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6.30 pm

Mr. David Chaytor (Bury, North): I want to focus on the Government's response to the Committee report which was published a few days ago. Other hon. Members dealt effectively with the criticisms contained in the original Committee report.

A couple of points of detail have not been raised. First, paragraph 24 of the Government's response contains an error. It is entitled "Remedial measures". It seems that there has been a transcription error because of a mistake in the title of the corresponding paragraph in the Committee report which no one spotted. The title should be "Intermediaries".

Secondly, there is an ambiguity in the Government's response. On the one hand, the response was good. It dealt point by point with the recommendations and conclusions of the original report, in contrast to some previous responses to our reports which were, to be kind, generalised. On the other, however, although the response was detailed and specific it did not deal with the full horrors of the situation.

Paragraph 5 of the response refers to the cap on the 80 per cent. discount. What is not made clear is that the cap was introduced several weeks after the launch of the original scheme. Paragraph 18 of the response—I do not recall discussing this in Committee—tells us that the cap of £200 on the 80 per cent. discount was introduced within seven weeks of the scheme's launch because the unlimited amounts of money available had been exploited and £22 million had been paid out in course fees that cost more than £200.

The total overspend on the scheme is estimated to be about £60 million on an original budget of £200 million, an overspend of just under 30 per cent. We now discover, however, that more than 30 per cent. of that overspend was incurred within seven weeks of the launch of the original scheme. That is significant new information which we did not have during the Committee's deliberations and it draws our attention to the importance of tighter budget monitoring in the Department.

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The permanent secretary hinted at that when he came before the Committee yesterday, although the focus was on the need to get a grip on the Department's underspend. The lesson is that financial monitoring needs to consider possible overspends as well.

In concentrating on three issues, I hope that I do not cover old ground, but instead give pointers for the future. The first is the scheme's objectives. One fundamental reason why the scheme got into difficulties was that the original objectives were not only confused but contradictory. There was a desire to open up the market and bring new providers into it, for which a generous subsidy was provided, and a desire to extend opportunities for lifelong learning to the whole population. There was also a specific objective to help people who were unable to afford further training or education.

The number of people for whom cost is a barrier to continuing their education is comparatively small—it is a minority of the population. Yet by making the scheme universal, we offered a subsidy to the public at large. A more focused objective on those who are most reluctant or least able to continue their education beyond school age is the right approach.

I shall digress briefly. I do not find the Opposition's argument about the use of the subsidy terribly convincing. They criticise the Government by saying that the Department was spraying cash around like a hosepipe out of a window, criticise them for switching off the hosepipe and then criticise them for not switching it on again to compensate for the problems caused by the switching off. It is not altogether a logical—

Mr. Bacon: Will the hon. Gentleman give way?

Mr. Chaytor: I am afraid that I will not give way because time is pressing.

The Opposition argument is not logical or convincing. However, I do think that the nature and eligibility of the subsidy are crucial. Therefore I was very pleased that my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis) and the hon. Member for South Norfolk (Mr. Bacon) both referred to recommendation 73 in the Committee's report, which suggests that a future scheme should be targeted explicitly at those adults whose existing level of qualification is level 2 or below. I am pleased that they supported that, not only because I was responsible for moving the amendment to the original draft of the Committee report, which is now in the Committee report, but because I consider that that is the most effective use of public money.

I also want to speak about the mechanism. The time may have come to say that the emperor has no clothes. That is not because we adopted the scheme rather uncritically from an original idea of the Liberal Democrats—there are lessons for all of us in that—but because the original pilot scheme, run by the training and enterprise councils, concluded explicitly that there was no demand for a savings account for learning.

There had been several discussions with financial institutions to explore the issue; the heart of the original concept of the ILA was a savings account for learning, not simply a subsidy. The experience was that there was no demand for it. The public did not see the purpose of

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it. Perhaps the mechanism was too complex; perhaps it was an idea whose time had not yet come, but I now suspect not. Even though the pilot schemes proved the lack of demand pretty conclusively, the Department went ahead with the concept of the account, although it became simply a means for giving a discount on courses.

Therefore, although the idea of the individual learning account is attractive—I am sure that there is the germ of a good idea there—we must ask whether it would not have been, and will not be in future, simply much better and more efficient to provide fee remission to eligible designated categories of students for designated categories of courses. I flag up that suggestion and hope that the Minister might consider it in his deliberations on the future scheme.

The third point that I want to raise concerns assumptions about stimulating the market. Having learned more about the ILA saga, I do not accuse the Department of incompetence as some people have done, but I do say that it was remarkably naive in its understanding of the behaviour of the private sector in post-16 educational training operations.

Various scandals operated throughout the post-16 sector from 1993 onwards, and no doubt before to a lesser extent. They were well publicised abuses of the system, whereby huge amounts of public money—far greater than the amounts lost in the ILA affair—were expropriated by different means. After all that had happened, particularly between 1993 and 1997, it was naivety of the highest order to assume that providing a universal subsidy to bring new entrants into the market would not equally be open to abuse and exploitation and would not be effectively a blank cheque for some cowboy operators. Therefore, a rigorous accreditation system for providers must be at the heart of any new scheme.

In my concluding minute, I shall flag up other points that I would have liked to discuss at enormous length. The first concerns the assumption in the Government's response that for the new learner entering the scheme, it was like entering any other marketplace, and it was therefore his or her responsibility to make a judgment about the quality of the product on offer. That is unacceptable. The motto "caveat emptor" is not appropriate for people coming back into education. We should build into a new scheme better advice and guidance for new adult learners.

Secondly, the courses on offer, as well as the providers, should be more rigorously accredited. Thirdly, we should consider the introduction of staged payments. If the provider can collect his money simply by enroling the student, that is a blank cheque for the cowboy operator. Staged payments, which are accepted practice in public sector post-16 education, ought to be accepted practice in private sector post-16 education.

Finally, I raise the question, which emerges strikingly from the Government's response, of the number of consultants other than Capita who were employed by the Department at various stages in the development of the scheme. I have counted six who are referred to in the report. It would be interesting to know the cost of employing the consultants whose advice was sought and who were asked to evaluate various stages of the scheme. Perhaps I will table that some time as a written question.

I endorse what several of my colleagues and several Opposition Members said about the role of Capita and the assumption that Capita will carry on as before.

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[Interruption.] I am conscious of the time; this will be my final point. That sends a bad message to learning providers who feel that they have been cheated by the abrupt ending of the scheme. It seems that there is one rule for Capita and another rule for genuine learning providers. That is a problem which I hope that the Minister will address.

6.42 pm

Alistair Burt (North-East Bedfordshire): This has been an excellent debate. I am sorry that there was not time to call all the members of the Education and Skills Committee who would have liked to speak.

I congratulate the hon. Member for Huddersfield (Mr. Sheerman) on securing the debate and on the quality of the report. Through him, I thank all the members of the Committee, who performed such a valuable service.

As we heard, the report was hard-hitting, correctly describing an appalling fiasco of finger-in-the-wind targets, failure to heed advice, failed delivery and a walk away from the debris of lost businesses and jobs, as well as—worst of all—the hurt caused through the lost hope and aspirations of those expecting to benefit from the scheme. Despite the constructive tone of the debate, we cannot forget how dreadful the experience has been for some people. What I have just described is the kindest interpretation of the Government's activity. I will come in due course to their self-serving and ineffectual response.

I welcome the Minister to his new responsibilities, although he is not new to the Department and can therefore expect us to show him slightly less mercy on the issue than would be usual. It has not escaped our notice that all those previously connected with individual learning accounts have moved on, their lips sealed, their silence the price of their promotion—the original Secretary of State and his junior Minister who set up the scheme, and the last junior Minister, now the Economic Secretary to the Treasury, who I am delighted to see in his place, and who is obviously well thought of by me and others for his hard work in connection with the scheme. He found the fiasco going on under his feet and stoically lived with it, in a manner that I understand all too well. However, the proper scrutiny of Government failure cannot be diverted because of decisions made in the Government's personnel department.

I shall make three quick points. First, I make clear our support for the concept of what the Government were trying to do—the expansion of individual learning to those who need it. That is why the failure has been so acute, as a number of colleagues commented—the hon. Members for Chesterfield (Paul Holmes), for Barnsley, East and Mexborough (Jeff Ennis), who described his area, where such work would have been particularly welcome, and for Bristol, West (Valerie Davey), and most movingly, my hon. Friend the Member for South Norfolk (Mr. Bacon), who spoke with passion and genuine anger, as he should, and produced a quote from Jesse Jackson of which we would all have been proud.

Secondly, we want to be positive. Of course, the report contains positive recommendations, but I shall not labour them because of time. Thirdly, this is a serious business and it is not my job to act as a ra-ra for a Government failure. I will not concentrate on the positive recommendations, although if we had more time, I would be pleased to do so. I am afraid that it is time to fix on

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the Government's response, as the excellence of the work of the Committee and of this debate has been ill served by a very poor response from them.

Let me explain why I feel so strongly about the response. The first page states:


Hold on a minute—the serious flaws that the Government identified were those with which the scheme had been set up in the beginning. That is what caused the problem. The Government cannot claim to be the good guys who spotted what was going wrong and acted.

The response goes on to describe what the Government have done since that time. First, we are told that they have been "managing the closure effectively". Let them explain that to all the people we have heard about, who were messed up because of the problems of dates and ending the system. They include people such as Mrs. Barbara Walsh of the Longridge teaching centre, who says:


Those hopes were dashed by the publication of the response yesterday. If that is managing the closure effectively, it is not very good.

Secondly, the Government say that they have been


They have not, because that has not been done yet either. Thirdly, we are told that they have been


As we have heard, however, the successor scheme may be up and running about a year after the closure.

That is just the Government's introduction. A series of comments suggest to the general public and the casual reader that, with hindsight, and having picked up on problems through experience of the system, the Government acted to deal with them. That is not true. The reason why the Government failed and why we are in our current position is not hindsight, but their failure to heed the advice that they were given on a variety of occasions about what they were doing. That is why public confidence in the scheme—and, alas, the Department—is at a low ebb.

Let me take a couple of examples. The hon. Member for Huddersfield, and my hon. Friends the Members for Billericay (Mr. Baron) and for East Devon (Mr. Swire), who spoke from personal experience, all raised the issue of compensation and spoke about the damage done in the market. Let us remember that the Government created that market. In paragraph 1 of their response, the Government admit that part of the intention of the scheme was to "attract new providers". Accordingly, they set up the market, but they have not dealt with the consequences of its complete destruction.


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