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ERSA welcomes recognition of low levels of fraud in the welfare to work industry

The Employment Related Services Association (ERSA), the trade body for the welfare to work industry, has today welcomed the recognition by the National Audit Office that the level of fraud within the welfare to work industry is very low - at around 0.01% of annual total spend - a lower figure than fraud by the Department for Work and Pension's own staff.

Speaking in response to the report, ERSA chief executive, Kirsty McHugh, said:

"Fraud at any level is completely unacceptable. However, we welcome the recognition by the National Audit Office that there is very little fraud in the welfare to work industry.  Welfare to work services are subject to multiple stringent checks.  Not only do providers themselves have rigorous internal systems in place, but the financial model of the Work Programme means that providers are only paid once they prove that people are off benefit and in employment.  Although it is impossible to design or manage out all risk of fraud in an industry that delivers multiple transactions with hundreds of thousands of customers, it does mean that risks are minimised. 

"There is a distinction that must be made between deliberate fraud and unintentional irregularities, such as incomplete paperwork supporting a claim. It should be stressed that of the 126 reported cases of fraud investigated by the DWP since 2006/07, only 24 have been found to be of false representation."

ERSA also recognises the confirmation by the National Audit Office that the Department for Work and Pensions has in place the key elements necessary for effective controls.  ERSA points to the following safeguards that are in place within the welfare to work industry to prevent fraud: 

• The Government's checking regime is vigorous. The Department for Work and Pensions conducts an 'off benefit' check before a 'job outcome' payment is made to companies and charities helping jobseekers through the Work Programme.  
• Providers need to provide evidence at four weekly intervals that people on the Work Programme who have helped into work have stayed there.  Only when these are completed satisfactorily are sustainment payments made. In addition, HMRC checks customers to ensure that they are in employment. 
• Providers have rigorous systems in place to identify and address any instances of alleged fraudulent behaviour. These systems often go above and beyond the obligations placed on them by the Department for Work and Pensions. 
• Providers tend to segregate the duties within their operations between those achieving performance and those reporting it to the DWP so that there are no perverse incentives to make false claims for payment.  

Press enquiries should be directed to Philip Curry on 07919 622 053. 

Notes to Editors

1. The Employment Related Services Association (ERSA) is the trade association for the welfare to work industry. Established in 2005, for the industry by the industry, it exists to help its members achieve their shared goal: to help people achieve and sustain employment.

2. ERSA's membership is as diverse as the welfare to work industry itself. Its members deliver a wide range of government-commissioned welfare to work programmes, including the Work Programme, Work Choice, Mandatory Work Activity and ESF Families, plus other employment-related services.

3. It represents 98 percent of Work Programme and Work Choice prime contractors, plus a larger number of subcontractors. ERSA's members are drawn almost equally from the private and voluntary sectors, with a small number of public sector organisations also in membership. It is the diversity of its membership that gives ERSA its strength to speak as the authoritative voice of the sector. 

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ERSA cautions against jumping to conclusions about the introduction of the Work Programme

15 May

The Employment Related Services Association (ERSA), the trade body for the welfare to work industry, is today responding to the publication of the Public Accounts Committee report (15 May) into the implementation of the Work Programme by agreeing with many of the Committee findings, but cautioning against jumping to conclusions about Work Programme delivery.

ERSA welcomes the recognition by the Public Accounts Committee that the economic backdrop to Work Programme delivery is more challenging than at the Programme's launch and that the referral of jobseekers is 32% higher than the government's initial expectations.  This has provided the welfare to work industry with a double challenge which it has worked hard to meet.

 However, ERSA cautions against jumping to conclusions about Work Programme delivery. In particular it highlights:

" On 'creaming and parking': There is no evidence of creaming and parking within the Work Programme. All providers have a duty to every single person on the Work Programme.  The financial model of the Work Programme means that it is impossible for providers to make a profit if they focused only on those individuals who are easiest to help.  Unlike previous programmes, providers now have up to two years to work with jobseekers that are furthest from the labour market, giving much greater chance of moving people into employment.   

" On relationship with subcontractors:  There are over 830 subcontractors of the Work Programme, nearly 400 of which are voluntary sector organisations.  One of the major problems of the Work Programme to date has been the very small number of jobseekers on Employment and Support Allowance (ESA) being referred to the Programme.  As these jobseekers are more likely to be serviced by the voluntary sector, charities have been disproportionately affected by this lack of referrals.  ERSA believes boosting ESA referral numbers needs to be a priority for government.  

" On Universal Credit:  ERSA welcomes the Committee's recognition that the introduction of Universal Credit will have a huge impact on the Work Programme.  It is essential that the government gets this right if jobseekers are able to have the best chance of getting into employment. 

" On fraud:  The level of fraud in the welfare to work industry is extremely low.  A Work and Pensions Committee report concluded in 2010 that not only are levels of detected fraud low, but there is little evidence that there is a problem with undetected fraud either(4).  There have been 125 investigations into allegations of malpractice by employment services providers since 2006. This needs to be put in the context of the many hundreds of thousands of people who have been referred to welfare to work programmes during that time.   

Speaking in response to the report, ERSA chief executive, Kirsty McHugh, said: 

'The introduction of the Work Programme was extremely challenging for the welfare to work industry.  Providers had to deal with the scrapping of old contracts and the introduction of new ones at record speeds.  When you combine this with the challenge of the economic backdrop, we believe that a large amount has already been achieved and that the Work Programme is likely to prove good value for public money'.  

ends

Press enquiries should be directed to Philip Curry on  07919 622 053. 

Notes to Editors
1. The Employment Related Services Association (ERSA) is the trade association for the welfare to work industry. Established in 2005, for the industry by the industry, it exists to help its members achieve their shared goal: to help people achieve and sustain employment.

2. ERSA's membership is as diverse as the welfare to work industry itself. Its members deliver a wide range of government-commissioned welfare to work programmes, including the Work Programme, Work Choice, Mandatory Work Activity and ESF Families, plus other employment-related services.

3. It represents 98 percent of Work Programme and Work Choice prime contractors, plus a larger number of subcontractors. ERSA's members are drawn almost equally from the private and voluntary sectors, with a small number of public sector organisations also in membership. It is the diversity of its membership that gives ERSA its strength to speak as the authoritative voice of the sector. 

4. See: House of Commons, Work and Pensions Committee, Management and Administrative of Contracted Employment Programmes, Fourth Report of Session 2009-10, p.9