Select Committee on Education and Skills Minutes of Evidence


Exmination of Witnesses (Questions 220-239)

MR DAVID GIBSON AND MR STUART INGLESON

WEDNESDAY 6 FEBRUARY 2002

  220. I will, do not worry.
  (Mr Gibson) I think you know there are fish in there!

Chairman

  221. I think we have got some good common sense here.
  (Mr Ingleson) I think the worst feature of this, as far as I am concerned in the position which I now hold, has been the dent in the enthusiasm and the addition of the few grams of cynicism to most of my staff involved in this area of work. They operate under a set of rules and regulations which are almost at strangulation proportions. They have worked with a funding scheme which hammers students who do not complete their course of study and they have seen the Government throw money at private providers, in the widest sense—and that is not meant to be pejorative to colleagues in the private sector with whom we work closely but to people who are in the business for making profit. That is the hardest part of this, and that is the hardest bit that is going to be present, I think, in any settlement scheme that runs in this way: Why should we do this? The risk factor is too high for us—not at the individual student level but in terms of impact on our overall finances.
  (Mr Gibson) From the survey, Chairman, four or five points which I think are directly a response. Complaints: Dealing with a considerable number of complaints from disenchanted students who were unaware of closure or who have lost an entitlement to public support as a result. Increased administrative burden. Adverse publicity for providers as well as from the ILA programme and the Government—a lot of students associate it with the college, in other words, adverse publicity for providers. Loss of campaign to promote life-long learning. I think from the colleges' point of view there were certainly concerns which were much more deeply rooted.

John Baron

  222. That is exactly the sort of answer I was looking for, in the sense that the implication from the colleges' point of view is that it has been a complete disaster obviously. Would there be some way of trying to claw back some credibility from the Government by getting adequate compensation. What do you think of the Government's approach that there is a difference between an agreement and a contract when it comes to compensation?
  (Mr Ingleson) My experiences with the franchising arrangements are that when push comes to shove there is a very clear difference between a contract and an agreement. In the ILA case I do not believe that there was a contract.

  223. Can I take you back to the original point Mr Ingleson made at the beginning. Bearing in mind both of you are very experienced individuals in this area, it is your conclusion, is it, that basically the Government overreached itself, in the sense that these ILAs became too popular, the budget ran away with itself and the Government is using the fig leaf of fraud in order to hide its embarrassment?
  (Mr Ingleson) I am not quite sure you could ascribe those words to me, Chairman.

  224. No, I ascribe them. Would you or would you not agree with them?
  (Mr Ingleson) I think in the context of the figures that I have seen, there clearly was an issue about the volume of spending. I fail to see why anybody should be surprised about that. The scheme was set out in such a way that it was a licence to print money really. The issues about single point of contact . . . I was intrigued by some of the language to which the Committee has been exposed about this topic, which, as far as I am aware, does not constitute in any sense illegality.

Chairman

  225. Could you repeat that, Mr Ingleson?
  (Mr Ingleson) Yes. I was struck by some of the words the Committee has seen: "misused", "mis-selling", "inappropriate"—issues around quality. To the best of my knowledge, none of those apply to anything which is illegal. They may be unsatisfactory and they may mean that students and learners have had bad quality experiences, but they are within the strict letter of the scheme. Students only had to attend once for the ILA to be paid in full. That is part of the issue for us, when we get hammered for the financial arrangements if people drop out before they complete and they have to get to the end of our programmes for us to generate our full funding, There is a difference in principle there from the same department which is, I find, quite staggering.

David Chaytor

  226. A question for Mr Gibson first about the AoC survey. 105 colleges responded to your survey, which is less than 25 per cent of your membership.
  (Mr Gibson) Yes.

  227. We assume, therefore, that for the other 75 per cent this was not really an issue and they did not suffer significant losses as a result of this.
  (Mr Gibson) No. No, is the simple answer. This was by 22 January and therefore had only gone out towards Christmas, so I think there would be others, through you, Chairman, which had not had the chance to answer by then.

  228. In terms of the typical loss per college on the basis of that survey, it comes out at about £25,000 per college (£2.5 million and 105 colleges).
  (Mr Gibson) As I know your academic background, I will fully accept that! I have not worked it out, though.

  229. I think the figure of £25,000 holds good.
  (Mr Gibson) OK.

  230. Mr Ingleson, how is it that Preston College is declaring a loss of a quarter of a million? Accepting that your budget is larger than the average college budget, is there not a strange discrepancy between the average £25,000 reported by the AoC colleges involved in the survey and your figure of a quarter of a million?
  (Mr Ingleson) I cannot speak with authority about what colleagues in other institutions have done with this. Preston was part of the original 12 pilots, the local TEC was one of the original pathfinder operations, so we have been involved with this since 1998. I was not there then; I speak second-hand this morning. The group of staff that was particularly concerned with an outreach activity, and worked with trade unions in particular, was quite clear this represented a significant opportunity to hit the students that they were being asked to work with, so we were very pro-active in our approach to that. I think that is the difference, that if we had simply said, "We will take this as a thesis and we will simply be receptive if somebody walks through the door and says, "I've got a bit of paper that says I am entitled to an allowance, what do I do with it?'" then you have a very different approach. I referred earlier to the way in which, for instance, we briefed trade union learning representatives in an attempt to spread the word on this and I think we have seen the benefit of that.

  231. I can understand how your college could have been more pro-active at an earlier stage and therefore taken advantage of it to a greater extent, but is it not the case that the figure of £250,000 is built on the assumption that the ILAs provided a contribution of £150 per person?
  (Mr Ingleson) It is a bit less than that. On average for us, when you do the 80/20 per cent split, it is about £100 a person.

  232. So you are not assuming that the original £150 which was available in the pilot scheme would continue?
  (Mr Ingleson) The way we have done this . . . Is it OK to go into the detail, Chairman?

Chairman

  233. Certainly. We have concurrent inquiry into further education, so this is all good grist to the mill.
  (Mr Ingleson) The decision we took was that we would seek to honour the arrangement that we had advertised, so we standardised our prices mid year, changed the fee levels. Let us take an example like the computer driving licence course. We set the fee for that at £138. That allowed us to say to people, "We will then discount your fee in exactly the same way that the 80 per cent discount would have done and you pay us your £25." So we honoured that particular situation.

Mr Chaytor

  234. The quarter of a million is anticipated fee income for the following financial year.
  (Mr Ingleson) Yes. And the basis for that calculation is that last year we enrolled just over 4,000 people on accounts that were subsidised by ILAs. We had at the time of the closure of the programme enrolled this academic year just slightly over 1,500 students. That is where we get the £2,600 shortfall at £100 a head, which gives us our £260,000.

  235. You mentioned the previous example of the withdrawal of funding for Demand-Led Elements but that was not quite the same, was it? because in that case there was not a bureaucracy or a bureaucratic structure that applied to the student numbers, there were no pin numbers, there were no accounts and so on. In terms of the outcome of the future, do you think there is any value in the concept of an Individual Learning Account as opposed to simply the provision of fee remission? What extra value does the concept of the account give?
  (Mr Ingleson) My understanding of the principle is that it places the discretion of choice in the hands of the individual in a way which may be running it through the providers, it might not. In practice, I would say that this is actually not a demand-led scheme at all. It has been a provider-led scheme and it is only through the promotion of it that we have attracted many of the individuals that we have. The examples I have given on the bottom of the sheet, which are quite detailed, are, I hope, something that colleagues in the LSC will take seriously, and, indeed, within the Department, but there are opportunities here to replace parts of the very complex funding machinery rather than adding on yet another bit which has its own rules, different audit trails and different sets of paperwork. The simplicity of that—not that I would necessarily support wholeheartedly some of the examples that I have given—would greatly outweigh I think, in terms of the numbers that would be reached by the funding, the benefits that we have had through the operation of the Individual Learning Account in its first form.

Mr Simmonds

  236. I was intrigued by one of the answers you gave earlier about the reason for the Government shutting it down was purely overspend in your view and nothing to do with fraud. In answer to one of the previous questions, you said why you think that is. That is in contradiction to some of the comments that we have received from other witnesses who clearly felt—indeed one of them actually warned the Government—that the system was open to fraud. In your experience, did you feel the same, that there was the potential for fraudulent abuse? If so, did you warn the Government?
  (Mr Ingleson) We took no action to warn any other external agency. We had experiences of what we regarded as shoddy practice; we had no direct experience of anything that I would call fraud.

  237. That shoddy practice was on whose behalf? Presumably not your own.
  (Mr Ingleson) No, we had examples of staff who had received a knock on the door, somebody said, "Sign this piece of paper and I'll give you a CD and this book." You sign to say you have received the materials for this distance learning course, tick "ILA paid in full," and never seen again.

  238. Was that something that occurred on a regular basis?
  (Mr Ingleson) There was sufficient anecdotal evidence to suggest there was a lot of that practice going on, yes.

  239. If the ILA had a failing, it was that it did not actually reach the target or roots that it was supposed to reach. I wondered how many out of those 4,000 people that the Preston College got involved, were actually individuals with no qualifications at all? I think nationally the statistic is 16 per cent. Were you above that or below?
  (Mr Ingleson) I cannot answer that in detail. In the time I had to get here, I was not able to provide information in that level of detail.


 
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