Emma Harrison is to step down from her role as the Prime Minister’s “families tsar” following allegations of fraud at her firm A4e.
In a statement published by the BBC on Thursday, Ms Harrison said: “I have asked to step aside from my voluntary role as Family Champion as I do not want the current media environment to distract from the very important work with troubled families.
“I remain passionate about helping troubled families and I am grateful for the opportunity to contribute in an area where I have been active for many years.”
The government has been urged by Margaret Hodge MP, chairwoman of the Public Accounts Committee, to suspend its welfare-to-work contracts with A4e.
It came after it was revealed police were investigating ‘irregularities’ at the firm, which A4e say dates back to 2010.
Four employees were arrested in relation to the allegation and released on bail until mid-March.
Andrew Dutton, CEO of the A4e Group, said: “A4e has zero tolerance towards fraud, and any instance of fraudulent or otherwise illegal activity is completely unacceptable.
“We take our responsibility very seriously and we are committed to using taxpayer’s money effectively and efficiently to deliver the best services to the public.”
The employment agency A4e, which has five main contracts to deliver the Work Programme, has come under fire from MPs because of its poor track record and large shareholder dividends.
Mr Dutton admitted in a session with the Public Accounts Committee that the UK turnover for A4e in 2011, estimated to be between £160 million and £180 million, came solely from government contracts.
Ms Harrison received 87 per cent of the £11 million paid in dividends to the company’s five shareholders last year.
Mrs Hodge criticised the Department for Work and Pensions (DWP) during the session for not considering the past performance of firms, including A4e, when managing the contract process.
“It seemed rather surprising to me that in managing the contract process, you did not have regard to the past performance of contractors,” Mrs Hodge said.
She later added that A4e’s past performance was “abysmal” during the Pathways to Work scheme.
“If you, as a sensible person, were letting a contract in your home for anything or if you were a private business, you would look at past performance before you decided,” she added.
Subcontractors of A4e on the Work Programme include Havering College of Further and Higher Education, Accrington & Rossendale College, Blackpool and Fylde College, Liverpool Community College, Highbury College, among others.