Firm paid pounds 2.3m for benefits advice

PATRICIA WYNN DAVIES

Political Correspondent

More than pounds 2.3m of taxpayers' money has been swallowed up by the highly profitable City consultants Andersen Consulting for advice over introducing the troubled Jobseekers' Allowance.

Ministerial replies to parliamentary questions from John Hutton, the Labour MP for Barrow and Furness, reveal that the firm has collected pounds 2,244,000 for its services to the Department of Social Security and another pounds 88,000 from the Department for Education and Employment.

The firm's fees represent just over 1 per cent of the pounds 200m benefit savings originally envisaged by the Government from the merging of unemployment benefit and income support and paying the new benefit for only six months instead of 12 before it becomes means-tested.

The full effect of the planned savings has already been delayed because the Government was forced to postpone the introduction of the allowance from next April to next November - at a cost of at least pounds 25m - because the necessary computer systems were not in place.

Earlier, the House of Lords forced the Government to re-write part of the Jobseekers' Bill because it was too vague and gave ministers too wide powers of interpretation.

Mr Hutton said the commercial arrangement with Andersen Consulting was the latest example of government departments employing consultants to help introduce new policy initiatives, a role traditionally performed by non-profit making civil servants.

He said: "The JSA will take millions of pounds worth of benefit payments away from unemployed people but has, at the same time, become the source of large profits for city firms, with millions being paid for consultants' advice.

"This confirms the hypocrisy which lies at the heart of government welfare changes."