Exit fees/ Ep11: Ouch! DWP grilled over FDM graduates ‘trapped’ in government department

DEPARTMENT FOR WORK AND PENSIONS SPOKESPERSON SQUIRMS UNDER SPOTLIGHT

* Update, 15 May 2022: We’re in the Sunday Times! Graduates hit by stinging ‘exit fees’ from recruiters (Don’t subscribe? Click here) *

The Department for Work and Pensions has refused to answer basic questions about how many FDM Group graduates are currently working on placements within the government department — and who at the DWP is aware that some of these graduates ‘bought in’ (yuck) to help with IT projects will have to pay ‘exit fees’ of up to £15,000 if they leave in less than two years.

Instead, when Graduate Fog sent detailed questions last week (full correspondence published below), the spokesperson provided what appeared to be a stock response to questions from journalists about the behaviour of suppliers:

‘We offer recruitment and training opportunities for people leaving university. Organisations contracted to supply us with graduates to work at DWP must act in accordance with the Government Supplier Code of Conduct and this includes an expectation that suppliers behave ethically and treat their employees fairly and with respect.’

Here is the first page of the Supplier Code of Conduct:

However, when we read the document, we found several places where FDM Group appears to fall short of the standards expected of companies that supply goods and services to government departments. When we raised these questions, we expected the spokesperson to thank us for the information and promise to investigate but instead they wrote:

‘We don’t have anything to add to our statement at this time.’

Yes, seriously.

Graduate Fog understands that ‘at least 20’ FDM graduates are currently placed within the Department for Work and Pensions, under exit fees contracts which they say ‘trap’ them in their jobs, as they can’t find the huge sums they need to buy their freedom. Other government departments — including the Home Office, the Department for Education and the Ministry for Justice — also appear to use the services of FDM. This graduate states clearly that he was placed at the Department for Education for six months:

As part of Graduate Fog’s campaign to Stop Exit Fees Now, we have published shocking excerpts of FDM graduates’ contracts showing the harsh terms that FDM ask their new starters to sign up to. Desperate young people agree to these, hoping that FDM’s promises are true, and they won’t want to leave – but many later realise they are trapped.

Tanya de Grunwald, founder of Graduate Fog, whose raising awareness about the practice of charging large exit fees to graduates, said:

“It is bad enough that the DWP is spending taxpayers’ money on this horrible supplier, while refusing to answer basic questions about how many FDM graduates are currently placed within the DWP, and who at the DWP knows about the highly restrictive contracts that these graduates are working under.

“But what’s even more shocking is that the DWP seems to have dismissed the troubling questions that arise from my analysis of where FDM may fall short of the standards expected from companies that supply goods and services to government departments. I went through their Supplier Code of Conduct and highlighted the most worrying sections. Yet, less than 20 minutes later, they appeared to dismiss these concerns outright, and gave no indication that they will even look into it. Is FDM fit to be a supplier of several government departments? It doesn’t look like the DWP is going to bother to look into it.”

Does the DWP care? Decide for yourself. Here is the full exchange between Graduate Fog and the DWP…

From: Graduate Fog
To: Department for Work and Pensions Press Office
Subject: DWP and FDM Group
Date: Tue, 15 Feb 2022 at 18:33

I am a campaigner raising awareness about the practice of ‘exit fees’ – where people are charged up to £20,000 if they leave their graduate scheme in less than two years. The employers claim that these sums serve to repay the investment made in their training, but it is difficult to see how these amounts correlate with the nature of the training that is described.

Needless to say, the prospect of having to pay such large fees if they leave (while earning a relatively modest salary) means that these graduates are effectively trapped in their roles. Given the nature of these firms – which tend to be in the IT outsourcing sector – these graduates frequently find themselves in the astonishing position of working for huge, well-respected organisations such as yours, while effectively being unable to leave.

Often they are told they must work anywhere in the UK that they are placed, which creates additional distress – especially for those with caring responsibilities. Graduates from under-represented and disadvantaged groups are among the most severely impacted, being the least likely to be able to buy their way out.

I believe there are important questions that need to be answered about the use of exit fees – not least by the clients of the firms that use them.

I have been told that the Department for Work and Pensions is a client of FDM Group, which currently charges up to £15,000 if graduates leave in less than two years.

I would be grateful if you could answer the following questions, for a blog post that will appear on Graduate Fog later this week:

1. How many FDM graduates have worked at the DWP within the last 5 years, and how many are there now?
2. During this time, have DWP staff and managers been aware that the graduates working for the DWP (albeit employed by FDM) were effectively trapped and unable to leave their roles, had they wished to?
3. Will the DWP consider terminating your contract with FDM, now that we have brought the practice of ‘exit fees’ to your attention?
4. If the DWP is not willing to terminate the services of FDM, please can you explain how FDM’s policy on exit fees fits with the DWP’s commitments to diversity and inclusion?
I look forward to hearing from you.

Regards,

Tanya de Grunwald
Founder, Graduate Fog

From: DWP Press Office
To: Graduate Fog
Date: 17 Feb 2022 at 14:45

A DWP spokesperson said:

“We offer recruitment and training opportunities for people leaving university. Organisations contracted to supply us with graduates to work at DWP must act in accordance with the Government Supplier Code of Conduct and this includes an expectation that suppliers behave ethically and treat their employees fairly and with respect.”

Additional information:
– The Supplier Code of Conduct can be found here
– Suppliers must also comply with all applicable human rights and employment laws in the jurisdictions in which they work.

To: DWP Press Office
From: Graduate Fog
Date: 17 February 2022 16:53

Thanks for this. Having read the Supplier Code of Conduct, two lines jump out:

“They [the public] expect that suppliers will behave ethically and treat the end users of their service, employees and subcontractors fairly and with respect.”
and
“Suppliers are an extension of the government’s business.”

With reference to the document, I have several further questions:

1. On p4, the document makes clear that suppliers to the government must behave in a way that is ‘comparable’ to the behaviour expected within the government departments they supply services to. Assuming that the DWP itself would not employ its own graduates under terms that require them to pay ‘exit fees’ of up to £15,000 if they leave in less than two years, how can this discrepancy be explained? If it wouldn’t be okay for the DWP to do this, why is it okay for one of their suppliers?

2. On p5, the document states that: “Both parties should be open and transparent with each other, and report any instances of non-compliance.” Assuming you accept that the behaviour I have outlined in my previous email would be classed as ‘non-compliance’, has FDM been ‘open and transparent’ about their use of graduate exit fees? If they have not, is this in itself considered a breach? And, if they have been honest about their use of graduate exit fees, are we to assume that the DWP knows what has been going on, and has no issue with their conduct in this regard?

3. On p11, it is stated: “We also expect our suppliers to be good corporate citizens… taking into consideration social value legislation in delivering goods and services and supporting key government corporate social responsibility areas such as diversity and inclusion.” As the practice I have described at FDM is likely to have a disproportionate impact on those from under-represented and disadvantaged backgrounds (concerns have been raised by the Social Mobility Foundation and Lord Bird, founder of the Big Issue), how does this fit with the standards expected of government suppliers?

4. I believe my emails have highlighted a clear case where a supplier – FDM Group – is not upholding the standards expected of suppliers to the government, as stated in the official Supplier Code of Conduct. I would therefore be grateful if you could confirm whether you agree and – if so – how this matter will now be escalated.

I look forward to your reply.

Kind regards,

Tanya

To: Graduate Fog
From: DWP Press Office
Date: 17 Feb 2022, 17:11

We don’t have anything to add to our statement at this time.

* ARE YOU AN FDM GRADUATE CURRENTLY WORKING AT THE DWP OR ANY OTHER GOVERNMENT DEPARTMENT?
Who is aware of the fact you’d have to pay up to £15,000 if you left your job? What do you think of the response from the DWP Press Office? Contact us here, in confidence…