Individual Learning Accounts (Hansard, 17 February 2003)

§ Lord Davies of Oldham
My Lords, the department's special investigation unit has been asked to investigate 153 learning provider organisations. One hundred and nine of these cases have been passed to the police. To date, there have been 62 arrests, resulting in 10 people accepting cautions. Eleven others are awaiting court appearances. One person has been convicted.

§ Baroness Blatch
My Lords, I am grateful to the Minister for that detailed reply. I have two further questions. First, what is the latest figure for the amount of money that was fraudulently taken from 904 the taxpayer? Secondly, is anyone in the department responsible for what happened? If not, who is responsible?

§ Lord Davies of Oldham
My Lords, we think that £69 million has been the subject of possible fraudulent claims with regard to the money spent on the individual learning accounts. However, that is against a background of the programme massively exceeding expectations. We budgeted for a take-up of 1 million students in the first year, but had 2.5 million applications. As soon as we discovered that fraud had been perpetrated, we put an early stop to the programme. We recognise that that caused considerable distress to students and to those providers who were providing legitimately.

§ Baroness Sharp of Guildford
My Lords, given the figures that the Minister gave, he will be aware that many people saw the scheme as an opportunity to open up training for themselves. Has the department any proposals to replace the scheme, which was so ill thought-through, with one that will really work?

§ Lord Davies of Oldham
My Lords, let me first reassure the House that Ministers have learned the lessons of the previous scheme. A new one will be guaranteed to ensure that no recurrence of such fraud occurs. We propose to consult on the new learning and skills strategy in April, with a document for consultation, and to introduce the new proposals in June.

§ Lord Burnham
My Lords, my noble friend asked who was considered responsible.

§ Lord Davies of Oldham
My Lords, clearly there were mistakes in the department—that goes without saying. The scheme was a novel one, and it was almost unparalleled in government that such a demand-led scheme should be developed. There is no doubt at all that the scheme had flaws and failures, about which we learned subsequently. The administration of the scheme, and the company employed to carry it out, were another aspect of the problem. In consequence, £1 million of the £2.5 million to which it was entitled was withheld, and £1.5 million was paid.

§ Lord Brooke of Sutton Mandeville
My Lords, the Minister referred to the expectation of a take-up of 1 million and an outcome of 2.5 million. However, did not providers encourage the large number of extra people to join? The scheme was flawed in that it did not provide a safety net to prevent that happening.

§ Lord Davies of Oldham
My Lords, fraud on that scale meant that some providers stimulated people to apply, through various strategies, for the advantage of taking the money without providing the service. However, of that 2.5 million, 91 per cent received satisfactory training and gave a satisfactory rating to the programme. Therefore, in terms of delivery, the programme was a considerable success. The fraud, however, leads to the inevitable embarrassment.

§ Lord Campbell-Savours
My Lords, is it not true that we do not always learn the lessons that we should from the past? In the 1990s, on several occasions, these training companies were caught out doing precisely what they did on this occasion. Indeed, the Public Accounts Committee in another place held inquiries into their activities and found fault. If I recall correctly, a decision was made to prosecute a major training company only three years ago, on a similar issue.

§ Lord Davies of Oldham
My Lords, I think we would all recognise that training involves the Department for Education and Skills in a particular relationship with a very large number of private providers, and that a very large number of people train effectively and efficiently in this country—hence the previous administration's difficulties, which my noble friend indicated, with training and enterprise councils. I think that we would all recognise the element of difficulty and risk that attaches when resources have to be committed to private organisations to provide the service, whereas the students themselves, by definition, are not able in their early stages of training to judge the quality of that service. I can only tell my noble friend that we have learned some very sharp lessons from the individual learning accounts. Those lessons will guarantee that the new schemes which emerge in June obviate any of these potential dangers.

§ Baroness Walmsley
My Lords, is the Minister—

§ Lord Swinfen
My Lords, who was the Minister responsible—

§ The Lord Privy Seal (Lord Williams of Mostyn)
My Lords, it is the turn of the Liberal Democrats.

§ Baroness Walmsley
My Lords, is the Minister aware that, at £300, the value of an ILA is only about one-tenth of the cost of professional training for, for example, a computer training programme, which might cost about £3,000, and yet no other support is available for those over 25? There used to be a scheme whereby such training could be offset against tax. Do the Government have any plans to reintroduce such a scheme? Would the Minister also be kind enough to answer the question from the noble Baroness, Lady Blatch, about who is responsible?

§ Lord Davies of Oldham
My Lords, on the first question, we are not proposing to reintroduce the scheme which the noble Baroness identifies. However, I am totally mindful of the fact that, as she rightly identified and the individual learning account scheme indicated, there is enormous need and demand in our community for access to high-quality training. It is very much in our interest that we support our people in receiving additional training. The training will inevitably entail a mix of government initiative and support and private resources, as much of the training can be delivered only within those terms.
906 As for responsibility, the individual learning account scheme was developed immediately after the Government came to office and successive Ministers played their part in its development and oversight. I think it is recognised that, because of the huge uptake of the scheme in its very first year, what looked to be a roaring success story was subsequently identified as subject to potential fraud in a relatively small percentage of cases.

§ Lord Graham of Edmonton
My Lords, perhaps I may—

§ Lord Williams of Mostyn
My Lords, we are into the ninth minute now and there are three other Questions.