Wednesday, 5 November 2014

Maximus - a name like a sex aid and a history of fraud and failure

Maximus are back in the news because the government have given them a £500 million contract for "Work Capability Assessments", taking over the job of harrassing the sick from Atos.

So I am republishing this piece that I wrote in the Morning Star on July 12th 2012

Solomon Hughes
Morning Star 12th July 2012

The government's work programme is failing. Currently only 24 per cent of those on the scheme are leaving benefits, and some of those are being forced out without even getting jobs. This is below government estimates for the number who would find work without the scheme - the programme is literally worse than nothing. There are two problems with Iain Duncan Smith's £5 billion plan to "help" the unemployed by hiring big "benefit-busting" contractors. First, it's the wrong scheme. Second, he's got the wrong people running it. The work programme is based on the idea that there is something wrong with the unemployed - maybe they can't find jobs because they have forgotten how to get out of bed. But rising unemployment is mostly caused by lack of jobs, not issues with the unemployed. Investing £5bn on schemes creating actual jobs - like housebuilding - would cut unemployment by far more. There is a case at the margins for an employability programme - some people really do get knocked out of the labour market and need help to get back in. Training, coaching and some job subsidies can help. But Duncan Smith has hired the wrong people to help the unemployed. The big work programme contractors are almost universally better at helping themselves to profits than helping the unemployed. All studies so far conducted show that public-sector Jobcentre staff do a better job. I've been writing about bogus "benefit-busting" firms A4e and Working Links for a few years. But there are plenty of firms you've never heard of that squeeze millions from the government to help the unemployed but only help themselves. Enough in fact for me to run a short series on the subject. This week, step forward Maximus. Maximus has a low profile, a name like a sex aid and contracts worth £176 million running the work programme in west London and south-east England. It's probably just as well that this US firm is unknown in Britain, as its record across the pond includes fraud and failure on a major scale. In 2007 Maximus paid a $30.5m (£20m) fine in the US over charges that it had cheated Medicaid, the state-funded health service for the poor, by making tens of thousands of false claims. The fraud took place in a "payment-by-results" contract. Washington state had hired Maximus to make savings in its spending - Maximus and the state shared the money claimed from the national Medicaid system for children in foster care. But Maximus, in a plan called "operation lightning rod," increased its income by making claims for children who had not received medical care. After the fraud was uncovered Maximus said it would not sign any more "contingency-based contracts" where it is paid from "savings" in state expenditure. But Duncan Smith's "payment-by-results" work programme is just such a "contingency based contract." Also in 2007 the state of Connecticut sued Maximus over the "abject failure" of its computer system. Maximus was supposed to run a police database, including real-time police record checks. Connecticut's attorney-general said that "Maximus minimised quality, squandering millions of taxpayer dollars and shortchanging law enforcement agencies." He said the database could "make a life-and-death difference to police and other law enforcers," so the failure was unacceptable. In 2010 Maximus settled the case for $2.5m (£1.6m). Maximus's performance over here is less dramatic, but still unimpressive. The firm got some benefit-busting contracts from the last Labour government. It never managed to get a "good" grade from Ofsted for these schemes. The last full inspection by Ofsted of its "workstep" programme for the disabled jobless in western England gave the firm the second-lowest possible grade, "satisfactory." Inspectors noted that "the proportion of participants leaving the programme without progressing into open employment is high." A 2010 follow-up inspection found "insufficient progress" on half of its targets. As the work programme fails, there are calls to bail out the scheme with extra cash. But as Maximus's record shows, this would be throwing good money after bad.