The emerging concerns - 'deadweight'
68. Mr Chris Hughes, Chief Executive of the Learning and Skills
Development Agency, told the Committee on 31 October 2001 that
ILAs were enormously popular but "inevitably there was a
deadweight factor, in that they were going to people who were
already involved in the system".
The National Institute for Adult Continuing Education [NIACE]
expressed the view that "that the near-universal offer was
an expensive way to widen participation because of the amount
In a written answer, Mr John Healey stated that
"With any universal offer deadweight will exist. Although
not an exact calculation, an assessment of deadweight within the
ILA programme can be based upon the evaluation evidence drawn
from a series of hypothetical questions. Based on the sample selected
the first stage evaluation showed that 44 per cent of account
holders said that they would have been able to pay for their course
without their ILA discount."
69. The cited figure of 44 per cent comes from the work carried
out by York Consulting, who stated that there was conflicting
evidence over how many ILA holders would have done the training
anyway: "this level of potential deadweight is not surprising
when you consider that ILAs are not means tested and are open
to everyone over 19 years of age in England".
Mr Rodger of York Consulting said that "the amount of targeting
that went on in terms of marketing was not significant ... That
is one of the conclusions and recommendations that we drew, that
if they wanted to get further into the new learner target group
they would have to adopt a different approach to marketing and
promoting the initiative".
Mrs Sammy Betson of Ipswich ITeC told us that she was in favour
"we were starting to get to the target areas, and by
definition they have been out of the education and training system,
and that is why we are trying to get at them, because they have
been out of it. You cannot then expect them to be first through
70. Mr Geoff Hall of the Learning and Skills Council said
that there were "some fundamental issues" about targeting
and that "one of the difficulties about the ILA scheme was
coping with fee policy. In many cases, the reason that disadvantaged
people do not show up in your figures is because they were getting
100 per cent fee remission."
Providers funded by Learning and Skills Councils are not permitted
to charge course fees to adult clients (or their dependents) on
means-tested benefits or to those on basic skills programmes.
71. Mr Alastair Thomson of the National Institute for Adult
Continuing Education [NIACE] told us that he was "not convinced
that it is the best use of public money to pay people to do what
they would do anyway".
The Trades Union Congress expressed a slightly different concern,
that ILAs should not be used for training which was job-related
and which would otherwise have been paid for by the employer.
It is of course difficult to make a precise assessment of how
much training paid for using ILAs would in fact have taken place
without the stimulus of the ILA incentive.
72. We note that 57 per cent of people of working age in England
have no qualifications above level 2,
that 24 per cent of adults in England experience difficulty with
either literacy or numeracy or both
and that these people are least likely to be offered training
in the workplace or to actively pursue learning opportunities
at home or in their communities.
73. We recommend that any successor scheme to the ILA should
be focussed on adults whose highest level of qualification is
at level 2 or below and that particular efforts should be made
to promote the scheme through employers, trade unions, community
groups, approved training providers, schools and colleges.
The emerging concerns - over-spending
74. Mr Derek Grover of the DfES confirmed that the ILA scheme
"did take off a great deal faster than we had expected, far
faster than the market research ... had suggested".
By September 2001 expenditure on the programme had reached some
£180m and had doubled since May 2001, reflecting rapid programme
expansion over the period, exceeding all expectations.
Ms Denyse Metcalf of Capita told us "we shared in the delight
of the Department that it had been an extraordinarily successful
scheme as it appeared at that point".
75. By 2 May 2001, the commitment to reach one million Individual
Learning Accounts (964,000 in England) had been met, a year early,
and an average of 3,000 accounts were being opened each day. At
that time, more than half the people who had opened an ILA since
January 2001 had not been in learning in the last three years.
The DfES told us that ILAs were clearly achieving the aim to make
learning more affordable and accessible and playing their part
in encouraging people to take responsibility for their own learning
and development. Expenditure on the programme had reached some
£90m at this point and the majority of this was on payments
to learning providers for the introductory £150 ILA incentive
using recycled TEC resources.
76. The Department set aside a budget of £202.1 million
over the two years 2000 01 and 2001 02.
This was based on achieving 1 million ILAs by April 2002. Spend
up to 31 January 2002, following the high level of take up of
ILAs, was £268.8 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 booked at 23
November 2001; 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 DfES assured us that the final overspend would be met from
within the Department's existing budget and resources had been
identified for the successor programme.
TABLE: Spending on ILAs
|DfEE/DfES||£ 40.4 million
||£ 46.6 million||£ 87 million
|TECs||£ 45.4 million
||£69.7 million||£ 115.1 million
|Total planned spending||
|| ||£ 202.1 million
|Total out-turn (estimated)*||
|| ||£ 265 million
*In evidence on 23 January, the total over-spend
to date on ILAs was estimated at £ 62.9 million, with further
payments of up to £13.5 million to follow as claims from
November 2001 are processed (QQ.29-30). The estimate of the total
overspend [as at the end of February 2002] was £66.9 million.
77. On 28 November 2001, the Chairman of the
Select Committee asked Mr Healey when he had the first meeting
or any meeting with the Treasury to discuss the ILA. Mr Healey
replied that he was "more content to prepare for the Committee
a schedule of the points at which we consider we took particular
decisions and in particular to identify the points at which any
discussions or notifications were made to the Treasury in advance
of that decision we announced on 24 October".
78. In his supplementary written evidence following
the 28 November evidence session, Mr Healey wrote
"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."
79. The DfES told us that they took into consideration
both the unexpected scale of the programme expansion and the sharp
increase in the volume and nature of the complaints.
As Mr Hugh Pitman of the Association of Learning Providers put
it, "the ILA programme has, to a large extent, been a victim
of its own success".
80. Without access to the detailed notes of
confidential discussions between Treasury and DFES officials,
we cannot know how large a part the desire to rein in over-spending
played in the demise of the ILA. This is not a satisfactory position
and we have requested the Secretary of State to provide us with
the relevant papers.
100 QQ.482 to 485. Back
Section MAB/F/00250 in Schedule 2 to the Service Provider Agreement
[evidence not reported]. Back
Section 5.101 of the Business Rules [evidence not reported].
See also Q.449. Back
Business Rules Section 7 [evidence not reported]. Back
The learndirect network consists of over 1,550 learndirect
learning centres grouped together in over 85 'hubs'. A hub is
a consortium responsible for one or more learning centres. A
typical hub may include colleges, employers, voluntary organisations,
universities, trade unions and private training providers. Ufi
require hubs to ensure that systems are in place to meet the requirements
of recognised QA systems for further, higher and adult education.
The Adult Learning Inspectorate began full inspections of learndirect
in January 2002. See Q.541. Back
IT and basic mathematics courses such as City and Guilds 4242
ICT basics; BTEC IT desktop skills; GCSE and Key Skills 2 Maths
and the European Computer Driving Licence. Back
Ev116 paragraph 16. For example, the British Computing Society
recommends that 125 hours training (at about £14 an hour,
that would total £1,750) are needed to complete the syllabus
for the European Computer Driving Licence - see Ev17. Back
Ev116 paragraph 16. Back
Ev14, 17-18. Back
HC Deb 19 December 2001 vol 377 col 405W. Back
QQ.305 to 307, 309 to 311, 317, 318. Back
Ev91. See QQ.439-440. Back
Ev62 paragraph 5. Back
Q.89 [emphasis added]. Back
The York Consulting researchers defined "redeemers"
as people who had used the Individual Learning Account to help
pay for learning - Evaluation of Individual Learning Accounts
Early Views of Customers and Providers: England, DfES Research
Report 294, September 2001, page 11. Back
Evaluation of Individual Learning Accounts Early Views of Customers
and Providers: England, DfES Research Report 294, September
2001, page 1. Back
Ev64-65 paragraph 6. Back
Q.108. See also Individual Learning Accounts - Follow Up Study,
DfES Research Brief RBX 01-02, January 2002. Back
QQ.116-117. See also QQ.136-137. Back
Ev118-119 paragraph 34, based on Individual Learning Accounts
- Follow Up Study, DfES Research Brief RBX 01-02, January
2002. See also Ev2. Back
QQ.105, 138. Back
HC 322-i Q. 16. Back
HC Deb 19 December 2001, vol 377 col 405W. Back
Evaluation of Individual Learning Accounts - Early Views of
Customers and Providers, DfES Research Brief 294, September
2001, page 3; QQ.119-121. Back
Ev154 Appendix 2 paragraph 6. Back
Ev47 paragraph 2, QQ.153,158 Back
In the National Qualifications framework, level 2 qualifications
include GCSEs at A* to C, intermediate GNVQ as well as NVQ level
2. ONS/DfES Statistics First Release SFR 02/2002 Table 2. Back
Opinion Research Business survey carried out on behalf of Basic
Skills Agency - www.basic-skills.co.uk/research Back
Ev120 Annex 1. Back
Ev116 paragraph 19. Back
The total expenditure of the DfES in 2001-02 is expected to be
more than £23 billion. Back
Ev118 paragraph 33. See QQ.436 to 438, and 566. The Spring Supplementary
Estimates approved by the House on 7 March 2002 included the virement
of £126m from Section R [which covers spending outside the
Departmental Expenditure Limit including grant-in-aid to the Learning
and Skills Council and student loans payments], £90m of which
was transferred to Section B [spending within the Departmental
Expenditure Limit], which includes a figure of £156m for
Career Development Initiatives (including ILAs). In the circumstances,
£60m of the £90m was allocated to the line within Section
B which includes ILA expenditure [Cm 5385]. Back
HC 304-v, Q.360. Back
HC 304-v, pages 99-100. See QQ.522 and 523. Back
Ev117 paragraph 22. Back