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House of Commons

Thursday 14 March 2002

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]


City of London (Ward Elections) Bill (By Order)

Order for further consideration, as amended, read.

To be further considered on Thursday 21 March.

Oral Answers to Questions


The Secretary of State was asked—

Individual Learning Accounts

1. Mr. John Baron (Billericay): What plans she has to compensate individual learning account training providers who have suffered financial loss as a result of the closure of the scheme. [40719]

3. Mr. Stephen O'Brien (Eddisbury): How many providers have been investigated by her Department in relation to abuses of the individual learning account scheme. [40721]

The Parliamentary Under-Secretary of State for Education and Skills (John Healey): The Department has no plans to compensate learning providers in relation to the closure of the individual learning accounts programme.

The Department's special investigations unit has completed one case and is investigating a further 105 registered learning providers. In addition, the police are investigating another 66.

Mr. Baron: I thank the Minister for his response, but I believe that that answer is shameful. Given that it is generally recognised that because of poor controls the Government allowed this initiative to turn into a shambles, which has cost £65 million in fraud, left many students in the lurch and forced many learning providers to shed jobs—and, in some cases, go out of business altogether—why will the Government not honour their responsibilities and at least compensate those learning providers who invested in this initiative but rue the day they ever took the Government at their word?

John Healey: Quite simply because the Government's first duty is to safeguard public funds and to look after the interests of individual learners. The business decisions

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that learning providers took to take part in the programme were a matter for them. There was no contract between the Department and learning providers, and the legal advice that the Department has is very clear.

Mr. O'Brien: The Minister has had two weeks' notice of my question yet all he produces is that vacuous answer. Is it any wonder that the Government's complete incompetence has rendered them impotent in the light of this ridiculous scandal over ILAs and the alleged fraud, with only one completed investigation?

Will the Minister try to answer an easier question? Evidence given recently by his officials to the Select Committee on Education and Skills showed that his Department had no control over ILAs. Will he now admit that he has responsibility for the waste of an estimated £65 million of public funds? How many teachers could that have provided?

John Healey: The hon. Gentleman may have missed my answer, but I gave him precisely the answer that his question required. One investigation into learning providers has been completed by the Department and a further 105 are under way. Some 66 investigations are being undertaken by the police, 11 further cases are being discussed with the police, and 44 arrests have been made, with 13 people charged and one convicted. That is an effective early start to mop up the problems that we had with the individual learning account scheme.

If the hon. Gentleman reads the Select Committee evidence, particularly mine—I have given evidence before it three times in about three months—he will see that I explained clearly that the problems in the scheme began to arise and accumulate over the summer. We took action during that time to tighten the scheme's rules and operation. We were simply unable to do so within the design of the scheme and were left, regrettably, with no option but to announce on 24 October that we had to close the scheme to protect public funds and the interests of individual learners who were being abused by the minority of learning providers taking advantage of the scheme.

Judy Mallaber (Amber Valley): One of the most rewarding jobs that I have undertaken as a Member of Parliament has been to present education certificates to trade unionists who have been helped by their union to take up education opportunities for the first time in many years. They have often been helped by individual learning accounts. I urge my hon. Friend to introduce a successor programme to ILAs as soon as possible and also to take steps to encourage the development of union learning representatives who are often in the best position in the workplace to encourage non-traditional learners to take up education opportunities.

John Healey: My hon. Friend may know that alongside the task of managing the closure of the ILA scheme and getting to the bottom of the problems that we had with it, we are working very hard on the design of a successor programme. My right hon. Friend the Secretary of State and I have both confirmed in the House that there will be a successor scheme. In the design of that scheme we are conscious of the fact that unions, often through union learning representatives in the workplace, have made imaginative use of ILAs and, by so doing, have helped

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reach target groups such as part-time workers, older male workers and shift workers whom we have been unable to reach within the lifelong learning system.

Alistair Burt (North-East Bedfordshire): The Minister's belated understanding of the fact that his Department has a duty to protect public funds caused a sharp intake of breath and a reference to the Trade Descriptions Act. Who does he think has been most damaged by the disaster with individual learning accounts? Is it the students, the learning providers, or the Government themselves, who, in pursuit of yet another lazily conceived manifesto target, have lost the confidence of everyone they needed to make a perfectly good idea work?

John Healey: The hon. Gentleman misses the point. Individual learning accounts certainly encouraged new learning and brought new business to learning providers. I am conscious of the fact that both groups are affected by our regrettable, but inevitable, decision that we had to close the scheme. If, with hindsight, the hon. Gentleman is saying that it was so clear to so many people for so long that there were problems with the ILA scheme, why was it that from the general election until 24 October when we announced the closure of the scheme, only one parliamentary question on ILAs was tabled by Opposition Members? The hon. Gentleman and his colleagues on the Conservative Front Bench did not ask a single question.

Student Financial Support

2. Mr. David Laws (Yeovil): What recent representations she has received regarding the review of student financial support in higher education. [40720]

The Secretary of State for Education and Skills (Estelle Morris): We have received correspondence from a range of individuals and organisations. We will be taking their opinions into account as we develop our policy.

Mr. Laws: Will the Secretary of State take this opportunity to congratulate the Liberal Democrat-Labour Administrations in both Wales and Scotland on their decisions to bring back maintenance grants for students on lower incomes?

Estelle Morris: The decision was properly taken by the Assembly. I note that that is the way it has chosen to deal with the issue—I will say no more and no less than that.

Mrs. Lorna Fitzsimons (Rochdale): Will my right hon. Friend consider the people who study for higher education in a further education setting, in particular those whom we are desperately trying to get into higher education and who have child care needs? Under the present funding formula, such people cannot receive any contribution towards the cost of child care whereas if they were studying in a higher education setting, they could do so. Will she also assure me that she will take no lectures from the Opposition parties? When in power, they spent all their time trying to do down students and student funding.

Estelle Morris: My hon. Friend has a fair point. In this country, there is a long-established tradition of supporting

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students in higher education, but she is right to point out that traditionally students who go into further education have not received that level of personal support. Since 1997, the Labour Government have invested a great deal in child care support for students in further education as well as for those in higher education. Given her interest in the matter, she will recognise that. I have no doubt that in future years, as we progress our wish to ensure that 50 per cent. of the under-30s have experience of higher education, many people will come through non-traditional routes such as FE colleges. Clearly, their needs must be part of our thinking in the medium and long term.

Mr. David Rendel (Newbury): Does the Secretary of State agree that, if and when grants are reintroduced in England, at least part of the cost should fall on the general taxpayer, since all taxpayers benefit from getting more students from less well-off backgrounds into higher education, and that the rest of the costs should be borne by graduates who go into good well-paid jobs rather than by upfront tuition fees?

Estelle Morris: The hon. Gentleman is making the case for a graduate tax, I think. What is clear is that funding students in higher education has to be a combination of contributions from the Government, who have the responsibility, the learner who is the biggest gainer and from the family. We are looking into how to achieve that combination. Clearly, those are the three sources of income and that will remain the case.

Gillian Merron (Lincoln): May I tell my right hon. Friend that at a meeting with students at the university of Lincoln last week to discuss student finances, I was struck by the fact that their perception of the amount to be repaid on their loans was far in excess of the reality of the repayments? Will she ensure that the review looks into ways to get clear and accurate information to would-be students as well as actual students and their families, so that people are not unnecessarily put off going to university?

Estelle Morris: My hon. Friend makes a valid point. Another point that is often misunderstood is that while people are not working, they do not have to repay the loan. Indeed, some of the changes that my right hon. Friend the former Secretary of State for Education and Employment introduced following the 1997 election have made repayment far easier than was formerly the case. One misunderstanding is that people think they are paying all the fees, if they pay a fee at all. In fact, those students who pay fees—even if they pay the maximum contribution—pay only a quarter of the total amount and the state picks up the remaining three quarters.

Mr. Jim Cousins (Newcastle upon Tyne, Central): I congratulate the Government on reintroducing grants last autumn in the form of opportunity bursaries. Between 400 and 500 such bursaries have been awarded to students in universities in the north-east of England. However, I have spoken to many of those in receipt of the bursaries and can tell my right hon. Friend that the basis of any future student grant scheme will have to be much broader

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and wider than the opportunity bursaries, whose tests of parental income and parental experience of education are drawn far too narrowly.

Estelle Morris: As my hon. Friend knows, the opportunity bursaries were initially payable in the excellence in cities areas. If he casts his mind back four years, he will recall that we started the excellence in cities programme in six urban areas; it now covers a third of all the country's secondary schools. The opportunity bursaries have been widely welcomed: from a £36 million fund, a grant of £2,000 has been paid to students whose family income is less than £20,000. Such students are often the first generation to experience higher education. I have heard my hon. Friend's comments, however, and no doubt as part of our comprehensive spending review considerations we shall look at the success of the opportunity bursaries and reflect on whether they are a good form of further Government investment.

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