Ministers have been accused of failing to properly investigate allegations of fraud in Government welfare-to-work schemes including those run by Sheffield-based A4e.
The Commons Public Accounts Committee said the Department for Work and Pensions had missed ‘vital evidence’ of potential fraud in the provider.
The overseeing of outside contractors was said to have been insufficient and cases of alleged fraud overlooked because officials had not ‘asked the right questions.’
In the case of A4e, the committee said the Department for Work and Pensions failed to obtain internal audit reports from 2009 which referred to a ‘considerable number’ of cases of alleged fraud and malpractice.
Founder Emma Harrison quit the firm and a post as Government family champion in February, amid claims of problems at A4e.
The DWP launched an inquiry into controls which saw one contract being cancelled.
But the committee said it had not addressed whether A4e was a ‘fit and proper’ company to carry out such work.
The committee said: “The department’s arrangements for overseeing and managing its contractors did not pick up vital evidence about potential frauds.
“Investigations of alleged fraud that the department has carried out have not been sufficiently thorough.”
A DWP spokesman said cases of fraud referred to ‘previous Government schemes’, and it had been made clear to the committee that ‘the toughest anti-fraud measures ever’ were included in a new scheme.
“We have learned from experience to ensure taxpayers are no longer exposed to bills without guaranteed results.”