Individual Learning Accounts (Hansard, 18 July 2003)

§ Mr. Mahmood
To ask the Secretary of State for Education and Skills whether further education colleges will be able to claim compensation for losses due to the withdrawal of individual learning accounts. [125786]

§ Mr. Ivan Lewis
As a result of a report by the Parliamentary Ombudsman on a complaint from a learning provider, the Department has decided, in line with Government Accounting guidance, to offer reimbursement to registered Individual Learning Account (ILA) learning providers, including further education colleges, in respect of those learners who properly applied to open accounts before 24 October 2001; were committed to purchase ILA eligible learning with a specific learning provider; and who had not been issued with account numbers by the time the system closed down at 6.30 pm on 23 November 2001, subject to the provision of appropriate evidence.
All learning providers who were active in the period leading up to the closure of the programme have been invited to claim against these criteria.
These learning providers have also been invited to make claims for payment in respect of learners who had received their ILAs and had received learning, but that learning had not been recorded ILA Centre system before the scheme was closed.

§ Mr. Boswell
To ask the Secretary of State for Education and Skills what representations he has received since November 2002 in connection with the reintroduction of a scheme for individual learning accounts(a) in favour and (b) opposed to its revival; what safeguards were suggested to prevent fraud and waste; what responses he has sent to those making representations; and if he will make a statement on reasons for not proceeding with a successor scheme. [126799]

§ Mr. Ivan Lewis
Since November 2002 I have received 10 letters on the future of Individual Learning Accounts (ILAs), and replied to 6 Parliamentary Questions about ILAs. In addition, some of the 83 responses to our "Developing a National Skills Strategy and Delivery Plan: Progress Report" published on 26 March, including the responses from the CBI and TUC, covered ILA. Correspondents often supported some, but not all, characteristics of ILA, and a number of comments have been mutually contradictory. For example some wished to keep the wide range of providers in the original ILA scheme because they believed that that increased learner choice; others wished to restrict the range of providers to minimise wasteful competition between them and to protect quality. It is, therefore, not possible to categorise representations as simply in favour of, or opposed to, ILA; opinions are usually qualified. What is clear is that the principles of the ILA scheme are still widely supported.
As to safeguards, many correspondents suggested that fraud and waste in ILA would be minimised if the assessment process for learning providers was more rigorous. I agree with this view.
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Those who have written to me specifically about the future of ILA have had full replies dealing with the points they raise. Their comments, those of hon. Members, and those of the respondents to the Progress Report, have been carefully considered in making our decision on the future of ILA.
The reasons for not proceeding with a stand alone successor scheme are set out in paragraphs 4.31 and 4.32 of the White Paper "21st Century Skills: Realising Our Potential" (Cm5810) published on 9 July.

§ Mr. Boswell
To ask the Secretary of State for Education and Skills if he will make a statement on recent developments in the winding-up of the scheme for individual learning accounts, with particular reference to(a) the number of learning providers whose account has not been cleared, (b) the number of fraud investigations (i) concluded, (ii) in process and (iii) still under consideration, (c) the overall losses in fraud and waste and (d) compensation payable to learning providers and students after closure of the scheme. [126805]

§ Mr. Ivan Lewis
Since the closure of the Individual Learning Account programme on 23 November 2001, there remain 558 registered learning providers whose accounts have not been cleared as at 9 July 2003.
The Department's Special Investigations Unit has investigated 159 learning provider organisations. 100 of these cases were passed to the police. Police have made 78 arrests, which have to date resulted in charges being brought against 31 individuals, 18 of whom are awaiting court appearances. To date, five learning provider cases are concluded, resulting in either successful prosecutions or recovery of funds. The precise extent of fraudulent activity will not be known until all investigations are complete.
As a result of a report by the Parliamentary Ombudsman on a complaint from a learning provider, the Department has decided, in line with Government Accounting guidance, to offer reimbursement to registered learning providers in respect of those learners who properly applied to open accounts before 24 October 2001; were committed to purchase ILA eligible learning with a specific learning provider; and who had not been issued with account numbers by the time the system closed down at 6.30pm on 23 November 2001, subject to the provision of appropriate evidence. All learning providers who were active in the period leading up to the closure of the programme have been invited to claim against these criteria. Evidence received as a result is still in the early stages of assessment.
The Department has additionally previously reimbursed £51,843 to a total of 498 learners whose accounts were used without their consent, and who subsequently incurred additional expenses in order to pursue their chosen course of learning.