Individual Learning Accounts (Hansard, 18 November 2002)

§ Baroness Blatch
asked Her Majesty's Government:
What was the extent of fraudulent activity during the administration of individual learning accounts.

§ The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland)
My Lords, the department's Special Investigations Unit has been asked to investigate 152 learning provider organisations. Ninety-nine of those cases have been passed to the police. The total amount paid to those organisations is £70.9 million. The department is withholding £10.8 million in outstanding claims. The precise extent of fraudulent activity will not be known until the investigations are complete.

§ Baroness Blatch
My Lords, I am grateful for that reply. However, does the Minister not accept any responsibility whatever for the department in this matter?

§ Baroness Ashton of Upholland
My Lords, as our permanent secretary made absolutely clear when he appeared before the Public Accounts Committee, we 139 do take responsibility. This was a brilliant scheme: 91 per cent of those who participated received a valuable learning experience. However, there is no question but that it was badly implemented.

§ Baroness Walmsley
My Lords, does the Minister accept that, before their withdrawal, ILAs presented a welcome respite from the tangled web of funding available to those seeking qualifications in early years education and childcare? Given the urgent need to recruit more workers into that sector and to improve the quality of provision, how urgently will the Government replace the system with a new fraud-proof system of ILAs?

§ Baroness Ashton of Upholland
My Lords, I agree wholeheartedly with the noble Baroness, Lady Walmsley. There are key issues here in terms of the advantages to those taking up that learning. We want to have a successor scheme, and we have decided to link this very firmly to our school strategy, which will be published next June. Work has already been undertaken to produce a successor scheme, which has now been fully integrated into the programme. I look forward to putting that before your Lordships' House.

§ Lord Marsh
My Lords, can the Minister give the House any indication of how long it took to discover this somewhat strange problem?

§ Baroness Ashton of Upholland
Well, my Lords, as noble Lords will be aware, and as we have mentioned in your Lordships' House before, we have been examining complaints from individuals which they brought to us in the preceding months. I can give the noble Lord some figures. In September 2000, we had five complaints; by October 2001, we had 8,448 complaints, by which time the number of accounts opened had reached 2,529,000.
It is quite clear that, towards the time that we took action, we began to see systematic activity that needed to be addressed. We undertook a variety of different schemes in order to try and prevent the situation. When it became very obvious, in October of last year, that we had to do something dramatic, we did exactly that and closed the scheme.

§ Baroness Sharples
My Lords, can the noble Baroness say when we will hear the true cost of this disaster?

§ Baroness Ashton of Upholland
My Lords, we know from our discussions with the police and with those investigating the matter that it could take up to two years to know the full extent. I have given some preliminary figures, but I speculate that the total figure could be up to £97 million. I am speculating only 140 because I want to give your Lordships as much information as possible. It is speculation and I would not wish noble Lords to see it in any other way.

§ Lord Roberts of Conwy
My Lords, can the Minister tell us what lessons the Government have learned from the poor implementation of this brilliant scheme?

§ Baroness Ashton of Upholland
My Lords, the noble Lord, Lord Roberts, makes a very important point. There is a great deal to learn, not only for the Government, but also for Capita, which administered the scheme for us. As I said, 91 per cent of people had a good experience, but we have a number of lessons to learn.
There is much to learn about how to make a scheme as unbureaucratic as possible without making it so unbureaucratic that fraud can occur. We need to make sure that we have the proper registrations in the process, and we need to make sure that we have a scheme that does precisely what this scheme attempted to do and was successful in doing—to attract those who would not go through the normal learning routes. We are looking very carefully at those lessons, and I am sure that the scheme which comes forward will be to the benefit of those whom the noble Lord would wish to benefit.

§ Lord Rotherwick
My Lords, is Capita liable for any of these losses since it was administrating the scheme? Will the Government again use Capita to administer a new scheme?

§ Baroness Ashton of Upholland
My Lords, decisions on who will administer such a scheme will be for a tendering process at the point at which we move forward with that. We are in discussion with Capita, particularly about the robustness of some of the systems it has in place. That is all that I am able to say to the noble Lord at this stage.

§ Baroness Blatch
My Lords, why is it that, in view of the failure by Capita in this matter, the Government have given a contract for criminal record checks to the same company?

§ Baroness Ashton of Upholland
My Lords, the decisions on Criminal Records Bureau checks were taken by the Home Office, and taken on the basis of the right kind of proposals being put forward in the normal tendering process. The Department for Education and Skills has a number of contracts with Capita which are running very successfully. There are particular lessons to learn in this case and we should all learn them.

§ The Earl of Listowel
My Lords, can the Minister confirm that there are more teachers in training than there have been at any time in the past 12 years, and that, this year, there has been a 7 per cent increase in 141 the number of teachers in training? Does she, in the face of this very sad episode, take some consolation in those facts?

§ Baroness Ashton of Upholland
My Lords, I do indeed take comfort in the number of teachers in training. I am sure that noble Lords across the House would welcome the fact that there are more teachers in training. This scheme was not applicable to teachers, but it was important because of the number of those who were consequently able to develop their skills.

§ Lord Swinfen
My Lords—

§ The lord Privy Seal (Lord Williams of Mostyn)
My Lords, we are now well out of time, I am afraid.