Local News
South Norfolk
  Individual Learning Accounts

free web page hit counter

This speech was given as part of a debate on Lifelong Learning in the House of Commons, on 11 December 2001

Mr. Richard Bacon (South Norfolk): I am pleased to have the opportunity to introduce a debate on lifelong learning, following the closure of individual learning accounts. The subject is important to many people, including the students who were able to use the scheme until the Government suddenly cancelled it. Many of them were elderly, from ethnic minorities, unemployed or people who had missed out in one way or another on the chance for an education and who were seeking to do something about it. They suddenly found that the courses that they had hoped to do were denied to them.

The subject is also important to the training providers, who had done what the Government asked and set up community-based schemes to deliver to people from all groups the benefits of access to computer technology, only to find that the Government suddenly closed down the ILA scheme. The subject is of equal importance to all taxpayers, as there are indications that tens of millions of pounds of public money may have been wasted and that there may have been widespread fraud.

I shall quickly summarise the points that have led to the present position. After two years of pilot programmes and transitional arrangements, the Government introduced the individual learning account scheme in September 2000. Under the scheme, the Government offered 150 to help adults who were seeking training. The Government awarded a 50 million contract to Capita plc to run the scheme through the ILA agency. There were warnings even before the scheme started that the scheme as proposed was flawed and would be likely to lead to abuse.

There were many such warnings, perhaps most notably from Mr. James O'Brien of Pitman Training Group, one of the UK's leading training providers, who wrote to the then Secretary of State for Education and Employment on 20 September last year, before the scheme was launched. In his letter Mr. O'Brien stated:

"We have expressed our concern both to DfES officials and to Capita plc that there was insufficient detail in the rules of the initiative. As a responsible training provider we worried that this lack of detail left the scheme open to abuse, which would not be helpful to either the initiative itself or the majority of the training sector."

The Government then introduced a cap on the value of the training at 80 per cent. of the first 250 of eligible training in any one year, although that did not seem to do much to stop the abuses that were going on.

There were repeated stories in the press about abuse of the scheme in the News of the World, The Mirror and the regional press. None the less, the Government continued to trumpet the scheme as a success. At the time, according to the Government, there were signs neither of a huge fraud, nor of such a massive increase in the take-up that the scheme required a rethink.

On 20 July, the Under-Secretary of State for Education and Skills, the hon. Member for Wentworth (John Healey), issued a statement under the exciting headline "Individual Learning Accounts to continue into new era", which began:

"Adult skills minister John Healey today confirmed details of how the successful introduction of Individual Learning Accounts over the last year will be followed up."

I see the Minister smiling; I do not know how many times he has heard that quote. It does not seem consistent with what happened next.

Mr. Christopher Chope (Christchurch): Does my hon. Friend know that one of my constituents was summoned to a focus group meeting at the Department on 25 July, and at that meeting told Department officials what scams were occurring? Since then, nothing seems to have been done about his specific complaints.

Mr. Bacon: I did not know about my hon. Friend's constituent, although it does not surprise me that the Government invited the constituent to a focus group meeting. We all know the Government's great fondness for focus groups. It does not surprise me that my hon. Friend's constituent explained to the Department that scams were going on. As I mentioned, people were doing that even before the launch of the scheme.

The scheme which the Minister described on 20 July as leaping and bounding towards the future, and which was described by the Secretary of State on 24 October as a "great success", was to be suspended from 7 December. The reason, she said, was that

"the rapid growth of the programme has exceeded all expectations, causing us to think again about how best to target public funds in this area and secure value for money."

The Secretary of State also mentioned her concerns

"about the way some ILAs have been promoted and sold."

She stated:

"There is growing evidence that some companies are abusing the scheme by offering low value, poor quality learning."

My hon. Friend the Member for Christchurch (Mr. Chope) may be reassured to learn that the notion that something was amiss was starting to percolate, although the Secretary of State said no more than that some people were abusing the scheme and offering low value, poor quality learning. The possibility that they were offering no learning at all, but removing the funds from the individual learning accounts before the people whose accounts they were had the chance to use them, was not mentioned.

The Secretary of State continued by saying that in order

"to protect the interests of individual learners"

she had

"decided to prevent any further take-up of ILAs",

although learning begun by existing account holders would continue to be supported, provided it was booked by 7 December. The Secretary of State assured learning providers and account holders that

"the decision to end the programme has not been made lightly",

a fairly terminal sentence which caused many training providers who had invested in the scheme a great deal of concern.

The scheme was thus closed to new applicants. That was an astonishing turn-about, considering what the Minister had been saying only in July and compared with three months previously, when it had seemed to be all systems go. However, the scheme did not close on 7 December, as the Secretary of State had announced. Suddenly, on 23 November, the Department put out an announcement that it had called in the police to investigate fraud and theft involving individual learning accounts, and that the ILA programme was to be suspended immediately, two weeks earlier than had been announced.

One of the key questions which remains unanswered, to which I hope the Minister will provide an answer today, is what new evidence emerged to justify the sudden change. If the fraud was on a fairly small scale, as we had been led to believe, why did not the Government deal with it and let the rest of the scheme go on intact?

I shall examine the effect of the sequence of events that I described on the various groups involved: first, the students whom the scheme was designed to benefit. I have a letter from a constituent, Mrs. Marion Ford, of Harleston in South Norfolk. Mrs. Ford applied for and was eventually sent a card with a membership number. On receiving the card, she immediately went to a local computer training firm in Harleston, only to be told via the ILA centre in Darlington that there were no longer any funds in her account.

As Mrs. Ford wrote to me,

"Apparently, someone had registered me on Tuesday 13th November, but I only received my card on Wednesday 14th November".

Mrs. Ford had been registered by a different computer firm for a course that she did not know about. Her letter continued:

"How did they get my name? How did they know I wanted to do a course? How many details of me have they got, without my knowledge?"

The case of Mr. Philip Geggie, which has been brought to my attention, shows that even meeting the Government's new deadline did not necessarily help. Mr. Geggie applied for an ILA account before applications were shut down, but his ILA number took several weeks to arrive. After the number finally arrived, Mr. Geggie applied for and paid for his software on 19 November, four days before what became the new deadline, 23 November, only to find that the ILA centre was denying his training provider, Carrerra's, access to the Darlington computer; so he could not be registered, although the Department had said that it would honour only those who were registered.

In an e-mail to Mr. Nick Parry, an official in the workplace learning division of the Department for Education and Skills, Mr. Geggie wrote:

"What you should be doing is to honour those people who are in the system and who have been in the system from prior to 7th December and penalise those who are abusing the system."

Mr. Parry replied:

"There has been some comment that ILAs could have continued if we had taken action to remove from the scheme those learning providers who were abusing it. You can be assured that if there had been a reliable way of doing this immediately, this action would have been taken."

That prompts the question of why the Department did not listen to the advice that it was given in the first place about ensuring that learning providers had approval first, before they undertook training. We have a right to ask what will happen to the good people who have done nothing wrong and who have been denied training, simply because of the failure of the Government to promote a robust scheme.

I had another letter from a Mr. Granville Powell, a constituent of mine from Wortwell in south Norfolk. Mr. Powell signed up for a course at the Suffolk Learning and Resources centre, just over the county border in Bungay, Suffolk. He had already done two computer courses and wanted to study for the European computer driving licence, as he had decided that it would probably help him to get a job. On receiving a letter telling him about the 7 December deadline, Mr. Powell rushed to sign up quickly, only to be told that all funding had been stopped anyway by the ILA centre in Darlington. He writes that he knew about the alleged fraud from the newspapers. However, as he eloquently puts it:

"Why should the excellent teaching people at the brilliant Bungay Resources Centre be punished because not enough checks were put in place from the start?"

That brings me to the second group of people who are affected by this fiasco: the training providers. Pitman Training Group states in its document responding to the suspension of the ILA scheme that it had expressed its concerns to Ministers and officials on several occasions, since before the launch of the programme. It states:

"Without minimum standards, anyone has been able to set up business as a 'training provider' with the consequences that have become so apparent over the past few months".

My own view is that it is just about understandable that Ministers might seek to take a light-touch approach to potential students. That is arguable. One could also argue that the lack of any completion thresholds for students, and the tying of at least part of the payment to the learning provider to such thresholds, has made it much easier for unscrupulous operators to take the money without showing any care whatever for the individual's learning experience.

Indeed, Pitman Training Group advances precisely that argument in its response document. Whether or not one agrees with such a view, one can at least see that there is an argument to be put for a light-touch regulation for customers, especially as they may lack confidence because of negative experiences with more formal education or training, or may wrongly feel that it is too late in life for them to learn to use new technology. That is at least an argument to be advanced, but I find it utterly incomprehensible that one would apply such a light-touch regulation or criterion - perhaps the best description would be a no-touch criterion - to the providers of the learning. Such an approach has two very predictable effects, both of which are bad. First, it guarantees that the quick-buck merchants, who have absolutely no concern for the students and are interested only in taking the money, will come steaming in for the kill. At best, students will get from such people a pathetically inadequate course consisting of one booklet that they could have bought for five or 10 quid anyway. At worst, their individual learning account numbers may be stolen. Secondly, many good training providers who are genuinely working to respond to Government policy are tarred with the same brush as the bad ones, which is quite wrong.

I shall mention some of the allegations that have been flying around. I do not know whether they are true; it is for the Minister to reassure us that they are not correct or to confirm the situation if they are. It has been suggested that at least one training provider was doing business of more than 1 million a week. Under the new 200 scheme rules, a provider would have to find 5,000 students each week - the equivalent of a small university - to generate such business. If that has been happening, one wonders what the paymaster in the Department was doing when he saw 200 going out of the door in one direction, 20,000 in another direction and more than 1 million in a third. Perhaps he did not know that that was happening, because it was all done by computer and nobody did anything but press buttons until it was too late.

Another allegation has been made by a banker who spotted an account that was set up in July and into which more than 2 million had since been paid. Apparently, that money came purely from the ILA scheme and there was no other source of income - not even the 20 per cent. of funds that one would have expected from the student contribution. It is alleged that, after the 2 million had dribbled in, the account holder requested that the sum be transferred to an offshore account. I have even heard it suggested that one dubious provider alone may have been responsible for busting the Department's budget, in so far as it appeared to have any budget or limit at all. Perhaps most horrible of all, is it possible that some of these tricksters kept just within the strict letter of the law, so that no action is possible against them?

Training providers have told me that they were approached by individuals attempting to buy large numbers of completed application forms. I assume that that was against the law. God help the Department if it managed to create a scheme in which even that was permissible.

Mr. Bill Wiggin (Leominster): Jane Davidson of the Welsh Assembly noted that the Assembly foresaw at an early stage that ILAs would need to be closely managed to ensure that there was minimal opportunity for fraud. How can it be that the Welsh Assembly saw the potential for fraud, but the Department for Education and Skills did not?

Mr. Bacon: My hon. Friend makes an extremely good point. It is extraordinary that the Welsh Assembly, reputable training organisations such as Pitman Training Group, the press and even the Office of the e-Envoy, whose annual report, published a few days ago, refers to the need to look out for the potential for computer fraud and to provide safeguards against it, could see the problem and the need for safeguards, while the Department could not. Everybody - the world and its brother - could see that need. Indeed, I understand that the structuring of the scheme in Wales has been so successful that there has been no abuse and that it runs to this day. It is extraordinary that all the parties to which I have referred could recognise the threat - and where possible, as in Wales, do something about it - but that the Department could not. I share my hon. Friend's astonishment at that.

I referred to the scam in which completed application forms were being bought. It appears to have worked in the following way. Scammers - if I may call them that - sought to buy for 40 each completed application forms bearing the name and address of the student. When scammers succeeded in obtaining forms, they would copy the names and addresses on to their own database.

They would then send the forms to the ILA centre at Darlington. Three days later, they would know that, all other things being equal, the ILA centre computer would have generated an ILA account number. They might then have hacked into the ILA computer - assuming that there is no truth in the rumour that someone on the inside looked at the computer because they were already inside the premises - and obtained the ILA number using the name and address. They would then have put the number through one of the companies that they had set up. At that point, the student would still be waiting for an ILA number to arrive in the post, but the funds would already have gone. That would certainly explain how the funds of my constituent, Mrs. Ford, were used up the day before she even received her ILA account number.

There have been so many examples in which funds appear to have gone before clients received their account numbers - in some cases, fake registration occurred as much as one month before - that there appears to be something in the allegations. As I said, it has even been suggested that there may have been corruption among individuals inside the ILA centre, which is run by Capita. That is a most serious charge that deserves to be examined at once, so that the position can be made clear.

I look to the Minister to refute these allegations or to tell us what has been going on if there is any truth in any of them. The point is that the genuine trainers have had their good names besmirched by a breed of rogue providers.

Mr. Paul Goodman (Wycombe): On that point, does my hon. Friend agree that bona fide operators such as my constituent Stephen Good have been left in an impossible situation? Inter alia, Mr. Good writes:

"Should we, or should we not, continue to retain our employees? If so for how long can we continue to pay them when all payment due from DfES has been indefinitely suspended and monies properly due for payment to us remain overdue and unpaid?"

Mr. Bacon: My hon. Friend makes an excellent point. I spoke to another training provider who asked precisely the same question about whether he should hold on to his employees. He was a computer manufacturer who had branched out into training because he saw that it was a good fit in terms of his business. His employees are relatively lucky, as there is at least a possibility that he will be able to retain them. That is not the case with all the providers. Even the business man to whom I referred said that he wanted clarity above all. He wanted clear information about what would and would not happen so that he could begin to make decisions. I am sure that the same is true of my hon. Friend's constituent in Wycombe.

Genuine providers have been besmirched by rogue traders. The real providers are varied and include big and small businesses. Mr. Neil Avery, who is part of the Hairnet computer training network, wrote to me from Taverham, near Norwich. Since January, he has trained 33 people who have opened ILAs in the Norfolk area. His success stories include a 21-year-old hospital cleaner from Norwich who wanted to improve her employment prospects, a disabled elderly lady from Norwich who can now keep in touch with her extended family through e-mails and the internet, and, I am reliably informed, a Norfolk county councillor who can better serve the community because she can now use computer technology.

The Internet Exchange was founded in 1994. It runs 38 stores throughout the country, from Glasgow to Southampton; from Cardiff and Bristol to Cambridge, as well as in London, where the company is concentrated. Many of the stores, especially in London, are in deprived areas. Indeed, of the 34 stores in England, 25 are located in wards that feature on the Department's list of the 2,000 most deprived English wards.

The Internet Exchange has invested in training and worked with organisations such as the British Computer Society and the Training Standards Council to ensure that its training is of the highest quality. It has a diverse customer base: 51 per cent. female, 49 per cent. male, 45 per cent. ethnic minorities, 15 per cent. lone parents, and 35 per cent. unemployed or looking for work.

Hon. Members may hear more this afternoon about Henley Community Online at a meeting in Portcullis house. It is a not-for-profit company that offers computer and internet access. Two hundred and twenty people currently participate in its courses. Like the constituent of my hon. Friend the Member for Wycombe (Mr. Goodman), the people who run Henley Community Online are worried about what will happen to them and their employees.

Carrerra's is part of the Digital Network group, which is based in the west midlands. Between 40 and 50 per cent. of its customers are either disabled, elderly or unable to train during the day. It has taken on an extra 40 staff and invested in training them in software at a new training centre, so that customers can have a high quality training experience.

All those people were doing the right thing; they were doing what the Government asked of them. The Government owe them tens, in some cases, hundreds, of thousands of pounds. What will happen to them? Will they go to the wall because the Government did not have the common sense to get rid of the rogue providers at the beginning? Must they put their staff on the streets and thus add to the Government's unemployment bill? Will they get the money that they are owed? Will a new Government scheme emerge? If so, when? In a nutshell, what steps are the Government planning to restore confidence in the training sector? We look to the Minister for clear, specific answers.

The Government have created an environment in which the genuine training providers distrust them, and the most vulnerable customers - those whom the Government are trying to help - are scared off by stories of rogue providers. Mr. James Golfar of the Internet Exchange wrote in his response to the closure of the ILA scheme that the Department's explanation to clients of the scheme's operation was poor. Many were unaware that the cards were issued by the Department, not learning providers. They thus wrongly blamed the learning providers for problems in their application process. Some, especially those for whom barriers to learning were high, became confused and disheartened as their applications were lost or rejected unfairly, or when unscrupulous providers took advantage of them. Yet the scheme was designed to help those people above all.

The Minister and his colleagues should not underestimate the good will and trust that have been destroyed by the debacle. I hope that the Minister realises that the Government face a crisis of confidence among legitimate, community-based training providers and that warm words will not be enough. We need specific proposals from the Minister about the steps that he plans to take. The Government should be in no doubt that there is precious little hope of helping the most vulnerable people if they do not restore confidence among those who can do the most to help, namely, the legitimate training providers.

I must mention the taxpayer's plight. I am grateful to the Minister's office for supplying me with the figures yesterday. However, as a member of the Public Accounts Committee, I cannot say that they are pleasing. I have written to Sir John Bourn, the Comptroller and Auditor General, and to the Chairman of the PAC, asking for ILAs to be examined urgently.

According to the figures that the Minister supplied me with yesterday, the Department budgeted 202.1 million for the ILA scheme over the two years 2000-01 and 2001-02. That includes the Department's budget allocations and 115.1 million which has been recycled from training and enterprise council resources. Department records show that expenditure on the programme in 2000-01 and 2001-02 to 23 November totalled 260.9 million. That is an overspend of 58.8 million up to that point.

The Minister said in his communication to me that significant payments are due for claims that learning providers have already made, and for committed expenditure for learning that providers on the ILA centre system booked before it was shut down on 23 November. He also stated that the police investigation into abuse and fraud means that access to the ILA centre system is not available and it is therefore not possible to estimate the additional financial commitment. That is a scary remark.

The Government know about an overspend of approximately 60 million so far but do not know how much more is to come. They have ignored the warnings of experienced professionals before and since the scheme was launched. They have also ignored many warnings in the press, and lost the trust of the genuine training providers without whom they have no chance of achieving their goals. They have been reckless with taxpayers' money and the people who suffer most are ironically those whom the Government most want to help.

The Government have a lot of answering to do. I look forward to the Minister's reply.



Go to top

Back to
Speech Index