We use cookies to improve user experience for our customers.

NAO Fraud in Contracted Employment Programmes

It's a busy week in the welfare to work sector, with A4e being cleared of fraud by DWP and SFA and now the National Audit Office (NAO) finding that instances of fraud are low. Today's report: Preventing fraud in contracted employment programmes, indicates that the payment by results approach of the Work Programme has largely addressed the weaknesses within previous provision but there are still risks that need to be addressed.  

Since 2006, cases of fraud have accounted for £773,000.  While this is a large amount by anyone's standards, it is less than 0.01% of the expenditure for the same period. The NAO highlights that in light of weaknesses in the systems for validating payments, it is likely that the level of fraud is understated as the NAO report only focuses on reported fraud. It also indicates that weak systems and improper practice are actually a bigger issue than fraud itself.  

The instances where DWP found a case to be answered were spread across 37 provider organisations, with 5 providers having more than one case to answer.

DWP's own controls (or lack of) come in for fair criticism.  NAO recognise that Flexible New Deal and the Work Programme have increasingly improved the payment validation process.  They also highlight that DWP now require providers to have specific anti-fraud controls in place as part of their contractual conditions.  However, unless these controls are independently tested to a rigorous degree, there is no guarantee that they are effective.

In light of the alleged fraud within the Mandatory Work Activity programme, NAO cautions that unless DWP check with employers that an individual has started their work activity, there will remain a high risk of fraud on this programme.  Other smaller programmes that do not have the same controls as the Work Programme could also be open to similar risks.

The NAO suggest that DWP overly rely on provider's self-assessments and recommend that they should seek information such as providers’ internal audit plans and reports and complaints information if they are to properly assess the effectiveness of internal controls.  A further recommendation is for DWP to conudct unannounced visits to providers. The NAO cite the example of A4e's own internal audit is used where they checked 224 cases and found 16 irregularities, identifying possibile systematic failure to mitigate the risk of fraudulent and irregular activity. The NAO suggest that such an error rate from a sample should lead to further testing to establish the size of the problem, but also indicate that it should also lead to DWP conducting similar testing of other providers.  

The report goes further than looking at financial fraud and comments on quality of service delivery.  DWP are again criticised for not systematically collecting customer feedback and complaints which could improve its awareness of the key areas where claimants consider they are getting a poor service, and also for not having a central line where allegations of fraud can be reported to ensure they are followed up. The NAO have also produced an interesting table of how complaints about the Work Programme relate directly to the minimum service standards promised by subcontractors, reiterating again how vague and unquantifiable many of them are.

While many in the industry are feeling confident about the results of the NAO report, W2W Solutions cautions against complacency.  While many companies have quite rigorous audit procedures, others still fall short. The pressure to keep costs to a minimum under a payment by results regime means that audit and quality assurance functions  in some quite major organisaions are extremely tight.  Of the 94 reviews completed by DWP's Provider Assurance Teams to January 2012, only 61 per cent of providers achieved a ‘strong’ or ‘reasonable’ level of assurance, so more still needs to be done by the provider community to ensure they are beyond reproach.

16 May 2012

« Back to previous page

Your Critical Friend

Independent scrutiny of service delivery with realistic solutions to increase efficiency and performance!

Contact us for more information

Copyright W2W Solutions 2019