G4S: Welfare

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In April 2011, G4S won three contracts to run the coalition government’s Work Programme in Kent, Surrey and Sussex; Greater Manchester, Cheshire and Warrington; and North East Yorkshire and the Humber. Over the lifetime of the programme, G4S is contracted to find long-term jobs for 125,000 of the 250,000 “jobseekers” it will see. The DWP has allocated £5 billion to the work programme over seven years, of which G4S could take a £250 million share.[1] G4S has also won a £15 million contract in Greater Manchester, Cheshire and Warrington to “help England’s most troubled families”, in an initiative supported by the European Social Fund (ESF) and coordinated by local authorities.[2]

G4S’ employment practices have given it rather more experience of work-to-welfare than welfare-to-work, of which it could boast zero years of experience before winning these contracts. But it won’t be worried too much as the structure of the Work Programme allows prime contractors like G4S to sub-contract many of their responsibilities to charities and other “delivery partners”. In the regions G4S is operating in, 120,000 people will be sent from the Jobcentre to a G4S office, where they will then be sent to another organization that G4S has contracted to do the work it is being paid for.

So why bother getting G4S involved at all? The government's reasoning is that, while the services needed to get jobless people back into work “already exist”, what is missing is “an effective structure for managing and coordinating this provision.” Outsourcing giants like G4S are seen as having “the experience, capability and vision” to do this.[3] Well, that clears that up.

It is more likely, however, that the Work Programme’s emphasis on discipline may explain G4S’ success. G4S had already supplied benefit fraud officers to housing and benefits departments to snoop out and report benefit fraud,[4] and such skills will inevitably be put to use by the Work Programme.

The scheme is a not-so-new continuation of New Labour’s Flexible New Deal and is the central part of the government’s strategy of using a harshly enforced sanctions regime to ‘cut the benefits bill’, either by forcing people who have been unemployed for a year or more into poorly paid or unpaid jobs or simply by forcing them into destitution by cutting their benefits.[5]

Sean Williams, managing director of G4S Welfare to Work, has said the money saved by taking people off benefits makes G4S’ involvement good value, arguing that if 125,000 benefits claimants are 'helped' into employment, G4S will be helping the government save £1bn a year in benefits payments (if the average cost of benefits is £8,000 to £10,000 a year).

But getting a job is not the only way to come off benefits; you could also have your benefits cut if you are deemed to be not looking hard enough.

Evidence obtained by Corporate Watch in July showed that, in the first six months of the Work Programme, G4S has referred almost 8,000 claimants to the government to have their benefits 'sanctioned' (stopped for between one week and six months). However the majority of these referrals have been turned down, with the reasons given for sanctioning deemed inappropriate, suggesting G4S is even more eager than the coalition to cut benefits.

The government has approved less than 40% of sanctioning referrals from G4S. Of 7,780 referrals made, 2,960 have led to people having their benefits cut. (Note some referrals remain outstanding or have been cancelled. For a full analysis of the figures see here).

The benefits of welfare

The big change from the Flexible New Deal is that provider companies like G4S will receive only a small upfront fee per person, and even this will be phased out over the next three years. To make serious money from the programme, we are told, providers have to actually get people into work. Payments range from just under £4,000 for an unemployed person who is kept in work for 18 months to £14,000 for someone on incapacity benefits who stays in work for two years.[6]

But with not too many jobs around, these targets will be hard to meet. The government has already said it will not be releasing progress statistics until the programme has been running for 18 months, so there will be no way to analyze its performance before October 2012. Initial signs are not encouraging, though. For example, the Department for Work and Pensions and G4S have recently asked The Guardian not to publish figures from the Hull office of Pertemps, one of the companies subcontracted by G4S, as they were not meeting their targets.[7]

So how is G4S going to make its money? Advisers told the Guardian a lot of the jobs they do find are part time, 20 hours or fewer, even when the individuals wanted full-time work. G4S is unconcerned: it gets paid as long as they stop claiming benefits.

There have already been accusations of ‘cherry-picking’ by charities peeved at being superseded by G4S. They claim companies like G4S are choosing to work with unemployed people who are most likely to gain employment, while passing on people with less chances of finding a job quickly to charities.[8] Charities have also complained they are not being paid quickly enough.

But happily for G4S, its knowledge of the corridors of power in this sector are intimate enough to allow it to stay closer to policy-makers than charities and other rivals (see the Staff section for details). Indeed, the company took over the national security contract for the Department for Work and Pensions in January 2011. No doubt more lucrative contrcts, and better working relations, are in the pipeline.
[1] A Gentleman, ‘Rising unemployment puts Cameron's work programme in the spotlight’, Guardian, 31.1.12

[2] ‘European Social Fund Support for families’, www.g4s.com, accessed 13.5.12

[3] See www.corporatewatch.org/?lid=4032

[4] Accessed from: www.policingsolutions.co.uk/benefit-fraud-officer-jobs on 14.5.12

[5] J Domokos, ‘Jobcentres 'tricking' people out of benefits to cut costs, says whistleblower’, Guardian, 1.4.12

[6] N Timmins, ‘Back-to-work preferred providers named’, Financial Times, 1.4.11

[7] ibid 1

[8] ibid 1