Cameron faces demands to suspend 'back to work' tsar after police launch fraud probe into job placement scheme

David Cameron is facing demands to suspend his 'back to work' tsar Emma Harrison after police launched a fraud inquiry.

A senior MP will today table a parliamentary question asking if he will block the A4e company's contracts.

Mrs Harrison, appointed to help problem families find jobs, caused uproar this month when it was revealed she had paid herself £8.6million of mainly taxpayers' cash.

'Posh commune': A4e boss Mrs Harrison's £5million pile has 16 bedrooms, 100 acres of land, a pool, spa, a bar, a nightclub and a long dining table for banquets

Prime Minister David Cameron is facing calls to sack his 'back to work' tsar after a fraud probe was launched

On Friday, detectives visited her company A4e's offices amid claims that it took funding for putting some clients back to work for only a day.

Whitehall sources say ministers are demanding urgent reassurance there is no 'systematic fraud' designed to rip off the taxpayer.

Margaret Hodge, chairman of the influential Public Accounts Committee, went further.

She said she would be asking the Department of Work and Pensions 'whether, given the allegations of fraud, they will be suspending their contracts with A4e until this matter is resolved'.

She added: 'I think the Government should certainly consider suspending them. It is of great concern that any such investigation is necessary.'

A4e – formerly called Action For Employment – was set up to retrain redundant Sheffield steelworkers and Mrs Harrison built it into an operation spanning 11 countries.

On Friday police visited the company's offices in Slough, Berkshire.

They stayed for up to four hours and demanded staff hand over documents and computer files going back two years.

A source at the company claimed the police were investigating allegations that the company had been given generous fees from taxpayers for finding 'jobs' lasting no more than 24 hours.

The fraud investigation will make uncomfortable reading for Mr Cameron, who has hailed Mrs Harrison as an inspiration in his campaign to help the unemployed.

He made her 'families tsar' in December 2010 to advise on getting 120,000 troubled households back to work.

Her boasts that she can find jobs for the long-term unemployed have won her a string of lucrative Whitehall contracts worth millions over the past 20 years.

But there was outrage when it was revealed that she had awarded herself an £8.6million dividend from the company, which makes all its UK income from state contracts.

One Labour MP described the bonanza a 'reward for failure' amid complaints that A4e's record on job schemes is 'abysmal'.

Labour's Margaret Hodge, who is chairman of the Public Accounts Committee, has led calls for Mrs Harrison's company to have its state contracts suspended

Mrs Harrison, 48, is worth an estimated £70million. She has appeared on several television programmes, including the BBC1 reality series Famous, Rich And Jobless, and Channel 4's The Secret Millionaire.

She and her husband Jim married in India and she is known to wear a sari on formal occasions.

The couple and their four children live in a 16-bedroom mansion on a 100-acre estate in Derbyshire, shared with other families in an arrangement Mrs Harrison describes as a 'posh commune'.

Callers yesterday were told she was not at home. The police investigation has prompted alarm in Whitehall.

Ministers yesterday asked for 'urgent reassurances' there was no 'systematic fraud' of the public purse, according to a Department for Work and Pensions source.

Fiona Mactaggart, the Labour MP for Slough who also sits on Mrs Hodge's committee, said she was 'deeply concerned' about A4e.

She added: 'My view is that this company has demonstrated that it is unfit to hold this kind of contract.'

Employment Minister Chris Grayling said he believed the matter related to events under the Labour administration.

'The inquiry – and I only discovered about this last night – dates back two years to schemes run by the previous government.

'It would not be possible for our work programme to have a fraud of this kind because the providers aren't paid until somebody's been in work for six months.

'The truth is that some of the schemes put in place under the previous government were contracted very badly and mismanaged. We've tried to learn the lessons of their failure.'

A4e is one of several contractors which earn payments for helping the out-of-work find a job. Half of its work is subcontracted to charities, generating millions in management fees.

It paid Mrs Harrison the controversial £8.6million after posting a turnover of £234million, with pre-tax profits rising by £5.5million to £15million in the year to March 2011.

The company defended her jackpot payout by saying she had risked millions of her own money during the 21 years she has been building the firm.

MPs have questioned why A4e has continued to win government contracts – under Labour and the Conservatives – despite failing to hit its targets.

The company even received a share of £63million in 'termination fees' when the DWP ended a previous back-to-work programme in which the firm was involved and replaced it with another one.

Last night A4e claimed the alleged fraud took place in 2010 and involved four employees, and that the company itself had uncovered it.

A spokesman said: 'Thames Valley Police visited our offices on Friday for a mutually agreed meeting in relation to an allegation of fraud that was identified by A4e's internal processes and was reported to the authorities by the company.

'The allegation concerns a very small number of former employees and dates back to 2010. As the investigation is ongoing, we cannot comment further.'

It is not the first time A4e has been involved in a fraud investigation. In 2008, the Department for Work and Pensions launched an inquiry after discovering employees at its office in Hull were falsifying documents.

Two recruiters had filled in forms meant to be written out by employers who agreed to hire an unemployed person – even forging signatures to pretend the jobless person had been found work, triggering a commission payment.