The dark side of the Big Society
Fraser Nelson 8:56am
The A4e scandal is getting worse. Emma Harrison has quit as David Cameron’s
back-to-work tsar, the police are still investigating a case discovered last year and there’s a suggestion their investigation is widening. This is, for David Cameron, the dark side of the
Big Society. In my Daily Telegraph column today, I explain
why.
‘The Big Society’ is a silly name for a good idea: that lots of companies, charities, etc will help provide government services. They are given freedom to innovate, to create — and the freedom to get things badly wrong. This is the freedom which A4e seems to have availed itself of. It grew like crazy, perhaps too fast. Its internal audit procedure found four staff who had been falsely claiming to get people back in work. It fessed up to the DWP, and presented the findings to the Thames Valley police.
It doesn’t really matter that the fraud was committed under the Labour years, under contracts signed by the Labour government, on a paper-based system which A4e itself warned was wide open to fraud. What matters is that Margaret Hodge, former head of Islington Council now chair of the Public Accounts Committee, is on a campaign against the concept of private companies working on government contracts. This is her line of attack: using the A4e debacle to portray the whole subcontracting (or Big Society) idea as corrupt.
So far, at least, it seems we’re dealing with a few rotten apples — not a diseased crop. The welfare-to-work programme is no more riddled with corruption than the House of Commons is a hotbed of head-butters. It won’t seem that way, especially if more A4e claims emerge. But it’s important for Cameron to emphasize that this is not a disaster. Fraud is simply detected far more often by the audit procedures of private companies that it is in the state sector. PricewaterhouseCoopers conducted research into this at the time, and found a dismal difference between the two. It noted that most fraud in the public sector is discovered by accident (14 per cent) or by a tip-off (45 per cent) — ie, not because the company was looking for it with any success. Most (61 per cent) government agencies have internal fraud risk management procedures, but these uncover just 5 per cent of fraud — in the private sector, such checks are three times as effective. Government just isn’t very good at it.
I am not saying ‘private good, public bad’ — I suspect both have their sinners and their saints. I’m just saying that, if you have systems open to abuse, people will abuse them — whether they work in the private sector or not. For example, did you hear about the civil servant in charge of payments in a government department who invented eight invoices, then credited his own account with £246,000? He’d have gotten away with it, too, had his bank manager not smelled a rat and called up the government to ask about the provenance of this large bonus. If this happened in A4e, you can imagine Hodge saying she’s never know such venality: such theft of taxpayers’ money. As it happened in a government department, it wasn’t even reported: just an everyday story of state-sector waste. (Detalils on p11 of this National Fraud Authority report).
In America, there’s a saying: that the greatest threat to Charter Schools is bad Charter Schools. That a whole project can be contaminated by a few cases that go spectacularly badly. So I don’t underestimate the potential of the A4e revelations to rebound on Cameron, but he ought to make a gritty point in return. If you set schools free, and have scores of new providers, there will be some rotten ones. If you move welfare-to-work provision into the private sector, where inquiries are twice as likely to pick up wrongdoing, then you’ll get more bad headlines. It’s a horrible thought, but if the Big Society is going to progress then these scandals will keep coming. And this is not the best time to stick your head in the stand. The task for the Prime Minister is to argue that his liberalization programme will bring its problems — but they are heavily outweighed by the successes.
Previous
TomTom
February 24th, 2012 9:22am Report this commentHow little has changed since Brown. Harrison was always a self-publicist after taking over her father's business and obviously appealed to our dim politicians.
We still have Universities in Business and Child Social Services in Education. Brown's demented changes have continued.
We have the same economic policy as Brown. Give the Banks everything and suppress the households.
There has been simply a lurch to the Left since Brown with gay marriage and other trivia. Otherwise it is Gordon as Usual courtesy of Dave and Nick
REPay
February 24th, 2012 9:24am Report this commentYes, the state producer collective will try to roll back the private sector. At 50% of GDP the Labour party's old dream of state dominance is nearly complete. Those of us not enjoying its unfunded pensions, low-risk employment and suffering the real austerity of government overspend and regulatory negligence can shut up and pay our taxes.
Charles
February 24th, 2012 9:27am Report this commentJust a side note, the bank manager wasn't doing anything special - just following banking regulations on 'reporting suspicious transactions'.
The vast majority of bankers are more normal people than the mass media would have you believe
Simon Stephenson.
February 24th, 2012 9:37am Report this commentDon't get a fixation about fraud. This is only the extreme end of sharp practice. If there is an easier way to qualify for a reward than producing the outcome which the reward is supposedly incentivising, then, in our contemporary culture, this is what people will do. It is absurd to believe that we are still guided by personal feelings of the need for reciprocity - if there's a short cut to the reward, who cares if one hasn't produced the outcome that was intended?
Fergus Pickering
February 24th, 2012 9:39am Report this commentShe's got a face like a bag of spanners.
TrevorsDen
February 24th, 2012 9:59am Report this commentA4e were given millions by labour, so as far as I can see any dubious actions took place under them. And we see from Mid Stafford and the care homes how the govt agency to monitor them, the CQC, again set up by labour went bad.
Under labour we see money spent with gay abandon. The Tories (the coalition! need to make sure its now spent wisely.
PS
All the nefarious activities at News International and elsewhere (The Mirror?) took place at labour supporting newspapers and were studiously avoided by the Met.
Old Northerner
February 24th, 2012 10:16am Report this comment'What matters is that Margaret Hodge, former head of Islington Council now chair of the Public Accounts Committee, is on a campaign against the concept of private companies working on government contracts. This is her line of attack: using the A4e debacle to portray the whole subcontracting idea as corrupt.'
This is quite at odds were her previous views. I distinctly remember her addressing a meeting with representatives from ERSA (a body representing the major private sector welfare providers) when she was a Minister at the DWP in 2005. I know because I was there. She confidently predicted a bright future for its members given the Labour administration's plans to outsource welfare provision. How times change...
Guru McKenzie
February 24th, 2012 10:36am Report this commentLet's face it a lot of private sector activity is just a tawdry, fraudulent and corrupt as the public sector - it just does it all a bit more efficiently
In that respect it seems less bad than state provision
But all the guff about private sector provision being the shiny new tomorrow should be taken with a pinch of salt
telemachus'
February 24th, 2012 11:18am Report this commentI like spanners
Give me a good wrench
Fish
February 24th, 2012 11:47am Report this comment'What matters is that Margaret Hodge, former head of Islington Council now chair of the Public Accounts Committee, is on a campaign against the concept of private companies working on government contracts'
Not only is it at odds with her previous views, ON, I would argue that it is incompatible with her role as Committee Chair. It is said that her next target will be Free Schools, Academies and private NHS providers. This is politic-ing pure and simple and Hodge is using her role to advance a sudden lurch to the left.
There was a time when Select Committees took pride in their independence and were highly respected not least because they were able to rise above party interests.
Coalition members of this Committee must not allow Hodge to hijack their work and if they are unable to do so, they must withdraw.
Jeremy
February 24th, 2012 11:58am Report this comment@Fergus Pickering:
So have you. Can I borrow one?
Axstane
February 24th, 2012 12:23pm Report this commentFegus Pickering
At first I thought it was a pic of the Divine Cherie. Have they ever been seen in the same room at the same time?
Most of these whimsy-whamsy government consulting contracts are a licence to print money. It is called patronage. I have racked by brains to try to think of a government that does not use these devices.
Eyesee
February 24th, 2012 12:45pm Report this commentMargaret Hodge is a thoroughly unpleasant individual who is bedrock Labour: she is wealthy and believes she deserves privilege whilst actively seeking to deny it to others. It was beyond farce when she was made Childrens Minister after having cavalierly ignored child abuse at the council she ran (and actively refused to allow an investigation). She isn't however, against private firms making money from government contracts. She wouldn't object I'm sure to many millions going to PWC for 'Consultancy'. What she opposes is anything Tory. You could say this is ideology, but spite probably fits better.
stereodog
February 24th, 2012 1:14pm Report this commentHaving had the misfortune to deal with A$e during a spell of unemployment I'm so glad they're being hauled over the coals.
They chased me out of some useful volunteer work I was doing because it didn't net them a bounty.
They're staff were bullies who made me grovel on the phone to a job agency because I couldn't apply for a job that was sent to me (it was totally unsuitable to my skills).
They said that I would have to do a six week job placement which I was totally fine with because it would have buffed up my CV. I politely asked them to make sure it was relevant to my skills which they reassured me it would be. One day the announced that they had found me a placement with them doing their filing. I thank God that I found a job (albeit a part time one) before I had to do that.
These companies exist solely to get a bounty from the government for whatever dubious job or training they place their victims in. They don't care whether the job or training is relevant or helpful. They've always been a fraud and I hope they get the book thrown at them.
Pot Head
February 24th, 2012 1:18pm Report this commentPWC. You sure you want to quote them? Remember they have helped rip off the British taxpayers to the tune of £billions via their dodgy PFI schemes..
PWC were clever enough to see workfare was a non starter, they pulled out of a contract to administer part of the scheme last year,. Citing it as "unworkable" or more probably unprofitable unless you scam the results like A4e appear to have done.
Dimoto
February 24th, 2012 3:11pm Report this commentAxstane -
Quite so.
While we have a No10 addicted to constant PR stunts, "czars" of various things, "champions", "summits", "new initiatives" etc. etc.
this is bound to happen.
The seedier end of business "emtrepreneurship", can smell these types of "opportunities", from a hundred miles away.
And especially when we have a PM, DPM, Foreign Secretary, and plenty of lesser lights, apparently with far too much time on their hands.
porkbelly
February 24th, 2012 4:49pm Report this commentWhen a politician or civil servant has the opportunity to hand over cash to a private company there is fertile ground for corruption and cronyism. Even those who are not venal simply have no experience in the private sector, and of course they are not spending their own money. More than likely these contracts are seen as a handy way to recycle public funds via a private contract into party donations. Perhaps instead of farming out so many State functions to well-connected private firms we should be asking whether these State functions are really necessary in the first place, and if they are how to make them responsive to individual citizens rather than the usual well-fed civil servants?
Percy
February 24th, 2012 5:29pm Report this commentI just want to know how I can get on this gravy train, I'm not bothered about becoming an elected representative, the pickings seems quite slim; or heading up one of our excellent state controlled banks where you'll get a load of gip of everyone.
But this A4e thing looks like a fantastic gig; you don't seem to have to be very good at anything, just try and appear authentic, a nice folksy regional accent clearly helps in persuading the Oxbridge tits, that are either in government or at the top of the civil service, that you're the real deal and voila! Your chance to become as rich as Croesus is in the bag.... what a country, what a land of opportunity and I want a nice big bowl of it!
Fergus Pickering
February 24th, 2012 5:33pm Report this commentJeremy dear
Don't be so rude.
michael
February 24th, 2012 10:15pm Report this commentGiving good jobs to people you 'trust' rather than casting the 'track record' net... Tits up.
-It has to be said though, that in the loyalty business (eg politics), nepotism usually works.
The gamble is: That it leaves a nasty stink when it doesn't.
daniel maris
February 24th, 2012 11:57pm Report this commentPlenty of people including me warned of the dangers of corruption arising from blurring the boundaries between the public and private - in all sorts of ways.
I've never known a government accumulate so many policy car crashes in such a short time . Wherever you look there's blood and twisted metal! Incredible!!
Radford NG
February 25th, 2012 1:24am Report this commentWe dont need the Big Society...We need the Little Batillions as as Dr.Johnson called them...and they do not come from corporate business which is an impedement to such.
Radford NG
February 25th, 2012 1:29am Report this commentLast weeks Spec. pointed out how many charities are dubiouse big businesses with top staff on massive wages.
Radford NG
February 25th, 2012 1:34am Report this commentNever trust any organization with a stupid unpronounsable name like A4e.
Marky Mark
February 25th, 2012 3:25am Report this commentIs this the same PriceWaterhouseCoopers "Fighting Fraud in Government" report in 2012 that says, "Detection of frauds by internal audit teams in the public sector is now on a par with their private sector counterparts."
That doesn't seem to tally with your article some how.
EC
February 25th, 2012 8:17am Report this comment"on a paper-based system which A4e itself warned was wide open to fraud. "
Fraser,
If you are implying that computer systems aren't "wide open to fraud" then you are sadly mistaken.
Colin Cumner
February 25th, 2012 9:37am Report this commentI well remembeer when the employment and recruitement section of the Department of Social Security here in Australia was outsourced under similar circumstances to those obtaining in the UK. Private companies jumped on board in a flash. Lots of dubious employment figures were passed on to Government which made them look as though they were getting the long-term unemployed back into work. Of course, the more people they claimed were suitably placed, the more money they got from a Government contract that 'rewarded' them for their efforts, real or imagined. GURU MCKENZIE is right. There is no shiny new tomorrow resulting from these schemes and - more like dark horizons. In this day and age - sadly - corruption in nearly every walk of life is rampant.
gracie
February 25th, 2012 12:38pm Report this commentThis has not simply happened under Labour and stopped when the Tories took over. It began under labour and when A4e was paid £63 MILLION by this Tory government to sever a contract awarded under Labour, the alleged fraud, looks to have just continued under the new contract awarded by the Conservative government.
As ever Fraser Nelson has his "see no evil, hear no evil and speak no evil" about Cameron and the Tories head on. Talk about selective reporting. I bet this post doesn't make it to you thread of apparatchik posters though.
Simon Stephenson.
February 25th, 2012 1:59pm Report this commentColin Cumner : 9.37am
Both you and Guru McKenzie are right, but it's important to understand that most of the cheats and corrupters would not behave in such a way if the culture of our societies wasn't so welcoming of "winners", and so uncritical of whatever means they used to bring about their successes.
Terence Messenger
February 25th, 2012 7:07pm Report this commentFraser Nelson ducks the difficult issue. Given human nature, some fraud and fiddles may well be inevitable. But the bigger scandal is the £8.6 million Emma Harrison paid herself. She is effectively a public servant. Her £8.6 million comes from our taxes. We are required to stump up a vast sum to a woman whose performance on our behalf is questionable at best. Her avarice hardly sits well with David Cameron's claim "we are all in this together." He probably leant on her to resign as Families Tsar but has done nothing to prevent her hoovering our money. The privatisation of public services allows greedy and disproportionate rewards for this breed of public servant. That's not inevitable. It's a deliberate result of political choices.
mike
May 1st, 2012 10:23pm Report this commentGreat article...these absolute animals should be named and shamed for their disgusting behaviour...again we see the weakest people in society being scammed by the elite...repulses me ..shame of Britain...
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