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5.54 pm

Valerie Davey (Bristol, West): As a member of the Education and Skills Committee, I am pleased to contribute to the debate and I hope that it will mark some

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progress. Let us remember that much was achieved by the ILA scheme. Thousands of people benefited from it and they look to continue to benefit in the future. The Committee's report and the response from the Department will, I trust, take us a step forward. I hope that the debate is also a step towards the launch of the new scheme and that the Minister will be able to tell us when that might be.

I shall comment briefly on the Government's response to our report. That response can be summarised in two words—contrition and commitment. It was clearly recognised early on that we need to strengthen the quality checks on the learning providers and to tighten security. The Committee recognised that the balancing of wider access for learners with less bureaucracy and a wide range of new training providers was always going to involve an element of risk.

It was in part the failure to evaluate the risk that was the fault and that has led us to the current problem. The Government's response states:

That is reassuring in one way, but those words follow a long list of groups that have sought to evaluate risk and try to prevent fraud, in the Department for Education and Skills and in other Departments. Those groups include the fraud response liaison group, which is chaired by officials from the Department for Education and Skills and involves officials from many other Departments. It was set up in 1997 and has met quarterly. The Treasury-led special investigation group was set up last year. The better governance and counter fraud group is chaired by a member of the Chartered Institute of Public Finance and Accountancy and it disseminates best practice on risk management, especially relating to fraud. All those groups are operating, and now we expect a departmental internal audit unit that will work closely with the development for the successor scheme, to ensure that the lessons learned from the ILA programme are addressed.

Given all those different groups, my concern is to ensure joined-up thinking not only for the Department for Education and Skills, but more widely across Government. We must ensure the learning of lessons between Departments. I am pleased to follow the hon. Member for South Norfolk (Mr. Bacon) who clearly recognises the importance of that work. I trust that the Opposition have some constructive suggestions and will not only describe the faults of the past. It is their job as well as ours to ensure that lessons are learned and the outcome is positive.

The element of contrition in the response makes it clear that registration for learning providers will be strengthened. The complaints procedure will be more effective and random checks will be made on providers. Those who abuse the scheme will lose their registration. Quality assurance will be more rigorous and financial controls will be stronger. That is great and it is all necessary. However, like other hon. Members, I am disappointed that the Department still seems to have sufficient confidence in the work of Capita to continue to work with it.

From the Government's response to the Education and Skills Committee, it is clear that Capita's ILA centre allowed access by registered learning providers to information that they were not authorised to receive.

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We need stronger security measures. The faults in the complaints system were clear. However, despite its faults, the Government and Capita took action in response to complaints, and the response lists the events that took place.

Thirdly, on risk management, the report states that the Department should have had a clearer agreement with Capita about the risks, their significance and how they should have been managed. The faults with the Capita programme were recognised, but the Government say that they are continuing to work with Capita in winding down the ILA programme. That is understandable, as has been remarked, but in their response the Government say that they and Capita gained a great deal of experience from running ILAs. We must ensure that that good experience is used in the future.

Finally, the Government state:

The ILA scheme was about innovation, and it was designed to draw new people into further education. It was about quality for the future. The report expresses clear doubts, which I share, about whether the Government should automatically continue their work with Capita, given past experience. However, the Government appear to disagree with that assessment. I hope that the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Bury, South (Mr. Lewis), will reassure the House that there has been greater scrutiny of Capita's work, and that alternative companies have been considered.

However, there are positive elements in the Select Committee report, which the Government have accepted and which will lead to an enhanced scheme in the future. One of those elements—the use of trusted intermediaries and the monitoring of group provision—was mentioned earlier, but I wish to revisit it.

For me, one of the most poignant moments in the exercise occurred when we met some members of the Union of Shop Distributive and Allied Workers who worked for a large company in the north of England. On a visit to Parliament to lobby hon. Members' they told us about what ILAs meant to them. The USDAW education officer said that the company employed between 800 and 900 people but that, before the ILA scheme was introduced, she had struggled to get as many as two or three into adult education classes at a local college.

The trade union officer said that the employer granted the use of company space for ILA participants. The scheme caused it to work together with the local education authority, a local college, and 300 employees entering further education for the first time. She told us about a man in his 40s with a severe sight impairment who had never expected to do anything other than cleaning in that company. The ILA scheme meant measures were taken to help him with his defective sight, with the result that he was able to take a computer course. The man had already applied for a more senior post in the company.

That is what ILAs do, and the effect has been replicated in work place centres up and down the country. The example that I have given shows what intermediaries such

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as the trade unions and others can achieve. I am delighted that the Government are looking to that good practice for the future.

I am delighted too that the Government have recognised that ILAs need to be taken forward with support from the learning and skills councils. My hon. Friend the Member for Wakefield and Mexborough—

Jeff Ennis: My constituency is Barnsley, East and Mexborough.

Valerie Davey: I apologise to my hon. Friend. However, I am afraid that I have now lost the thread of my argument.

Mr. Boris Johnson (Henley): May I intervene on the hon. Lady?

Valerie Davey: That would help me—it is very gracious of the hon. Gentleman.

Mr. Johnson: The hon. Lady has given examples of the ways in which the Government could show contrition over this sorry affair. Does she also feel that they might show their contrition by compensating those very many learning providers who entered into commercial arrangements on the expectation that the scheme would keep going, then found it violently terminated, found themselves out of pocket and are now facing the loss of their homes and other severe financial embarrassments as a result? Does she not believe that the Government's contrition should extend to compensation for the ILA providers which have been done down by this collapse?

Valerie Davey: The Committee has made its view quite clear. If evidence can be supplied that people suffered in the gap of three weeks before the scheme actually came to an end, the Committee agreed that the Government should give their situation further consideration, and I agree with that position.

The future role of the learning and skills councils is important. Their understanding of quality trainers and the way in which they can ensure that they are fast-tracked into any new scheme is an important element. That also applies to further education colleges and new providers who come forward, provided that their track record and past quality of work can be clearly demonstrated.

I wish the Department well in taking on the breadth of experience that it has at its disposal. I trust that there will be, in the short term, a statement on the relaunch of the scheme and that it goes ahead with all the blessings of this House and the hard work of many in the country who also want to see it succeed.

6.7 pm

Mr. Hugo Swire (East Devon): I am most grateful to have the opportunity to speak in this debate. I am not a member of the Select Committee, but I congratulate the hon. Member for Huddersfield (Mr. Sheerman) on an excellent report. I also congratulate my hon. Friend the Member for South Norfolk (Mr. Bacon) on an extremely good speech; I agreed with almost everything that he said.

I corresponded on a number of occasions with the Minister's predecessor about an ILA provider in my constituency, the Open College for Distance Learning,

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which was forced into receivership on 23 March this year. The company owed more than £120,000, and although much of that was owed to the Inland Revenue, a significant amount was owed to local companies—office suppliers, accountants, local newspapers which had taken the advertising, the landlord of their office premises, and so forth. Ironically, the company was—and still is—owed approximately £140,000 from ILA schemes in England and Wales, if they had been operated properly. Incidentally, I am not sure why Education and Learning Wales, which always maintained that there was no fraud in Wales, closed its scheme, but no doubt the Minister will enlighten us.

The Open College for Distance Learning had 786 students who were enrolled before the schemes were scrapped. Of those, 100 had had their ILA accounts raided by the fraudsters, and the remaining 686 never received their membership numbers before the deadline was brought forward to 23 November because Capita was too slow. In other words, a perfectly good company has been brought to its knees through no fault of its own because of a combination of fraud and incompetence. Who is taking responsibility? After this afternoon's speeches, I am no wiser. Where does the buck stop? What plans, if any, does the Minister have to resolve this case, of which his Department has knowledge, in a way that will allow the Open College for Distance Learning to be brought out of receivership and to pay off its creditors?

East Devon—particularly Exmouth, in which the company operated—is not an area with a lot of big businesses, and the company was becoming a significant local player. Formed in April 2001, it achieved a gross turnover of £782,422 in its first financial year. In April 2001, it enrolled 166 people, and that figure increased every month until October, when the scheme was shut down without warning. The founders told me that they first heard about the closure on the 5 o'clock news.

The founders of the college, Mr. Simon Hall and Mr. Andrew Demetre, ran a good company. They employed qualified, experienced tutors and kept accurate records of their students' progress and achievements. They did that not least because they expected to be audited and inspected by the ILA scheme operators.

Who is the winner from this fiasco? It is not the local creditors or, indeed, the Inland Revenue—we have already established that. It is not the 93 people made redundant by the company, many of whom are struggling to find employment six months later. It is not the taxpayer—the company received more than £500,000 of taxpayers' money. It is not the 3,000 people who lost their money.

Almost 119,000 people registered for individual learning accounts in the south-west. The great majority of those who registered at the Open College for Distance Learning were aged between 25 and 35—just too old to have been taught IT skills in depth at school.

In a written reply, the former Under-Secretary for Education and Skills, now the Economic Secretary to the Treasury, stated:

As my hon. Friend the Member for Isle of Wight (Mr. Turner) pointed out, that repeated promise has had a negative effect on genuine providers; people are waiting to register in the expectation that, at any moment, their training will be provided free.

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Companies still struggling to operate in the sector continue to lose. As we have heard this afternoon, there is still no successor, so we have ended up with the worst of all worlds.

I understand that ILAs were originally a Liberal Democrat brain-wave, but a Labour Government implemented them and must take responsibility for the fiasco. There has been an almost unique combination of incompetence and inaction in which everyone is the loser.

The Select Committee's excellent report repeated the points made at paragraph 127 again in paragraph 25 of its conclusions and recommendations. I, too, believe that the Government should be proactive in offering compensation to the companies and people who entered into arrangements in good faith. I urge the Government to address that matter. As we all know, ILA is dead, so before continuity ILA is born—before the Government embark on a new scheme—the Minister, the Government and all those responsible should give some hope to the people who have lost their livelihood and their companies. There is not much to hope for in the Government's reply to date.

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