Select Committee on Education and Skills Minutes of Evidence

Examination of Witness (Questions 360-379)




  360. Minister, you will know, because you will remember as a distinguished member of this Select Committee in a slightly different form, that we have the power to request papers. I wonder if you would accede to a request of this Committee to have a record of any meetings that you had or your Department had with any other Department on ILAs. In other words what we particularly want to know is when you had the first meeting or any meeting with the Treasury to discuss the ILA. Would you be able to do that?
  (John Healey) Chair, I am more content to prepare for the Committee a schedule of the points at which we consider we took particular decisions and in particular to identify the points at which any discussions or notifications were made to the Treasury in advance of that decision we announced on 24th October.[4]

Mr Baron

  361. Minister, just coming back to the professional management of the ILA scheme in its entirety. What has concerned a number of us on the Committee is the fact that there is a deadweight factor, some would argue. We had Chris Hughes, the Chief Executive of the Learning and Skills Development Agency, tell the Committee ILAs were enormously popular but there was inevitably a deadweight factor in that they were going to people who were already involved in the system. Has any assessment been undertaken with regard to how many people were not in some form of structural educational training and has there been any assessment of the deadweight factor and take up of ILAs? I suppose the point is this, has this been getting to those people it should be getting to?
  (John Healey) I think there are two aspects, Mr Baron, to your question. The first short answer is yes we have done quite a significant study of people who have opened ILA accounts and those who have used them. Just over one fifth who opened the accounts and used them said they had not participated in any learning in any form for at least 12 months. One in six of those who use their ILAs—one in six—had no previous qualifications whatsoever. That is an indication of the degree of targeting that has been achieved through the ILA policy and scheme as a universal offer and links to the discussion we had earlier on about whether or not there is a case for redefining that universal offer to one that is more tightly targeted. The question of deadweight is I think less a question of who it goes to and more a question of—perhaps, Chair, I can just lay my Treasury background here—would those learners have covered the cost of that learning anyway and done that learning without the offer of the ILA account? That is I think the most important working definition of deadweight. In one of our evaluation exercises we asked users to comment on a proposition "With an ILA I would not have been able to pay for my learning." 44 per cent either fairly or strongly disagreed with that so in other words it gives you a hypothetical feel for perhaps 40 per cent of those who have used ILAs who would have pursued, or certainly could have afforded to pursue the learning that they undertook without an ILA support. 50 per cent, however, agreed they would not have been able to do their learning with the financial help of the ILA account.

  362. Does that not suggest there should be more careful targeting with regard to who we offer these ILA accounts to in order to ensure they are those who most need it.
  (John Healey) Yes.

  363. Is that going to be a factor or criteria you use in any sort of replacement scheme?
  (John Healey) It is one area, as I have explained I think to the Committee, we are looking at very clearly and carefully as part of the work we are having to do in terms of redesigning the policy for a prospective relaunch.

  364. In any replacement scheme that is going to come forward, I know it is very early days but having said that you must be thinking about a replacement or you should be. How are you going to move us forward? How are you going to target any replacement scheme to ensure it is aimed at those people who most need the help?
  (John Healey) You are right, Mr Baron, it is too early to tell you that because we have not weighed up and looked very carefully at what we can do. Just as an illustration. The current scheme was devised and introduced in England being eligible for anyone over 19 as long as they had not got a higher education degree. Sorry, it was designed in England for training which excluded higher education learning. In Scotland, Wales and Northern Ireland, they took a slightly different criteria for eligibility which shows the flexibility of the concept itself. Their cut off age was 18 and they allowed learning to be funded by ILA accounts for part-time higher education study. In other words, there was an element of different decisions about targeting in the four different areas. It is a very flexible concept. The decisions that we need to make on how we design it and how we target it, it is really, frankly, at the moment, as you suggest, too early to give you a definite answer on.

  365. It is going to be an intention in the future that anything like this we are going to target more?
  (John Healey) It is one of the areas for the redesign of the policy that we are looking very closely at.


  366. Minister, in terms of the overall picture, what this Committee I think is trying to probe is, on the one hand, I think every Member of this Committee is delighted about the whole concept of individual learning accounts and all the measures that show they were successfully taken up. We have our reservations that—I do not know why it is called the deadweight factor—the people you really want to put in ILAs, not enough of those are being brought in by the scheme and of course that makes it difficult for you in terms of meeting other targets in terms of tackling adult literacy and skills. In a sense what we are finding difficult, not just from your officers but from the Department's officers, is here is a scheme and all schemes are prototypes in a sense and you have to learn from them and if something goes dreadfully wrong you go back to the drawing board and you get it right and you manage again. What seems to be worrying the Committee, it is certainly worrying me as Chairman, is this change in the view of why it happened. I do not see what is wrong with the Department saying "Look, it is an interesting prototype. It was wildly too popular. It did not quite hit the target that was agreed in the original vision. It was costing a lot of money and on the margin there was a bit of fraud". I do not understand the two voices coming from the Government about this. If you put your cards on the table and state "These are the problems, as a Select Committee understand that." I think the Committee would understand it. We are getting a very strange message from the Department. We are sitting here, you used to sit on this side, we train some good people here. There is a potential one sitting behind you smiling at the moment. The fact of the matter is can you not see why you have had a session here dominated by the ILA because we are discontent with the sort of answers not just from you but from the Government on this flagship policy?
  (John Healey) I completely understand and, if I may say so, I think you are right to give this such close attention but what I hope I have been able to explain is that there were twin concerns at the time of the decision to withdraw the programme but the principal concern was about the protection of the proper use of public money, the protection of individuals who were putting some of their own money into their ILA supported learning and the fact that the steps we had taken clearly were not stopping the minority of providers that were frankly not just abusing and misusing the system but drawing down increasing amounts of public money by doing so. That seemed to me the proper basis for the steps we took. I have tried to explain how the two concerns perhaps combine but that is the principal and proper overriding concern, the misuse of the system by a small number of providers and the amount of public money that they were drawing down as a result of their activity.

  367. Minister, you can understand that the Committee is concerned, quite rightly, about the individual learning accounts such that it has really dominated the whole session. I have made a suggestion to the Committee, and I think we all agree, that we will continue only on this subject today and we will invite you back in the New Year to discuss the other aspects of your brief. Is that acceptable?
  (John Healey) I would be delighted to do that.

  Chairman: Right. We have another 15 minutes.

Mr Pollard

  368. I watched some trainees who are returning, these are mums bringing up families they were going back. They were keyed up by this opportunity, there is no question about that. It provided a useful skill to come back part-time. There was competence and confidence being pulled in. That competence has taken a knock, certainly locally, and I would guess nationally, how will we get that back? The second question, you have been very shy about saying when the son or daughter of ILA might come on stream. You must have an ambition or aspiration that you would like to see it back and that would send out a stronger message than you have been sending out already. Yes, it will come back, cast iron guarantee, at some time. The Forth Bridge is being continually repainted, we do not want to get into that in the future, so far in the distance it is of little consequence.
  (John Healey) I want to see this reintroduced as soon as we can. That is the reason why despite the very heavy pressure on the Department to deal with the current situation we are facing I have insisted that some of our officials in this territory continue to work on the plans and the development of policy for a future ILA style scheme. The reason for that is just as you say, Mr Pollard, this is actually a programme which has helped people with their skills and knowledge. From the evaluations that we did 84 per cent said as a result of using their ILA it has improved their knowledge and 59 per cent said it has helped them grow in confidence which was the other element. You placed quite proper stress on this. In a sense it is almost ironic, the confidence that here is a policy with a very important and positive impact which is actually growing through this period of operational difficulty as we hear more from a range of providers and a range of individuals including constituents through Members of Parliament actually we are getting a much better idea of the impact that their the scheme has been having than perhaps we had a month ago.

Jeff Ennis

  369. I do not have to tell you, Minister, the importance of a flourishing FE sector in places like South Yorkshire, which we both represent, in terms of future regeneration of South Yorkshire, particularly in light of the fact we have some of the highest levels of poor adult literacy and numeracy skills. Looking specifically at how the ILA scheme has operated, what proportion of ILA account holders were pursuing courses of basic adult literacy and numeracy, do we have statistics on that?
  (John Healey) At the end of October of the 2.5 million ILA account holders in England just around about 1.3 million at that point had drawn down the discounts in order to pursue learning. That was in part why when we took the decision and announced it on October 24th we did not stop the scheme in its tracks at that point because we wanted to give those other learners who had opened their ILA account some opportunity to sign up for training in order to be able to take advantage of their ILA account before we had to end the scheme on December 7th. We gave them that notice period. For ILA account holders they had until then to register with a provider, decide what training they wanted to pursue, register with a provider and make sure that provider booked that learning with an ILA centre. It did not matter whether or not they had started that learning because they could start it at any point within six months from December 7th and still be able to draw down that discount.

  370. Do we know what the success rate of pursuing that particular policy has been in terms of the continuing learning?
  (John Healey) In what terms?

  371. In terms of the number that are actually transferred?
  (John Healey) I cannot give you figures for the number following October 24th that have signed up or redeemed their ILA account off the top of my head but we could find that information out for you. I am happy to provide that.


  372. Thank you.
  (John Healey) We will be able to work on that as soon as the operation of the ILA centre is restored.

Jeff Ennis

  373. Just one further point in terms of the pursuance of basic adult literacy and numeracy skill courses. I guess there will be the regional variation details in terms of the take up of the type of course. I guess for South Yorkshire it is probably higher than the national average. Do we have any regional stats on that?
  (John Healey) No, we do not, but for adult literacy and numeracy, the adult basic skills that quite rightly you identify as a big problem generally but tending to be even more concentrated in areas like South Yorkshire where there is economic and social disadvantage, the ending of the current ILA programme will not affect provision of adult literacy and numeracy. That is an entirely separate strategy and an entirely separate programme which is fully funded and does not require the individual to contribute at all to the costs of learning and does not require the application of an ILA style top up in order to be able to pursue it.

Mr Baron

  374. Can I just come back very briefly to this issue about fraud within the system. You stated to us this morning that basically you were aware there was a small number of providers abusing the system. Why did you not then just close down that small number of providers and allow the majority, who were obviously providing a very good job, as judged by the enormous popularity, to carry on? Why did you throw the baby out with the bathwater?
  (John Healey) We had tried that approach during the course of the summer. The first learning provider we suspended as a result of allegations and an investigation into fraud was in June. What we found was that we simply did not have the wherewithal to be able to take strong enough action to stop them simply by applying the rules of the scheme as it was devised and undertaking that course of action.

  375. Can I come back to that? Surely if you had evidence that there was fraud, why did you not have the wherewithal to address those providers with the evidence that you had? I am still unclear why you had to close down the whole scheme. How was closing down the whole scheme going to provide that?
  (John Healey) Let me try to help by getting a sense of proportion and perspective. At the end of October, when I said that we had 2.5 million account holders, we had received, up to that point, 8,448 complaints just over a quarter of which were about misuse of the system. Those 8,448 complaints related to 404 providers. Of those 404 providers the vast majority had maybe one complaint raised against them and only a quarter of those complaints were about misuse of the system. I am giving examples of the other sorts of abuse that were registered. Those were the providers of principal concern. By November 17 that list of providers for whom there had been some complaint raised was 565 off the back of just over 10,000 complaints. Those within that category where either there were a number of complaints raised against them or for which the nature of those complaints meant that we had serious concerns number 86, and 60 of those were already investigated, five of them referred to the police, the others we are preparing to investigate, and of the cases of alleged fraud where we involved the police in helping us investigate, during the entire operation of the scheme for more than a year, that amounts to 39 arrests connected with three learning providers, with one person charged. So you have a span of activity which is an important context for this, I think, which is the run-of-the-mill sort of complaints you get from punters of any system or programme that you have; you have a proportion that is just over a quarter of those complaints that essentially are about non-compliance with the system, misuse of the system, and then you have a very small extreme end where you have serious allegations of fraud. This of course is all a description of the position before the end of last week. We simply were not able to control the activities, conduct the investigations, protect the proper use of public funds and the interests of individual learning account holders, by working within the system we had set up. It was a regrettable conclusion we came to. We tried the measures that we thought we could take during the course of the summer and early autumn. We came therefore to the conclusion that we had no other alternative than actually to withdraw the programme, which is what we announced on October 24.

  Mr Baron: I am conscious that time is ticking on, but perhaps I can ask a question about, that very quickly, Minister. As you were providing a lot of finance for all this, why could you not have sent a simple letter explaining to those providers that you had a serious doubt about that you were withholding finance until you had time to undertake a further investigation? That would have allowed the vast majority of providers who were obviously doing a good job to carry on and not cause the maximum disruption that this has caused. You had the power to do that, because you were not implying guilt, you were providing the finance, you had the power to say, "We're going to cut off finance for the time being until, in your best interest," you could have worded the letter, "these allegations are resolved."


  376. Could you come back briefly on that?
  (John Healey) Yes. Those were precisely the preliminary steps—an inquiry, investigation—that we took with providers that we were concerned about during the course of this summer. It did not allow us to close down their operations sufficiently within the way the system operates. We did precisely that, and it proved to be not strong enough action to allow us to control the situation.

Mr Baron

  377. Even though you were supplying the money?
  (John Healey) Yes.

Mr Chaytor

  378. Minister, had there been no allegations of fraud, would you have suspended the scheme?
  (John Healey) No, we would not have taken the decision to withdraw the scheme if we had not had the increasing concerns and increasing evidence of activity that was frankly a misuse of the system and an improper use of public funds.

  379. There were 10,000 complaints the overwhelming majority of which were nothing to do with fraud?
  (John Healey) Yes.

4   Ev. p. 98. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 11 February 2002