Millions at risk for Therese Rein as Britain slams work efforts 

by: Jacquelin Magnay, London
From: The Australian 
July 08, 2013 12:00AM
   

THERESE Rein faces multi-million-dollar contractual problems with the British government after her jobseeker company, Ingeus, failed to deliver on promises to get sufficient numbers of long-term unemployed back to work. 
 
Ingeus, which was founded by Kevin Rudd's wife, is one of five British providers believed to have been issued with "improvement notices" and faces having some of the lucrative contracts axed before the end of the year.

The move comes as the government's pound stg. 5 billion ($8.2bn) flagship Work Program, of which Ingeus is an integral part, has failed so miserably that political opponents claim it would have been cheaper to bury the cash and pay the unemployed to dig it up.

Opposition works spokesman Liam Byrne noted that, in many parts of the country, taking part in the scheme was indeed "worse than doing nothing".

Ingeus partnered with accounting firm Deloitte to win a pound stg. 727 million five-year contract with the British government to deliver seven of the work program contracts throughout England and Scotland two years ago.

Its reputation has been tarnished, especially among the poorest and most disadvantaged, after it coerced some unemployed people to work unpaid for 30 hours a week for up to six months in charity shops and big-name retail outlets.

This "workfare plan", detailed in Ingeus's tender document, is mandatory for the claimants to maintain their pound stg. 71.70 a week jobs benefit (only pound stg. 50 a week for those aged under 25). Ingeus told The Australian "all work experience is voluntary, with the duration determined by the individual".

But local lobby groups are scathing about Ingeus, saying it is one of the most aggressive providers in pushing clients into the workfare scheme.

The scheme was challenged in a High Court appeal, with critics labelling it self-defeating slavery by replacing real jobs with endless rotations of short-term free workers, but the government retrospectively changed the law in its favour. That law change is subject to ongoing action in the Supreme Court.

Joanna Long, a member of the lobby group Boycott Workfare, told The Australian that the unemployed had no real alternative but to work for free with no job at the end of the period.

"It is deeply concerning someone so closely connected to the Australian Labor Party is helping to erode labour rights in the UK," Ms Long said.

"Ingeus's plans for their Work Program contract promised six months of forced unpaid work for unemployed people -- a recipe for replacing paid work and undermining the minimum wage."

Such has been the level of complaints about Ingeus there are Facebook sites and a "week of action" planned for this week.

There is also bitter resentment that Ingeus receives trailing payments from the government for up to two years -- sometimes earning more in these incentives than the newly employed person may earn -- and receives the money even if the jobseeker finds the job independently.

Ingeus pockets pound stg. 400 every time a person unemployed for more than 12 months is automatically referred to it by the government's Job Start centre. It then receives pound stg. 1400 for finding them a job and then the trailing commission of up to pound stg. 2795 is paid to encourage the company to ensure the job is an appropriate one. Another incentive of pound stg. 1000 per person is also paid if the person remains in work.

The latest figures, released last month by the Department of Work and Pensions, underscore a poor performance, dramatically below the government's target that Ingeus and others would find work for 30 per cent of applicants, which was a minimum figure the government expected would be "significantly exceeded".

Instead 130,000 of the 1.2 million people who joined the Work Program since June 2011 -- 13.4 per cent -- have found employment, a figure well below that which the government believed would have found work without any intervention at all.

The Chancellor of the Exchequer, George Osborne, warned of a "hard-headed assessment of the underperforming programs" as he issued legal notices for performance improvement to 12 of the contracts. The government has refused to detail which contracts are under threat but warned that unless there was significant improvement in the next four months they faced termination.

British Employment Minister Mark Hoban said taxpayers were getting a better deal than in previous schemes because the providers were paid only for success.

Ingeus in Britain refused to comment on the negotiations with the government, and the head office in Brisbane did not respond to a list of questions.

Pierre Lapin, an engineer jobseeker with building experience from Norfolk, was referred to Ingeus nearly two years ago and said the experience had been painfully inadequate and dispiriting. He said he turned up to sign on every fortnight and had received no extra assistance beyond his own job-seeking and a small polishing of his CV. "Ingeus have never found a position for me to apply for, or even sent me for an interview," he said. "All they do is provide a turn-up place to look at the papers and at the computers. My branch has six computers for over 600 clients. They are a disgraceful waste of time."

Mr Lapin said he believed he had been bullied by staff and was constantly threatened with sanctions which, if acted upon, could instantly halve and then withdraw his payments.

Another Ingeus client, Rowan Singh, from the relatively affluent London area of Wandsworth, said he had been placed with Ingeus for the past six months and the best thing about the company was "the free tea and coffee". He has had one job organised for him to do some construction agency work so he rated the company "not too bad", adding "it's a little better than the jobseeker centre but that's not too hard".

Mr Singh, 45, said he lived with his pensioner mother to make ends meet and was looking for handyman and painting work. He too has never been offered any training, but he was unsure if he qualified for such a privilege. "I can't knock the staff, they talk to me with respect, but they did threaten me with a sanction when I missed an appointment when I was sick," he said.

Ms Long said Ingeus was pushing people into destitution through sanctions, and claimed this was a back-door way to reduce the burgeoning British welfare bill. The number of people recommended to the government to face sanctions and have their benefits withdrawn has risen 300 per cent since Ingeus and the other private contractors took control of the long-term unemployed.

"Ingeus are failing miserably to help people find work," she said. "Instead they are pocketing millions at taxpayers' expense to force people into unpaid work and push people into destitution through benefit sanctions."



Opinion


Rein rakes it in from UK Tories 

by: Kevin Morgan
From: The Australian 
July 08, 2013 12:00AM
   
DOES Kevin Rudd's spouse Therese Rein still call Australia home? Seemingly not, according to a document lodged with Companies House, the corporate records office in London. 
 
In a return lodged last December for her international job placement agency Ingeus UK, Rein, one of seven directors, states that the country in which she is usually resident is the United Kingdom. Clearly, unlike her spouse, Rein does not fear life under Tory policies.

Last week as justification for his backflip on the ALP leadership Rudd warned of the need to stop Tony Abbott because "his alternative economic policy is to copy the British Conservatives -- launch a national slash-and-burn austerity drive and drive the economy into recession as happened in Britain".

It will be a much-repeated theme in the run-up to the election that has already been taken up enthusiastically by Rudd's colleagues.

On the last day of sitting, South Australian MP Nick Champion warned the House of Representatives of the dangers of the economic austerity policies pursued by Britain's Conservative leader David Cameron. "Who suffers from these policies? Mature-age workers and young workers -- they are the people who are thrown on the scrap heap of unemployment," he said.

Well every cloud has a silver lining, especially if, like Rein, you're in the welfare-to-work industry in Britain. For while Rudd might rail against the evils of "Cameronite" policies, a company ultimately 50 per cent owned by Rein's Australian company Ingeus has bagged contracts worth $1.2 billion under the Tories' "Work Program". The policy is intended to secure jobs for the long-term unemployed and other disadvantaged groups.

The British government's tender website shows that in April 2011 Ingeus UK won seven regional franchises worth pound stg. 777,563,445 for a five-year period to deliver welfare-to-work services. Ingeus UK is a joint venture with Deloitte, with the other 50 per cent owned by Ingeus Europe -- which in turn is wholly owned by Ingeus in Australia, the Rein company chaired by education policy wonk David Gonski.

It's part of a web of companies Rein controls that have seen her brand of job placement expand to countries such as France, Poland, South Korea and Saudi Arabia.

The tender lodged with the British Department for Work and Pensions shows what helped Ingeus win was its blend of positive psychology and detailed administration. This was embedded in its mantra of "Every Day Counts", under which Ingeus says "customers must undertake meaningful activity every day in order to best progress towards employment. Customers who become inactive tend to drift and disengage, while those who are set structured activity in between appointments are substantially more likely to enter employment".

But it seems while Rein's mantra may have helped Kevin return to his rightful position, it's not proving quite as effective with the unemployed in Britain. The Guardian reported last November that by mid-2012 Ingeus, the largest of the contractors, had placed only 3.3 per cent of the 28,000 individuals referred to it in jobs.

Then the House of Commons committee of public accounts noted in its report on the "Work Program" policy in February: "The difference between actual and expected performance is greatest for those considered the hardest to help most, including in particular claimants with disabilities."

Though the report did not name any contractor, Rein had built Ingeus's reputation on its initial commitment to placing the disabled in work.

The committee noted: "These claimants have been receiving a poor service from providers."

That's bad news for Ingeus and Rein because payments are largely dependent on how many people they place in jobs.

Nevertheless, within six months the "Cameronite" contracts boosted Ingeus UK's revenues by 25 per cent to pound stg. 93 million, according to the last financial statements lodged. That allowed Ingeus UK to pay the Rein-controlled Ingeus Europe a pound stg. 9,969,000 dividend.

Unfortunately for Ingeus, that may not be sustainable given a further parliamentary report from the House of Commons work and pensions committee in May. Though it suggested poor performance by contractors may have been due to "worse than expected economic conditions", it also noted deeper concerns about the policy, saying, "the welfare to work sector lacks effective regulation; the suspicion remains that many smaller specialist organisations with experience of supporting jobseekers with the severest barriers, were used by the primes (contractors) as 'bid candy' to make their bid more appealing".

So, instead of engaging hands-on practitioners as subcontractors, it seems contractors substituted touchy-feely motivational rhetoric, delivered through advisers with large caseloads.

The report noted advisers had caseloads of between 120 and 180 jobseekers, making their task near impossible.

Yet while the delivery end of the work program may be somewhat "touchy feely" there is nothing soft about the business model contractors have adopted. Despite the huge amounts of cash disbursed the margins are small, demanding skilled management and hard-nosed boards to manage the cash flow that underpins the delivery model. Rein's boards are no exception, with appointments from the top end of town -- corporate financiers and legal advisers.

In summary, the service Rein delivers is a hard-edged business that does not sit comfortably with Labor values that prefer not-for-profit delivery of essential social services.

Rudd may feel Rein's divestment of her Australian government contracts during his first term as prime minister put sufficient distance between him and his spouse's business dealings. But conflicts of interest have a moral dimension and no more so than when Rudd denounces "Cameronite" policies while his spouse seeks to profit from them.

Kevin Morgan is an independent consultant