Career Development Loans (Hansard, 3 March 1994)

§ Mr. Donohoe
To ask the Secretary of State for Employment what is the annual cost to his Department of administering the operation of the career development loans scheme.

§ Miss Widdecombe
Administration costs associated with the career development loan programme were £212,000 in 1992–93, compared with £206,000 in 1991–92.

§ Mr. Donohoe
To ask the Secretary of State for Employment what arrangements exist for writing off the debt incurred by those applying for funding under the career development loan scheme.
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§ Miss Widdecombe
There are no arrangements for writing off career development loan debts. CDLs operate similar to normal unsecured personal loans and, as CDL literature points out, borrowers are responsible for repaying to the bank the loan and interest on it at the end of the repayment holiday period, currently the period of training and up to three months afterwards.

§ Mr. Donohoe
To ask the Secretary of State for Employment how many loans made under the career development loan scheme in each year since the introduction of the scheme were for courses with a duration of(a) less than three months, (b) between three and six months, (c) between six and 12 months and (d) more than 12 months.

§ Miss Widdecombe
The following table sets out the number of approved career development loans by course duration, for each of the financial years since the scheme was introduced nationally in July 1988.

Career development loans by course duration

Financial year Less than three months Three months and up to six Six months and up to 12 More than 12 months¹

1988–89 401 188 1,787 —

1989–90 842 369 5,286 —

1990–91 1,033 498 6,073 —

1991–92 1,543 788 8,233 —

1992–93 1,237 935 8,172 —

²1993–94 1,153 889 8,321 26

¹ CDLs for courses lasting longer than one year and up to two years were only available from April 1993 through local sponsorship by training and enterprise councils and local enterprise companies. From April 1994 the criteria for all CDLs will be extended to courses lasting up to two years.

² Figures for 1993–94 are as at 1 March 1994.

§ Mr. Donohoe
To ask the Secretary of State for Employment what is the annual cost to his Department of meeting interest charges on interest-free loans awarded under the career development loan scheme.

§ Miss Widdecombe
The Employment Department currently pays the interest on career development loans whilst the borrower is undertaking training and for up to three months afterwards. From April this year the Department will pay the interest during the period of training and for up to one month afterwards. Borrowers who are registered unemployed one month after completing training may apply to the bank to defer repayments for up to a further five months. During 1992–93 the cost to the Department of meeting interest charges was £3.4 million, compared with £2.8 million in 1991–92.

§ Mr. Donohoe
To ask the Secretary of State for Employment which financial institutions operate the career development loan scheme in conjunction with his Department; and what remuneration they receive for this service.

§ Miss Widdecombe
The Department operates career development loans in partnership with three major high street banks—Barclays, the Co-operative and the Clydesdale. Under the conditions of the scheme the Department agrees to pay interest charges on loans while the borrower is training and for up to three months afterwards. From April this year, the Department will pay the interest during the period of training and for up to one 865W month afterwards. Borrowers who are registered unemployed one month after completing training may apply to the bank to defer repayments for up to a further five months.
In addition, the Department agrees to pay the banks the value of defaulted CDLs up to an agreed percentage limit of the bank's CDL lending portfolio.
The Department also pays the banks a small administration charge, £45 plus VAT in each case, in connection with loans of less than £300 and costs associated with recovering moneys on defaulted loans. Total costs since the scheme began have been modest, £3,491 and £1,532, respectively.

Number of approved career development loans

Value of approved loans 1988–89 1989–90 1990–91 1991–92 1992–95 1993–94¹

Up to £500 211 347 334 658 609 613

£501 to £1,000 467 1,410 1,049 1,467 1,383 1,286

£1,001 to £2,000 612 2,064 2,906 3,068 2,752 2,379

£2,001 to £3,000 306 594 894 1,501 1,360 1,476

£3,001 to £5,000 780 2,082 2,421 3,870 4,240 4,622

Over £5,000² — — — — — 13

Total number of loans 2,376 6,497 7,604 10,564 10,344 10,386

Average value of loans £2,401 £2,417 £2,477 £2,643 £2,778 £2,911

Notes: ¹Figures for 1993–94 are as at 1 March 1994.
²CDLs for loans over £5,000 and up to £10,000 were only available from April 1993 through local sponsorship by training and enterprise councils (TECs) and local enterprise companies (LECs). From April 1994 the loan criteria for all CDLs will extend to £8,000.

§ Mr. Donohoe
To ask the Secretary of State for Employment what assessment his Department has made of the effectiveness of the career development loan scheme; what assessment has been made of the employment status of applicants to the scheme; what assessment has been made of the employment status of those who complete the scheme; and what types of courses were founded under the scheme.

§ Miss Widdecombe
The career development loan programme is monitored closely and includes follow-up questionnaires being sent to a sample of trainees three months after they have completed their training. The 1992–93 annual report on CDLs shows that with total public expenditure costs for CDLs amounting to £15.27 per training week, costs are much smaller than those associated with other publicly funded training programmes.
Currently, 30 per cent. of trainees are employed full-time at the time of applying for a CDL and a further 30 per cent. are registered unemployed. More than two out of three obtain jobs as soon as they finish their training.
A wide variety of courses are supported by CDLs, ranging from postgraduate to sport and tourism. Further information on CDLs, including a list of the varying types of courses undertaken, can be found in the 1992–93 annual report, a copy of which is available in the Library.

Career development loans by course duration
Financial year	Less than three months	Three months and up to six	Six months and up to 12	More than 12 months¹
1988–89	401	188	1,787	—
1989–90	842	369	5,286	—
1990–91	1,033	498	6,073	—
1991–92	1,543	788	8,233	—
1992–93	1,237	935	8,172	—
²1993–94	1,153	889	8,321	26
¹ CDLs for courses lasting longer than one year and up to two years were only available from April 1993 through local sponsorship by training and enterprise councils and local enterprise companies. From April 1994 the criteria for all CDLs will be extended to courses lasting up to two years.
² Figures for 1993–94 are as at 1 March 1994.

Number of approved career development loans
Value of approved loans	1988–89	1989–90	1990–91	1991–92	1992–95	1993–94¹
Up to £500	211	347	334	658	609	613
£501 to £1,000	467	1,410	1,049	1,467	1,383	1,286
£1,001 to £2,000	612	2,064	2,906	3,068	2,752	2,379
£2,001 to £3,000	306	594	894	1,501	1,360	1,476
£3,001 to £5,000	780	2,082	2,421	3,870	4,240	4,622
Over £5,000²	—	—	—	—	—	13
Total number of loans	2,376	6,497	7,604	10,564	10,344	10,386
Average value of loans	£2,401	£2,417	£2,477	£2,643	£2,778	£2,911