Despite a string of fraud probes A4e gets two new state contracts worth up to £30m

By Jason Groves
PUBLISHED: 23:53, 13 March 2012 | UPDATED: 00:13, 14 March 2012

The embattled firm owned by David Cameron’s former ‘back-to-work’ tsar Emma Harrison has been handed two new state contracts worth up to £30million.

The Skills Funding Agency quango last night confirmed that A4e has been appointed to run prison education programmes in London and the east of England, even though it is facing a string of fraud accusations.

The decision came despite an announcement by the Department for Work and Pensions last week that it has launched an inquiry into ten welfare-to-work contracts operated by A4e.

The DWP warned it would cancel all of its contracts if it uncovered evidence of systemic fraud.

The firm, owned by Mrs Harrison, the Prime Minister’s former adviser on troubled families, is already facing investigation by the police. The Serious Fraud Office has also faced calls to look into the claims.

Yesterday’s decision by the SFA, which is part of the Department for Business, Innovation and Skills, provoked anger.

Margaret Hodge, chairman of the powerful Commons public accounts committee, said it was ‘astounding’ that A4e was being handed major contracts when its conduct was being investigated by both the police and Government officials.

‘I find it astounding that, at a time when one Government department is investigating a company for systemic failures, another department is awarding the same company new contracts,’ she added. ‘You couldn’t make it up.’

The new contracts involve providing basic education to prisoners in area such as maths and English, and helping prepare them to find jobs on release. The London contract is worth about £15million.

The SFA declined to comment on the value of the east of England contract, but it is thought to be worth a similar amount. Other contracts were mostly awarded to further education colleges.

One rival bidder said: ‘It seems deeply ironic that offenders are to be given lessons in getting back on the straight and narrow by a firm that is being investigated for fraud.’

A4e’s entire £180million UK turnover comes from state contracts. The firm has faced a storm of criticism since the Mail revealed that Mrs Harrison paid herself an £8.6million dividend last year – despite the firm’s failure to hit Government targets for finding jobs for the unemployed.

The revelation prompted a string of whistleblowers to come forward with allegations of fraud at the company, which is one of five main contractors on the Government’s £5billion Work Programme. Mrs Harrison resigned from her role advising the Prime Minister and quit her post as A4e’s chairman, although she retains ownership of 85 per cent of the firm’s shares.

A4e insists it has a ‘zero tolerance’ approach to fraud. The firm has appointed lawyers to carry out an internal audit of its activities to reassure ministers that there is no evidence of systemic fraud.

Meanwhile, Labour stepped up pressure on the Government over its links to A4e. In a written statement to MPs, the Employment Minister Chris Grayling acknowledged the DWP was aware of fraud allegations at the time that A4e was given hundreds of millions of pounds.

The claims are the subject of an inquiry by Thames Valley Police.

Mr Grayling told MPs that officials were made aware of the allegations in February last year, although they did not inform ministers until the autumn. In the intervening months A4e was handed five Work Programme contracts.

Liam Byrne, Labour’s work and pensions spokesman, said: ‘This is an astounding failure of ministerial oversight. We need an urgent explanation of exactly what reassurances ministers sought before signing off on the A4e deals.’

The Skills Funding Agency said: ‘The Agency continues to receive assurances from A4e to ensure public funding is used appropriately both for current contracting arrangements or future contracts.’

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