Select Committee on Education and Skills Minutes of Evidence

Further supplementary memorandum from Mr John Healey MP (DfES 18)


  In keeping with my aim to ensure that you and Members of your Committee are kept as fully updated as possible on developments in relation to ILAs, I am now able to confirm a number of further details. I hope members will find it useful to receive this information before I give evidence to the committee tomorrow when you indicated that you wanted to cover the full range of my Adult Skills portfolio.


  On 18 December I wrote to you and all MPs explaining the arrangements for validating and paying claims from providers for learning for the period up to 21 November 2001. Before Christmas we were able to pay 91 per cent of provider claims, covering almost 1,400 providers, with a value of £3.5 million. However, 136 providers' claims, with a total value of £11.3 million were not paid, representing 76 per cent of the pay file value. These are being held while complaints and concerns about the learning delivered are investigated.

  I can also advise the Committee that we are now finalising checks of providers' claims made between 21 and 23 November, amounting to some £4.7 million. We expect to make payments to the majority of these providers by 25 January.

  Our commitment on provider payments remains that, subject to validation checks, all bookings of eligible learning made with the ILA Centre before systems were suspended on 23 November will be honoured. Any learning booked in this way has a further maximum period of six months in which to be confirmed and, once confirmed, payment becomes due. These claims will of course also be subject to a validation checking process before being paid. Validation arrangements are currently being developed and officials will be writing to providers with details of the new claim procedures.


  I promised to keep the Committee informed about spend against the total ILA budget set for England over the two years 2000-01 and 2001-02 which is £202.1 million, including DfES budget allocations and £115.1 million recycled TEC resources. I was able to confirm when I wrote to you on 18 December that up to 23 November, the ILA overspend was £58.8 million. I am now able to confirm that this figure has been updated to 31 December 2001 to include payments to providers up to 21 November. The revised total is therefore £62.9 million.

  The final overspend, which will not be known until later in 2002-03, will depend upon a number of factors, in particular: the full extent of claims outstanding for learning books on the system by 23 November, the extent to which claims will be validated after investigation and analysis by officials and the amount of money recouped from providers who have filed invalid claims for payment. The final overspend will be met from within the Department's existing resources.


  When I gave evidence to the Committee on 28 November, I agreed to provide more information about the points at which decisions were taken regarding ILAs. As the Committee is aware, there were two critical decisions that we took. The first was the decision announced on 24 October that the ILA scheme would be withdrawn from 7 December; and the second was on 23 November when we decided that the scheme should be closed with immediate effect.

  In both cases, after considering all available information, the Secretary of State took the decisions and then informed the Prime Minister, the Chancellor of the Exchequer and Ministerial colleagues of her decision before the announcements were made public on 24 October and 23 November respectively.

  Investigations are continuing into the nature and extent of potential fraud and theft that led to the latter decision. However, I am now able to give you more detailed information about the events which led to our 23 November decision without compromising this investigative work. I hope this will enable the Committee to understand more fully the serious nature of the allegations and risk these posed to public funds. On Wednesday 21 November an approach was made to the Department by an ILA learning provider alleging that a third party had offered to sell them a large number of ILA account numbers. The Department immediately arranged for a member of its Special Investigations Unit (SIU) to visit and interview the learning provider the next day. At the interview, the SIU official was presented with a computer disc which had been passed to the learning provider from the third party, allegedly as evidence of the authenticity of the offier to sell ILA account numbers. The disc contained full names, addresses and contact details as would have appeared on the ILA record, as well as ILA numbers.

  After taking a statement from the learning provider, the SIU official returned to the Department's offices to check the contents of the disc. It was apparent from these checks that the data on the disc did indeed represent live ILA account numbers which had either not been used at all (and which were therefore still available for use to claim funding) or which in some cases had been used to make a claim in the previous few days.

  The SIU conclusions were presented to senior officials and Ministers on Friday 23 November. In the light of confirmed evidence that the disc contained ILA numbers which had been obtained from the ILA database and the allegations that very large numbers of such ILA accounts details were being offered for sale, Ministers concluded that there was a very serious risk that public monies could be obtained improperly and in order to protect public funds, we took the decision that day to close the scheme immediately. The Committee will be aware from my previous statements that we did, of course, consult the police before taking the decision to close the scheme and have involved them fully since then.


  I thought it might also be helpful to update the Committee on our follow up to complaints which has led to investigations being conducted both by our Special Investigations Unit and the police. We have asked our DfES SIU to examine 82 learning providers where the most serious concerns and larger number of complaints have arisen. Of these, the police are already investigating 13 learning providers and the SIU is discussing a further 42 cases with the police. To date the police have made 39 arrests in connection with cases involving two ILA registered learning providers. One individual has been charged in connection with a further case and is due to appear at Crown Court early in 2002.


  I have also been asked in the House of Commons about the Capita Group Plc who manage the ILA systems on our behalf. Investigations into the control and security arrangements that were in place in the ILA system continue and we have engaged consultants from Cap Gemini to support that process. We are working very closely with Capita on this work.

John Healey

Minister for Adult Skills

15 January 2002

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