FactCheck: Is G4S trying to get paid twice?
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


There are 14 comments on this post
Cathy/Patrick,
Of course they are “trying to get paid twice.”
It’s what liars and cheats do when the establishment sets an example of just that.
Since G4S are one of the world’s leading “risk taking entrepreneurs” what did anyone expect?
Nice update Cathy/Patrick. Keep up the good work – though I don’t suppose you’ll make many friends at G4S; well, not unless they want to shut you up, that is
Like or Dislike:
0
0
Buy cheap buy twice. This is what has happened with the police farce. It would have been better to pay for ‘professionals’ (ex-military) in the first place than later rely on the inept, corrupt and sexually perverted police farce.
Like or Dislike:
0
0
words cant sum up how angry i feel that they are being paid at all
Like or Dislike:
0
0
A serious question:
What is the evidence that “workfare” the “policy of making unemployed people do unpaid work, on pain of having their benefits cut off” is “widley unpopular”?
I’m not arguing whether it is right or wrong, but what is the evidence that it is “widley unpopular” which you state as fact?
Dave.
Like or Dislike:
0
0
Hi Dave,
Tesco, Matalan, Waterstones, Sainsbury’s, Superdrug, Boots, Holland & Barrett, Friends of the Earth, Salvation Army and Mind all pulled out after countless negative press stories. There was also a pressure group, a petition and early day motion in parliament.
Patrick
Like or Dislike:
0
0
I think it may be “widely unpopular” with unemployed people who would rather stay that way and enjoy a free ride at the taxpayers expense.
And I think the press saw it as great stick to beat the government with.
But I suspect it is very popular with taxpayers who are expected to fund these lazy good-for-nothings.
We have managed to create a society where those voters living off the taxpayer are outnumbered by those voters paying actually paying tax. So no wonder governments have such difficulty in passing reforms that would result in less noses in the trough.
Like or Dislike:
0
0
Caliban: I find myself wishing unemployment on your and yours….
Like or Dislike:
0
0
e: Me and mine, even to our extended families have never been unemployed for significant periods.
You might say we have been lucky, and there may be some truth in that. But I think the work ethic of my family and many, many, others is the key reason.
It cannot be mere luck that some families have always worked and others never worked, generation after generation.
If we pay people to do nothing, many will do just that. I don’t doubt there are genuine hard cases where people are who are eager to work simply cannot find employment.
But there is an old legal saying, hard cases make bad law.
Like or Dislike:
0
0
Caliban: Really I’m glad your families have never experienced extended unemployment. I apologise for my comment above, I shouldn’t allow my irritation off its leash…
By way of excuse: your conviction that unemployment is a consequence of “lazy good-for-nothings” must rest on a belief that something unconnected to economic neo-liberalism, something ethereal perhaps, came upon us from the late 1970s onwards because at this point in our nation’s political-economies history full employment was the norm despite a well functioning social security net more generous than today’s.
Like or Dislike:
0
0
e: You must see my “lazy etc” remark in context. It is about people who are being asked to do a small amount of work for the money the taxpayer gives them. “Unpaid” is a complete misnomer.
There is genuine unemployment in this country. But there is also work that some people refuse to do. We have had 5 million or so immigrants into this country, and the vast majority have been able to find work. So why have we got so many Brits unemployed?
A large part of the reason is because they can live happily on Benefits. I believe if you are offered work and refuse it (or contrive to get fired) your benefits should stop.
I see nothing at all wrong with unemployed people working for Benefits. If the taxpayer pays, the taxpayer should get a return.
If the options were work or starve, there would be very much less unemployment.
Like or Dislike:
0
0
Caliban, I see your context; it’s in the fault of the individual which must be ‘corrected’. Your view that there is “genuine unemployment” and “work some people refuse to do” evidently defines “hard cases” which as you earlier say “makes bad law”
I ask, but please don’t bother to answer with a tabloid based homily, on what do you base your belief ‘they’ live happily on benefits? You argue migrant workers, or as you say, “immigrants”, without note of issues of access to differing labour markets, a consequence of education and, in particularly, training, or lack of training opportunities.
Your right of course, if the option was work or starve they’d be a lot more off it, but not of the paid employee type which offers a living wage, more likely the type that redistributes land and property ownership….
Like or Dislike:
0
0
very good read very interesting
Like or Dislike:
0
0
I’m no fan of the WP or G4S, but as long as it’s not forced workfare, and the “customer”/worker is happy and properly paid(by G4S) then I can’t see a big problem. Especially while there’s an under-supply of security workers.
Problem will be in 7 weeks time when there’s an over-supply of security workers, how are they going to top-up to 26 weeks of paid work to get the next wp payment – retrain them as retail workers? – Displacing jobs.
@ Dave & pworrall
Not only the companies, but also “widely unpopular” with the employees in them. Especially part-timers who over winter/xmas. couldn’t get more hours, and some even had their hours cut. I’ve seen the protesters claim that they got on fine with the paid employees of the companies involved.
Like or Dislike:
0
0
The problem with analyses like this is that by taking G4S security in isolation it misses the main thrust. G4S is set to benefit from, amongst other things:
- private prisons
- prisoners working for profit
- any removal of minimum wage
- privatisation of police
- workfare service extension
The government’s policies are not individual but part of a coordinated move towards the type of limited state advocated by Koch-funded American Legislative Exchange Council.
Like or Dislike:
0
0