The public spending watchdog criticises a government department for its handling of private companies whose fraudulent practices cost the taxpayer hundreds of thousands of pounds, writes Jackie Long.
The Department for Work and Pensions (DWP) has been criticised for not doing enough to stop fraud by private companies running welfare to work programmes for the government.
In a report by the National Audit Office (NAO) it was revealed that more than £770,000 worth of fraud had been identified in a variety of welfare to work programmes going back to 2006.
More than half of the cases related to the new deal work programme operated by the previous government.
Although the total losses are described as "small", the NAO criticism of the DWP is harsh.
The report said: "The Department (the DWP) did not do enough to quantify and address the fraud risks in the design of New Deal and other legacy programmes.
(It) knew of the risks ...but did not introduce compensating controls. In particular, there were no checks with employers to verify claims that people had been placed into work."
On Tuesday, the government announced that it had been forced to terminate one of its contracts with employment specialists, A4E, after a DWP audit revealed "significant weaknesses" in its internal controls. The department concluded that continuing with the contract posed "too great a risk".
The NAO report criticised the investigation though, arguing that the department's past assessment of the risk of fraud at A4e "missed vital evidence". A4e remains a key contractor with the government's flagship Work Programme.
There were wider criticisms of the work programme in the report too. A key area of concern is transparency. The NAO said it was impossible for people going through the programme to know whether they are getting the sort of service they should because there are no clear standards set out.
And in perhaps one of its most damaging sections, the NAO said the department could not even assess the quality of service these crucial providers are delivering. It raises important questions about how the work programme is operating.
The government's plan was always to give providers the right to approach getting people back to work in their own way. Payment by results would mean if they fail they simply did not get paid.
But what is happening to the unemployed people going through this process? Are they being well served by the private providers?
The NAO says the department needs to do a much better job of finding out.
16 March 2012