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Fraud levels in contracted employment programmes are low, says NAO

New report finds that DWP’s past assessment of the risk of fraud at A4e missed vital evidence.

Fraud levels in contracted employment programmes are relatively low compared with the benefits system and the losses from staff fraud and irregularities, according to a report by the National Audit Office (NAO) that examined arrangements at the Department for Work and Pensions (DWP) for detecting and preventing fraud and improper practices in employment programmes.

However, the report finds that some risk still remains because not every control applies to every programme, particularly to smaller ones.

The DWP spends around £900m a year on employment and support programmes that assist unemployed people to find and keep work.

In 2011 alone, government spending on employment programmes was £829m. Over half of reported fraud in employment programmes since 2006 relates to the New Deal programmes that ended in 2011.

The current Work Programme, which started in June 2011, will cost £3bn to £5bn over the next five years depending on performance.

In particular, the report finds that the department’s past assessment of the risk of fraud at A4e missed vital evidence. The department does not currently obtain all relevant copies of providers’ internal audit reports and did not receive the paper sent to the chair of the Public Accounts Committee. This included evidence of nine possible cases of fraud and seven of improper practice by A4e’s staff and highlighted a possible systematic failure to mitigate the risk of fraudulent and irregular activity at both an office and regional level.

There have been 126 reported cases of potential fraud investigated by the DWP since 2006-07. According to the report, the total value of cases of reported fraud investigated since 2006 is £773,000. More than half of fraud allegations since 2006 have been in respect of New Deal programmes which ended in 2011. The department knew of the fraud risks inherent in such programmes but did not do enough to quantify and address them. Compensating controls, for example, checks at employers to verify claims that people had actually been placed in work, were not introduced.

In its report, NAO said that the department did not do enough to quantify and address the fraud risks in the design of New Deal and other legacy programmes. However, NAO said that the Department has now significantly improved the controls.

Schemes such as the Flexible New Deal and the Work Programme that replaced the New Deal have been designed with measurable and verifiable outcomes to minimize the risk of fraud. For example, the DWP now checks the records of HM Revenue and Customs to test whether claimants are actually working. But, notably, in the case of the £8m programme providing mandatory work activity, there are still no independent checks with employers that unemployed people said to have been placed with them for work activity have been.

The NAO recommends that the department should make the most of the fraud risk knowledge it possesses and share it more effectively; and that users’ complaints be used to assess the quality of service providers.

Amyas Morse, head of the NAO, said:

The department has improved its range of controls on the Work Programme, in particular, compared with previous schemes. However, it missed a number of opportunities to detect potential problems at A4e and it needs to tighten controls on its smaller programmes.

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.