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  Individual Learning Accounts

This speech was given as part of a debate in the House of Commons, on 27 June 2002

Mr. Richard Bacon (South Norfolk): It is a pleasure to follow the hon. Member for Barnsley, East and Mexborough (Jeff Ennis). I agreed with just about everything he said.

I congratulate the hon. Member for Huddersfield (Mr. Sheerman) and his colleagues on a sensationally good report, produced at amazing speed. I am not a member of the Select Committee on Education and Skills, although as a member of the Public Accounts Committee I sat in on some of its hearings, which I considered to be a model for the way in which other Select Committees should do their work.

The report contains much that is worth mentioning, but I do not want to take up too much of the House's time. Let me just quote a couple of quick headlines. According to page 14,

"It should have been possible to design a scheme to encourage new providers that was not wide open to fraud or abuse by unscrupulous people posing as learning providers, but the lack of quality assurance made it almost inevitable that it would be abused."

The most extraordinary thing perhaps is that there were timely warnings. Perhaps most famously, Mr. James O'Brien of Pitman Training Group gave a warning on 20 September 2000. In criticising the lack of detail in a letter to the Secretary of State, he said:

"As a responsible training provider we were 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 report makes it clear that it was not clear who was responsible. Paragraph 154 says:

"It is not clear who was responsible for delivering the specific outcomes of the ILA project. There does appear to have been some confusion of responsibilities."

Paragraph 169 states that the objectives were not clear:

"We are not convinced that the Government had adequately clarified the precise educational and social objectives of the ILA scheme . . . With a target fixed in terms of the number of accounts . . . it was clear that the delivery mechanism had become confused with the educational objective."

I refer briefly to the role of Capita, as other hon. Members have done. The report says on page 16:

"Surprisingly, the potential expertise of Capita in designing systems to be fraud-resistant was neither called upon, nor offered."

Later, paragraph 97 states:

"We find it hard to credit that Capita, a major player in winning contracts for work contracted out to the private sector, should not have pointed out that, without a quality threshold for providers, the ILA was a disaster waiting to happen."

Capita is a major player in a variety of aspects to do with public administration. It provides advice and services to over 120 local authorities. It collects 1 billion in council tax and business rates. It administrates the teacher superannuation scheme, which has 1.2 million teachers and 400,000 teacher pensioners. It seems that there may be a role for the National Audit Office, in addition to the report to which the hon. Member for Huddersfield (Mr. Sheerman) referred, in doing a study specifically on Capita and its relationship with the public sector, both at local and central Government levels.

As a member of the PAC, I am particularly concerned about the management, or rather the lack of management, of financial resources. I say in passing that the former Minister with responsibility for adult skills, who is now Economic Secretary to the Treasury, has been helpful to me personally and I am sure to other hon. Members in keeping me informed of progress, although there has not been as much as one would have liked. One of the most shocking things that I heard was in the evidence presented on 28 November last year, which is not in the report, but which I have a transcript of from the internet. The hon. Member for Chatham and Aylesford (Jonathan Shaw) was probing the then Minister and not getting very far. The Chairman intervened and said:

"Minister, what you are being asked by"

the hon. Member for Chatham and Aylesford is

"surely there must have been an estimate of how much this would cost year on year, an estimate. He is just asking what sort of level of overshoot is there . . . What are the ballpark figures you are knocking around the Department on this?"

The then Minister replied:

"At the moment because of the uncertain number of individual learning account discount payments we are going to have to pay we simply cannot give you a sense, even a ballpark I regret to say, of what the possible overspends are going to be."

So there was no control of cash whatever. There was no control of information technology.

The Audit Commission report of February 1998 entitled, "Ghost in the Machine" says on the front page:

"The overall position shows little improvement . . . Frauds or cases of IT abuse often occur because of the absence of basic controls, with one-half of all detected frauds found by accident. Senior management still appears to lack a commitment to improving IT security and cracking down on abuse."

Why did no one in the Department for Education and Skills take notice of that?

In relation to basic project management and financial control, again, a very good report was published by the Cabinet Office in August 1994. On page 60, at paragraph 4.42, it says;

"A project plan is agreed to identify who does what and ensure different contributions are brought together effectively. It will set strict timetables, identify interim deliverables . . . establish clear performance measures . . . There will also be tight financial control throughout, with expenditure closely monitored."

That was eight years ago. Those are not new ideas; they are obvious, common-sense ideas, which many people who work hard to pay the tax that the Government sometimes waste would be able to come up with without too much difficulty. It is not surprising, therefore, that page 11 of the report reached the following conclusion:

"We regard the failure of the Department for Education and Skills to learn from mistakes made in the past by its predecessors and other Government Departments to be one of the most disturbing aspects of the ILA experience."

I conclude by referring to the hugely important role of the accounting officer. If permanent secretaries of Departments, who are accounting officers, are not happy with the steps that Ministers propose to take, specific provision is made within British Government to enable them to flag up that fact. A document published by the Treasury in 2001, entitled "The Responsibilities of an Accounting Officer", establishes that, if a course of action is being followed that a permanent secretary is unhappy with, he can require the Minister to issue a ministerial direction, if the Minister chooses to override the advice given. Paragraph 15 of the document states:

"If the Minister in charge of the department is contemplating a course of action involving a transaction which as Accounting Officer you consider would infringe the requirements of propriety or regularity . . . you should set out in writing your objection to the proposal, the reasons for your objection and your duty to notify the Comptroller and Auditor General . . . If the Minister decides nonetheless to proceed, you should seek a written instruction to take the action in question. Having received such an instruction, you must comply . . . but should then inform the Treasury"

and the National Audit Office. If that has been done,

"the PAC can be expected to recognise that the Accounting Officer bears no personal responsibility for the transaction."

For a project with at best confused policy objectives, and which was not properly planned or implemented, one might have thought that a very good case existed for seeking direction. I tabled a parliamentary question, asking what directions had been given since 1997. The answer was that 14 were given: one by the Department of Trade and Industry, one by the Northern Ireland Court Service, one by the former Department for Transport, Local Government and the Regions, three by the Export Credits Guarantee Department, three by the Ministry of Defence, and - to no one's surprise - five by the former Department of Social Security. However, from the Department for Education and Skills there was a deafening silence. The scheme ended up sticking a fire hose out of a window and spraying taxpayers' money over anyone who happened to walk by.

All hon. Members will agree that the saddest thing is that this was such a good and noble idea. During the 1988 Democratic national convention, Jesse Jackson said:

"I was born in the slum, but the slum was not born in me. And it wasn't born in you, and you can make it."

That should have been the message of this programme, but what kind of message is sent by its absence for nearly a year? The message is, "I was born in the slum, but I'll remain in the slum and I cannot make it because the people who should know better - the people who are paid to know better - cannot put in place basic project management, basic information technology security and basic financial controls." That is the sad saga.

I hope that the Minister will talk about when the new scheme will be introduced to help the people who need it most. I agree that it should be directed towards low achievers, in accordance with paragraph 73. We need some specifics. The Minister needs to tell us not only when the new scheme will be introduced, but how much money has been spent in total, and how much of that was fraud. He also needs to tell us about compensation for providers. People who trusted the Government and took them at their word have gone bankrupt, and have had to sell their houses. It is not enough for Ministers simply to say, "I'm sorry, but it's not our responsibility." There is evidence on the record from departmental civil servants that the attempt was made to create a market and expand the number of providers. That places a moral responsibility on the Department to help providers who got into trouble.

The Minister should also say sorry, and if he does all of the things that I asked him to do, he will earn the respect of the House. [Interruption.] He looks as if he is about to intervene. He leaned forward with great eagerness, and I shall listen to his reply with equal eagerness.


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