Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 80 - 86)



Paul Holmes

  80. A question for Roger, but possibly James as well. To go back to the question of accounts that were not registered by the 7 December deadline, because that is what training providers were working towards. When they suspended the scheme on 24 October they said categorically that you had got until 7 December. They then wrote out on 29 October, presumably to all 2.5 million account holders, saying that you had got until 7 December, do not be rushed by people pressing you to sign up quickly, just keep to the deadline, make sure it is the right course, etc. They wrote to everybody involved saying you had got until 7 December and you do not need to rush, make sure you are doing the right thing here, and yet they then pulled the plug late on a Friday two weeks before the deadline. Emma has already said they have got some people who they had not registered by the previous deadline of 7 December. There is a company in Chesterfield in my constituency with nearly 200 people who were not registered because they were working to their usual monthly accounting and that would have been the next week after 23 November. How widespread is this? How many companies are affected by losing money because they had not registered people by 23 November when they had been told quite clearly they had until 7 December? Secondly, has any legal advice been taken so far whether this is a breach of contract and the Government could effectively be sued? It seems to me absolutely outrageous. John Healey has said to me three times now "There is no way we would consider paying for anything that was not registered by 24 November" and yet it seems to be a clear breach of contract.
  (Mr Tuckett) I will go fairly light on the last question of legal action because I believe James O'Brien may have a little bit more to say on that. On the first question, it represents at the very least two lost weeks but I think a lot more than that, it represents people clearing the cupboard out in order to put everything in and make sure they have got everything in at the end, so probably it represents a lot more than two lost weeks. In my organisation's case it represents lost numbers. If you read the brochures that came from the ILA they issued numbers in seven to ten days. I wish it was seven to ten weeks. Despite seven to ten phone calls per week most people took two months, three months. I was getting numbers in a week or so before closure of the scheme which had been lodged by the learner concerned in July or August. Unlike many other centres we had let people start their learning even though the number had not actually arrived. Some people were a bit more careful. Because the scheme enabled you to, if you like, book in advance for courses starting up to six months ahead, either there were amounts left outstanding on the number or else the numbers leading to the following year. There could well have been quite a batch of people who were going to make registrations in the few days leading up to 7 December. I think it said normally in terms of Government tenders for contract very, very few are deposited in the postbox more than 12 hours or 24 hours before the deadline, so one would expect it to be a lot more than two weeks. Although there was this breach of contract, as you have said John Healey has said there was no contract, which I find very, very difficult to believe. Everybody who was regularly involved, those 1,400 people who were putting in claims on a weekly basis, that money corresponds to January's salary for staff and we are coming up to pay day. We were told this morning a little bit is going to arrive for those two missing days. Certainly the lost two weeks is a serious concern.
  (Mr O'Brien) The important thing is, as you pointed out, the timescale of events. We understand why the system had to be closed down on 23 November but it did not mean that the process had to stop, and that is what we believe could have happened. As Roger has mentioned, if you are told by the Government at the end of October you have got until 7 December and do not rush, what happens? We know if there is a sale that the last days of the sale are always the busiest. Lots of learning providers, ourselves included, promoted Individual Learning Accounts and learning providers generally were responsible for the success of the Individual Learning Accounts because it was the learning providers' money that was marketing and promoting the scheme, it was the learning providers' time and effort that was going into promoting that. In that six week period, or what was supposed to be a six week period, a lot of marketing effort was going into promoting the ILAs. What then happened with the sudden withdrawal of that was people were turning up at training centres saying "Well, fine, the Government says I can start until 7 December" and as learning providers what could we do? What we decided to do in many cases was say "Fine, you can start your learning" because we need to mitigate our loss, because it is our reputation as well as the Government's reputation. We actually accepted those people, they paid their contribution, a minimum £50 or whatever it may be, to complete their training on the expectation that the ILA would be honoured at some point in the future once it was resolved. We have taken advice to see if the contract, if you like, between the DfES and the learning providers is valid. In terms of this you can get opinions either way, the most important thing that we have discovered is that the Government had set a legitimate expectation for individuals to be able to access that learning up until 7 December and they should honour that commitment. We have done a sample and we can see names, Individual Learning Account numbers, never mind the people whose accounts never came through in time because of poor administration up in Darlington at Capita. I can supply names of 5,000 people across 200 training centres, so not a big number per centre, not as high as in your own constituency of 200, of people who want to access learning. In some cases they have started their learning and will hope to regain the fees that are due but in some cases they have prolonged it and said they are not going to commence their learning. That is a problem, that is not helping the economy agenda generally, getting people skilled, moving into the IT area. There are big issues here for us. That two week period needs resolving for those people who have started learning, or want to start learning, based on the Government's promise that they could commence their learning by 7 December.

Jeff Ennis

  81. A general question but I would be happy if you could take just one or two responses to the question, Chairman. The witnesses are indicating that they felt the system was open to abuse from day one and potential fraud was inbuilt into the system. Do any of the witnesses feel that there has been an organised element to the fraud that has been built up or is it just individual people taking advantage of a flawed system from the start?
  (Mr Tuckett) I think the first point to make is that the system is very, very flawed in its design and construction. Everybody I have talked to, even with a modicum of computer security expertise, say that it just was not built in in the first place and lots of things could be done. The fact that you could enter a single number and not even have to cross-relate it to the surname, for example, was crazy. The fact that the number was a numeric number rather than alphanumeric meant that there were ten options rather than 26 and so on. The level of computer security was pitifully low. I can also say that I have heard numerous accounts of numbers being offered for sale and numerous stories, none of them substantiated. One is that these come from the printers, secondly that these come from insider information and, thirdly, these come from people hacking into the system. I certainly have no firm, definitive information which of those it is but I always look at that in the context of a computer system put together under a £50 million contract. To me it is a very, very modest investment. I would hate to come out with a figure, but a few tens of thousands of pounds may have gone into the development of that computer system. To say simply that we should have been able to trust the 8,000 people who filled in a one page form not to misuse their capability to look at it simply does not wash water.
  (Ms Lambie) I do not know who actually commissioned the database that was running via the website but in terms of having a basic knowledge of IT and how databases work, people who typed in the wrong number three times should have been shut out of the system in the same way if you are trying to register with your online banker. People who were registering more than 1,000 students per week per centre should have been shut out of the system because there is no way any training centre could train that many people in a week. There are simple things that databases can do and it does not take an IT expert to understand that. I do not know who commissioned it or what consultancy they received on designing databases but certainly it was a very simple system.
  (Ms Solomon) You were asking was this organised. If you think about it, if someone wants to defraud the system they are not just going to take £200, are they? If they have found a way to get in they are going to take as much as they can get. It has got to be people who have decided quite seriously that is what they are going to do. As Roger said, there is an awful lot of Chinese whispers around about 80,000 numbers in Kent, all sorts of things that people cannot substantiate.


  82. Eighty thousand numbers in Kent?
  (Ms Solomon) There was some story about somebody putting 80,000 ILAs through from Kent.

  Chairman: Kent is well known for its enterprise.

Mr Shaw

  83. Absolutely right.
  (Ms Solomon) There are a lot of these stories. We do not have the full stories, we do not have the names, but I think all training providers could give you an example of some nutty story. The fact remains if you are going to defraud it you are not going to just take £200.
  (Ms Lambie) Just a quick point. In any new scheme that comes in there should be a number that people can call that is a fraud line and if they are unhappy with their experience there should be some place to report that. There was not anything like that. If you phoned Capita you got people in the call centre who were just there to put information into the system, they were not there to deal with any complaints. There was no complaints mechanism at all.

Mr Baron

  84. A question to Mr O'Brien to give us an overview. From evidence given to us it does appear that we all agree that whilst ILAs were a very good idea the structure and the systems put in place were a complete shambles which almost beggars belief. The Department for Education and Skills seems to be wanting to exacerbate this shambles by refusing to compensate learning providers, which I think is personally scandalous and I know the Parliamentary Ombudsman will be looking into this. How do you think that decision alone is going to affect the long-term future of your industry, something that we are going to depend on very heavily if we are going to move this initiative forward?
  (Mr O'Brien) That decision to compensate the learning providers is critical for the long-term survivability of small training providers as well as medium and large providers. The compensation is due in two parts. One is up until 23 November people who were registered on to the learning system, those monies are still outstanding. A payment was made for the week ending 21 December but it was a part payment and we cannot find a way to reconcile that. Secondly, those providers who have not been paid have been advised there is going to be a verification check but no timescale of when that verification check will be undertaken, no information on what that verification will comprise of, has been forthcoming. Up until 23 November, first of all, those monies are outstanding. The DfES this morning said there will be a further payment made this week for the final parts. If that is full and final payment of that, that is a step in the right direction because in small business cash flow, as in many businesses, is very, very important and those businesses will not survive. As Roger said, people are not going to be able to afford to pay their staff wages this month, and that is very important. The second issue in terms of compensation, again, is that it means people in the training industry in the longer term can reinvest and go out there and market to learners to come back into the learning environment, take up life long learning and get the skills which will help them, whether it is to get a job, get a better job or communicate with their grandchildren by e-mail in terms of training people from the ages of 18 to 88. It is very important that compensation is decided on but it has to be checked and verified and all legitimate training providers will have no issue with that. It is very important for the long-term future of the business.


  85. We are running out of time. I want each of our witnesses to briefly say what is in store. We are hopefully going to get the ILAs back on track, what would be the characteristics that you would want the new scheme to embody? What do you want out of the new scheme?
  (Ms Lambie) A vetting system that is much tougher and people actually come and visit us, see what we are doing, talk to people that we have trained. I think that is probably the best evidence you can get. Consultancy on a new database system so that it is more secure, it can block people out more easily. They are the two main things.
  (Ms Solomon) I would add, I think, the element of personal choice in the new scheme is very important. This is something that came up for us particularly at Hairnet because what people choose to do is have personal one-to-one instruction. Many people need to do that if they are going to get into IT because they simply do not want to or cannot get to a class. If we get a new system that tends to push learners through Government favoured training organisations I think it is worse than not having a new system because that element of personal choice is very important to retain. If I can just say something on the back of what John was asking about compensation. I think if the compensation issue is not sorted out it becomes as good as the Government saying "we actively consciously now penalise you for having joined us in the ILA scheme in the first place". In terms of our faith in the Government to stick to what it says it is going to do and play fair, it is very damaging to be left in that position thinking "Okay, ILA mark 2, do we go in, do we not go in? What is going to happen this time?" I think that is tied up with the way they deal with the compensation issue. Lastly, I think we have all said here, just get on and do it. It is really imperative, as James has said, that we know we are dealing with a date. Even if they say it is April or June at least you know what you are working towards. If you do not know what you are working towards it is very difficult.
  (Mr Tuckett) Three things. One is build on the flexibility of the old scheme. The second is introduce one or both of quality assurance or monitoring of achievement. The interesting comment was made earlier that both seemed to be lacking from the first scheme. A little rider to that is in a non-bureaucratic way. The third is the question that is in vogue, joined-up Government, please. Not only join up the ILA initiative, which has primarily funded computer training, or a lot of the money has gone there, with the digital economy, digital society initiatives, join it up with that but, secondly, join it up with the whole funding of adult learning generally through the Learn Direct Scheme, through the Learning and Skills Council funding, who gets it and who does not, because it has become clear there is much disjointed thinking and disjointed initiatives and objectives that seem to conflict.
  (Mr O'Brien) I support all of the comments made and I do believe in the accreditation of learning providers but I do believe that needs to be open to all learning providers, existing and new coming into the marketplace. I would not support the comment by the DfES earlier to possibly make that open to tendering because you may get just specific groups. I think it has to be open to providers who have to go through some quality thresholds and if you pass those thresholds you should be invited into the scheme. We believe strongly, the Association of Computer Trainers, that it should be done at a local level. Use the framework that is out there already. The Learning and Skills Council is ideally suited for this, so please consider that. It needs an adequate regulatory and compliance framework but do not make it overly bureaucratic. There has to be some bureaucracy but it needs to be a simple scheme. Learning providers need clear guidelines which are unambiguous, put a version number on them so we know which one we are working to but issue those so that everybody knows what the rules are because the rules were lacking in the first instance, so make that clear.

  86. Can I thank all of our witnesses for their contribution today and thank Members of my Committee who have stayed the course. I must finish with one last question, I see it is only 11.59. Why Hairnet?
  (Ms Solomon) Because you would ask us that question and remember the name.

  Chairman: Thank you very much.

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