John Harris

A4e boss Emma Harrison paid herself £8.6m last year. Nothing unusual for a top banker perhaps. But her company is funded by the government to find jobs for unemployed people. And it’s being investigated for fraud

Emma Harrison is not quite a household name, but plenty of people will recognise her face. You may have seen her on a handful of TV shows: Channel 4’s Make Me A Million, Benefit Busters and The Secret Millionaire, or BBC1’s Famous, Rich And Jobless. There is a fair chance you will have read about the government appointing her as their “families champion”, charged with the task of changing the lives of the 120,000 households deemed to lie at the heart of the Britain’s supposedly broken society.

Just lately, you may have seen some of the slightly more negative coverage of Harrison and the company she founded in Sheffield, 21 years ago: A4e (it means “Action For Employment”), who were decisively glued into the heart of the welfare state by New Labour, and have seen their importance increase thanks to the coalition. They specialise in that very modern practice known as “welfare to work”, and their only income in the UK comes from public contracts. The company’s promotional blurb characterises what it does as the simple business of “improving people’s lives”.

Including, it seems, Harrison’s own. Earlier this month, hearings by the House of Commons’ public accounts committee revealed that last year, Harrison – who is 48, and was given a CBE in 2010 – paid herself a dividend of £8.6m. The company says that, “as with other shareholders”, the money “reflects the risk” she and they have taken during the 20-year lifespan of A4e. Coverage of the story was accompanied by descriptions of her luxurious home in rural Derbyshire: Thornbridge Hall, a grade II-listed mansion that includes a bar, nightclub, pool and 100 acres of land. She, her husband and their four offspring share it with 11 of their friends and six of their children: Harrison describes it as a “posh commune”. The property is also available for hire as an events venue: in 2011, Harrison received £462,000 from her own company for the use of her home for meetings.

If that suggests that all in Harrison’s world is luxury and success, at least some voices have lately been questioning the high-achieving image that she projects. The chair of the public accounts committee, the former Labour minister Margaret Hodge, says aspects of A4e’s past record on welfare-to-work are “abysmal”; one of her Tory colleagues has used the word “dreadful”. Moreover, during her committee’s proceedings two weeks ago, Hodge loudly called into question the amount of money A4e takes from the government, and how much goes into the pockets of its senior figures.

This week, there came even more bad news. Last Friday, it transpired, officers from Thames Valley police raided A4e’s offices in Slough as part of a fraud inquiry: the Daily Mail reported allegations that the staff concerned had managed to place people in jobs that lasted only 24 hours, but still take payment-by-results money from the Department of Work and Pensions. It is not the first time accusations of fraud have been made against A4e staff: in 2009, the Department for Work and Pensions (DWP) discovered that, at A4e’s office in Hull, forms meant for employers agreeing to take on workers had been falsely filled in and signatures forged. A4e dismissed an employee and paid £15,000 back to the DWP. In response to the latest allegations, A4e issued a statement saying that all four of the staff concerned had now left the business, that the company had discovered the “situation” itself through “internal systems”, and that it has “zero tolerance towards fraud”. Meanwhile, those MPs who have set themselves against A4e insisted that its contracts be suspended while the police did their work.

Yesterday, the plot thickened. The MP for Slough, Labour’s Fiona Mactaggart, announced that she has put together a dossier of malpractice at A4e, including its clients being forced to sign blank timesheets, and people being placed on mandatory back-to-work courses during which they were “shunted in and out of rooms, staring at walls, long silences with none of the staff telling the group what was happening”. The company countered that such concerns had been resolved, and repeated the “zero tolerance” line; Mactaggart told me that although the allegations are “not particularly recent”, they “go straight to the integrity of the company”. She said they made A4e “not fit to receive a government contract”.

In the stories that reported all this, there were the inevitable résumés of Harrison’s career, and portraits, complete with her trademark tumbledown fringe, red lipstick and ever-present smile – along with such quotes as this: “I’ve taken the best of my home, the friends, the parties, the laughter, the creativity, and brought it all to Thornbridge. Now we live in utter luxury.”

All told, Harrison is the sort of person whom newspaper profiles routinely term “colourful”, though one of her clients once put it rather more bluntly. “She seeks publicity,” he said, “like a burning plane seeks the ground.”

A4e was founded in 1991, and first specialised in assisting long-term unemployed people in Sheffield – a matter, as Harrison once put it, of “helping my steelworker mates get back to work”. Six years later, it got its first big public contract thanks to the freshly elected Labour government. By 2001, it had opened 35 new welfare-to-work centres across Britain and, as welfare reform began to kick in circa 2009, it became the single biggest supplier of Labour’s Flexible New Deal. As well as the UK, A4e also operates in Australia, France, Germany, India and Poland. Among their paid advisers is the former Labour Work & Pensions secretary David Blunkett, who helps them with “global public service reform”; their director of policy and strategy is Jonty Oliff Cooper, a one-time Tory insider and ex-aide to David Cameron’s strategy director Steve Hilton.

A change of government has only boosted its influence. A4e is now in charge of Iain Duncan Smith’s Work Programme in five regions of the UK, where, in keeping with the idea of the “big society”, it is supposed to work with a tangle of subcontractors: private firms, charities and social enterprises. Some of these organisations complain that A4e has hardly given them any work to do at all; other voices claim that the company takes a big cut of their funds, and does precious little in return.

In another five areas of the country – and if this seems complicated, that is down to the Work Programme’s labyrinthine structure – A4e works as a Work Programme subcontractor itself. In both cases, its essential task is to help long-term unemployed people (those out of work for a year or more – or, in the case of the under-25s, nine months) get back to work. The global downturn may not be quite the barrier it seems: last year, Harrison was caught talking about there being “hidden jobs everywhere”, and she evidently believes in a kind of positive thinking that her detractors claim is somewhat delusional. That said, A4e’s claims of success are superficially impressive: though there is no way of verifying such numbers, its corporate fact sheets claim that “every three minutes of every working day, someone on benefits goes back to work through A4e’s support”, and that between 2010 and 2011, the company helped more than 43,000 people into what they call “meaningful work”.

If it is working directly with unemployed people, each time a jobseeker is referred to it, A4e receives an ”attachment fee” of £400. If that person finds a job and manages to work, either continuously or in short-term chunks, for a total of 26 weeks, the company gets a ”job outcome fee” of £1,200. From then on, if things go according to plan, A4e gets a monthly “sustainment fee”, which can account for the bulk of the money it receives: the most A4e can expect to get for a successful case is around £13,000. The payments vary according to criteria that seem to have been drawn up without much thought about our current economic predicament: despite record-breaking youth unemployment, for example, the lowest fees come from finding work for 18- to 24-year-olds.

In last week’s flurry of outrage over jobless people being compelled to work for their benefit in such retail chains as Tesco, TK Maxx and Argos, A4e was an implied presence. The decision to cut people’s benefit if they either fail to take “placements” or leave them is down to jobcentre staff rather than the firms that see to the Work Programme, but like all welfare-to-work specialists, A4e is a believer in the wonders of unpaid “work experience”.

The rise of A4e also highlights a very modern fact of public life: handing over large swaths of what the state used to do to the private sector has become so mundane as to barely attract comment, and some people have been doing very well out of it indeed. The management consultancy McKinsey is tightly bound into Andrew Lansley’s health reforms; such firms as Serco and Capita provide everything from call centres, through supply teachers, to private prisons. The cutting edge of all this can be mind-boggling: as well as being an unlikely Work Programme provider, for example, the security firm G4S is about to sign a contract to run a privatised police station in Lincolnshire. There is, in short, a growing shadow state, which manages to pay its shareholders handsome dividends despite the climate of chilly austerity. Certainly, in the UK, A4e seems to be something close to an arm of government: it depends on the state for all its takings, and hold contracts worth up to £180m a year.

In terms of the face they present to the world, Harrison and her company have two distinct sides. One is bound up with that strangulated officialspeak that took root in the New Labour period, as proven by the company’s promotional blurb: “Through quality assurance, contract management, performance management, data management; evaluation; capacity building; and market making we help governments deliver more for less.”

The other is in keeping with that slightly twee, cuddly approach one associates with Virgin Trains and Innocent smoothies. A4e’s chosen typefaces often approximate children’s handwriting. If you hit the contact button on its website, the kind of faux-naif drawing that you see on the cover of chick-lit novels appears, with the words, “We’d love to meet you. The kettle’s always on.” On the section of the site devoted to welfare-to-work, the text says: “Even after you’ve landed a job, we’re always here if you need us. And besides, we’re nosy.”

This air of slightly laboured sweetness extends to Harrison herself, as demonstrated by the YouTube film made to announce her work with the government as “families tsar”. All is good cheer, innocence, and slight oddness. “It’s everything I wanted to: it’s absolutely wonderful,” she says. “I’ve been asked by No 10 – you know, David Cameron and the gang – to see what I can do to help the families who’ve never worked.”

When the public accounts committee held its recent session about A4e, Margaret Hodge – the MP for Barking, a former work and pensions minister and now the committee’s chair – was on feisty form. “You are one of the first examples we have had of a company which is entirely dependent on public contracts for your existence,” she told A4e’s chief executive, Andrew Dutton. “The profits you make come from the taxes that ordinary, hard-working people pay.” She went on to question not just the company’s track record, but the cut it takes from the charities and social enterprises with which it works: “sheer profit”, she claimed.

When I speak to her, Hodge does not exactly hold back. She says she first came across A4e in her east London constituency, where it is sub-contracting Work Programme activity to a charity. “It seems like a scam,” she says. “They win the contract, and all they do is sub-contract – to a perfectly adequate organisation in my borough called LifeLine, which has developed out of a church. A4e slice off 12.5%. When I met A4E in Barking, I kept asking: ‘What do you do for that money?’ They said: ‘Well, we put people in touch with national employers.’ But this outfit know Asda and Tesco. They’ve been placing people there forever anyway. A4e has no risk, its contribution is minimal, and it still slices off that money. To you and me, that will feel like a scam.”

A4e claims the fees it charges are “amongst the lowest in the industry”, though that will hardly dampen Hodge’s ire. When I mention Harrison’s dividend payment, she is every bit as blunt. “It’s a rip-off. Emma Harrison lives entirely on public contracts. She’s got a load of contracts with the DWP; I believe she’s aiming at getting contracts with the Ministry of Justice, for probation work. It’s all public money. That’s what gets my goat.”

There is perhaps one weakness in Hodge’s position: it was Labour that decisively brought A4e into welfare-to-work in the first place, and commenced the whole outsourcing feast to which she now objects.

“You’ve got to learn from your own mistakes,” she says. “I’ve been completely upfront about that. We got it wrong. Private providers often don’t provide well, and you’ve got to have a tougher hold on them.”

“There are so many areas where there are question marks over A4e’s performance,” she says. “And if there’s a fraud investigation, it’s just common sense to suspend the contracts until the police have completed their investigation. There’s a real lesson here about the ideology of privatisation and how it can lead to waste. There is an assumption that the private sector will always be more efficient than the public sector. But the excess profits in the private sector from providing public services is horribly wasteful of taxpayers’ money. The next thing you’ll be writing about will be free schools and academies, and then it’ll be private providers in the NHS. This is all about some people in the private sector exploiting public spending for private gain.”

One of the most illuminating conversations I have is with an insider at a charity that is one of A4e’s sub-contractors on the Work Programme. Harrison’s image might be that of a workaholic go-getter, but this source tells me that A4e has handed them hardly any work at all: they have been working with A4e since the start of the Work Programme in June last year, and have had “less than 10″ people referred to them. They suspect that they were mere “bid candy”, inserted into A4e’s pitch to the government so as tick the right big society boxes, but now all but marginalised. This suggestion blurs into another allegation made about A4e’s relationship with its Work Programme partners: that it has a habit of creaming off easy cases and handing people with ingrained problems – drugs and alcohol issues, usually – to charities and social enterprises. The company “completely refutes” the second claim, stating “it’s simply not in our interest to do this”. It deems the first allegation “hugely disappointing” and says it has had no formal complaints on the subject. But it acknowledges that “referrals have not come though to some partners as expected”.

But there is a bigger issue: whether, particularly in times like these, the government should be allowing people such as Harrison to take so much money from the public purse, particularly when the results seem so uncertain and the payback seems to include all that negative publicity.

“The charge is that the government is throwing cash at the private sector, into this big money-making machine,” one Work Programme insider tells me. “And at some point, they’ll have to be seen to act. A4e might be an obvious target: being on the front page of the Daily Mail all the time isn’t great, and neither is being accused of fraud.”

They let out a quiet smirk. “It’s just unfortunate that the person at the top is the prime minister’s families champion.”