A4e, a for-profit company entirely dependent for its business on £180 million of government contracts under which it is supposed to help unemployed people get in to work (something which used to be the job of the State), last year paid Harrison £8.6 million in dividends – money directly siphoned from tax-payers.
But this cosy arrangement has now gone catastrophically wrong with the arrest of four A4e employees over claims of fraud. It has emerged that, among other allegations, A4e has had to pay back public funds on five occasions after government investigations found irregularities, and that the company made job seekers work in its offices for at least a month for no pay.
Margaret Hodge for Labour has called for all of A4e’s contracts to be suspended until the allegations of fraud have been investigated, but the government has so far resisted, and for good reason – under New Labour and the Coalition, A4e has practically made itself into an arm of the State. In five regions of the UK it is in charge of the government’s Work Programme, responsible for selecting providers to do the work of job placement and channelling public money to them, taking a huge fee along the way. Some third sector providers (charities, non-profits, community initiatives etc) that work under A4e in these regions have complained that job seekers have not been sent their way by the company and that they were merely window-dressing for A4e’s contract bid. In other areas of the country A4e wears a different hat, working as a provider itself.
This is what the patchwork privatisation of the welfare system looks like. A dominant player gets itself into an indispensible position and (allegedly) abuses the system, so that even when it is being investigated for fraud and is under so much public pressure that its celebrity chairman has to resign, the State appears powerless to act.
This is all the more shocking because the activities of A4e should come as no surprise – exactly the same scenario played out in Australia under the Howard government when it implemented the original scheme which the Tories have explicitly copied.
The problem, common also to other faux-market reforms of public services, is that there is (and can be) no functional market because there are no proper customers (the unemployed) and only one source of money – the tax payer. What emerges instead is a form of contractual clientelism.
In 2008 Red Pepper published an article called 2014: A Tory dystopia. The piece was written from an imaginary future but was based on the policy papers developed and published by the Tories in opposition – no one can say they weren’t warned. We are still two years from the imagined date of the article, but the piece bears re-reading (even if I did write it myself) because so much of it has already come true. (This speaks volumes about the Lib Dem’s “moderating” influence on the Tories.)
And what do you know, the piece contained a section on the Tories’ plans for job placement privatisation and the likelihood that it would end in fraud. The article predicts the emergence of dominant players with huge power to abuse the system, the sidelining of third sector organisation, and points to New Labours culpability. Here is the section, written back in 2008, but as if it was 2014:
As well as squeezing the benefits system, the Conservatives have privatised its job placement function. Jobcentres now grade potential benefit claimants according to their capability for different kinds of work and refer them to a private company to find a job. This fundamental reshaping of the welfare system built on New Labour’s reforms – Tory ministers defend their policies by saying they are only continuing James Purnell’s work.
The ‘payment-by-results’ system, under which companies’ funding depends on getting people into jobs and keeping them there, is meant to provide the state with the levers it needs to control the process. But it doesn’t work like that. The Tory plans were largely based on the Australian system introduced by the Howard government, but in that country the profit motive produced perverse outcomes and fraudulent behaviour. There was no real market, because the ‘customers’ (unemployed people) didn’t pay for the service and couldn’t choose to switch between companies. Although private providers were paid by results in Australia as in the Tory scheme, there was minimal competition once a few companies became dominant. To compensate for the failure of the market, the Australian government was forced to tighten regulation and central control – undermining the original aim of cutting bureaucracy and costs.
The Conservatives chose to ignore this evidence, and promptly repeated the Australian experience. They also faced an outcry from the voluntary sector, which had been promised a key role delivering job placement services but didn’t have the capital necessary to win many contracts. The sector belatedly realised that its involvement had been used as PR cover for privatisation.
When the current scandal could be seen from as far back as 2008, we should say ‘I told you so’ as loudly as possible.
Hilary Wainwright argues against reclaiming populism for the left and for a leadership that supports people’s capacity for self-government
It may seem as though these apps are working for us, but we are also working for the apps, writes Kurt Iveson
It's over 100 years ago that domestic workers began to organise to demand the same rights as other workers. Yet with LSE cleaners on strike this week, historian Laura Schwartz asks: how much has really changed?
Omar Barghouti asks whether Donald Trump, in his recent break with America’s long-standing support for the two-state solution, has unwittingly revived the debate about the plausibility, indeed the necessity, of a single, democratic state in historic Palestine?
Glenn Greenwald was interviewed by Amandla Thomas-Johnson over the phone from Brazil. Here is what he had to say on the War on Terror, Trump, and the 'special relationship'
In 1972 David Widgery wrote about the bitter intensity of love in capitalism
Andrew Dolan on how the left must match the anti-establishment rhetoric of the right, but with a different politics
Emma Snaith speaks with directors Emer Mary Morris and Nina Scott about the power of theatre to encourage community resistance to estate demolitions.
In the first of a series of interviews with migrants' rights and racial justice activists from the US, Marienna Pope-Weidemann speaks to Peter Pedemonti, co-founder and director of the New Sanctuary Movement in Philadelphia
Photos from The World Transformed festival in Liverpool, by David Walters
Red Pepper’s race section: open editorial meeting 19 April
On April 19th, we’ll be holding the second of Red Pepper’s Race Section Open Editorial Meetings.
Changing our attitude to Climate Change
Paul Allen of the Centre for Alternative Technology spells out what we need to do to break through the inaction over climate change
Introducing Trump’s Inner Circle
Donald Trump’s key allies are as alarming as the man himself
Secrets and spies of Scotland Yard
A new Espionage Act threatens whistleblowers and journalists, writes Sarah Kavanagh
#AndABlackWomanAtThat – part II: a discussion of power and privilege
In the second article of a three-part series, Sheri Carr reflects on the silencing of black women and the flaws in safe spaces
How progressive is the ‘progressive alliance’?
We need an anti-austerity alliance, not a vaguely progressive alliance, argues Michael Calderbank
The YPJ: Fighting Isis on the frontline
Rahila Gupta talks to Kimmie Taylor about life on the frontline in Rojava
Joint statement on George Osborne’s appointment to the Evening Standard
'We have come together to denounce this brazen conflict of interest and to champion the growing need for independent, truthful and representative media'
Paul O’Connell and Michael Calderbank consider the conditions that led to the Brexit vote, and how the left in Britain should respond
On the right side of history: an interview with Mijente
Marienna Pope-Weidemann speaks to Reyna Wences, co-founder of Mijente, a radical Latinx and Chincanx organising network
Disrupting the City of London Corporation elections
The City of London Corporation is one of the most secretive and least understood institutions in the world, writes Luke Walter
#AndABlackWomanAtThat: a discussion of power and privilege
In the first article of a three-part series, Sheri Carr reflects on the oppression of her early life and how we must fight it, even in our own movement
Corbyn understands the needs of our communities
Ian Hodson reflects on the Copeland by-election and explains why Corbyn has the full support of The Bakers Food and Allied Workers Union
Red Pepper’s race section: open editorial meeting 15 March
On 15 March, we’ll be holding the first of Red Pepper’s Race Section open editorial meetings.
Social Workers Without Borders
Jenny Nelson speaks to Lauren Wroe about a group combining activism and social work with refugees
Growing up married
Laura Nicholson interviews Dr Eylem Atakav about her new film, Growing Up Married, which tells the stories of Turkey’s child brides
The Migrant Connections Festival: solidarity needs meaningful relationships
On March 4 & 5 Bethnal Green will host a migrant-led festival fostering community and solidarity for people of all backgrounds, writes Sohail Jannesari
Reclaiming Holloway Homes
The government is closing old, inner-city jails. Rebecca Roberts looks at what happens next
Intensification of state violence in the Kurdish provinces of Turkey
Oppression increases in the run up to Turkey’s constitutional referendum, writes Mehmet Ugur from Academics for Peace
Pass the domestic violence bill
Emma Snaith reports on the significance of the new anti-domestic violence bill
Report from the second Citizen’s Assembly of Podemos
Sol Trumbo Vila says the mandate from the Podemos Assembly is to go forwards in unity and with humility
Protect our public lands
Last summer Indigenous people travelled thousands of miles around the USA to tell their stories and build a movement. Julie Maldonado reports
From the frontlines
Red Pepper’s new race editor, Ashish Ghadiali, introduces a new space for black and minority progressive voices
How can we make the left sexy?
Jenny Nelson reports on a session at The World Transformed
In pictures: designing for change
Sana Iqbal, the designer behind the identity of The World Transformed festival and the accompanying cover of Red Pepper, talks about the importance of good design
Angry about the #MuslimBan? Here are 5 things to do
As well as protesting against Trump we have a lot of work to get on with here in the UK. Here's a list started by Platform
Who owns our land?
Guy Shrubsole gives some tips for finding out
Don’t delay – ditch coal
Take action this month with the Coal Action Network. By Anne Harris
Utopia: Work less play more
A shorter working week would benefit everyone, writes Madeleine Ellis-Petersen
Mum’s Colombian mine protest comes to London
Anne Harris reports on one woman’s fight against a multinational coal giant