The work and pensions secretary has accused the public accounts committee of “holding back” evidence over alleged fraud at the welfare-to-work company A4e from government investigators.
In a letter to the chairman of the public accounts committee Margaret Hodge on Thursday, Work and Pensions Secretary Iain Duncan Smith complained that the committee had withheld critical evidence from investigators at the Department of Work and Pensions (DWP):
“it is extremely disappointing that as we have been conducting audits of all our commercial relationships with A4e, that you chose not to allow us to include the allegations you were clearly aware of in this process.”
The written evidence in question had been submitted to the public accounts committee in confidence by Eddie Hutchinson, who had previously worked as head of audit at A4e.
Mr Duncan Smith’s letter continued: “I can only reach the conclusion that the committee has held back details from the DWP in order to generate media coverage.”
Mrs Hodge said she would launch an enquiry into how the evidence heard in secret about allegations of fraud at welfare-to-work company A4e was leaked to a national paper.
On Thursday, she said: “I think all members of my committee will be extremely distressed [at the leak] as the evidence is very sensitive and could cause damage both to the individual who gave the evidence and the company involved.”
The documents published by the Telegraph claim systemic fraud and an “unethical culture” at the company, which provides schemes to get people back to work.
In response, A4e said in a statement that it had not been given any formal sight of the allegations made by Mr Hutchinson in a private session of the Public Affairs Committee.
It went on to say “The majority of allegations made by Mr Hutchinson are unfounded and untrue .. from the evidence we have seen, published by the Telegraph, we can state that the remaining, small number of allegations which had any susbstance were fully examined. In all but one of those cases it was concluded there was no case to answer; the remaining case was referred to the relevant authorities and is that which is currently being investigated by Thames Valley Police.”
The company emphasises that “none of the issues raised here prove there is systemic fraud at A4e and all of them relate to historic contracts.”
Only three days before Mr Hutchinson’s evidence was seen by the committee, A4e Chief Executive Andrew Dutton told the Sunday Telegraph that there were “market issues”, insisting “we’re not alone”. He pointed out that of 126 investigations made into alleged fraud since 2006 only 10 cases related to A4e even though it is one of the government’s main contractors for such schemes.
A recent National Audit Office report estimated a loss of some £773,000 due to fraud in the welfare to work industry since 2006.
On 15 May the government announced that it was ending a contract with A4e for the mandatory work programme after an audit found that to continue the contract would be “too great a risk.”
The government currently spends around £990m a year on employment and support programmes that assist unemployed people to find and keep work.