Committee urges more rigorous fraud detection

18 March 2010

The Work and Pensions Select Committee today publishes its report on the management and administration of contracted employment programmes.

The Committee examined the Department for Work and Pension’s (DWP) Commissioning Strategy and the Flexible New Deal in 2009. This report is wider and looks at contracted employment programmes as a whole. It focuses in particular on the prevention of fraud, the treatment of subcontractors, and ensuring fair treatment of customers.

The Committee found that levels of detected fraud in contracted employment programmes are low and was also told that there is little evidence of a problem with undetected fraud. However, the Committee feels that there is no room for complacency; the frauds uncovered to date have highlighted the existence of weaknesses in the system which could be exploited.

The report therefore calls on the Department to ensure that processes for the detection of fraud are rigorous and robust. In addition, in the Committee’s view the financial penalties for providers who have fraud in their organisation are not severe enough. The Report notes that a system which combines greater use of "off-benefit" checks with stringent deterrents could be as effective, and cheaper, than the current one.

The report calls for customer rights to be given a much higher priority, and for a universal, monitored, and enforceable customer charter to be introduced. It also calls on the Department to carry out a "Customer Survey" of customers of contracted employment programmes to enable standards of customer service to be compared between providers and with Jobcentre Plus.

The report notes that there is already evidence of "parking" in Pathways to Work - where providers offer a limited service to those who they feel are unlikely to move into work. The Report notes that the high rates of disallowances for the Work Capability Assessment are leading to more people with health problems on Jobseekers Allowance, and to a higher proportion of claimants of Employment and Support Allowance having more severe disabilities.

The Committee notes that this will lead to providers needing to work with customers with more severe barriers than they had anticipated. The Report recommends that the evaluation of Flexible New Deal should include the impact of the programme on different impairment groups, and that the new Work Choice programme for the severely disabled should include monitoring by impairment groups.

DWP sees itself as having a "market stewardship" role. However, the Committee did not see evidence of this happening in practice. The Report examines several examples of potential mistreatment of sub-contractors including allegations of the operation of a cartel, and notes that while it does not know how widespread unfair treatment of subcontractors is, neither does the Department.

It concludes that the Department does not even have a clear idea of what constitutes fair treatment, and, despite its rhetoric, it had shown no willingness to get involved with even the most serious cases.

Terry Rooney MP, Chairman of the Committee commented:

"DWP is delegating responsibility for fraud prevention, customer service and the treatment of subcontractors. This system could work if it was rigorously policed by the DWP, but this is just not happening. There are inadequate financial penalties for providers with fraud in their organisations, and this does not provide the required deterrent.

"DWP doesn’t have robust data on the standards of customer service offered by providers, and has limited contact with those customers. Furthermore, DWP is not talking to sub-contractors who feel they are being mistreated and we are not convinced they know what is happening on the ground. We are also concerned that if such mis-treatment is widespread, or large numbers of sub-contractors go out of business, it would jeopardise the delivery of contracts."

Image: PA/Johnny Green

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