The Department of Work and Pension’s mistreatment of benefits claimants is well documented. But an issue less often explored is the way in which large companies profit off the misery of unemployed people.
Welfare-to-Work companies are raking in tens of millions from lucrative DWP Work Programme contracts — and these contracts are so profitable that companies are even spending millions just for a chance at getting them. Most recently, Work Programme providers have also started snatching up offender management, healthcare and social work contracts. In the very near future, the most important aspects of our lives will be governed by these four or five companies.
Work Programme companies profiting off taxpayers’ money and the unemployed
A Freedom of Information request to the DWP revealed that they paid Ingeus approximately £160 million from April 2013 to March 2014, and paid a further £80m during the six months from April 2014 to October 2014. The DWP initially refused to release these figures on the ground that this constitutes “commercially sensitive information,” but changed their minds on appeal.
Ingeus states on its site that it is “funded by government,” which may simply reflect the DWP’s payments for fulfilling its contracts, or may refer to other, separate funding. Ingeus also admits to being funded by the EU’s European Social Fund, as well as receiving payments from the Skills Funding Agency.
Ingeus handles tenders of £50,000 to £500,000 and uses a partner network to vet businesses for supply chain opportunities. Ingeus currently has over 600 partners and claims to have received over 1,300 applications to its partner network. Once a company is accepted to the partner network, it may answer Ingeus’ Calls for Proposals. If the company is successful, Ingeus charges a 20% management fee from each unit of payment.
Even companies which aren’t paid by the DWP manage to profit indirectly. According to the DWP, TWP Solutions was not contracted by them in 2013 or so far in 2014. But TWP’s Founding Director Alex Pollock revealed that TWP earns “hundreds of thousands” for each time they help a smaller business land a DWP Work Programme contract. DWP contracts appear to be very lucrative and sought-after in the welfare-to-work industry, with businesses spending £1.5 to £2 million to win contracts, according to Pollock. It’s no surprise that TWP Solutions gets a lot of work helping other businesses with pitches, sometimes working with them for 5 to 7 months.
“We’re very successful at what we do,” he said.
It’s the DWP process itself that is to blame. For an organisation to become a prime contractor, it must have at least a£20 million turnover. Smaller organisations and those in the voluntary sector end up further down the supply chain. Pollock claims that the process puts “huge barriers” in the way of smaller businesses and charities getting any contracts.
Organisations furthest down the supply chain are classed as Tier Two subcontractors, and according to the DWP’s Work Programme Evaluation, “many Tier Two providers received very little income from the Work Programme. In some cases, lower than expected referrals had led to staff being laid off or kept on zero hours contracts. Many of these organisations were from the voluntary and community sector.”
But the large companies were making a lot of money from the unemployed: “It was common for Tier One subcontractors to report higher levels of referrals than they had originally expected … this had caused pressure on services.”
14 per cent of subcontractors relied on the Work Programme for more than half of their UK turnover, while “private sector organisations were much more likely to derive a majority of their UK turnover from the Work Programme than voluntary and community sector organisations.”
The DWP maintains strict control over Work Programme companies. By its own admission, “DWP performance managers were in regular (at least fortnightly) contact with primes and held monthly contract performance reviews to monitor Performance Development Plans (PDPs).”
This led to “frustrations” and strained relationships as the companies wanted more flexibility and did not appear to have known that they would be controlled to such a large extent.
Companies can increase their earnings by being prime contractors while also acting as subcontractors for other primes. According to the DWP, in 2012 “Eleven of these 14 organisations [prime contractors] also delivered as subcontractors for other prime contractors.”
The evaluation also mentions companies having “a combination of Tier One and two contracts across different supply chains.”
In fact, around half of the providers were delivering other DWP contracts. No wonder the intent to remain involved was more prevalent among private and public sector organisations, while for those seeking to end their involvement with the Work Programme, all but one were Tier Two suppliers.
Work Programme companies monopolising the public sector
Ingeus works in “close partnership” not only with the Jobcentre Plus but also with local authorities. Ingeus also claims it has to consult “NHS bodies” to make sure it isn’t duplicating existing services, which suggests Ingeus isn’t only covering the welfare and rehabilitation industries, but is moving in to the healthcare sector as well, perhaps as a result of increasing NHS privatisation.
This isn’t that surprising, as Work Programme prime contractor Working Links provides services related to physical and mental health as well as sex offenders, domestic violence, women offenders, young offenders, offender management and sex work — meaning they have influence over many aspects of life, especially over stigmatised groups.
Sex workers in particular are often forcibly “rescued” by State actors, especially in the US and other Western countries, and forced to leave the adult industry and get minimum wage jobs or face prison and losing their children. Given this state of affairs, offering profits for “helping” sex workers seems like a potentially dangerous idea.
And, as Work Programme companies’ staff are not trained social workers, the standard of help given to domestic violence victims can also be called into question. Many DWP programmes are more appropriate to be handled by Social services, such as the European Social Fund (ESF) support for Families with Multiple Problems. Working Links also implements the Ministry of Justice Rehabilitation Programme.
“While our ultimate goal is to get people into employment, we see our overall role as much broader,” Working Links’ site declares, before inevitably stigmatising benefits claimants as having “often deep-rooted mindsets about dependency.”
One of Working Links’ directors, Catherine Yeomans, is also the Chief Executive of Christian nonprofit welfare organisation Mission Australia and Director of Mission Australia Early Learning and Mission Australia Housing. Prior to her 2014 appointment as Mission Australia’s CEO, she was Mission Australia’s Chief Operating Officer. Martin Watkins, another director, was Mission Australia’s Vice President, and an alternate director, Ewen Crouch, is Chairman of Mission Australia and has been since 1995. Working Links’ voluntary sector share is also owned by Mission Australia.
The fact that a single company has control over so many areas of individuals’ lives — unemployment, social work, rehabilitation, health — is bad enough. The fact that it appears to be, de facto, run by a religious group is likely to fuel concerns even further.
But Working Links is in good company. A4e has been shortlisted to deliver the National Offender Management Programme, and other Work Programme providers such as Seetec, Interserve, Sodexo and Ingeus have also been declared “preferred bidders” for probation work. Working Links’s Chief Executive Phil Andrew was previously Chief Executive for Sodexo Justice Services, and Chief Financial Officer for Sodexo UK and Ireland.
In the near future we can expect increasing control of the public sector by A4e, Ingeus, Seetec, Interserve, Working Links and Sodexo.
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