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Select Committee on Education and Skills Minutes of Evidence

Further supplementary memorandum from Mr John Healey MP (DfES 12)


  I am now able to give you and members of the Committee an update on the investigations that we have been conducting with the police on Individual Learning Accounts. As with my evidence to the Select Committee on Wednesday 28 November, then my letter to you on 30 November, I wish to ensure that I provide update information to you and therefore Parliament before it is released elsewhere.

  As I explained to the Committee on 28 November, we received an increasing number of complaints about the operation of the Individual Learning Accounts programme from the summer onwards. By 17 November we had had complaints from just over 10,000 people, relating to 565 of approximately 8,500 providers registered as ILA providers. Out of this total of 565 providers, we had serious concerns about 86 providers, on the basis either of the number or the nature of the complaints. When I appeared before your Committee on 28 November we had investigated 60 of these complaints and referred five to the police. The police have arrested 39 people in connection with these cases and charged one person.

  The position on these investigations now is that we continue to work closely with the police, and have now referred a total of 27 cases to a number of police forces with whom we are working and are continuing joint work on investigations into these cases. All these arise from investigations that had started before we took the decision on 23 November to suspend the ILA programme with immediate effect.

  As I explained to the Committee on 28 November, I was not then in a position to be able to give any details about this decision because of the risk of compromising the police investigation. However, I am now able also to provide the Committee with more information about the nature of the further problems which led us to the 23 November decision.

  I explained to the Committee that the Department received new information about serious allegations of fraud and theft in relation to ILAs on Wednesday 21 November. The allegations were that the ILA computer system had been compromised through unauthorised access. The strength of these allegations was confirmed by our Departmental Special Investigations Unit on Thursday 22 November before Ministers were informed on Friday 23 November. The evidence that we were able to confirm on Thursday 22 November meant there was a serious potential risk to large amounts of public money and personal data. That is why Estelle Morris and I took the decision on Friday afternoon to close the programme immediately.

  Our investigation at this stage was taken forward by the Durham Police because the main ILA system is located in Darlington. The investigation was supported by the national high tec crimes unit, as I explained to the Committee. These investigations have now led to the transfer of responsibility for this case to Cheshire police and we are continuing to work very closely both with the police and with Capita who manage the ILA systems on behalf of the Department. We do not yet have a full picture of the extent of this kind of unauthorised access of the system but I will keep the Committee informed of progress.

  There are a number of investigations under way in different parts of the Country and the West Midlands Police Force have agreed to co-ordinate the investigations with us.

  I also promised to keep the Committee informed about overspend and how we are dealing with valid claims. I explained in my letter of 30 November that the overspend up to 23 November was around £58.8 million. The final overspend will depend on a number of factors, in particular:

    —  the full extent of claims outstanding and bookings for learning that had been confirmed by 23 November;

    —  the extent to which claims will be validated after investigation and analysis by officials;

    —  the amount of money we recoup from providers who have filed false claims for payment.

  Our aim is to make payments of outstanding claims as soon as possible where these are validated, to investigate rigorously any claims where we have doubts about their validity and to pursue repayment in any cases where our investigations indicate that money may already have been falsely claimed.

  You will appreciate, I know, that the continuing investigations will take some time to complete and that we do not yet have full use again of the ILA data systems. However, as I indicated in my letter of 30 November, I will let you have an estimate of the likely end-year programme overspend as soon as I am able and I will continue to provide you and your Parliamentary Committee with updated information more generally.

  I hope this information is useful to the Committee.

7 December 2001

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