will only last a few days... using purchasing card for personal use and then putting the spend on to a job seekers records
This is not an exhaustive list...
Continually brushing proven incidents under the carpet following 'inconclusive' inverstigations.....
sound familiar?
Does not surprise me.
They brought out a small provider called [Kittens] (?) about 5 years ago simply so that they could get their grubby mitts on [some local] Programme Centre/Gateway contracts. They ditched the last of that organisation's staff working in the disability consultancy side of the business after they failed to be PC in any Pathways areas.
More fool them as one of them has gone on to set up on their own as a specialist niche provider and doing very well - even expanded into Australia last I heard. Others have gone freelance and one has landed a senior job with a large blind org.
[Moderation - I've removed identifying details]
A simple ground rule for this (and all) discussions:
Thank you for sharing your experiences!
I think the post by Daniel at 14:18pm sums it up rather well, and it mirrors my experience with a former employer.
Paperwork fraud is possibly quite common and very much the product of an unforgiving system that takes no account of common sense. Things like: insisting on an employers stamp on a job outcome, whereby we know that many companies, even large ones, no longer use rubber stamps. Other companies who insist on paperwork being sent to 'head office' for validation, never to be seen again, despite much chasing and wasted staff time. The temptation is bound to be there to bend the rules when you know you have 'earned' the outcome, but the administrative process is preventing you from claiming it. Similar probelms with time sheets, the client has been dismissed, you know that they have attended placement, but there is no way of getting them to sign a time sheet. Again, the money had been earned, so why should the provider loose it?
I believe attendance and outcome fraud are both very rare and very wrong. However, like for any 'petty criminals', for some there will be a moment when the temptation to move on to more serious fraud becomes irresistable.
I don't condone paperwork fraud, but while providers must chase their tails to feed a process based, paperwork driven system, it will continue.
Rather than suggest that "how could the reports have done a better job", surely We should simply applaud the attitude which investigators have demonstrated, to acknowledge the need for fraud to be identified (wherever and whenever it is identified, whomsoever commits the fraud) and for any prevalence of fraud to be dealt with in the most appropriate way possible.
After all, if the Government is targeting "Benefit Thieves", for example, which is more series.... someone in receipt of Job Seekers Allowance who commits fraud amounting to several £'000 (for example), or a Third Party Agency which commits fraud on a much larger scale?
Perhaps, given that A4E have been investigated, other agencies should also be investigated, such as Working Links.
The Channel 4 piece clearly involved some full-on investigative journalism. The Observer piece was about a fraud involving two people in Hull, covered in huge lashings of innuendo to make it sound like the entire welfare to work industry was in the frame.
I would argue that both of them had too narrow a frame of reference. They ignored more important issues in favour of more newsworthy ones. Consider an organisation's standard response to fraud: adding more paperwork, regulating frontline activity more closely, measuring individual bits of activity rather than the intended outcome, and generally micro-managing what everyone gets up to.
This response would make many of the bigger issues (paperwork, process-driven delivery, perverse incentives) far worse. A better response would be to do many of the things that FND does - finding what the really important outcomes are and measuring them in a way that's very difficult to fake.
In response to the suggestion of investigating Working Links instead of just A4e, the Channel 4 report has details of just that, so I'm not sure I see your point. You're also skirting the edges of the discussion's ground rule. Name-calling and abusive argy-bargy isn't going to get anyone anywhere.
There's now a second Observer piece with allegations of a fraud investigation into Triage Central. As fraud goes, this one is (if true) possibly the most incompetent example I've ever heard of. According to the article, they distributed flyers in Dundee earlier this year which said:
This is very similar to the Maatwerk fraud allegations in Manchester, except they weren't so astoundingly stupid as to print up flyers telling everyone they were breaking the terms of their contract. Incidentally, this is one of the types of 'actual' fraud identified in the original fraud analysis from a while back.
Earlier I raised the issue of fraud with respect to A4E...my comments were removed...warning to those in charge of this site...wake up !!! I have evidence...fraud is rife among the various providers I have personal experience of...a comment by another contributor regarding pressure on provider frontline staff by more senior managers to either commit - or turn a blind eye - to fraud holds true...[redacted] ?
I expect to see more exposure of fraud...dare I say...I told you so :-)
[Moderation - try not to accuse people of fraud without solid evidence. If you do have solid evidence, then this is an odd place to post it in any case]
I am an advisor at a small provider in London and have been in this business for nearly ten years. Fraud IS rife throughout this industry, some quite small and for the benefit of clients, some is HUGE and based on greed and protecting ones position.
'Fraudwatcher' - If the removed post was the one made under a different username, last night, in reference to named individuals employed by A4e, then you (a) are using multiple identities in violation of site terms, (b) posted potentially libellous content in violation of site terms and the simple ground rule that appears about one screen above this, (c) posted the same content multiple times in different areas of the site, and (d) can't manage basic spelling or grammar for toffee.
Oh look, reading your post more closely, 'fraudwatcher', I note that you've just accused DWP contracts staff of corruption. Consider this your only warning.
Zednice - I've been in the industry since 2001. My mum (seriously!) was in the industry from the 1980s until a few years ago. The 1980s schemes were renowned for fraud. The legacy of companies exploiting the complete lack of monitoring back then is the crushing burden of paperwork and monitoring we have now.
There's some fairly basic maths / logic that should tell you there are limits on how far any fraud can go. People have to actually move into and stay in work, otherwise they reappear at the Jobcentre and the game is up. This applies less to self-referral provisions, but as the Maatwerk case shows, they're undone by the need to find large numbers of people who are about to start work and get their co-operation in the fraud.
I do wish the NAO or someone would hurry up and announce an inquiry. There's clearly some widespread belief in fraud at the delivery end, and hopefully such a move would help to clarify what's really going on, and provide reassurance that FND is bombproof.
"The Channel 4 piece clearly involved some full-on investigative journalism. The Observer piece was about a fraud involving two people in Hull, covered in huge lashings of innuendo to make it sound like the entire welfare to work industry was in the frame. I would argue that both of them had too narrow a frame of reference. They ignored more important issues in favour of more newsworthy ones."
I agree with this, but it's the "newsworthy" element that's important. Radio 5 Live did an important piece on what was going on in some A4e offices, but despite its small audience it meant that anyone else wanting to cover the subject had to come up with another angle. The producer of the Channel 4 piece (which had been in the pipeline for a long time and was stymied by R5L) focussed on the fact that these frauds were known to the DWP but had not been publicised. It was unfortunate that he chose a type of fraud which few in the industry would regard as such, but it has highlighted the need for more openness about New Deal contracts. People have been blogging about it for years but no one noticed, apparently. What really angers many is that providers which are known to have engaged in fraudulent practices and very poor service still get new contracts.
agreeing with honesty and integrity,
I currently work for a company [removed] and we are under pressure to hit targets and get outcomes.
To achieve this we are being told to edit this and write a new form out and copy signature. We are even making up business cards and passing them off as a companies card. i would say that on a monthly basis 70% of the job outcomes are either edited or faulse. If the employer states that work might not last 13 weeks we advise to leave it blank then and we would then tick YES. if we were audited we would be in the ....
its not just our office either, the other offices are also doing this. I am only speaking out as i think this is wrong and if people are not doing this then the managers are pressured into dismissing them as underachievers.
[Moderation - best to keep the company a bit more vague on this]
I have heard that [deleted] are under investigation in [deleted] for a huge fraud ??
[Moderation - I've asked for confirmation on this, but can't allow it on the website in the meantime I'm afraid. Sorry!]
someone that works for jcp told me she said the investigation has been going on for 3 months, the fraud has been going on for years and it is a huge amount of money
because 2 individuals act in such a way, does not mean the company condone this behaviour!!
What if two individuals OWN the company, then??
I can tell you that the 2 individuals are from 1 part of the country and i know that it is happening else where. in my office
i am from another part of the country and on a different contract.
Fraud within the company i work for is happening alot! the company may not condone this behaviour but they turn a blind eye to it and in some cases managers will often tell you to amend it! i have evidence. but do i spill the beans on it all... unfortunatly not I wont have a job to go to.
DWP investigation has been going on for 3 months but only focusing on a certain contract and a certain part of the contract.
Blimey. This is starting to feel like the good provider / bad provider discussions that I had to kick off the site a few months back, with added libelly goodness. The problem is that general claims about fraud can't be verified, and specific claims can't be made, so it just ends up with people going 'fraud!', 'no fraud!', 'fraud!', 'no fraud!'.
What I may end up doing on this is redirecting everyone to the /whistleblowing.aspx">National Audit Office whistleblowing hotline, and closing down the discussion until there's something more solid. NAO staff have been subscribing to this site for some time, but there's really not much for them to go on unless they get sent specific allegations.[see the final comment in this thread]I would link to the DWP's internal contract fraud division, but I can't find any details on them so far. Will post as and when I get hold of them. For what it's worth, I still think that the 'genuine' fraud of making up non-existent job outcomes is confined to the occasional individual, rather than being systemic.
Rumours that one of the larger FND providers mentioned in the news article have had their contract offer withdrawn by DWP. Any info/news from elsewhere??
Those rumours seem to emanate from a single blogger who produces no evidence at all. It seems unlikely that contracts would be withdrawn at this stage, when the DWP knew about the incidents before the FND contracts were allocated.
I do know that one blogger out there got rather excited by the news stories that were mentioned in this article and concluded that contracts were obviously being lost. In the absence of further information, that seems as likely a source as any of this rumour.
It would be incredibly difficult to drop FND preferred bidders at this stage, and it's unrealistic that the 'rotten apple' kinds of fraud that have shown up so far would lead the DWP to do so. As it happens, the FND contracts still haven't been signed, and the DWP are apparently having fun and games getting the final contract terms right. In most previous contract rounds, there would be little or no negotiation on contract terms and conditions, but that's changed rather given the sizes of contract and risks to primes.
Update 28/7 - As per this posting and my previous comments, all discussion on fraud is being closed down during the Work and Pensions Select Committee investigation into the matter. They are welcoming submissions on the topic until 1st October 2009.