The Government has ended a contract with welfare-to-work provider A4e following allegations of fraud at the company.
A statement released this afternoon by the Department for Work and Pensions (DWP) explained that, although a DWP audit into A4e's work found no evidence of fraud, it presented "too great a risk" to continue with the relationship; it has therefore terminated its Mandatory Work Activity (MWA) contract with A4e in the South-East.
MWA was designed to help claimants of jobseeker's allowance to develop skills to help them seek employment, by participating in "brief spells of work-related activity". Participation was mandatory and those who failed to participate, failed to complete, or lost their place due to misconduct faced sanctions.
A4e's role as a welfare-to-work provider meant that it was paid in relation to the numbers of applicants who had been placed in work.
The DWP's audit was launched in March after it was alleged that fraud had taken place at A4e and that employees at the company had claimed payment for MWA participants who had not been placed in work. The audit investigated all MWA claims at A4e's Epsom office (from which the original fraud claims originiated), as well as 20% of all other A4e claims under its contract with the DWP.
In today's statement, the DWP said that 97% of payments related to participants who had successfully been placed in work-related activity, and that anomalies in the remaining 3% could be attributed to inadequate procedures rather than fraud.
However, the DWP said: "While the team found no evidence of fraud, it identified significant weaknesses in A4e's internal controls on the MWA contract in the South-East. The documentation supporting payments was seriously inadequate, and in a small number the claim was erroneous. There was also a high incidence of non-compliance with other relevant guidance, including A4e's own processes.
"The process established prior to March fell significantly short of our expectations. As a result, the department has concluded that continuing with this contract presents too great a risk and we have terminated the MWA contract with A4e for the South-East."
The DWP said that it had reminded A4e of the need for "the highest standards of governance in relation to all their other contracts", and extended this reminder to its other welfare-to-work providers. It added that it is "considering what further steps can best ensure that providers meet their minimum standards, and participants are clear about procedures for complaints".