The Skills Funding Agency has revealed that investigations are ongoing into alleged fraud at the training company A4e, despite it being the government's preferred bidder for a pound;30 million prison education contract.
The allegations relate to A4e's education and skills contracts. They come in the wake of similar claims made earlier this year regarding the company's welfare-to-work contracts with the Department for Work and Pensions. That controversy prompted the FE funding body to begin its own audit of current contracts with A4e, which has been involved in prison education since 2005 and currently works in 20 prisons. A4e denies all the allegations.
The agency had found no evidence of "current fraud" at the company, it said in a statement. However, a spokesman said it had found examples of "poor practice", which A4e was working with the agency to remedy.
But the spokesman said that there were older, "historic" allegations of fraud which were still under investigation and which could involve the police. "There are some cases that are quite old and historic that we are investigating at A4e," he said. "Sometimes, allegations, particularly when they go to the police, take a particularly long time." He declined to discuss details, saying he did not want to prejudice the investigation.
But the spokesman said the agency was satisfied that A4e was doing all it could to prevent and detect fraud or poor practice in its education and skills contracts. In some instances, concerns were first raised by A4e's management. "Our current view is that A4e has got the appropriate mechanisms in place to manage this," the spokesman said. "There's a point where an organisation hasn't got suitable processes or an organisation is deliberately trying to defraud the public purse, that we stop working with them. That is not the case with A4e."
A4e for its part has denied any connection to the alleged fraud, saying that the cases under scrutiny involve another company and A4e is only assisting the investigation. "The investigation is not into us or any A4e former employees. It is into another organisation I'm not able to name," a spokeswoman said. "We are cooperating with an investigation but that investigation is not into us or any of our employees. We can't comment further as I am sure you will understand, given that this investigation is ongoing."
A4e has previously called for the details in other fraud investigations relating to its DWP contracts to be made public, arguing that greater transparency would reveal that there were issues in the whole market, not with any one company. There have been 126 investigations into alleged fraud in welfare-to-work contracts since 2006, of which only 10 related to A4e.
The company lost one of its Mandatory Work Activity contracts last week, however, because officials deemed it was "too great a risk" and "identified significant weaknesses in A4e's internal controls", according to the DWP.
Eight people have been arrested to date over allegations of fraud relating to the company's offices in Slough, Berkshire. All of them have been released on bail.
The allegations have also proved embarrassing for the government, which appointed Emma Harrison, the company's founder, as a "back to work" tsar whose task was to help 100,000 families in long-term unemployment into jobs. She resigned from the role earlier this year and stepped down as chair of A4e, saying that she did not want the media focus on her to distract from the company's work.
MPs on the Public Accounts Committee held part of their session in private this week, as they heard new evidence from A4e whistleblowers. The committee chairman argued that the evidence should not be disclosed as it had not yet been seen by the DWP.
The University and College Union has argued since March that the allegations against A4e's welfare-to-work business should disqualify it from being awarded new prison education contracts in London and the east of England worth pound;30 million.
In response to the union's arguments, FE minister John Hayes said that the prison contracts had not been finalised and that "should events indicate that A4e is not an appropriate provider, the agency will refrain from contracting with them".
However, Sally Hunt, general secretary of the UCU, said: "Some might argue that one good way to stop fraud is to stop rewarding companies that have issues with fraud with major contracts."
She added: "We're not convinced by the SFA's excuses to continue awarding A4e contracts and call once again for a full and transparent re-tendering that can give everyone confidence in the process."
Original headline: Fraud probe continues but A4e in the frame for pound;30m contract