Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Good morning. Can I welcome both of you to the Committee's proceedings. You will know that we only decided this time last week to initiate an inquiry into ILAs. I want to emphasise that this is not an audit committee: we are not mainly interested in fraud or that aspect of ILAs although that will impinge on some of the questions that we ask. We are interested in what has happened to the ILAs. Many of us were great supporters of the whole principle of individual learning accounts and know that, in very many ways, it has been a great success. A large number of people have had learning opened up to them in a way that was not possible before, so we start by saying to you that we have a real balance in this Committee on how we view what has happened. On the other hand, we are astounded that something that really only got the go-ahead formally on September 1 2000 within something like 14 months had had a trajectory of enormous support and enormous growth provision across the country and now, sadly, it is the end of the scheme. We are, therefore, very interested in two questions: what went wrong in the sense of issues like quality control, what went wrong in terms of the checking of the quality of provision; also, the mechanisms that were built in at the very beginning to prevent mis-use of the fund and the individual learning accounts? We are also very strongly interested in ILA mark 2. We are very interested in knowing how quickly we can get back on stream a very successful scheme and a scheme that speaks to the needs of a large number of providers who, at this moment, are struggling financially. Can I first ask, briefly, both Derek Grover and Peter Lauener if they would like to say a couple of words in introduction?

  (Mr Grover) Thank you very much. I think the clerk has had a list of our respective responsibilities. I am responsible essentially for policy, for all learning post 19 outside the higher education sector, and Peter is responsible for learning delivery, particularly relations with the Learning and Skills Council.

  2. Mr Grover, I am afraid you will have to speak up, otherwise there will be glazed expressions!
  (Mr Grover) I would not want to induce glazed expressions anywhere! I am responsible for ILA policy and, in particular, future policy; Peter at the moment is looking after particularly the wind-up of the first ILA scheme. What we have done is produce for the Committee what I fear you may think is a rather formidable bundle of documents that sets out the history, because the advice we had from the Clerk was that you wanted to start with an overview of the history of the scheme. What we have given you is a collection of all the public documents we could put our hands on in the last week that we thought would be helpful. In some cases they are samples of categories of documents of which there are a number of others—reports of consultations, that sort of thing—but we have included all the main public documents that the Department issued.

  3. Thank you.
  (Mr Grover) What I thought I would do, if it would be helpful, is just very quickly summarise the history so there is a common background, and I have offered some slides that just set out the headlines. On the second page there are four key phases for the development of individual learning accounts. These, please remember, run over a period of nearly five years, so it is a rather long history that I am attempting to summarise, and the four phases are not strictly sequential—some overlap. First of all, there was an initiation phase: then a phase while we were putting in place the longer term arrangements where we ran a set of interim arrangements largely through the Training and Enterprise Councils; the work that we did to develop the national framework; and then, finally, the full implementation which, as you say, came from September 2000. The next page just sets out the manifesto commitment with which I am sure the Committee is familiar, but that is what we were charged with implementing from May 1997. On the first phase, which I have called the initiation phase, the initial model we were looking at was one in which we were trying to develop something that looked much more like an account in the sense of a financial services instrument, so we began a very extensive series of discussions individually and collectively with a range of financial institutions to see if we could develop some sort of public/private partnership with one or more of them to deliver individual learning accounts. We also commissioned some work to look at the market for individual learning accounts; what individuals wanted from accounts; what their perceptions were of the usefulness of a financial instrument of this sort and whether they would use it or not: looked at issues of marketing and communications; and then went into some pretty detailed consultations with the financial institutions but also with some other key stakeholders, including providers in public and private sectors. That was a phase of work that lasted, I guess, for something like a year to 18 months from the date of the May 1997 election. The next slide sets out what we put in place by way of interim arrangements because we were anxious to learn some practical lessons as quickly as we could. We invited all the Training and Enterprise Councils to submit proposals to run development projects on individual learning accounts—in the bundle of papers that you have, the invitation to tender is document 4, so that would show you clearly what it was we were trying to test. There were twelve pilot programmes involving Training and Enterprise Councils, some of them involving more than one, so there were more than twelve Training and Enterprise Councils involved. Some of those were run by the Training and Enterprise Councils themselves: some were run by the Training and Enterprise Councils in partnership with financial institutions and, again, in the bundle at document 6 you will see an example of a newsletter from one of the TECS setting out what their scheme was and the sorts of results they got from it. Clearly, there is a great deal of material of that sort which we can show you. From the beginning of the 1999-2000 financial year it was open to all Training and Enterprise Councils to offer individual learning accounts and, in varying degrees, they all did. The other important milestone in that interim period was the 1999 budget which included four relevant items. The first of them was the removal of the vocational training tax relief for which other arrangements were intended to substitute. Secondly, the Chancellor reaffirmed the commitment to offer a £150 subsidy to the first million people to open individual learning accounts if they contributed £25 of their own towards the cost of training: thirdly, there were 20 per cent discounts on very wide range of learning and, fourthly, there was an 80 per cent discount for basic IT and numeracy training. The third phase was the development of the national framework. After, as I said, really very extensive discussions with financial institutions, it became plain we were not going to be able to set up a model that enabled us to work jointly with them to offer individual learning accounts for two important reasons: one was that the market research I referred to showed that individuals were not particularly interested in saving for learning. They were quite prepared to borrow for learning and in some circumstances to pay for it, but saving for it as a proposition was not something that appealed very much so there did not seem to be a great market for it. If we did not have to have a savings element to the account we did not necessarily need to work with financial institutions offering the package. Secondly, the financial institutions themselves were not especially interested in developing a product of this sort. They had other pressures at the time—individual savings accounts and coping with the millennium bug or preparing for it—and we were not able to develop a business proposition with which they felt comfortable and secure. So we developed an alternative approach which was to develop the national framework, where we delivered from the national customer provider the service to the individual account holders. So we started a procurement process for that national service provider with an advertisement in the journal of the European Communities in August 1999 and at the same time began developing things like the brand, the visual identity, how we were going to market and present it. The last phase, of course, is the implementation of the individual learning account national framework. After that procurement process, we selected Capita as the provider of the national service centre: we put in place the statutory framework required for the delivery of ILAs in the Learning and Skills Act—that was the Act that set up the Learning and Skills Council—and then the related statutory instruments to implement it. We implemented the national framework from September 2000 and immediately began a programme of collecting management information but also collecting customer evaluation of how the programme had gone. The last of the pages on the slides sets out some of the key facts about the scheme which I know in the Minister's previous evidence you have heard many of. I will not take time going through them now but these show the sorts of impact that the ILA system had and then, of course, towards the middle of last year, we began to identify and deal with the problems that I know you have discussed extensively with the Minister before. I hope that is helpful; it is a bit of a rush through what is quite a lengthy history, but I hope it sets the background.
  (Mr Lauener) Adding one point to fill in a bit of background, one very important part about the TEC involvement was that TEC resources were used to support the £150 incentive element of individual learning accounts and over the first couple of years a very important part of the work the Department was doing was securing agreement to the use of Training and Enterprise Council resources with Training and Enterprise Councils to fund the individual learning accounts. Some of those resources were used in 1999-00 and then in the two subsequent years as well, but in the budget figures that you have seen for the programme over the two years, since April 2000, there is quite an element of the Training and Enterprise Council funding that is involved in that. Although the manifesto referred to £150 million of Training and Enterprise Council resources, in fact the English share of that is £127.5 million and that is the amount of money from Training and Enterprise Councils in the overall individual learning account programme.

  4. Reading your documentation and the excellent briefing we have had from our own staff and from the House of Commons Library, it seemed that all was going well when you were rooted in the Training and Enterprise Councils and had a local delivery point and local input, but that things went wrong when you went to the national service framework. Is that the reality?
  (Mr Lauener) I do not think that is maybe an appropriate comparison. As Derek has explained, the Training and Enterprise Councils were involved in a lot of the early development work: they helped develop a lot of the ideas that went into the national framework as well as some ideas that they tested out that did not make it because they just did not work, and a lot of the work the Training and Enterprise Councils did in that early phase was extremely useful in developing the final version of the national framework. What was also apparent from the early stages, though, is that while some of the local pilots from the local work were quite successful, it was going to be difficult to operate on a national framework with equal availability throughout the country—

  5. Yes but, when you were rooted in a locality, a community, even in a sub-region, people knew about the local providers and the quality of local providers and so you had some checking mechanism of quality, cowboys or whoever was pulled in, to the expansion of the scheme when it went national. What seemed to be missing is that, when you went national, you lost your local roots and the ability to check who was providing, both their quality and reliability?
  (Mr Lauener) I think that is a very fair point: the framework that was developed was designed to encourage new learners back into learning and also to encourage new providers into the market, and it was designed to be simple and non bureaucratic in a way that would build the demand for learning. The downside of that was that there was less knowledge about some of the providers than there would have been if it had been an entirely local scheme with contracting with locally known providers who would have been doing other things. The upside is it did undoubtedly stimulate the market, as you have seen with the very rapid build-up of learning. So there are certainly issues to look at there. The previous discussions you have had in this Committee about individual learning accounts have already drawn attention, I think rightly, to the quality assurance arrangements for providers and that is certainly a very important part of designing a new programme—to look at what might be appropriate arrangements.

Mr Baron

  6. Mr Grover, can I take us back to October of last year, hoping to learn lessons for the future? There does seem to have been an extraordinary turn of events in the sense that there we were, halfway through the month, with 2.5 million ILA account holders: we had John Healey saying on Radio 4, I believe, that ILAs were achieving the Government's objective of increasing the investment individuals are prepared to make in their learning and future skills; yet on 24 October—eight days later—we had the Secretary of State for education informing this Committee that ILAs were to be closed. We have taken evidence from the ministers involved with regard to this particular ten day period, but can I hear what went wrong from your point of view? Why this sudden turn of events?
  (Mr Grover) As Mr Healey explained to the Committee, the position was that from the summer onwards we had increasing evidence that there was mis-selling going on of the individual learning accounts because of the way the scheme had been structured. There was evidence that some providers, probably a small number, were using the scheme inappropriately, putting inappropriate pressure on learners to sign up and offering learning that was, in fact, bad value for money, and that was something that emerged over that period and that was one of the main motivations behind the decision in October to suspend the scheme. The difficulty I think was that, in trying to set up the scheme initially, we were trying to balance the need to attract, as you said, a very large number of new learners back into learning to get at non traditional learners and, indeed, to use a very wide range of providers, perhaps wider than traditionally had been used, and trying to balance that against a need to ensure that you control the use of public money. Those were the issues, therefore, that led to the October announcement. The information that we had from our management information systems and, indeed, what we got from what was an increasingly worrying level of complaints was what led ministers to take that decision in October.

  7. You made the point there that there was a small number of providers exploiting the situation. Why did you simply not close down those small number of providers causing the problem and allow the rest to move forward, the vast majority? It does appear to many that you were throwing the baby out with the bathwater?
  (Mr Grover) I do not think there was a practicable way of identifying the providers who had to be removed because one of the difficulties of the situation was that it was easy in the system that was set up to register as a provider, and we do know there were cases where people would be suspended from the list of providers and, in effect, would set up in business again under another name. In other words, the way the system was set up—and this is something we clearly needed to address in the design of a successor system—it was extremely difficult to stop individuals determined to exploit the system from doing so.

  8. What you are saying, in essence, is there were no structures in place to insulate, if you like, the initiative from fraud. What lessons are you going to carry forward from this? How are you going to stop this happening in the future?
  (Mr Grover) We clearly have to put in place a system that enables us to address those issues of quality and value for money effectively in the way in which providers are admitted to a new system. It is clear from what has happened that the old system was not robust enough to deliver the programme that was intended to be delivered, so that clearly has to be addressed in setting up a new successor system.

  9. Can I press you on this? Can you be more specific? Obviously there are lessons to be learned and we have to try to ensure this does not happen again, but how specifically are you going to ensure this? You have expressed an intention but given very few details.
  (Mr Grover) It is something we are still working on and thinking through. There are a number of possibilities; you might want to rely on existing systems of inspection or accreditation, as I believe was done in Scotland: you might want to designate categories of providers whom you would accept: there are a number of different ways of doing it but, in deciding what the best way of doing it is, you have still to strike a balance. We are talking about a set of arrangements in which a very large number of relatively small learning episodes is undertaken, we hope, by a very large number of people, so it is not something where you can have a universal inspection system: that simply would not be economic. You are driven back to say, "How, then, do we get a handle on the quality of the providers?" One of the issues we were trying to address in designing this scheme was to widen the base of providers: not to rely simply on, say, the further education colleges or a particular short list of private providers. We did want to broaden the base, and that was why we deliberately did not restrict it to particular categories of provider because we wanted to widen the opportunities and give people the widest possible choice of learning provider. Clearly, what we put in place was not strong enough and robust enough to deliver value for money in the way we want and intend, and particularly value for the learners involved, so that is the issue we have to address, but it has to be a solution that addresses that balance as well if we are not to go back to a very rigid system that would be just as off-putting to new learners as we fear the old arrangements were. There is an old saying—"If you do what you always did, you get what you always got"—and we really wanted to get some different learners involved and some different providers, so in any new system we would have to strike that balance.

Valerie Davey

  10. Following on from that, who is responsible, who was responsible, and who would be responsible for the quality monitoring? The DfES is saying "We, we, we", yet set up the Capita or statutory framework to do that for you. Who do you feel should be responsible and when, going back to the history of it, did Capita first raise any concerns about the quality of the providers?
  (Mr Grover) It was not Capita's job to be expert on the quality of training provision; that is not what they were asked to do in their contract. What they were asked to do was to run the system that brought together the providers' claim for funding in the individuals' account and their entitlements and to bring those two together. There was a system of provider registration but it was a very basic system; it simply required them to say who they were and give the contact name and the details that were required to do that processing work I have described. It was not a quality assurance system in that sense. What we had built into that initial system was alongside what was being done through the national service centre, and there was the learndirect information line introduced at the same time to give individuals information about what was available to give them the basis on which they could choose and, at the same time, we were improving the services available in terms of information, advice and guidance for adults with developments in information, advice and guidance partnerships. But there was no specific inspection regime in relation to ILAs, and what we would need to introduce in a successor scheme is how best to put in place quality assurance arrangements to fill that gap.
  (Mr Lauener) Let me add very quickly, Capita was responsible for supplying monitoring and management information and one of the things we looked at which is a good measure of quality was the level of complaints we were getting for individuals. As Mr Healey has explained when he has been here, one of the things we were looking at was the way that that measure was rising quite sharply during the summer and, right through into the autumn, the complaints were getting more numerous and including very alarming aspects. Some of the complaints were, if you like, that something minor had gone wrong, but a significant number were about people saying, "I tried to use the money in my account but I found the money had gone" or "My account was empty", and that alerted us to the risk of fraud and the concern that led to the suspension and closure of the programme.

  11. I think we have heard a lot about the financial side of it; I am concerned now with the quality of what those individuals achieved. The other way of monitoring the quality of a provider is to see the qualifications or the level of attainment which the people using that service arrive at. Have we any evidence of not just emotional satisfaction, which I am sure was enormous for people who were coming back to learning in their 40s and 50s for first time, but what they actually achieved? Have we any evidence of the quality of the achievement of the people who undertook these courses?
  (Mr Grover) In setting up the programme, it was not the intention to make Individual Learning Accounts conditional on achieving particular qualification levels because, again, that was one of the things that the survey showed was off-putting for returners to learning. The thought that they would have to do an exam at the end of the process or that there was some rigorous qualification system attached to it was something that put people off. We did not, therefore, say that all the courses had to lead to a level 2 qualification or whatever. That is not one of the parameters against which we have assessed the scheme. I think you will have seen from the material that has been submitted to you already that quite a lot of the people taking part in the scheme did already have some level of qualification. I do not think that is necessarily a criticism: there are people, myself included, who would find it very useful to have an IT qualification to add to an existing qualification, just because life changes and you need to develop to work with it, but what we did not do and therefore have not evaluated in a very specific way is levels of qualification achieved. I have to say also, in considering any successor scheme, we might be rather reluctant to move to that as the measure because that would rather work against a policy objective that is about bringing a lot of people back into learning, because there is evidence that reluctant learners do find that off-putting.

  12. May I suggest that there ought to be something, however? It does not have to be a GCSE, not a hard qualification in that sense, but what level of attainment people reach for their own eventual satisfaction I think is important, as well as the quality of provision which we are asking for.
  (Mr Grover) I think that does raise a very important point: I think we almost certainly need to do more than was done in the original scheme to offer information and advice to the individuals taking it up. We did issue last summer a leaflet with some quite detailed advice and clear indications of sources of further advice. That is something we want to see how we can most effectively build on in a successor scheme.


  13. Someone looking at this independently, objectively, would say it is a rather odd aspect of the scheme that you have no quality assurance on the providers and no check on the qualification that is achieved. You can have one without the other, but having neither seems to be rather bizarre.
  (Mr Grover) As I say, what drove the development of the scheme was the intention to get a very large number of people back into learning—"kickstart learning" I think was the phrase used in the manifesto. That was what lay behind the design. Yes, with hindsight, I understand the points very well that have been made about quality assessment: they are well made and taken.

Ms Munn

  14. I would like to pursue this because I am more interested in the process in which people got registered in the first place. Quality assurance once they are in there is fine but I am a little astounded to hear what you said about the registration. I have had a look at the procurement for the national framework in document 18, and very clearly there it says that what you were asking people to bid for was registration of learning providers. Now, given that these have been piloted through Training and Enterprise Councils, what process were learning providers expected to go through when it was being looked at in the pilot phase, and what really were they expected to provide when it was the national framework?
  (Mr Lauener) Perhaps I could pick up the first point of that. With the early Training and Enterprise Council work, particularly the Training and Enterprise Council development pilots, the quality assurance arrangements varied from Training and Enterprise Council to Training and Enterprise Council, but generally they were much more likely to use, as was reflected in the discussion earlier on, their existing provider bases that were dealing with adult training or young people's training and colleges in the area, so the provider network for the Training and Enterprise Council work was usually much more their existing network, generally known providers. It was a feature of the new arrangements to try and stimulate new providers, and that led to the very simple registration arrangements for learning providers which are described in the document that you have.

  15. So literally anybody could come along, fill in a form, and say "I provide training", and they were up and running, is that what you were saying?
  (Mr Lauener) It was very open to new providers by design. But there was a further important aspect: that individuals were also expected to contribute to the costs of training. £25 in respect of the first million £150 incentives and then, of course, with the 20 per cent discount and the 80 per cent discount they were expected to contribute the remaining element of the cost. So this was not a system where the individual did not have a stake and the individual was expected to look around. There was information given about where to get advice and I think the individual stake in this is an important safeguard as well, but as we have already said we feel we need stronger mechanisms than that in the future.

  16. So individuals were supposed to know that somebody was a genuine, good provider when they were registered under a scheme when nobody else had bothered to check anything about whether they were able to provide the training to a quality at all, or had ever done so before?
  (Mr Lauener) Well, individuals were meant to be taking decisions about the learning that was right for them.

  17. Individuals who had been out of learning for many years.
  (Mr Lauener) In many cases, but there was also information available on learndirect, on the range of learning —

  18. So eventually what you are saying is that a system was set up to produce a large quantity of people learning, and that is what it did?
  (Mr Lauener) It was set up to bring people back into learning and it did, and some of the figures on that are quite striking and showed that a lot of people valued the learning they had, and had got learning for the first time for a long time. Some of the facts are in the material you have but 91 per cent of ILA learning met or exceeded expectations and 85 per cent of ILA redeemers said the ILA had increased training options already open to them.

  19. All I am suggesting is that, if you set up a system which is very simple in order to get a lot of people in, that is what you get. You do not necessarily get people who have the experience and track record to provide the training that you would really want people to have, and if that is your measure of success it was successful but we seem to have had other worries about it along the way.
  (Mr Lauener) I think there is a very fair issue about the balance between volume and quality and advice and guidance.

  Chairman: Is there not a saying, "Never mind the quality, just feel the width"? It comes from the textile region but I can see what you are aiming for. Meg Munn is pushing you on this and I do not think she is being given a direct answer.

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