Training and Enterprise Councils (Hansard, 12 November 1991)

Earl Howe
My Lords, TECs are private companies engaged in training, education and enterprise with a performance based contract with my right honourable friend the Secretary of State. There are no proposals to change these arrangements.

§ Lord Dormand of Easington
My Lords, that is an even more complacent Answer than we are used to on this side of the House. Are the Government giving urgent consideration to the most serious criticisms of TECs which have been made by the Auditor General and by the Commons Select Committee on Employment? Is the noble Earl aware that one of the criticisms made by the Auditor General is that a sum of £24.5 million has been paid to trainees who have not regularly or even at all attended courses organised by the TECs? There are equally devastating comments made in the report. What is the Government's response to the replies to the Select Committee from 60 of the 82 TECs which are now in existence, which say that the training guarantees—the core of the TECs—to youth employment and long-term employment are simply not being met because of the shortage of funds?

Earl Howe
My Lords, I hope I can reassure the noble Lord on both those points. The National Audit Office report is being taken very seriously by my department. The report says that in some cases a lack of comprehensive attendance records means that some payments might have been made to training providers without supporting evidence of trainees' attendance. We arc anxious that the Government should get full value for money, and that all payments are supported 472 by proper evidence. Having said that, the report contains figures and comments which are some months old. The auditors have seen and noted a marked improvement in all areas of procedure and record keeping since TECs became operational last year.
Turning to the noble Lord's second point about the Select Committee report, again I stress—and I hope reassure the noble Lord—that the YT guarantee is being met. Furthermore, the Government are fully committed to that guarantee. It is the top priority for each individual TEC to ensure that its local arrangements are effective to meet the guarantee, but no TEC will be prevented by lack of resources from meeting the guarantee. Many TECs are saying that school staying-on rates seem to have turned out higher than expected. That is a welcome development and is taken into account when setting budgets.

§ Lord Mellish
My Lords, the noble Earl will know that the Government have taken some action which has held up the progress of, for example, the Construction Industry Training Board. The CITB has a wonderful reputation, so much so that the Government themselves have paid tribute to it. Yet by their action they have delayed matters. Do I understand from the noble Earl's reply that no further action is to be taken against the TECs and that they are to be allowed virtually carte blanche to do what they will?

Earl Howe
My Lords, TECs have considerable autonomy to manage their own affairs and their own budgets within certain strictly defined limits. For example, there is a 5 per cent. latitude on switching funds between budgets. Therefore, it is a matter for each individual TEC to decide how those funds are allocated within the limits that I have mentioned.

§ Lord Holderness
My Lords, has my noble friend been able to reach a decision on the proper relationship of the TECs with vocational training for disabled people? If not, can he say when he may be able to do so?

Earl Howe
My Lords, TECs are contractually bound to make appropriate provision for trainees with special training needs. The guarantee group in YT and the guarantee and aim group in employment training include substantial numbers of people with special needs who thereby receive priority help. It is for TECs to decide with whom to contract in order to meet the training and enterprise needs of their locality. They will make that decision on the basis of quality, the appropriateness of training for individuals and value for money. What matters is that those needs are being met effectively.

§ Baroness Seear
My Lords, is the noble Earl aware that many organisations, particularly those involved in the provision of training for those with special needs, are having great difficulty due to the late payment of money by TECs? Is he further aware that the Government have made available capital funds to deal with such cash flow problems but the TECs are refusing to use them for that purpose, thereby causing 473 great disruption and serious hardship to the organisations concerned? Since that capital fund is public money, are not the Government responsible for seeing that it is used in the way intended? Does the noble Earl not agree that the answer to the question, which has been raised before, that it is for the TECs to do what they like with the money, is inadequate in view of the purpose for which the money was given to the TECs?

Earl Howe
My Lords, I am grateful to the noble Baroness for drawing my attention to those points. I was not aware of them. I shall make sure that they are brought to the attention of my right honourable friend the Secretary of State.

§ Lord Peston
My Lords, the noble Earl is quite right to say that the TECs are private enterprises. However, they were invented by the Government and are the Government's training flagship. Can the noble Earl say what is the nature of the contractual arrangement? Some TECs are doing quite well but many are doing very badly indeed. Can the Minister tell the House what is the mechanism for making those TECs which fail to meet their contractual obligations rectify matters? For example, can a TEC be made bankrupt? Can the board be fired? What is the mechanism for making the system work?

Earl Howe
My Lords, it has always been the Government's view that the relationship between the department and TECs would need to evolve and develop over time as the full network comes into place. The review which is now being undertaken is giving effect to that view. To speculate on TECs coming to an end or going bankrupt is premature. I do not believe that that will ever occur. However, in the event of schemes closing, other TECs would endeavour to take up the slack; and there would also be referrals to regional offices.

§ Lord Glenamara
My Lords, can the noble Earl give a more specific answer to the question which was asked by the noble Lord, Lord Holderness? Can he give any assurance to the four colleges which are engaged in training the disabled, one of which is in Durham? Those colleges are very apprehensive at present. If the noble Earl is not prepared for the question, would he write to me and the noble Lord, Lord Holderness, about the matter?

Earl Howe
My Lords, I shall be happy to write to the noble Lords on that subject.

§ Lord Williams of Elvel
My Lords, perhaps I may declare an interest as President of the Federation of Economic Development Authorities. Is the noble Earl aware that district authorities, which in many cases are the largest employers in an area, have no right of representation on these employer-led boards, and that the Government have consistently denied the local authorities the right to be so represented? Will the Minister undertake to look at the matter again in the light of the review? Furthermore, will there be a formal consultation process with the FEDA on the performance of the TECs?

Earl Howe
My Lords, I am very surprised by the noble Lord's comments. As he may know, guidelines are laid down as to the composition of the boards of TECs. Typically, one third of those boards is comprised of representatives of local authorities, local schools, voluntary organisations, and so forth. The suggestion of a policy of deliberate exclusion is new to me. However, I shall look into the matter and I thank the noble Lord for drawing it to my attention.

§ Lord Dormand of Easington
My Lords, am I right in assuming that in his reply to my supplementary question the Minister was saying that the Government accept the serious criticisms made by the Auditor General? If that is so, can the noble Earl say on behalf of the Government when those matters are likely to be corrected? After all, it is the second year running that the Auditor General has refused to confirm the accounts. Regarding the replies to the Select Committee to which I referred, I understand that in another place the Secretary of State said that those replies were out of date. How can those replies be out of date when most of them were made in September and October?

Earl Howe
My Lords, the Government take seriously the report of the National Audit Office. In defence of TECs it is fair to say that 1990–91 was a year of unprecedented upheaval when responsibility for delivering services shifted from my department to the TECs. However, the auditors noted a considerable improvement in the standards of record keeping and in general procedures.
As regards the noble Lord's second question, it is important to emphasise that the replies to which he referred, and to which his honourable friend Mr. Blair has also referred, are several weeks out of date. Events have moved on. The department has been in discussion with TECs about the YT guarantee with a view to agreeing any necessary actions. It has reached agreement with 18 of the 19 TECs referred to by the noble Lord. Discussions with the remaining TEC are in hand. The majority of TECs feel comfortable about being able to meet the demands placed on them. The essential point to note is that the Government are fully committed to the YT guarantee and will ensure that it continues to be met.