fraud

In an interview with Channel 4 News, Lord David Freud, minster for welfare reform discussed the high costs of the welfare system:

 "The direct cost of our welfare system will shock you. There is fraud and error in excess every year of £5bn. We disregard nearly a billion and it actually costs £2.5bn to administer.

According to Camilla Cavendish,the benefits system has produced a generation of men incapable of finding work or a wife. Writing in the Times, she criticises the huge potential for ‘fraud’ and ‘foulplay’ within a system that has created an army of ‘unemployed, unmarriageable and unconfident men’.  The women do not want them, she argues, because they can raise families on benefits without their help.  Controversial?

Following a rash of stories about contract fraud and failure in the press earlier this year, the Work and Pensions Select Committee announced an inquiry into the management and administration of contracted employment programmes. Interested parties were invited to make submissions.

Reproduced verbatim from the Parliament website

The Work and Pensions Committee today announced an inquiry into “Management and administration of contracted employment programmes” The Committee welcomes submissions, in accordance with the guidelines set out below, with reference to areas such as:

• Are there sufficient safeguards in place to prevent providers from making fraudulent claims for outcomes they have not achieved?

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:

The DWP have announced the shutdown of Financial Audit and Monitoring by the end of July, confirming rumours circulating in recent weeks. However, this is a brief suspension to allow set-up of a new, national level team that monitor a provider across all regions at once. Interestingly, the monitoring will be to measure 'assurance of added value for money'. Still no word on how this will work together with Ofsted or with primes' subcontractor monitoring. The full announcement follows:

One of the more interesting ways in which different stakeholders view welfare-to-work delivery is the assumption made by the most disenchanted customers that the industry is a gravy train, and that the whole thing is some kind of fraud being perpetrated on the taxpayer with them as the victims. While at one time there was room in the industry for sharp practice, procurement and contract management both now take account of performance in securing job outcomes, eliminating the persistent underperformers.

A perverse incentive is an incentive that has an unintended and undesirable effect, that is against the interest of the incentive makers. While perverse incentives are equally possible in government-run delivery of services, this article focuses on their application to delivery by third-party providers.

Cherry picking, Creaming and Parking