Last week, G4S admitted it would not be able to deliver enough security guards for the London Olympics, sparking public apologies, emergency statements in the House of Commons and angry Select Committee inquiries.
One of the most worrying aspects of the scandal is the fact that the security giant is contracted to provide many other services across government.
As well as running prisons, guarding airports and supporting police forces, G4S is one of the prime contractors hired to deliver the Work Programme for the Department for Work and Pensions.
The government’s flagship Welfare-to-Work programme is itself no stranger to controversy, as regular readers will know (see here, here and here).
When the Work Programme was launched last summer, we raised an eyebrow over the fact that some of the providers, who are being paid by the state to find permanent jobs for unemployed people, were themselves huge employers.
G4S makes much of its position as one of the biggest private employers in the world, with more than 630,000 workers worldwide.
We wondered whether these companies could simply find large numbers of Work Programme “customers” jobs within their own workforces, fulfilling their own recruitment needs, boosting their Work Programme performance figures and collecting a payment from the government at the same time.
DWP confirmed that this was indeed possible, saying: “If a provider has a vacancy they want to fill with a Work Programme customer that is a good thing.”
FactCheck spoke to Sean Williams, Managing Director of G4S Welfare to Work, at the time, and he said: “I wouldn’t see it as a conflict of interest but as a huge positive synergy…I would be delighted if we managed to get a lot of job seekers into our own vacancies.”
But he doubted whether the ranks of the Work Programme client group – many of whom have been unemployed for a long time and may have complex problems – would provide rich pickings for big employers, saying: “I would challenge the assumption that there are a lot of job seekers who are easy to help in this group that can just be creamed off.”
There’s no reason to doubt Mr Williams’ word about that, but the possibility remained that a company might find a small number of unemployed candidates suitable to join its ranks through the Work Programme – and get paid for it.
When G4S was thrust into the limelight this week over the Games it occurred to us that there might be an opportunity for an even bigger “synergy”.
Other bloggers have questioned whether “workfare” – the widely unpopular policy of making unemployed people do unpaid work, on pain of having their benefits cut off – lay behind this scandal.
G4S categorically denied to us that anyone recruited will be benefits claimants made to work for free under threat of sanctions.
A spokesman said: “None are being threatened. Everyone who secures work with us on the 2012 contract is being paid a minimum of £8.50 per hour. If they work all their shifts there will be a bonus applied at the end of the Games. More senior roles are being paid more on a sliding scale.”
So apparently, no one is working for free. And the short-term nature of the Games work placements (about six weeks) means that Work Programme payments won’t be triggered immediately. Providers usually get the first substantial payment for getting someone into work for six months.
But what if you skim a small number of the most suitable candidates from those thousands working at the Olympics and offer them long-term work afterwards?
You essentially recruit the best people for your own organisation but instead of paying for the cost of vetting, interviewing, training and trialling them yourself, the taxpayer picks up the bill because those things are covered by the 2012 contract.
You then collect from the taxpayer a second time because the people you recruited were on the Work Programme and you got them off the dole queue.
There’s nothing illegal about this, but taxpayers might well feel that it’s not cricket.
We asked G4S if it was anticipating getting Work Programme money for Olympic recruits and a spokesman told us: “We have about 100 in the 2012 recruitment and training system from the Work Programme. No more than 35 who are on the Work Programme have got through the system. If they stay with us then after six months that would apply.
“If these are with us for just five or six weeks, this is a proper job; they would come off benefits and then after the contract go back on benefits.”
The verdict
With G4S so much in the firing line this week, it’s easy to demonise the company.
Some bloggers have suggested that the company was planning to use unpaid “workfare” labour to squeeze more profit from the Olympic contract, but in the absence of any hard evidence, this is pure speculation.
The company has told us that everyone who works at the Games, including the “substantial numbers of unemployed” people, will get paid at least £8.50 an hour.
As far as the Work Programme goes, taxpayers may feel that it’s wrong in principle for G4S to be able to collect twice from the government in the circumstances, and the company hasn’t ruled out this possibility.
But the small numbers apparently involved (35 people) make it unlikely that this would produce a big windfall for the company.
It’s important to stress that Work Programme payments won’t kick in for people who just work for a few weeks over the Olympic and Paralympic Games.
G4S would have to give people work for up to two years to get the maximum payments under the Work Programme, so the numbers of people and sums involved at the end of the process are likely to be small.
Nevertheless, the possibility remains that the company will be able to scoop two payments from two different taxpayer-funded contracts for doing the same thing.
By Patrick Worrall
