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Exposed: welfare-to-work industry gravy train

The workfare scandal of forcing the unemployed to work for businesses for free or lose benefits has lifted the lid on outrageous profiteering at the expense of the jobless and taxpayers in general.

And we’re not just talking Tesco, Argos, Poundland and the other companies who may have got cold feet when the anti-workfare campaign took off and threatened to lead to consumer boycotts.

There’s an entire welfare-to-work industry out there that, beginning with New Labour and continuing with the ConDems, has been making a fortune out of lucrative government contracts. 

Leading the pack is A4e, founded by Emma Harrison who yesterday quit as the government’s “families champion” following a string of fraud allegations against her company which police are investigating. 

Her firm got on the Whitehall gravy train in 1997 when the Blair government launched its “New Deal” programme aimed at getting “socially excluded” or “problem” groups into work.

A4e and Harrison never looked back. Last year, the firm had an income of £180 million from government contracts, MPs on the public accounts committee were shocked to hear. Harrison herself boasts that she lives in “utter luxury” in a 20-bedroom mansion in the Peak District. She can afford it, paying herself a dividend of £8.6 million last year.

In the 2010 New Year’s honours list, drawn up under the Brown government, she was awarded a CBE for “services to the unemployed”. Seriously. The Daily Mail reported that some A4e “placements” have only lasted one day. The company can make up to £13,000 per unemployed person if all goes to plan, whatever that may be.

As is well documented, the assault on the unemployed and people with disabilities began under New Labour with the aim of “making work pay”, starting with the so-called New Deal projects and then Pathfinder schemes. The punitive approach was later followed by compulsory reassessments for those claiming disability allowance. Trial workfare projects were also launched. The ConDems have built on all these – with a vengeance.

In early 2008, James Purnell, then work and pensions secretary, announced a four-fold increase in the market for private companies and voluntary organisations to get the long-term unemployed off benefits. He said: “The private and voluntary sectors already play a role in delivering our work programmes. I want to take this to the next level, free them from central control and allow them to innovate. Their involvement is here to stay and set to grow. For the providers the rewards will be high, with longer contracts and a growing market.”

How right he was. Indus Delta is an online welfare-to-work industry website, detailing all the lucrative projects coming up and listing the major providers. There are no fewer than 67 companies involved. Apart from A4e, there are well known names like Balfour Beatty, the security company G4S and Manpower. Global firms like the US-based Maximus and Australian Sarina Russo are there too. 

The largest provider of the ConDem’s infamous Work Programme is Ingeus, which is 50% owned by the global accountancy firm Deloitte. Ingeus-Deloitte last year won an £103 million Work Programme five-year contract just for West London. A licence to print money, is it not?

By the time New Labour left office, contracting out of services and supplies formerly undertaken by the state had reached mammoth proportions. Total government contracts were estimated to be worth £80 billion a year, far more than in any other capitalist economy. You name it, it was outsourced or made into PFI public-private contracts, where the state picked up the bill when things went wrong. For example, 60 hospitals are in financial crisis as a result of PFI deals and the government is bailing them out.

A4e is just a small part of the market state that has all but replaced the welfare state. This undemocratic, authoritarian state directly serves the banks and big business, punishes the poor and is driving down living conditions like never before. Abolishing workfare and ending the demonisation of the disabled requires a totally new democratic constitutional settlement that ends the rule of the rich, the powerful and their hangers-on.

Paul Feldman
Communications editor
24 February 2012

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