Examination of Witnesses (Questions 80
- 99)
MONDAY 27 APRIL 1998
Mr Michael Bichard and Mr Frank Martin
80. But it acts solely on reports from the
hotline?
(Mr Bichard) No, it acts from wherever
those reports come. I think the Comptroller & Auditor General
has been generous enough in his report to indicate both of the
major cases which have been identified here were not discovered
by the Comptroller & Auditor General but were discovered by
the Government Office FAM team. The financial scrutiny unit would
have information coming through from all sorts of sources-Government
Offices, the hotline, comments which trainees make about their
training which we also collate in a separate unit within the Department,
and they would refer on cases to the financial scrutiny unit where
they feel there is cause for further investigation-so it is receiving
information from whoever wishes to provide it.
81. Is it satisfactory to have a financial
audit team based within the Department, given previous findings
of this Committee? Should it not be an external financial audit
team to check on what is really going on in these TECs?
(Mr Bichard) I do not think that
is necessary. The TECs themselves are responsible for financial
probity and for these systems. My task is to ensure that they
behave responsibly, they have systems in place which justify us
continuing to contract with those TECs. I have a vested interest
in being very rigorous in the assessment I make and we make of
individual TECs and following up allegations of fraud or irregularities.
We do that and I can promise you we do that very rigorously indeed.
82. Given the amount of disquiet about the
misreporting of financial information, why is it the directors
of these companies only have a maximum liability of £1?
(Mr Bichard) These companies are
limited by guarantee and they are in the same position as other
companies limited by guarantee. There is one which has a shareholding
which is in Hampshire, but otherwise they perform in the same
way as any other company. We do need to remember that what we
have on TECs are businessmen who are giving of their services
voluntarily. One of the successes of all Training and Enterprise
Councils is that they have enabled local businessmen to be more
involved in the delivery of training and business support. There
is a limit to what they are going to be prepared to accept in
terms of accountability beyond what is in place already.
83. What mechanisms are there to penalise
any of the TECs or providers which do not perform a satisfactory
service?
(Mr Bichard) The ultimate sanction
is that we terminate the contract with the TEC, which is what
we have done with CENTEC in the recent past.
84. That is a pretty draconian measure,
surely the idea would be to get the TECs to improve their performance
long before you get to that level? So what measures are in place
to get these TECs or providers to improve their performance?
(Mr Bichard) The Government Offices
are constantly assessing the TECs in their areas, they are constantly
giving advice and guidance to TECs on how to improve their service
and systems. If they come to the conclusion that the problems
with a TEC are such that they are no longer worthy of being banded
in the low risk category, they will give notice to them that they
are being put in the medium or high risk category. I receive quarterly
reports on those changes. At that point we seek from the TEC an
action plan to address the problems. Although in the past we have
allowed them a reasonable period to provide that action plan,
we now demand that TECs deliver that action plan within six weeks
of falling out of the low risk category. We expect the action
plan to show how they are going to resolve the situation within
three months. If they have not resolved the situation within three
months, we will serve normally a breach notice upon them, which
is what I did with a TEC last week and what I am considering doing
with one other TEC at the moment. So there is a careful, considered
process which will ultimately lead to contracts being terminated.
85. This banding, as I understand it, was
introduced in April 1997, so has been in operation for a year?
(Mr Bichard) No, the banding has
been in place for sometime. What we have done from April 1997
is to increase its rigour, as I said earlier, by ensuring that
errors are given a much higher profile. If TECs are making errors
or payments in error, they are much more likely to fall out of
the low risk banding. Also we have put more weight on the professional
judgment of the staff in the FAM teams because they are increasingly
professionally qualified-nearly half of them are either qualified
accountants or qualified auditors. It is more difficult to be
in the low-risk banding now than it was before April 1997. The
system was in place well before 1997, certainly as long as I have
been around.
86. Given that self-satisfied answer, can
I ask you, and it will be on the record, figure 1 of our Report
shows that incorrect and uncertain payments in the Department's
appropriation accounts have increased by 40 per cent between 1995-96
and 1996-97 from £8.6 million to £14.6 million, a very
unwelcome increase. When it started the trend was nicely down.
Will the figure this year be down on the figure for 1996/97 or
will it be up?
(Mr Bichard) I answered the previous
question and I am not prepared to say or to make promises --
87. If your banding system and your scrutiny
system is as good as you tell this Committee it is you ought to
be reasonably confident that the situation will improve.
(Mr Bichard) If my banding system
and my Government Office FAM teams and my financial scrutiny and
my flying squad accountants are as good as I think they are it
may just be that they will be even better at identifying problems
that do arise and we may see a further increase before it gets
better. I expect it to get better. That is why we are putting
all of this in place. That is why we are spending £10 million
of public money trying to resolve the problem but I am not prepared
to make rash promises at this stage of what is going to happen
in a year that is now almost finished.
88. I am delighted to hear that answer and
I hope that we will indeed share in your success and that you
will not be appearing before this Committee in two years' time
to report otherwise. The same Educational Press Group says: "The
recent finding of an ESRC funded Sussex University Research survey
showed that some 48 per cent of NVQ internal assessors and even
some 38 per cent of the internal assessors actually admit to passing
non-competent candidates. This surely raises profound concern
about the likely scale of invalid payments." If employers
cannot rely on a potential applicant for a job that their certificate
is valid does it not throw the whole vocational training system
into disrepute?
(Mr Bichard) I have not seen the
material that has been sent to you. What Article 26 need to understand
is that employers are voting with their feet on NVQs and they
are voting to send more of their staff through the NVQ process
than ever before. The growth of NVQs is some 28 per cent a year.
Article 26, I understand, have a particular vested interest in
all of this which is a vested interest couched in the role of
further education. That has failed employers in the past and now,
as I say, employers are now voting with their feet and they have
confidence in NVQs and in the assessment process. We are putting
in place a training inspectorate. We have increased the external
verification so we can pick up all sorts of problems you have
referred to. There is no doubt the NVQ system is growing in strength.
89. It is growing in strength because the
employers have nothing else to turn to and therefore they are
stuck with a less than satisfactory system. The same article goes
on to talk about a welter of invalid qualifications, a degree
of ghost training and even ghost trainees, alleged invalid payments,
false certificates and the rest. This surely is highly unsatisfactory?
(Mr Bichard) It is not quite true
to say employers have nothing else to turn to. Employers can if
they want to run their own programmes in house and some still
do but the majority, an increasing number of employers are showing
confidence in the NVQ system, certainly more confidence than they
had in the old system which did not test the competencies, the
skills of individuals in action. You can test them in theory but
it is an entirely different thing to see how a student applies
the knowledge and skills in the workplace. That is why employers
are now showing that they believe in NVQs provision.
90. I think that is an overly complacent
answer, if I may say so, Mr Bichard. We know very well and you
told this Committee today that you suspended one TEC for irregularities
of this kind. This is bound to reduce the confidence of employers
that these certificates are well and truly valid. If, as happens,
the financial reward to the individual TEC is based on results
there is evidence that people are being awarded certificates when
they have not actually reached the required level of training.
That is there.
(Mr Bichard) I have not terminated
a contract with a TEC nor have I served a breach notice on a TEC
as a result of the issues to which you have just referred. The
contract with CENTEC was terminated because they had lost the
confidence of other local partners. Yes, we did have some concerns
about their financial systems but they were not insuperable. It
was the fact they had lost the confidence of local partners that
caused us to terminate the contract. I have not taken a TEC out
of low-risk banding for these reasons but because we have some
concerns particularly about the way in which they are operating
their audit, their function and where it sits. I am not complacent
about the problems you have identified but they are of a different
order.
91. You have disputed the Sussex University
figures that I quoted to the Committee that 48 per cent of NVQ
internal assessors and 38 per cent of external assessors admit
to passing non-competent candidates. Mr Chairman, could we have
a note on my final question as to what you think the situation
is regarding the level of fraudulent award of vocational qualifications
for people who have not met the required level[9].
(Mr Bichard) I do not dispute the
figures because I have never seen the figures. Unfortunately Article
26 do not provide me with the material. I am not in a position
to dispute figures I have never seen.
92. I accept that. Would you let the Committee
have a note as to whether you agree with the figures and, if you
do not, what you think the correct level is?
(Mr Bichard) I am happy to look
into the problem that Sussex addresses, indeed I would welcome
the opportunity to do so.
Mr Leslie
93. Can I just clarify because I am not
completely familiar with how TECs operate. Training providers
can be local authorities, colleges, voluntary bodies, private
firms?
(Mr Bichard) Private sector, yes.
94. I know you have about 106 cases of potential
irregularities on your log but you say 27 of them are likely to
be serious irregularities. Of those what proportion are in private
firms or local authorities? What is the incidence of training
provider irregularities?
(Mr Bichard) I cannot tell you whether
any local authorities are represented on the list of malpractice
cases but I can let you have a note on that.
95. In your experience is it mostly private
firms?
(Mr Bichard) The two major cases
I have referred to today are private companies.
96. So you are not in a position to say
whether private firms are more prone to irregularities?
(Mr Bichard) One can only look at
the facts that are there and three or four of the recent large
cases have been private sector companies but I would not draw
any conclusions from that.
97. Could we have a breakdown of those according
to each type of provider?
(Mr Bichard) Indeed[10].
98. Similarly, do you have some sort of
breakdown to indicate which is the type of irregularity which
is most common? Is it the problem of NVQs awarding incorrectly
or is it ghost trainees or trainees ineligible for training or
those courses which might be running which never ran in the first
place? What is the most common theme you can see?
(Mr Bichard) If I confine myself
to cases where we think there are irregularities, then the two
main categories are eligibility, ie, trainees who are not eligible
for that particular programme. For example, one of the major cases,
the one in paragraph 13, involved a number of trainees coming
on to Training for Work who should only have come on having been
unemployed for six months or who were substantially disabled which
would have justified them coming on straight away. So there is
the issue of eligibility and the other one is invalid achievement.
In other words we are not satisfied on the evidence we have about
the process of assessment. Those are the two main categories.
There are other areas around attendance and the evidence about
the attendance of trainees.
99. Unlike a lot of other academic qualifications
in particular for NVQs there is no external independent assessment,
is there?
(Mr Bichard) Yes, there are assessment
centres around the country and it is those assessment centres
that are responsible for deciding whether or not someone is qualified
and it is those assessment centres which are visited by the awarding
bodies and that is why we have given additional money to the awarding
boards, of which there are somewhere in the region of 130, to
visit assessment centres regularly. They carry out 30,000 visits
to those assessment centres during the course of the year. We
have given them another £2.4 million so they can do 3,000
visits this year.
9 Note: See Evidence, Appendix 1, page 20 (PAC 320). Back
10
Note: See Evidence, Appendix 1, page 20 (PAC 320). Back
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