---

5.32 pm

Jeff Ennis (Barnsley, East and Mexborough): I am grateful for the opportunity to participate in an important debate on the report of the Select Committee on Education and Skills on individual learning accounts. I associate myself with the remarks of the Committee Chairman, my hon. Friend the Member for Huddersfield (Mr. Sheerman), and the hon. Member for Chesterfield (Paul Holmes).

I am one of the 11 Select Committee members, who all fully support the objectives that ILAs set out to achieve when they were introduced. They were designed to open up the learning market and to place as few restrictions as possible on what people chose to learn.

The objectives included attracting new learners and providers and the programme was therefore designed to be simple and flexible for both categories, with the minimum of form filling. The ILAs fulfilled the objectives by attracting more than 2.5 million people to become account holders, and almost 9,000 training providers signed up to train through the scheme.

The concept of ILAs is especially important in constituencies such as mine, which has some of the greatest deprivation in the country. We have the lowest GDP per capita—62 per cent. of the European average—of any United Kingdom constituency. No wonder south Yorkshire is one of the three objective 1 areas in the country. We have low staying-on rates at schools, and low academic achievement. Both are a direct consequence of the heavy mining and engineering industries in constituencies such as Barnsley, East and Mexborough. We also have many adults with numeracy and literacy problems. The provision of some type of ILA scheme as part of an effective lifelong learning strategy is integral to the successful regeneration of former coal mining areas such as South Yorkshire, so it is vital that we get a successor scheme off the ground as soon as it is practicably possible to do so.

27 Jun 2002 : Column 1041

The report highlights in great detail serious failings by the Department for Education and Skills in preparing and running the old ILA scheme. It also severely criticises Capita, the Department's private sector contractor, for various shortcomings in its delivery of the scheme. Time is short, so I do not intend to go into great detail about how all this happened: it is all in the report. Instead of focusing on the flaws and weaknesses of the old ILA scheme, it is more important for us to focus on what needs to be incorporated into the successor scheme, and it goes without saying that that scheme needs to be introduced as soon as it is practical to do so.

One of the key lessons to be learned is that quality assurance must be a prerequisite for the successor ILA. After taking many statements in evidence from witnesses, the Select Committee recommended that the Learning and Skills Council should take the lead on accreditation, implementing a fast-track registration process for providers with a proven track record of delivering quality training.

With hindsight, it seems a pity that the Learning and Skills Council's involvement in accreditation was not incorporated into the original ILA scheme, because there is no doubt that, as far as the National Institute of Adult Continuing Education is concerned, there was little or no evidence of abuse of ILAs when they were first piloted by the old training and enterprise councils. I accept, however, that the 47 local learning and skills councils are still bedding in—having followed on from the TECs—and the Department will still need to be vigilant to ensure that each of them performs effectively.

One difficult issue in the report that will require significant attention has already been flagged up: the so-called dead weight factor. I know that my hon. Friend the Member for Huddersfield, the Chairman of the Select Committee, hates that expression, so I apologise to him immediately for using it. We are talking about the number of people who would have done their training irrespective of qualifying for an ILA. A figure of some 44 per cent. is widely quoted in the report.

I am not certain how accurate that figure is, however. Given that 57 per cent. of the working-age population in England are educated only to level 2, and that 24 per cent. of adults experience difficulty with either literacy or numeracy skills, that figure appears exceptionally high. This is the client group that the new ILA should specifically target, particularly as it is people such as these who are the least likely to be offered training in the work place, and the least likely to pursue learning opportunities at home or in their local community.

Given this background, I believe that the recommendation in paragraph 73 in the report is crucial, and should form the basis for the successor scheme. Because I consider it very important, I should like to read it out for the benefit of the House. It states:

"We recommend that any successor scheme to the ILA should be focused on adults whose highest level of qualification is at level 2 or below and that particular efforts should be made to promote the scheme through employers, trade unions, community groups, approved training providers, schools and colleges."

I am delighted that the Government's response to that recommendation has been to include it in the remedial measures section of their response document, which states:

"We recommend that the successes of trusted intermediaries, such as trade union learning representatives, should be taken fully into account in designing an ILA successor scheme".

27 Jun 2002 : Column 1042

Indeed, the Government's response highlights the fact that ILA community group projects attracted people who had never heard of ILAs. Two thirds of the people who came to ILAs through the ILA community group route had never heard of them before. They also encouraged more participation by ethnic minority groups—14 per cent., as opposed to 5 per cent. nationally.

ILA community group projects also attracted a larger percentage of people with no qualifications—22 per cent., compared with 16 per cent. nationally—and 73 per cent. of people said they would not have been able to fund their learning without ILAs. Only 50 per cent. said the same about other types of provision.

Evaluation of accounts opened through the union learning fund showed that 79 per cent. related to the groups least likely to participate in learning. A project in Leicester and Lincolnshire, using small firms to promote ILA take-up, was also very successful. Such initiatives are crucial. They must become more widespread if we are to target the successor ILA more successfully to appropriate client groups and non-traditional learners.

As the hon. Member for Chesterfield pointed out, the Government are still at variance with the Select Committee on the important and difficult issue of compensation for learning providers. Paragraph 127 of the Committee's report recommends

"that the Department should at least re-imburse those bona fide learning providers who can demonstrate that they have been financially disadvantaged by the accelerated date of closure".

The Department brought forward the date by two or three weeks—I know this—after taking police advice.

The Select Committee fully appreciates the reasons why the decision was taken—the police advice aspect—and knows that, in the legal sense, the Government do not have to compensate the learning providers who have been affected. I believe, however—and I think the Committee believes—that in a moral context they should reconsider the decision.

It should be recognised that the ILA scheme was successful not just in attracting new learners, but in attracting new learning providers. Many provided courses that were out of the ordinary, some of which were both innovative and imaginative. We need to ensure that the new innovative training providers are encouraged to participate in the new ILA scheme. Some have had their fingers badly burned, while some have gone out of business.

I believe that all training providers would see it as an act of good faith if the Government changed their mind. The Select Committee is talking about compensation only for bona fide providers who can prove genuine financial hardship.

The Government have made clear their firm intention to introduce a new ILA programme, possibly in the autumn. Many Select Committee members may think that that is not soon enough, as the Chairman suggested. But we must all learn the lessons of the collapse of the original scheme. It takes time to get things right, but we must get them right this time. We must build on the many strengths of the original scheme for the benefit of all potential learners in our communities. We must again make the ILA a Government flagship that is an integral part of an effective lifelong learning strategy for the country.

27 Jun 2002 : Column 1043

5.43 pm

Mr. Richard Bacon (South Norfolk): It is a pleasure to follow the hon. Member for Barnsley, East and Mexborough (Jeff Ennis). I agreed with just about everything he said.

I congratulate the hon. Member for Huddersfield (Mr. Sheerman) and his colleagues on a sensationally good report, produced at amazing speed. I am not a member of the Select Committee on Education and Skills, although as a member of the Public Accounts Committee I sat in on some of its hearings, which I considered to be a model for the way in which other Select Committees should do their work.

The report contains much that is worth mentioning, but I do not want to take up too much of the House's time. Let me just quote a couple of quick headlines. According to page 14,

"It should have been possible to design a scheme to encourage new providers that was not wide open to fraud or abuse by unscrupulous people posing as learning providers, but the lack of quality assurance made it almost inevitable that it would be abused."

The most extraordinary thing perhaps is that there were timely warnings. Perhaps most famously, Mr. James O'Brien of Pitman Training Group gave a warning on 20 September 2000. In criticising the lack of detail in a letter to the Secretary of State, he said:

"As a responsible training provider we were worried that this lack of detail left the scheme open to abuse, which would not be helpful to either the initiative itself, or the majority of the training sector."

The report makes it clear that it was not clear who was responsible. Paragraph 154 says:

"It is not clear who was responsible for delivering the specific outcomes of the ILA project. There does appear to have been some confusion of responsibilities."

Paragraph 169 states that the objectives were not clear:

"We are not convinced that the Government had adequately clarified the precise educational and social objectives of the ILA scheme . . . With a target fixed in terms of the number of accounts . . . it was clear that the delivery mechanism had become confused with the educational objective."

I refer briefly to the role of Capita, as other hon. Members have done. The report says on page 16:

"Surprisingly, the potential expertise of Capita in designing systems to be fraud-resistant was neither called upon, nor offered."

Later, paragraph 97 states:

"We find it hard to credit that Capita, a major player in winning contracts for work contracted out to the private sector, should not have pointed out that, without a quality threshold for providers, the ILA was a disaster waiting to happen."

Capita is a major player in a variety of aspects to do with public administration. It provides advice and services to over 120 local authorities. It collects £1 billion in council tax and business rates. It administrates the teacher superannuation scheme, which has 1.2 million teachers and 400,000 teacher pensioners. It seems that there may be a role for the National Audit Office, in addition to the report to which the hon. Member for Huddersfield (Mr. Sheerman) referred, in doing a study specifically on Capita and its relationship with the public sector, both at local and central Government levels.

As a member of the PAC, I am particularly concerned about the management, or rather the lack of management, of financial resources. I say in passing that the former Minister with responsibility for adult skills, who is now Economic Secretary to the Treasury, has been helpful to

27 Jun 2002 : Column 1044

me personally and I am sure to other hon. Members in keeping me informed of progress, although there has not been as much as one would have liked. One of the most shocking things that I heard was in the evidence presented on 28 November last year, which is not in the report, but which I have a transcript of from the internet. The hon. Member for Chatham and Aylesford (Jonathan Shaw) was probing the then Minister and not getting very far. The Chairman intervened and said:

"Minister, what you are being asked by"

the hon. Member for Chatham and Aylesford is

"surely there must have been an estimate of how much this would cost year on year, an estimate. He is just asking what sort of level of overshoot is there . . . What are the ballpark figures you are knocking around the Department on this?"

The then Minister replied:

"At the moment because of the uncertain number of individual learning account discount payments we are going to have to pay we simply cannot give you a sense, even a ballpark I regret to say, of what the possible overspends are going to be."

So there was no control of cash whatever. There was no control of information technology.

The Audit Commission report of February 1998 entitled, "Ghost in the Machine" says on the front page:

"The overall position shows little improvement . . . Frauds or cases of IT abuse often occur because of the absence of basic controls, with one-half of all detected frauds found by accident. Senior management still appears to lack a commitment to improving IT security and cracking down on abuse."

Why did no one in the Department for Education and Skills take notice of that?

In relation to basic project management and financial control, again, a very good report was published by the Cabinet Office in August 1994. On page 60, at paragraph 4.42, it says;

"A project plan is agreed to identify who does what and ensure different contributions are brought together effectively. It will set strict timetables, identify interim deliverables . . . establish clear performance measures . . . There will also be tight financial control throughout, with expenditure closely monitored."

That was eight years ago. Those are not new ideas; they are obvious, common-sense ideas, which many people who work hard to pay the tax that the Government sometimes waste would be able to come up with without too much difficulty. It is not surprising, therefore, that page 11 of the report reached the following conclusion:

"We regard the failure of the Department for Education and Skills to learn from mistakes made in the past by its predecessors and other Government Departments to be one of the most disturbing aspects of the ILA experience."

I conclude by referring to the hugely important role of the accounting officer. If permanent secretaries of Departments, who are accounting officers, are not happy with the steps that Ministers propose to take, specific provision is made within British Government to enable them to flag up that fact. A document published by the Treasury in 2001, entitled "The Responsibilities of an Accounting Officer", establishes that, if a course of action is being followed that a permanent secretary is unhappy with, he can require the Minister to issue a ministerial direction, if the Minister chooses to override the advice given. Paragraph 15 of the document states:

"If the Minister in charge of the department is contemplating a course of action involving a transaction which as Accounting Officer you consider would infringe the requirements of propriety or regularity . . . you should set out in writing your objection to the

27 Jun 2002 : Column 1045

proposal, the reasons for your objection and your duty to notify the Comptroller and Auditor General . . . If the Minister decides nonetheless to proceed, you should seek a written instruction to take the action in question. Having received such an instruction, you must comply . . . but should then inform the Treasury"

and the National Audit Office. If that has been done,

"the PAC can be expected to recognise that the Accounting Officer bears no personal responsibility for the transaction."

For a project with at best confused policy objectives, and which was not properly planned or implemented, one might have thought that a very good case existed for seeking direction. I tabled a parliamentary question, asking what directions had been given since 1997. The answer was that 14 were given: one by the Department of Trade and Industry, one by the Northern Ireland Court Service, one by the former Department for Transport, Local Government and the Regions, three by the Export Credits Guarantee Department, three by the Ministry of Defence, and—to no one's surprise—five by the former Department of Social Security. However, from the Department for Education and Skills there was a deafening silence. The scheme ended up sticking a fire hose out of a window and spraying taxpayers' money over anyone who happened to walk by.

All hon. Members will agree that the saddest thing is that this was such a good and noble idea. During the 1988 Democratic national convention, Jesse Jackson said:

"I was born in the slum, but the slum was not born in me. And it wasn't born in you, and you can make it."

That should have been the message of this programme, but what kind of message is sent by its absence for nearly a year? The message is, "I was born in the slum, but I'll remain in the slum and I cannot make it because the people who should know better—the people who are paid to know better—cannot put in place basic project management, basic information technology security and basic financial controls." That is the sad saga.

I hope that the Minister will talk about when the new scheme will be introduced to help the people who need it most. I agree that it should be directed towards low achievers, in accordance with paragraph 73. We need some specifics. The Minister needs to tell us not only when the new scheme will be introduced, but how much money has been spent in total, and how much of that was fraud. He also needs to tell us about compensation for providers. People who trusted the Government and took them at their word have gone bankrupt, and have had to sell their houses. It is not enough for Ministers simply to say, "I'm sorry, but it's not our responsibility." There is evidence on the record from departmental civil servants that the attempt was made to create a market and expand the number of providers. That places a moral responsibility on the Department to help providers who got into trouble.

The Minister should also say sorry, and if he does all of the things that I asked him to do, he will earn the respect of the House. [Interruption.] He looks as if he is about to intervene. He leaned forward with great eagerness, and I shall listen to his reply with equal eagerness.

---