Examination of Witnesses (Questions 100
- 119)
MONDAY 27 APRIL 1998
Mr Michael Bichard and Mr Frank Martin
100. You do not feel there is any need for
more independent, external invigilation of the nature and quality
of the NVQ system?
(Mr Bichard) The awarding bodies
will inspect using independent qualified verifiers. So there is
a degree of independence there. In addition, the training inspectorate
which we are setting up, although it will focus on the training
providers and ensure that there is a visit every four years, will
clearly be looking at the process at the ground level and should
inevitably pick up problems of assessment with particular assessment
centres. If you take the two together then I think we have a pretty
good system in place that ought to be picking up the problems
where they exist.
101. But you will keep monitoring that?
(Mr Bichard) Absolutely. If we do
not carry people with us in terms of having credibility in the
assessment process then the whole system will fall apart. That
is why I place a good deal of importance on the fact that employers
are increasingly participating in the NVQ system. That was not
the case two or three years ago when they clearly had some doubts,
but they are now participating and that is costing them a good
deal of money. It is an important investment for them to make
and that gives us all cause for some confidence.
102. We know that there have been a number
of suspected irregular training providers and a number that you
have discovered and uncovered. These particular people found to
have had irregularities either of a fraudulent nature or of a
serious mismanagement nature, what is your policy in terms of
continuing to contract with them? Would they all automatically
be struck off?
(Mr Bichard) If there is any question
of fraud then we would refer it to the police. That is why 32
of these 106 cases have had the police involved. If it is not
fraud but we are concerned about their management or the quality
of their provision, then we would ensure that all TECs are made
aware of that so far as we can. There are some problems in terms
of defamation, libel and those sorts of things, but so far as
we can we make sure that TECs and Government Offices are aware
of the concerns that exist around particular providers, although
at the end of the day the TEC has got to decide whether or not
it continues to contract with that provider and I am afraid there
have been cases where we have drawn the attention of some TECs
to our concerns where they have decided to continue to contract
with providers and it has taken longer than we want for them to
withdraw.
103. So you delegate it to them. Are there
no national guidelines that you issue that say if you have a training
provider who has not been behaving properly, either in a fraudulent
way or a serious mismanagement way, local TECs can continue and
ignore what you might otherwise have hoped them to do?
(Mr Bichard) We would increase the
pressure to the point where they might have no alternative ultimately,
but if you are going to have TECs as independent companies limited
by guarantee involved in a commercial contract with a training
provider then you either respect that or you do not and at the
present moment that is the arrangement we have and we have to
work within the bounds of the contractual framework that exists.
104. So ultimately you do not really have
direct control over who they contract with?
(Mr Bichard) We would have to use
the framework which I have described today, i.e. licensing, banding
and general guidance to TECs to persuade them that they should
stop contracting with a contractor.
105. But no direct control?
(Mr Bichard) No. We have had one
or two examples where they have been reluctant initially, given
the stage of the investigation, to follow our advice, but in the
vast majority of cases TECs, too, want to deal with this problem.
I wrote to every Chairman of a TEC and I got a reply from almost
every Chairman of a TEC. They take this issue very seriously.
They realise their credibility depends on it. In London they have
set up a stewardship committee involving all of the London TECs
to look at ways in which they can deal with fraud and control
the error rate more effectively. I do not want to paint a picture
of TECs being reluctant partners in all of this. I think the vast
majority of TECs are very responsible in this area and are doing
their very best to get these problems solved.
106. It is all very well solving the problem
after the fact. Let us try and find a way of preventing it happening
in the first place. Can you tell me how training providers in
general are vetted in the first place before they are awarded
contracts? How can you tell whether a training provider is legitimate,
bona fide, trustworthy, suitable, competent and all the rest of
it? What happens?
(Mr Bichard) We would expect TECs
to assess the quality of the provision which the training provider
is capable of giving and look at its financial systems initially.
We would expect a TEC to take up references, as you would in any
commercial situation, about a particular training provider. We
would expect a TEC to be sensible in terms of its initial contract
with a new training provider. We require TECs to carry out, as
I explained earlier, an annual audit of the provider to look at
all of the comments that are being made by trainees. We expect
them to pass on to providers provisions on insurance, on audits,
to make clear what is acceptable in terms of the use of public
money, to have requirements around health and safety, equality
and openness. All of that we expect to be included in the initial
contract with the training provider. When they make visits to
providers they should look at the documents and meet the trainees.
So it is a fairly rigorous system. We effectively expect the same
system that we impose on TECs to be imposed on a training provider.
107. I am glad to hear that you inspect
a lot of the TECs. Just to make sure that I have got you right,
do you actually instruct the TECs? Do you give them guidelines
and tell them that they have to do that?
(Mr Bichard) Yes, indeed. Since
the last meeting we now have a system with the four major awarding
bodies to notify TECs directly of NVQs that have been awarded.
We are working with the TEC National Council at the moment on
a model contract for training providers. Clearly at the moment
there are a large range of different contracts around. We do not
want to impose one contract on every TEC to impose on every training
provider, but we think that there is scope for greater clarity
around a preferred model. We hope that that is going to be available
for 1999.
108. Just in terms of making sure you keep
track of any irregularities going on, do you think that there
is adequate financial support for the Financial Scrutiny Unit
within your Department? Do you think they get enough resource
in terms of making sure they can do the job properly?
(Mr Bichard) If you ask them they
will probably say no, but we have got 12 people in that unit now.
It had seven there before Christmas and at that time I think they
were satisfied they could cope with that work, but when it became
clear that they could not, largely because of the increase in
TECs not in low risk banding on some of the fraud cases, we immediately
increased that from seven to 12. I think that increased the amount
of money we were spending from something like £200,000 to
nearly £400,000. If we need to increase that again we will
do so because this has to be a priority area.
109. I have discussed irregularities so
far. I want to move on to the whole question of over-payments.
Whose job is it to monitor the priorities that TECs choose in
their public expenditure? In other words, who is monitoring the
management and executive expenditure spent within TECs?
(Mr Bichard) The main task falls
to the Government Office and we have a system of annual contracting
with TECs. We have the licence which is a three-year licence confirming
that we are prepared to contract with that TEC. We then have a
set of annual contracts which are negotiated by the Government
Office with the TEC which will provide for the amount of youth
training and workplace training that the TEC provides. It is then
the task of the Government Office through sample checking to make
sure that payments which are made are made properly, in other
words that errors do not occur and to look for fraud where they
believe that it possibly exists.
110. So it is the Government Office who
are effectively responsible for auditing?
(Mr Bichard) They audit on our behalf
and they have got 66 staff.
111. Would you not accept, given also that
there is very little public direct accountability for TECs, that
over-payments to TECs, as we see evidenced here, are a symptom
of lax accounting, lax auditing, lax monitoring?
(Mr Bichard) Whenever you have any
errors there has got to be some failing and I think we need to
keep in proportion that we are talking about 1.2 per cent of the
total expenditure. I hope I have tried to communicate today a
sense of urgency and concern about that, but let us just remember
it is 1.2 per cent. TECs are accountable in a number of different
ways. There is a framework of accountability which all TECs have
signed up to which sets out the way in which we expect them to
account to their local community.
112. But ultimately it is the regional Government
Offices which are responsible for either making sure the reserves
of TECs do not get out of kilter or as managers and executive
units they are not wasting money on entertainment, perks, bonuses
and cars. Ultimately, we are relying on the government regional
offices to make sure they are not frittering away public money.
(Mr Bichard) The other mechanism
which we have not mentioned today is the fact we do have a group
of TEC assessors who do visit TECs and keep an eye on TECs and
how they are managing and how they are accounting to their local
community. Those TEC assessors are chaired by a businessman of
national repute and involve businessmen and local authority representatives
as well so they are making, if you like, a broader view, a broader
assessment of how TECs are doing. It is the Government Office
for a particular TEC who will be the primary focus of accountability.
113. If there are all these overpayments
taking place, surely you can understand why other people are very
concerned that there are all sorts of management expenses and
wrong priorities going on that nobody is really keeping track
of.
(Mr Bichard) I think that would
be wrong. I think the Government Office has a very close monitoring
of how TECs behave generally. We are talking here, as I said once
or twice, about 4,500 providers, 72 TECs and hundreds of thousands
of transactions. I think if we are talking about the propriety
issue, Government Offices have a very close hand in what is going
on in their individual TECs. If you go and see a Government Office
then you will get a very clear and detailed summary of how a TEC
is performing and whether or not it is regarded as a good TEC
or an ineffective TEC, and whether there are any concerns around
those propriety issues and the action that they are taking. I
have been very impressed by the grip which Government Offices
have on local TECs.
Mr Davidson
114. You mentioned earlier on that there
were some bad TECs and some bad providers and so on. Are there
any particular characteristics that enable you to identify some
being at higher risk than others? Big ones, small ones, city ones,
urban ones, rural ones?
(Mr Bichard) I do not think so.
If we are talking about errors and fraud we are not talking about
too many fraud cases, but errors-it very much comes down to the
leadership that has been given to that TEC by the chairman and
chief executive. If they make it clear that issues of accountability
and audit are matters which they are really worried about and
determined to get on top of then you will generally find the TEC
is doing something about it. If that leadership is not given you
will have problems.
115. Almost using that single criterion
you will be able to identify those most at risk?
(Mr Bichard) That is why the Government
Office uses its local knowledge, links and contacts to identify
the TECs they are most concerned about and why we have given Government
Offices more discretion in deciding whether a TEC is low-risk,
medium- risk or high-risk. This year for the first time the Government
Offices will be producing a publicly available report on every
one of its TECs. This follows the recommendations of the Nolan
Committee and so members of this Committee and the public generally
will have a report from Government Offices on their local TECs.
116. In terms of providers are there any
similar criteria that can be used to identify those that are most
likely either to make errors or to be involved in fraud, big ones,
small ones, rural, urban? [11]
(Mr Bichard) Again, I do not think
the urban rural/split is relevant. Clearly one would hope that
you could rely on larger providers who have a track record more
than smaller providers who are new to training, but that is not
always the case and one or two of the frauds we have had have
been with quite substantial and long-standing providers. At the
end of the day, as so often with these things, it will come down
to the quality of management and leadership they give on these
sorts of issues. Are they really concerned with quality?
117. I understand that. I was wondering
whether or not in rural areas it might be more difficult to have
a choice of providers and the standards that were being deemed
acceptable were lower simply because there was no choice.
(Mr Bichard) I have no evidence
of that. It is an interesting question. I have not asked it directly
but I have no evidence that is the case.
118. In terms of declarations of interest
by board members in TECs, are there many of them declaring interests
in provider companies and has there been any pattern of irregularities
where declarations of interest have been made?
(Mr Bichard) We have not come across
numbers of cases, cases for that matter, where people are not
declaring their conflict of interest with the training provider.
119. So they are declaring an interest?
(Mr Bichard) The other side of the
coin. I am afraid I do not have the figures on the declarations
of interest by TEC members on various issues. That is public knowledge
and I can get it for you but I did not get it for this hearing.
[12]
11 Note: See Evidence, Appendix 1, page 23 (PAC 320). Back
12
Note: See Evidence, Appendix 1, page 20 (PAC 320). Back
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