A4e – Action 4 Emma?

“A4e is a social purpose company with one sole aim. To improve people’s lives around the world. We do this by helping them to find work, skills, direction – or whatever it is they need.”

This is how A4e (Action 4 employment) – the company that recently finds itself central to a rapidly escalating scandal over its role in delivering successive governments’ welfare to work schemes – describes itself on the front page of its website.  The firm was founded by Emma Harrison (now chair) in 1991, growing to employ four thousand people worldwide.  As it has been reported, A4e has been under ‘serious’ investigation five times since 2005 relating to financial irregularities. This did not prevent it continuing to win hundreds of millions of pounds of government contracts to provide, amongst other schemes, social care, legal aid helplines, education for offenders and the aforementioned welfare to work scheme.

A4e’s role in delivering welfare to work has been particularly notorious. It was involved in delivering the ‘mandatory work activity’  (for those ‘who need more focus’), which forced 24,000 people to work, unpaid, at pain of suspended benefits, between May and November 2011. Towards the end of the year this was outstripping a related, though separate, government scheme in which the unemployed can be asked to complete up to eight weeks unpaid ‘work experience’, which in the same period had scored 34,000 participants. Unsurprisingly, many of them were not told that they had the right to leave in the first week, after which resignation would result in suspended benefits. Both schemes saw thousands of people working at public expense for companies such as Tesco, Poundland and Argos. Tesco made just under £2bn profit in six months in 2011, clearly a firm in need of a helping hand from the (flush) taxpayer.

Recently, it emerged that, further to this, A4e had compelled several jobseekers to work in its own offices without pay. In this case the taxpayer was actually paying the employer, A4e, for the work of some of its employees. Now the company has had four former employees arrested by Thames Valley police as part of an ongoing fraud investigation leading, ultimately to Emma Harrison’s resignation as chair of A4e and role as ‘families Tsar’ (whatever that means).

All this while £11m were paid out to A4e’s five shareholders, £8.6m (87%) of which went directly to, you’ve guessed it, Emma Harrison. All of A4e’s 2011 turnover (of around £170m) came from UK Government welfare contracts. This means we, the tax-payer, paid Emma Harrison £8.6m last year – far more than Stephen Hester’s politically toxic bonus, or (perhaps more tellingly) Fabio Capello.

This, it seems, is a very modern story. It is a story of contemporary corruption within a hopelessly contradictory political system – one that viciously attacks welfare ‘cheats’, but pays out the best part of £9m to a woman whose company coerces young people to work for free in its own offices and supermarket chains. Mrs Harrison also stands accused by the Guardian  of creating a firm to bid for a contract she herself helped to design in her governmental advisory role – another demonstration of the insider culture afflicting the business of government and public provision. It was not so long ago that the multimillionaire minister in charge of overseeing changes to legal aid (opposed in this blog by Thomas Williams) was revealed to have £250,000 of investments in insurance firms set to benefit from proposed changes.

This sad story raises its own questions:

Why do we allow people to be forced into working for free? Do we think this is ethically justifiable? Do we think this will give them the skills and confidence needed to succeed?

Why do we pay for large, profitable firms to receive free labour? Do we think they are so hard up they could do with a boost? Do we think the transfer of wealth from the public sector to the private makes sense in ‘austere’ economic times? Why not use this money instead to create jobs?

Why was A4e continued to be awarded contracts, despite an average of around one serious investigation into financial irregularities a year from 2005? Do we suppose private sector efficiencies are enhanced or hindered by the potential for financial irregularities?

Is the delivery of welfare services suitable for profiteering? What added value do we think results from this arrangement?

Should we trust the judgement of a prime minister that appoints as advisors personnel demonstrably lacking in moral values? How many more Coulsons and Harrisons are there out there?

and finally, if A4e ‘is a social purpose company with one sole aim (being)…to improve people’s lives around the world’ why does it not reflect this in its legal constitution, for example by being a community interest company, or charity? Should we trust a private company, so constituted to generate profit for shareholders, when it publicly describes itself as above?

I forgot one: will Emma Harrison return her £8.6m dividend to the public purse, in recognition of the insult to those humiliated into working for free and (presumably) the fundamentally altruistic nature of a ‘social purpose’ company seeking to return the unemployed to work? As such a concerned citizen, does she not think that money could be better spent?