Select Committee on Education and Skills Third Report


Accreditation of providers - learndirect

54.  Mr Paddy Doyle of Capita stated that the scrutiny of providers was outside Capita's remit.[100] In the original model envisaged in the Service Provider Agreement, it was proposed that registration of providers should be conditional on being already registered with learndirect.[101] As Mr Simon Pilling of Capita told us, "at the time the system was developed, we were working to a specification which said we were talking about accredited learning providers in relation to the learndirect system".[102] It was later recorded in the Business Rules that, in a change of function from ILA Centre to DfEE, accreditation of learning providers was the responsibility of the DfEE.[103] It had not proved possible for the information about learning providers on the learndirect database to be transferred directly on to Capita's ILA Centre database.[104] It is not clear to what extent work on building the learndirect database was carried forward or whether a target date was set for implementation. Neither is it clear what steps the DfEE took to give effect to its newly­acquired responsibility of accrediting learning providers. One of the key differences between in­house and out-sourced working is that any design change has explicit cost implications and rigorous change control mechanisms are needed. These are not apparent in this out-sourcing. The Business Rules recorded that interim arrangements would have to be made while work continued on building the learndirect database .[105]

55.  Using the brand name learndirect, the DfES's University for Industry [Ufi] provides a range of services including online courses which can be accessed at home, at work or at one of the learndirect learning centres and an impartial information advice service (which includes a telephone helpline and website holding a national database of learning opportunities).[106] There is also a national database, covering the full range of learning opportunities, operated by learndirect which lists more than half a million courses, including further education, higher education, private and learndirect provision. Any learning provider can be included on the database free of charge. Providers need simply to apply (via the website[107]) to have their courses included. From the evidence it is not clear whether the learndirect database, even if usable, would have fulfilled an accreditation function. It seems surprising to this Committee that Capita was not able to make a speedy assessment of the suitability of the learndirect database to provide assurance on the quality of providers and to advise the Department accordingly.

56.  The unavailability of a list of accredited training providers undermined a key part of the ILA structure. Mr Paddy Doyle of Capita told us "at the very start when the system was being built, we believed that we were going to be hooking up to a database which was accredited. By the time the decision was made that that was not possible and it was not going to happen, the system was built".[108] Ms Denyse Metcalf of Capita underlined the point: "At no point was the registration by ourselves meant to represent a validation. It was a registration to provide learning under the scheme".[109] As Mr Peter Lauener of the DfES pointed out, "There is always a slight danger of confusing quality assurance arrangements with registration arrangements".[110] The DfES confused quality assurance with registration. It is this confusion which lies at the heart of the ILA debacle. Without a quality threshold or any systematic audit, there was nothing to stop unscrupulous opportunists signing up as providers on the ILA database.

57.  Without a quality threshold for providers to join the scheme it was left up to the individual account-holder to decide what course to take and whether it represented value for money. Ms Denyse Metcalf of Capita told the Committee —

    "one of the lessons for me in this is that a number of people who were entering learning, which was very laudable, were people who had not had experience of learning and therefore with hindsight they were perhaps not the right people to make the judgement on the quality of the product".[111]

58.  Ms Caroline Lambie of Hairnet described the lack of vetting procedures for learning providers as "shocking".[112] Mr James O'Brien of Pitman Training Group plc and the Association of Computer Trainers told us that he was "astounded that the lack of quality accreditation was so great".[113]

The £200 cap

59.  When the 80 per cent discount for a specific list of courses[114] was introduced there was no cap on the eligible course costs that could be claimed.[115] The DfES admitted that "Regrettably, some unscrupulous providers exploited this to charge inflated prices";[116] Mr James O'Brien alleged that "the scheme was abused from day one when it was in an uncapped period".[117] Ms Denyse Metcalf of Capita told us that —

    "As early as October 2000 we were aware that some of the courses had not got a capped limit, so prices were rising, and we brought that to the attention of the Department, and they acted upon it and a ceiling was put upon course values".[118]

60.  On 20 October 2000, it was announced that in future the Government contribution for each training episode would be capped at £200. This move limited the amount that the Government might be charged for any single episode; but it left the scheme open to abuse by unscrupulous providers with the resources or imagination to multiply the number of false claims they were prepared to make.

61.  On 20 September 2000 Mr James O'Brien, the Managing Director of Pitman Training, wrote to Ministers to express concern that the programme was open to abuse, and also that the cap on each individual's ILA account had been set at too low a level.[119] Mr Healey has confirmed that this was "the earliest correspondence we have traced on the specific topic of potential misuse of the ILA scheme."[120] Another early example of foresight was drawn to our attention by Mr Geoff Hall of the Learning and Skills Council.[121] The minutes of the termly meeting between DfEE officials and the Further Education Funding Council [FEFC] held on 13 July 2000 record that the then Director General of Lifelong Learning at the DfEE "noted the concerns of FEFC members about the possibility that public funding routed through ILAs might not be subject to the usual rigorous quality arrangements, depending on the providers involved".[122] The Department apparently failed to heed the warning, given three months before the national roll-out of the ILA scheme, from its own experts on the Further Education Funding Council, of the risk to public funding if rigorous quality arrangements were not put in place.

The emerging picture - who used ILAs?

62.  Although the Association of Colleges said that anecdotal evidence suggested the availability of ILAs as a universal scheme, accessible to all and with only a limited attempt at targeting, had meant in practice that take up of ILAs had been strong among better qualified groups, with little penetration among those with poor levels of attainment or little recent history of learning,[123] Mr Stuart Ingleson of Preston College told us that he had "absolutely no doubt that [ILAs] brought us into contact with students who otherwise would not have been there".[124]

63.  York Consulting described their work as "a barometer or a dipstick research approach to look at some of the key activities, characteristics, perceptions and processes that were going on in terms of ILA operation. It was not designed as a thorough evaluation in the broadest sense".[125] Mr John Rodger of York Consulting told us that in relation to learning providers the York Consulting study was a very qualitative piece of research,[126] although the main survey of account holders did represent a significant sample.[127]

TABLE - Users of ILAs up to summer 2001

By gender
Accounts open
Accounts used
By age
Accounts open
Accounts used
By occupation
Accounts open
Accounts used
Manual/factory worker
Manager (own business fewer than 250 staff)
Office/retail worker
Senior manager/professional
Skilled worker/tradesperson
Data not supplied

Statistics for the period up to 29 June 2001 [HC Deb 19 July 2001 vol 372 col 404-5W].

64.  The key findings of York Consulting's study, carried out between February and May 2001 and published in September 2001, included:

  • "Demographics - a wide range of earners is represented amongst ILA holders in terms of, for example, employment status, social class and age group. ILAs were proving to be particularly attractive to women, with 59 per cent of the sample being female. Over half of the redeemers[128] were within the 31-50 age group, 43 per cent were in managerial, professional or associate professional occupations.
  • Previous learning - the vast majority of redeemers (84 per cent) already possessed some form of qualification, with almost two-fifths (39 per cent) saying that they possessed a qualification equivalent to NVQ level 4 or above. Only 16 per cent of the redeemer sample stated that they had no qualifications at all. (This figure is slightly lower than that given within the Labour Force Survey 2000 which found that 16.5 per cent of the UK working age population had no qualifications.)
  • Courses supported by ILAs - in general ILAs were supporting courses over a range of NVQ levels and via a wide range of delivery methods.
  • Marketing - national and local marketing of Individual Learning Accounts did not have any significant impact upon the involvement of DfES target groups in ILAs. Most providers did not undertake any targeted marketing of ILAs and tended to advertise them to those individuals who enquire about training provision."[129]

65.  According to the Association of Colleges, further education colleges cited an extensive range of courses on which ILA account holders had enrolled. Although computing and information technology , including European Computer Driving Licence, Internet based training [IBT], Computer Literacy and Information Technology [CLAIT], internet technology, and computer-aided design [CAD], figured prominently many others were mentioned including administration, word processing, horticulture, garden design, floristry, languages, photography, building crafts, engineering, electrical installation, mathematics, open college network programmes, hairdressing, beauty, body massage, health studies, early years, management, teacher training and counselling.[130]

66.  In July 2001 the DfES asked York Consulting for rapid limited evidence to compare and contrast people who had opened their accounts early on in the national framework with people who had opened their accounts after 1 May 2001.[131] This small scale follow-up study was commissioned in August 2001. The field work, based on a follow-up telephone survey of 659 ILA holders, including 359 individuals previously contacted as part of the Spring 2001 survey, was carried out between 20 August and 10 September 2001. The Research Brief was due to be published in October 2001, but came out on 14 January 2002.[132] Mr Rodger described this delay as "quite normal".[133] The research showed that:

  • 91 per cent of ILA learning met or exceeded expectations
  • 85 per cent of ILA redeemers said the ILA had increased the training/learning options open to them
  • more than half ILA redeemers (51 per cent) said they had little (27 per cent) or no (24 per cent) prior knowledge of the subject(s) they were studying with ILA support
  • 22 per cent had not participated in any training/learning in 12 months preceding ILA use
  • 16 per cent of ILA redeemers had no previous qualifications
  • 54 per cent of redeemers said their ILA made them more interested in learning
  • ILAs continued to attract more women than men (66 per cent of recent redeemers were female compared to 59 per cent of redeemers in the spring 2001 survey)
  • in common with the previous survey the majority of recent redeemers (82 per cent) possessed some form of qualification prior to opening their ILA
  • over half of recent redeemers (56 per cent) were employed ­ this is lower than in the previous survey (69 per cent)
  • over half (54 per cent) of recent redeemers said that they would have been able to pay for their most recent ILA supported course without their ILA. This suggested a higher level of 'deadweight' than that of the earlier study, where it had been suggested that 44 per cent of redeemers could have paid for their course without an ILA.[134]

67.  The York Consulting researchers were puzzled that the data Capita gave them for the follow-up study proved to be unreliable.[135] Miss Jane Owens of York Consulting told us that the DfES had asked Capita to provide them with approximately 1,500 records of people who had opened and used their accounts, but when the telephone calls took place it was discovered that about 27 per cent of those called said that they had not used it.[136] Mr John Rodger of York Consulting said that "at the time we suggested that it may be due to some data issues in terms of information given by Capita, who managed the information system. Their initial reaction was that it was probably a data issue, or may be a recording issue in terms of the information that they received".[137] Under the Market Research Society code of practice, it was not possible for the DfES to chase up these individuals directly to inquire how it had come about that Capita thought their accounts had been used.[138] One possible interpretation of these facts is that the ILA Centre was incapable of providing the appropriate sample on request to the Department's contracted researchers. Another would be that by the summer of 2001 around one in four of those entered into the database as having completed training had had their discounts stolen by an unscrupulous provider before any training had taken place.

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".[139] 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 of deadweight".[140] 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."[141]

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".[142] 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".[143] Mrs Sammy Betson of Ipswich ITeC told us that she was in favour of universality —

    "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 the door".[144]

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."[145] 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.[146]

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".[147] 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.[148] 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,[149] that 24 per cent of adults in England experience difficulty with either literacy or numeracy or both[150] 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".[151] 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.[152] 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".[153]

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.[154]

76.  The Department set aside a budget of £202.1 million over the two years 2000 ­ 01 and 2001 ­ 02.[155] 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.[156] 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.[157]

TABLE: Spending on ILAs

£ 40.4 million
£ 46.6 million
£ 87 million
£ 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".[158]

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."[159]

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.[160] 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".[161]

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

101   Section MAB/F/00250 in Schedule 2 to the Service Provider Agreement [evidence not reported]. Back

102   Q.419. Back

103   Section 5.101 of the Business Rules [evidence not reported]. See also Q.449. Back

104   QQ.544,606. Back

105   Business Rules Section 7 [evidence not reported]. Back

106   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

107   www.learndirect­ Back

108   Q.430. Back

109   Q.468. Back

110   Q.538. Back

111   Q.591. Back

112   Q.59. Back

113   Q.64. Back

114   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

115   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

116   Ev116 paragraph 16. Back

117   Q.64. Back

118   Q.338. Back

119   Ev14, 17-18.  Back

120   HC Deb 19 December 2001 vol 377 col 405W. Back

121   QQ.305 to 307, 309 to 311, 317, 318. Back

122   Ev91. See QQ.439-440. Back

123   Ev62 paragraph 5. Back

124   Q.215. Back

125   Q.87. Back

126   Q.89 [emphasis added]. Back

127   Q.91. Back

128   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

129   Evaluation of Individual Learning Accounts Early Views of Customers and Providers: England, DfES Research Report 294, September 2001, page 1. Back

130   Ev64-65 paragraph 6. Back

131   Q.101. Back

132   Q.108. See also Individual Learning Accounts - Follow Up Study, DfES Research Brief RBX 01-02, January 2002. Back

133   QQ.116-117. See also QQ.136-137. Back

134   Ev118-119 paragraph 34, based on Individual Learning Accounts - Follow Up Study, DfES Research Brief RBX 01-02, January 2002. See also Ev2. Back

135   Q.93. Back

136   QQ.105, 138. Back

137   Q.93. Back

138   Q.140. Back

139   HC 322-i Q. 16. Back

140   Ev55. Back

141   HC Deb 19 December 2001, vol 377 col 405W. Back

142   Evaluation of Individual Learning Accounts - Early Views of Customers and Providers, DfES Research Brief 294, September 2001, page 3; QQ.119-121. Back

143   Q.120. Back

144   Q.275. Back

145   Q.329. Back

146   Ev154 Appendix 2 paragraph 6. Back

147   Q.183. Back

148   Ev47 paragraph 2, QQ.153,158 Back

149   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

150   Opinion Research Business survey carried out on behalf of Basic Skills Agency - Back

151   Q.23. Back

152   Ev120 Annex 1. Back

153   Q.396. Back

154   Ev116 paragraph 19. Back

155   Q.29. Back

156   The total expenditure of the DfES in 2001-02 is expected to be more than £23 billion. Back

157   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

158   HC 304-v, Q.360. Back

159   HC 304-v, pages 99-100. See QQ.522 and 523. Back

160   Ev117 paragraph 22. Back

161   Q.259. Back

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