Members present:

Mr Barry Sheerman, in the Chair
Mr John Baron
Mr David Chaytor
Valerie Davey
Jeff Ennis
Paul Holmes
Ms Meg Munn
Mr Kerry Pollard
Mr Jonathan R Shaw
Mr Mark Simmonds
Mr Andrew Turner


Examination of Witness

JOHN HEALEY, a Member of the House, Parliamentary Under Secretary of State for Adult Skills, Department for Education and Skills, examined


  1. Good morning, minister, welcome back and a happy new year to you. We hope you had a good rest over Christmas.
  2. (John Healey) Good morning, Chairman. Thank you very much.

  3. I think you will remember very well that because the Individual Learning Accounts took up all the time at our last meeting, we did ask you to come back, and thank you for agreeing to come back so quickly. We do not want to have the same thing happen again, so I am going to suggest to you, if this is agreeable, that we will spend 15 minutes talking about Individual Learning Accounts and then we will shift to your broader responsibilities, and a fascinating range of responsibilities they are. The clerk will keep us on track in terms of time. We will open straight away where we left off in terms of ILAs. May I open by saying there is a certain amount of unhappiness, certainly on my part and that of some members of the Committee, at seeing the Financial Times articles this morning. You did comment, minister, that you would let us know. In a sense, we were trying to track forensically what happened in terms of the ILAs, when the decisions were made, when the concern first arose, and short the process was. If you compare the Financial Times story this morning and your letter to us, the worry that we have is that the meeting that the FT refers to on 18 October is not actually included in your letter. I wonder if you could inform the Committee why that is. Was there a meeting on 18 October? Who was represented at the meeting. Was the Treasury there? Did the meeting discuss the fraud allegations or just the problems of the overspend?
  4. (John Healey) There was a meeting that week, on the 18th. It was entirely a DfES meeting. The two ministers responsible, myself and Estelle Morris, were there. The permanent secretary of the DfES was there and several of the key officials who have an interest or a responsibility in this policy area. It was solely a DfES meeting. That was the meeting at which we examined the evidence. We looked at the problem and we took the decision in principle then that we had no other option but to withdraw the ILA scheme. We took the decision then that we needed to give and we should give a reasonable period of notice, both to be fair to Individual Learning Accounts account holders, to give those that had not used their discount the chance to do so, and of course with legal advice to make sure that as a government in those circumstances we were acting reasonably and therefore would not potentially be open to any judicial review or proceedings for the action and decisions we took. It was after that meeting, after the decision was taken, that we did some more work on the logistics of what would be required to close the scheme within that six-week period. It was at that point that we informed ministerial colleagues in other departments, including No 10 and in the Treasury, and it was on the Monday of the following week that I personally also made calls to make sure that my counterparts in the devolved administrations, who were obviously affected by this decision that we were taking for England, were fully informed of the steps we planned to take. And then, of course, as you know, Chairman, Estelle Morris announced it on Wednesday of that following week, the 24 October.

  5. Can I just press you on one point. Who called the meeting?
  6. (John Healey) I called the meeting essentially. Having worked closely with the officials responsible over particularly the previous couple of weeks to make sure that I felt we had sufficient data on which to marshall a decision, having of course during that period kept the Secretary of State's office informed, this was clearly a discussion and a decision that in the end had to be taken with and by the Secretary of State.

  7. When you called the meeting, was your concern the fact that the scheme was running out of control in terms of expenditure and the cost and did fraud come later? What was the reason for the meeting?
  8. (John Healey) As I certainly tried to explain at our last session before Christmas, we had two things. We had evidence from the summer of a mounting volume of complaints, including just over a fifth of the complaints at that time that were about the misuse of the system; in other words, activities of learning providers, which, if they were substantiated, meant that they were misusing and breaching/not complying with the system.

  9. When you called the meeting, was it fraud that was uppermost in your mind or was it the overspend?
  10. (John Healey) Chairman, if you will forgive me and allow me to finish, it was two things. It was the combination of the two that really put us in the position where we had no other option but to decide to withdraw the scheme. One was the increasing volume of complaints, including serious complaints about a minority of providers. The second thing was increasing volumes of claims in particular patterns from some of these learning providers about which we were getting the most complaints and were starting to have the most serious concerns. I think, Chairman, that pattern, if you like, has become even clearer since we took that decision. In the letter that I sent you and the members of the committee yesterday, you will see that very clearly in the pay claims, the claims for payment the learning providers had filed that we were able to assess before Christmas. That last week of the full operation of the scheme up to 21 November, you will see from the letter there that nine per cent of those learning providers about whom we had concerns and from whom we had withheld payment were responsible for 76 per cent of the amount that had been claimed in that week. In other words, you have the problem with a minority of learning providers about whom we were getting increasing numbers of complaints who nevertheless were filing an increasing volume of claims, and therefore it was the combination of the two in the context of having taken a number of steps over the summer and the early autumn to try to tighten up the operation of the scheme which clearly had not stopped this problem which led us then to the decision that really the only step that we could take to protect the interests of individual learners and to protect the proper use of public funds was in fact to withdraw the scheme. We made that decision in principle at that meeting on 18 October and announced that decision on 21 October. That was a discussion and a decision we had entirely internally to the DfES and then, having made that decision, we informed colleagues both within government, in Whitehall, and the devolved administrations.

    Mr Baron

  11. Minister, can I just ask you to clarify this a little bit. You tell us that when you were before us last time, just before Christmas, you indicated that you were talking about a small number of players that were causing the problem. From that I asked the question "Why did you not then just close down that small number of providers ...?" and I did not feel I got a satisfactory response. What you are now saying is that although it is a small number of providers they were causing an increasing amount of problems and claiming an increasing amount of money illegally and so forth. Surely that information was available to you at our last meeting. Why this apparent move from saying, "It is a small number of providers," when we last met, to now saying, "Although it was a small number of providers, they were causing an increasing amount of fraud within the system."
  12. (John Healey) With respect, when we last met I was able to give you figures that took us to about mid November. I think the picture has become even clearer with the data that subsequently I have been able to collate and the analysis that we have been able to do and that I provided to you in the letter yesterday.

  13. Can I come back to my original question: Why, having identified the small number of providers and bearing in mind the inconvenience you have caused to a large number of people on this issue, both providers and those subscribing to the system, did you not just close down that small number of providers? Because that would also have dealt with the increasing amount of claims they were making. If you had closed down the small number of providers that were fraudulent, you would not have had an increasing number of claims.
  14. (John Healey) With respect, you may remember the conversation we had on this at our last meeting, and I explained some of the steps that we had taken over the summer and early autumn to tighten up the system. We were in a situation where we made moves to investigate and challenge and cross-question some of these learning providers where we had concerns, indeed we suspended some of them during that period, but, quite frankly, despite the changes that we made, including a new registration process for learning providers, the rules and the robustness of the scheme simply was not sufficient to allow us to close down the misuse and at the margins the outright abuse and some fraud that clearly was creeping into the system.

  15. So what you are saying is that not enough thought had been given to this subject of potential fraudulent providers and how you would deal with them.
  16. (John Healey) What I am saying is in the light of the experience of a year of operation in the ILA system, what became clear was that, whilst the vast majority of learning providers were seizing it in order to deliver learning that a lot of people were finding met their needs and to bring into learning a lot of people who had not learned for a long time, there were a minority who saw it as a fast track to cash from the Government and that they were creative in the way that they tried to misuse that scheme.

  17. Sure, I am not disagreeing with you on that, but what we are agreeing, I think, is that you did not have the systems in place to deal adequately with fraudulent providers.
  18. (John Healey) The design of the ILA system, in the end the decision to which we came, was not sufficiently strong to allow us to stamp this out.

  19. I think we are agreeing.
  20. (John Healey) But clearly within the system what it did allow us to do was to take these concerns, trigger inquiries from our own investigations, and in the end, of course, gave us the grounds clearly and the evidence that we needed to make what, I would repeat to the Committee, was a very difficult decision because we were conscious of the disappointment that would cause to so many learning providers and indeed learners as well.


  21. Did the Treasury press you to keep the scheme going despite all the problems?
  22. (John Healey) No. There was concern from a number of quarters that the ILA scheme, that was, you will know better than anyone, Chairman, a flagship of the sort of bid to bring new people into learning and to boost levels of interest and demand for learning, there was concern that what was a flagship, cross-government scheme that the DfES was responsible for appeared to be in such problems that there was no other alternative but to withdraw it in England. They, the Treasury and others, quite rightly, as we had asked ourselves, considered the very question Mr Baron asked, "Is there no other option for doing this?" and "Should it not be continued?" Having looked at those questions very carefully ourselves within the DfES and come to that judgment and decision that there was no other option but to withdraw it, we clearly explained that. That settled any questions that others within the government might have and we proceeded, as we and the DfES had decided to do, to withdraw the scheme with effect from December 7. Then of course the second issue arose that forced the decision to withdraw the scheme with immediate effect in November, on the 23rd.

    Mr Shaw

  23. Minister, in November I asked you how much the programmes had overspent by. At that time you told me, looking at the transcript, that you were not in a position to be able to tell the Committee. According to the report in the FT, in October the department knew that you had overspent by 30 million. Why did you not tell us in November that you had overspent by 30 million? Was it that you wanted to avoid a total calamity or were officials not providing you with that information? Or, rather than conspiracy, which I am suggesting, was it just more cock-up?
  24. (John Healey) Mr Shaw, I would advise you first of all not to believe everything you read in newspapers, even the Financial Times. The situation was, as I have explained earlier, that we were aware of course there was a budget overspend. It was very difficult to make any calculation with any certainty at all about what that would be. I explained that to the Committee when we met in November. We had not done the sort of calculations with the certainty I was able to do after we met and, when we were able to do that, with a clearer picture I then informed the Committee as soon as I could that the overspend to the point that we could calculate it with certainty in those circumstances, which I think was November 17, was at that point 58.8 million against the budget that we had over two years. Subsequently, of course, having made some further payments against claims that had been submitted to the Capita centre before it was closed down on the 23rd, that now is 62.9 million.

  25. So this 30 million, that information that is reported in the paper, was not known by the department in October or it was not accurate enough, is that what you are saying, in order to bring it to the Committee?
  26. (John Healey) Any figure like that, at that stage, with the degree of uncertainty that was there about the activity and the degree to which we were exposed, would inevitably have lacked accuracy and certainty. I would not set any store by a figure such as that that the Financial Times might have got hold of.

    Paul Holmes

  27. Initially the department said that they were going to suspend the scheme on 7 December and then suddenly on Friday 23rd they said it was suspended from then. There are a number of companies around the country, including one in my constituency that I have written to you about, who were working towards the date of 7 December - their monthly accountancy procedures would fall in the week after 23 November. The company I have written to you about have about 150/200 people on the books, but because they had not registered them by Friday 23rd, because they were aiming for the date of 7 December, it would now appear from the various correspondence they have had from you that they are not going to get consideration for payment, although you are, subject to validation, paying everybody up to 23 November. Does your department propose to do anything for those companies who have not got legitimate registration in by the 23rd because they were working to your initial date of 7 December?
  28. (John Healey) Mr Holmes, I appreciate the position the company in your constituency is in, and there are a number like that which have contacted the department, but, if you pause and think, we simply could not do anything other than say we would honour the claims that had been properly made at the point that we closed down the system. We could not possibly have closed down the scheme and the system and then had an arrangement where people could have said, "Ah, but next week we were planning to file another 600 claims, you have got to take these into account." The circumstances with which we were faced on 23 November were so serious and so severe that we really had no other option but to close that scheme down with immediate effect. I hope the further details that I have been able to provide to the Committee in my letter to the Chairman yesterday explain the nature of that and explain the decision that we took and really, I hope, explain that really that was the only decision we could have taken in those circumstances.

  29. I accept that you may have had to move very quickly on 23 November. Nonetheless, if companies can provide you with their company accounts, their details, the written letters from people involved, all of which show that they are valid, legitimate claims but that they did not file them by your emergency close-down date because they were aiming at the date you told them to aim for, surely there should be some leeway there for legitimate companies who, as I say, have got the paperwork. I can send you some of the paperwork for this particular company, to show that they are legitimate claims.
  30. (John Healey) We can only accept as valid and legitimate claims that were actually filed in the system before we closed it down. To do anything other is impracticable and would not be something that we really could or should do.

  31. Surely in private business, if a company said, "We will pay you out by a certain date" and then they brought it forward two weeks, they would not be allowed in a court of law to get away with that.
  32. (John Healey) No, of course, but the circumstances you are describing there would be circumstances where the two companies had a contract between them. What I have explained to the Committee and said in the House at other times is that under the ILA system the Government had no contract with learning providers that were registered to draw down discounts under the scheme.

    Mr Chaytor

  33. In your letter of 18 December, minister, you say that there would be in January and February a systematic consultation with providers, learners and other stakeholders about the way forward to establishing a replacement scheme. Has that consultation started?
  34. (John Healey) Yes, that has started. We have got a company working with us to conduct that consultation. The 400 or so learning providers who have already offered to help us in redesigning a successor scheme will be contacted first. All the other registered learning providers and other organisations that have an interest in the scheme will have an opportunity also to comment and offer us their views. We will do a survey of some of the Individual Learning Accounts account holders as well, as part of the groundwork and consultation we think we need to do to try and get both the design of the successor policy and the design of the successor system sorted out.

  35. Is there a deadline for an innovation on that consultation?
  36. (John Healey) I am looking for an interim report on that in February and I am looking for that to be completed probably by early April.

  37. In retrospect, what are the main conclusions that you have drawn to date about the policy and implementation failures that led to the collapse of the scheme?
  38. (John Healey) With respect, Mr Chaytor, we covered some of this at our last session and my views have not changed since then. I can go over them now ...

    Mr Chaytor: It would be useful if you could.


  39. Briefly, minister.
  40. (John Healey) Briefly. Policy. Innovative, radically new scheme. Seized the imagination of learners in a way that nobody anticipated and to an extent that nobody anticipated, therefore hitting our one million ILA holders nearly a year early, drawing many - I think it is around one in six - who were new to return to learning, encouraging new providers and new provision to be offered. However, as a universal offer, also one that was taken up by some - probably our best crude guess might be up to about a half - who say that they would not have needed the ILA discount in order to pay for their course. Whether or not they would have taken the course and paid for it anyway is another matter, because, if you like, there is both the financial support aspect to the contribution and of course the incentive contribution as well.

    Chairman: The last word to Andrew Turner, as long as he does not take more than a minute.

    Mr Turner

  41. The message seems to be to providers - and this applies in some other aspects of government as well: "Don't do anything on the Government's say so, wait until you have got a contract in writing." Is that correct?
  42. (John Healey) No, I would not say that at all. It was clear from the outset of this scheme, and no learning provider that decided that they wanted to take advantage of ILAs had any contract at any point with the Government on this - and that is different from some of the arrangements for the delivery of other learning programmes, but that is the nature of the ILA system. So it is tough but it is a reality of the situation that they were faced with and that we are in now, which is that the decisions that any learning provider took to build ILAs into any of their business planning was a matter for them. Our first and principal relationship as a Government was with the individual learners that we wanted to encourage to use the ILA to take up learning for themselves.

  43. And the lesson they must learn is that good faith, when dealing with the Government, is not enough.
  44. (John Healey) I am not in a position to say what lessons the 8,500 individual and varied learning providers might take from their experience, but we had a conversation at this last committee meeting where Ms Davey made the point that in designing any successor ILA scheme clearly there is a challenge in restoring and underwriting the confidence that learners and learning providers would have in any successor scheme and I am very conscious of that.


    (John Healey) Minister, thank you very much for that session on ILAs. Can I tell you that we have decided that we will launch an inquiry into ILAs. The terms of reference are to examine the lessons from the closure of the Individual Learning Accounts' scheme, the future of the DfES's Lifelong Learning Strategy in England, with particular reference to management, to policy plans for replacing ILAs.

    (John Healey) May I say, Chairman, I would very much welcome that. I think there are some important and innovative features in the ILA scheme from which we can learn and the view of the Committee plus the analysis that you might be able to offer. I hope you will be able to do it on a timescale that will feed into the sort of work that we need to do in terms of redesigning a successor scheme.

    Chairman: We are going to hit the ground running and we will take evidence next week. Thank you for that. Now let us move to the other part of your wide range of responsibilities. I am going to ask John Shaw to commence the questioning.

    Mr Shaw

  45. I want to talk about ICT and education and training, minister. The IT learning centres - and I think I am attending the opening of one in my constituency this coming week - you have a target of 6,000. There are lots of targets. 50 per cent more into higher education by 2010 with 6,000 IT learning centres. Why do we need 6,000?
  46. (John Healey) May I start with a point of information and clarification. I think, Mr Shaw, what you are talking about there are UK Online centres.

  47. That is right.
  48. (John Healey) I am delighted you are getting one in your constituency. What you will find is that that is likely to be located in an area of relative disadvantage. The philosophy and the policy purpose behind the UK Online centres - and you are quite right to say we are aiming to have 6,000 in place by the end of 2002 - is to create access to ICT equipment, and in particular e-access, Internet access, for community use within communities where the individual ownership and the opportunities for learning about the use of computers are limited. That feeds therefore very strongly into, across-government, the Government's ambition that was set out by the Prime Minister of making sure that there was universal access to the Internet by 2005. UK Online centres are a very important part of that strategy. The DfES is playing a lead role in making sure that many of the new ones are set up - by no means exclusive because libraries will play a big part in developing Online centres - but they are also distinct from Learn Direct centres which are the local centres of course of the University for Industry, where learning rather than simply access is at the core of the mission that they have.

  49. Yes. There is a myriad of IT schemes in schools and adult learning. Sometimes it is difficult to see how all these link up. Is it right that the advisor within the DfES who is heading this up is out of post now and there are no plans to replace them?
  50. (John Healey) No. Well, on the last point, no, that is not the case. Whether or not you are thinking of the former head of our ICT Strategy Unit, who has returned to his post in Lewisham College, I am not sure. But you are right with the first bit. So you are incorrect on your last point and you are correct on your first point, which was this, that there are indeed a myriad of different schemes. I think, as minister responsible for the ITC strategy for the department, that brings me to the conclusion I have reached in these early days of my tenure in the post, which is: during the first four years the DfES was responsible and imaginative about getting a wide range of essentially pilot schemes up and running, and we are at the point now, it strikes me, where we have got to rationalise those. We have got to learn the lessons from the wide variety of things which we have been trying over the last couple of years in particular - that is number one challenge - and the second challenge as a department is that we have got to bring together more effectively the activity that has been going on there in schools, that is there in colleges, and that it is there, as you started by asking me about, in communities. We have not done that as effectively as we could in the past and that is something that both Baroness Ashton, who has responsibility for this in schools, and I, who have responsibility post-16, are working very closely to try to do. At the start of this second term in government, we are really at the point where we need to refresh and refine the ICT strategy we have got across the education and learning field.

  51. I think there is a feeling that if it is computers, if it is ITC, it must be good: "Let's put computers in and we will be providing opportunity for people." I think that sometimes - I do not know if you will agree me - the whole of the picture is not looked at. For example your colleague Baroness Ashton said that she wanted two megabytes into schools in terms of capacity, so that curriculum online can be utilised. That would run about 10 computers. In a school of a thousand pupils, that is simply not going to be satisfactory, is it? Or in rural areas as well, where there is very little broadband capacity, I think there is a concern. The starting point, that computers are good, I think is right, but, in terms of how they are best utilised and the infrastructure to support them, I think that is not always there. Would you agree with that?
  52. (John Healey) I would agree that actually in the past - and I have to say I think we saw this quite clearly before '97, where the emphasis of the previous Government on computers in schools was just that, getting computers into schools - a lot of teachers did not use them to transform the way they taught, did not have the skills to be able to make best use of them. That is why the strategy that we need to put in place has got to tackle questions of infrastructure; that is the hardware and it is also the question of connectivity, adequate connectivity, to which you are quite rightly drawing attention. If we are going to make the best use of this, it has to make sure that it tackles the questions about learning processes, teaching methods and practice in the classroom or in the lecture room, and it has also got to tackle the question of the skills and confidence of those teachers who are using the technology as well. Those are the three elements of the overall strategy that we are putting in place and I hope we will therefore avoid the sort of isolated way of introducing ICT-related innovation that I think we have seen in the past and has been inadequate.

  53. Are you confident you are going to hit your target by the end of this year?
  54. (John Healey) Yes.

  55. Where are you? Do you know what the climate is?
  56. (John Healey) We have got 2,150 UK Online centres opened already. It is the third phase of setting up the UK Online centres that are supported by the capital modernisation fund. The DCMS, who are responsible for libraries, are accelerating their programme of turning and accrediting libraries, public libraries, into UK Online centres. So all the indications that I have at the moment are that we should hit, despite the difficulties, that target by the end of the year.

    Valerie Davey

  57. I am very pleased to hear you talking about cross-departmental work. Downstairs, in the post office here, there is a superb, I think, contact point for benefit provision. When I asked the post office downstairs who had provided it, it has come from the DTI. I am not in Leicestershire, where there is going to be a pilot scheme, but I want to see it rolled out. It is excellent. How is all that linking in? If I have accessed a whole lot of information from that, anyone could. It will give tremendous confidence to people in exactly the areas that you are looking for. Is there a link with the DTI as well as the DTMS and the others?
  58. (John Healey) I think what you are describing there is the bid to find a new role for post offices as a government services access point in the communities in which they exist, whether it is the bottom of Portcullis House or whether it is an important part of my own constituency. In terms of education services, we have been part of the working group that has been trying across government to develop that and to contribute to that. We see post offices potentially being a useful point for information about learning opportunities that may be available in a local area, a useful information point about contacts that people using the post offices may then follow up. It is of limited value in our judgment at present, if you think about the need for hard facilities, to consider that learning is likely to take place actually in post offices, so we are very much part of that project and behind it but it has probable limitations in terms of what it can offer the education and learning fields as a point of access and provision.

  59. My point is that that will be the first learning experience on a computer which many people will ever have had.
  60. (John Healey) Right.

  61. They will begin to learn as a result of the motivation and find out the information. That surely is the best way of learning, to have that motivation. It seems to me that is a learning skill which people will acquire in that context which we should be celebrating and working with.
  62. (John Healey) You are absolutely right. In a sense Mr Shaw posed the question that, you know, we need to be careful about assuming that anything to do with ICT is necessarily good, but it is the case, in exactly the way that you are talking about, in exactly the way that we are finding in our UK Online centres or Learn Direct centres, that people who have not had any contact with that technology before find increasingly there are things they need it to be able to do and worlds and opportunities that it can open up. By using it, it means that they are beginning to gain skills that they are going to find very useful in work, in supporting kids they may have in school, in booking holidays or even supermarket shopping online. So, increasingly, in every aspect of life these are becoming essential basic skills.

    Mr Baron

  63. I am delighted to hear that you are up to target with regard to the number of IT learning centres and so forth.
  64. (John Healey) On track rather than up to target.

  65. All right. I will accept that. It is still good news.
  66. (John Healey) Thank you.

  67. Having said that, the real litmus test of whether the schemes are successful or not is the effect they are having not whether they are meeting the targets. How are you going to measure how successful you are in your aims with regard to this particular incentive? You will have to excuse the slight criticism here. Have you devised a definition of what overcoming exclusion is? How are you going to judge how successful this particular initiative is?
  68. (John Healey) With UK Online centres and one or two of the other pilot projects I mentioned earlier, like our wired up communities pilots, we have in place from the start plans for a pretty thorough evaluation of the impact - and those of course will be published and available for the committee and others to examine. In terms of the learning provision rather than the opportunities to access the technology or the Internet, our principal concern must be the University for Industry and Learn Direct centres in this field. We have 1300 Learn Direct centres now open and here we are putting in the same inspection arrangements as we would with any other learning provider, whether they are work-based learning providers, FE, or in any other field, so the Adult Learning Inspectorate is just beginning its first series of independent thorough inspections of the learning provision that those Learn Direct centres are offering. I think that is the guarantee that the funding we are putting in will be properly used, that is the way that we are going to be able to identify what is working well and what is not and spread that, and that is the way we are going to be able to identify where we can increase the pressure and encouragement to improve the standard of what is offered there.


  69. Minister, I know you are keen to give full answers, but we have a hell of an agenda to get through of questions for you, so can I ask my colleagues and you to be brief. We are trying to get through a lot - otherwise we will have to have you back.
  70. (John Healey) Chairman, should I be required I would be delighted to return, but you will probably have had enough of me.

    Mr Baron

  71. Following on from that, very briefly, have you put proper structures in place and have you properly thought through the funding required, assuming this is going to be a success, bearing in mind what has just happened with regards ILAs? Are their proper structures in place? Is the funding going to be ring-fenced and properly thought through to ensure there is success? If the funding is there, if anything goes wrong with the system then we can on this occasion make sure that we can put it right.
  72. (John Healey) I think the structures for making sure that what we are setting out to do is being done are there. We covered that a moment ago. In terms of the funding in place for the future if these prove to be an established success, that is part of the discussions that we across government are now beginning to have as part of the spending review process, which of course is where the government will commit its funding from the year 2004 to 2007.


  73. I want to move on to adult basic skills. We do live in a society with the ghastly fact that a very high percentage of our population are illiterate and the government has a specific target of reducing by three quarters of a million the number of adults who have literacy and numeracy problems. The evidence we have taken from other sources suggests that this is going to be a real problem because there is a tremendous shortage of teachers in the FE sector who are specialists with these skills. What are you doing to tackle this? Here you are with a very clear commitment. On the other hand, you have a real shortage of the skills to deliver on the commitment. How confident are you that you can actually achieve that quite large target?
  74. (John Healey) It is potentially a big challenge. I am not certain but I hear the same anecdotal recourse as you do that we have not got enough teachers on the ground to be able to deliver the courses that we need for this target.

  75. We got that from Chris Hughes, Chief Executive of the Learning and Skills Development Agency, and from Ruth Silver of Lewisham College.
  76. (John Healey) Yes, and I have had it from similar figures in the FE field and I have had it from basic skills' tutors at conferences that I have talked to as well. Two things, if I may: the first is that we set out, for the first time ever, to standardise the whole system in delivering basic literacy and numeracy to learning. That included support and tuition for the tutors for the first time, systematically delivered. We thought when we set out on this earlier last year that there were probably about 7,000 basic skills' tutors that were working more than six hours a week across the country. We have already trained in the new national system more than 8,000. In other words, there may be more practitioners out there than we realise. We are now turning our attention to those who are "very short hours" part-time tutors, the next group, who are at present delivering less than six hours teaching a week, whom we obviously want to support and encourage to do a bit more. That is the first point. It may be that actually there are more tutors and potential tutors out there than any of us knew at the outset. The second is - and I am very concerned about this - that I do not want us to find, in pursuing what is an ambitious target, which clearly is only a step towards what is a massive problem and one we will need to and want to take further, that we run into the sort of supply and capacity constraints you were talking about. At the moment - and I should have a report on this by April - we are doing a thorough audit and survey of quite what is the supply and potential supply of basic skills' tutors out there that we can either draw on or that we need to develop.

    Mr Baron

  77. Again, minister, I just want to question you, if you do not mind, with regards to how you are going to measure the effect of this initiative. A laudable initiative, etc, but how are you going to ascertain yourself whether you are successful? Are adults going to be taking tests themselves?
  78. (John Healey) Yes.

  79. Can you tell us more about that.
  80. (John Healey) The specific terms of the target that we have set is that by 2004 we aim to have helped 750,000 adults with poor literacy and numeracy skills improve those skills. We have set ourselves the exacting measure of that, that we will require them to have done tests in order to demonstrate that their learning skills have improved. This is not, in management terms, an input or a process; this is about the impact, that learning for this group of people that need these skills will have improved. As part of the new national system that I explained earlier that we are putting in place for the first time, we have devised now national tests, which have never been catered for, both for literacy and numeracy. The first wave of learnings in one of our sort of pilot areas took those in June/July and they will become the bedrock for monitoring the progress of our programme, but for each and every individual who is learning it could be their confirmation that their skills are improving as well.

  81. What standard level? Will it be taken or accepted that they have reached a certain standard with regards an improvement? For example, NVQs, is there going to be a comparable standard there?
  82. (John Healey) Yes, the tests range across from entry level to level 1 to NVQ level 2. That is roughly equivalent of a 7 year old, an 11 year old, and GCSE.


  83. We would be very interested to know what is the nature of your target audience here. Who are the people in this country who have these problems? In every other part of education we have a very pretty good profile of the children that we are trying to deliver better education to and retaining education. With adult literacy, it does seem very vague. Who is the target? How does one reach them? Some of the discussions that have been taking place in terms of education for citizenship are around: "Should learning the English language be a part of the award of citizenship in a country?" Who are the targets? Is it newly arrived people in the country? Is it people from a particular background or from particular parts of the country?
  84. (John Healey) You are right, Chairman, this is a very special challenge. In every other part of our education system, our learners are those who are in our schools or in our colleges. We know who they are and as the DfES we, or the institutions or agencies we deal with, have direct contact. But the people who generally lack decent levels of reading, writing and maths tend to be more commonly unemployed, they tend to be more commonly in prison, they tend to be more commonly (if they are in work) in low-skilled, casualised, low-paid jobs. In other words, as the DfES our challenge here is that we do not have direct contact with the learners for whom we want to provide the learning. The big challenge for me and for the department is that we do not have control over the departments or the agencies through whom we need to work and through whom the screening/contact with these potential learners must be delivered. That is why we are working so closely with the prison service, with the employment service, with the Army to identify the people who have these skills gaps and then to be able to deliver literacy and numeracy learning as part of what they may be doing as part of their search for work, as part of their time inside or as part of their training when they join the Army.

    Mr Pollard

  85. A lot of money, minister, is spent on advertising. I am particularly thinking of the Gremlin advert which we all love dearly! I wonder at the effectiveness of that because when I look at that it frightens me stiff, I would not like to be thought of as somebody who could not read. I wonder whether the message is right and how effective that advertising is and whether you are doing some evaluation as to whether you are getting value for money.
  86. (John Healey) A very important question, if I may say so, first because one of the big challenges here is how we reach people who have difficulties of reading, writing and maths and encourage them to decide to do something about it instead of just getting by as they may have done for years in the past. Advertising clearly has a part to play in that. We tried the Gremlins' campaign (as you might term it) in September/October. We had a response line, as you may have known, from that. We had 50,000 calls to that and sent out more than 30,000 packs, which were information, video and motivational tips as well as contact points for people wanting to take up learning. The post-campaign evaluation, as far as we have been able to do it, suggests that 73 per cent of those who have got basic skills and problems were aware of the campaign. Significantly - and this is part of why we have decided to relaunch it in January - 38 per cent of those who have got the biggest difficulties with reading and writing say it would make them more likely to take up some learning. The proof in the end will be in the practice and in the pudding, but the second wave of the campaign is designed much more explicitly to follow through and get potential learners not just contacting us for information and advice but signed up to courses. For me that will be a crucial question of whether we can convert the interest the advertising seems to be generating to people who would not otherwise sign up for learning.


  87. Thank you, minister. I want to move on, but I do hope you take away Val Davey's point that there are ways in which people are able to learn and access those basic skills. A teacher, when we were looking at an inquiry in one school, said that the best thing that had happened was the driving test, because a large number of young people wanted to drive and had to be literate in order to get through that great desire to get wheels.
  88. (John Healey) Chairman, if I may encourage you perhaps to pay a trip to Aston Villa Football Club or one of the Tesco stores in Leeds or any number of projects where the delivery of this sort of learning and the opportunity to learn is being put in places where people are rather than in classrooms. I hope that is going to help, in the way that Ms Davey suggested, to overcome some of the barriers.

    Chairman: Perhaps Val and I should do that together. Can I move on now to the relationship with employers. We had a very interesting session with the General Secretary of MAFF, Paul Mackney on this and I know some colleagues would like to follow that through.

    Mr Shaw

  89. It does tie in very much to the adult basic skills and the relationship that perhaps the Learning Skills Councils have with the employers. You said, in answer to the Chairman's question, "Who are we talking about?" that part of the group that we are targeting for this 750,000 are people who are low-paid. Getting those employers to release people to increase their skills and so therefore not only help themselves but help the company, I think is proving quite difficult. I understand there is a pilot in Liverpool where you are paying employers 50 a day to release people for training. Could you tell us how that is going and whether you have evaluated that yet and whether you have any plans to expand that.
  90. (Mr Healey) Specifically on adult basic skills, Mr Shaw is right, we are piloting in nine different areas a whole range of different ways to try and tackle what we think, from experience so far, are the barriers. One example is encouraging employers to release people to do it. Other experiments include incentives for the learners and sanctions for those in the job seekers system that will not. They include also different ways of screening for problems and also including intensive residential weekends to kick-start the learning they have got to take. Given that those additional pilots have only started from September onwards, we do not have sufficient data at the moment, particularly in relation to control areas that we are obviously watching as well, to be able to come to an evaluation. I am hoping that by the spring that will be a bit clearer in terms of the specifics. In terms of the general, you are absolutely right, employers are going to be key in this. If we reckon that there are seven million adults who have poor literacy and numeracy skills, at least three million are actually at work. We know from the pressure of the changes in the workplace at the moment that being able to learn new skills is a crucial part of people's future job security. Of course if you are required to learn new skills from your company and you do not have good reading, writing and maths it makes that very much more difficult. The response that we are able to encourage employers to have to this programme in the coming months and years is going to be critical not just to the potential for these learners to develop the skills but, to be honest, the success of those companies.

  91. Is it in your mind at the moment or on your agenda that, if you find yourself that you are getting to a certain point where the target of these 750,000 people is not being met because there is clearly a large body of employers who are unwilling to release people to go and have training, you would then think, "Right: what we need is educational leave because people have to have a statutory right for educational leave"? If you are perhaps a single parent working part time at a distribution centre on low pay and the employer says, "Yes, you can do it but you have to do it in your own time", it is simply not going to happen, I would suggest. The demands upon someone in those circumstances are too much for them to take on learning outside of all the other pressures they have. If it is done within works time then that is more likely. Is that on the agenda? If you are not reaching this target will the Government introduce legislation requiring employers to provide educational leave?
  92. (John Healey) The short answer is yes, it is in our policy thinking for the medium term. The long answer is this, that employers, like the rest of us, are only just waking up to the scale of the problem. We will be producing over the next few months a toolkit that will help them realise the scale of the problem and have a look in their own workforce at the basic skills needs they may have. Most are not aware of the scale of the problem, if I may say so. Many employers legitimately take the view that this sort of basic reading and writing and maths ought to be something that the state should have ensured these people had in the first place, and therefore many are reluctant to concede immediately that it is their responsibility to pick up all the costs of doing so. That is why we have accepted as a Government that there is a proper role for the public purse to pay for the costs so that all adult learning for basic skills is free. That is one barrier. Some of the evidence suggests that time is another barrier to learning. You may have seen in the Pre-Budget Report that the Chancellor published in late November that there is a strong chapter on productivity, a large section of that on skills and productivity which I mentioned when I came before the Committee before Christmas, and proposals within that to set up perhaps three or four pilots which will be run by local Learning Skills Councils which will attempt to trial new policy ideas which include a tax credit for the costs of basic skills and learning up to Level 2 skills, and they write time off for the individual employee who will pursue that.


  93. When you talk about pilot schemes, sometimes when Ministers come before us it sounds a bit waffly. How many people employed in your Department do you think have a deficiency in basic skills?
  94. (John Healey) We do not know.

  95. You have never done an analysis?
  96. (John Healey) We do not know because part of what we are doing as our basic skills strategy is working with a whole new resource department but in each of the other government departments as well -----

  97. It would be nice to see your department evaluate how many there.
  98. (John Healey) ----- to identify the degree to which there are basic skills deficits within government's own employees.

    Chairman: It would be useful for you to look at your department and perhaps the Houses of Parliament. We have about 3,000 people working here. I suspect that a significant minority have problems that we could identify.

    Mr Pollard

  99. Would the Minister bear in mind the requirements of the small business sector who employ perhaps two or three people and who might be bothered about a questionnaire coming round to assess basic skills in their organisation? They would see it as another bit of red tape and bureaucracy - "What are we going to get out of it?" There would also be concern about releasing Jimmy or Georgina to go off to learn to read and write. They will say, "You should have done this years ago" to them and to the state. Could you bear in mind when you are looking at this, and I would support legislation if it is needed, the requirements of small businesses and that they do not have the same flexibility that large organisations have?
  100. (John Healey) Can I reassure Mr Pollard that we are very conscious of the position of small businesses, both the pressures they are under but also the fact that the levels of learning investment and training are also much lower than elsewhere. If I can encourage you to look at that Pre-Budget Report you will see that the outline proposals for testing these pilots load the compensation costs heavily towards small businesses and the whole emphasis of the PIU Report on workers' development which the PVI was partly in response to emphasises the importance of the small business sector in this regard.

    Mr Chaytor

  101. Minister, can you confirm that the Government's policy remains to achieve convergence on funding for all post-16 education and training?
  102. (John Healey) The policy remains as it was set out in the manifesto when we together fought the last election, which is that for sixth forms in schools there is a real terms guarantee. For other parts of the system we want to bring up the funding, which is of course in FE and in sixth form colleges.

  103. So that is convergence?
  104. (John Healey) That is a question of bringing up those levels of funding relative to the levels that they are at at the moment and we have never, as you are aware better than anyone, been able to set a timescale on that because it is clearly a feature of what we are developing as our discussions and our proposals as part of the spending review process.

  105. In the Department's letter to the Committee in September of this year when we wrote to ask for some clarification following the previous review on FE, it clearly says that there will be a common funding formula established by 2003/2004. There is some ambiguity as to whether it is the beginning of that financial year or the end of that financial year. Will that common funding formula not pay for all post-16 education and learning at the same rate? You seem to be saying that that is not so.
  106. (John Healey) The common funding formula is not the same as the common funding rate.

  107. So what is the difference between the common funding formula and the common funding rate?
  108. (John Healey) The formula means that for the LSC over the four main streams of post-16 learning they will develop and are developing a framework that allows them to assess and plan for provision in a way that is consistent right across the four streams. As you know, they have been separately managed and separately planned and separately budgeted for in the past and so bringing those together in a common framework is an essential step towards the sort of ambition that you have there but it is not the same.

  109. So by the end of 2003/2004 it is probable therefore that there will still be a differential funding rate for students following the same course in a sixth form in a school, a sixth form college and a tertiary college?
  110. (John Healey) Yes, because by 2003/2004, given that the budgets have already been set, it is not possible to see how that gap could be closed. This challenge and commitment that we have made to bring up the funding in general FE and sixth form colleges that we made in the manifesto is very much part of our thinking in the plans that we have got for the spending review process which should be settled by the summer, though you will know of course relates to the period 2004 to 2007.


  111. We do not usually operate as a dating agency, Minister, but could we fix an appointment for you with Bryan Sanderson to discuss this issue? We have had very strong views from Bryan Sanderson on this topic and perhaps you two ought to get together at some time.
  112. (John Healey) We do get together but I would be extremely surprised if Bryan Sanderson would say that a common funding framework was the same as a common funding rate for streams of post-16 learning.

    Mr Chaytor

  113. In terms of the Comprehensive Spending review of this July therefore, has the Department made a bid to achieve a common funding rate in the next three year spending period?
  114. (John Healey) The bids are due with the Treasury on 18 February.

  115. Also, will the Department be submitting a bid by 18 February to achieve a common funding rate within the next three year spending period?
  116. (John Healey) The Department will be submitting a bid by 18 February to the Treasury. It would be rather an oversight if we did not, but I simply cannot say because it has not been settled what will be in that bid. You must remember of course that it is a bid that will span the whole range of the Department's programmes, ambitions and plans.

  117. If the Department were to submit a bid by 18 February to achieve a common funding rate how much would it cost?
  118. (John Healey) I cannot give you the answer to that because it clearly depends on all sorts of variables, does it not, including the amount of learners you want to put through any part of the system plus any other levels of investment you might want to put in to increase standards as well. There simply is not an easy answer.

  119. There is not an estimate on the shelf?
  120. (John Healey) There is no answer to the question as asked.

    Ms Munn

  121. Minister, you have already mentioned when we were talking about basic skills issues that that brings up people within prison, and we have known for many years the kind of educational background, skills and abilities that are often found among people in prison. We have also known for a long time issues about the inability to access work because the lack of skills is a key part of the recidivism. Is there currently a joint vision between the Home Office and the DfES on where prison education is going?
  122. (John Healey) There certainly is a joint vision beginning to emerge. It is early days in the degree of the new working arrangements that we have got. Members of the Committee will be aware that funding for prison education now comes via the DfES for the first time this year.


  123. And the inspectorate arrangements.
  124. (John Healey) And the inspectorate arrangements are like those for any other part of the post-16 learning, principally led by adult learning especially, that is correct. That gives us a very direct stake for the first time. The impact of the direct input from the education and learning point of view will be seen next year and in successive years. Jointly Beverley Hughes and I are responsible for the Prison Service Learning Unit that has been set up. At the moment we are finalising together the work plans and programmes that we want to see happening in prison education. Aligned with that there is an increase in the resources which also for the first time are ring fenced within the Prison Service so that education funding cannot be diverted elsewhere. It is 56 million this year and by 2003/2004 it will be 68 million which is quite a significant increase.

    Ms Munn

  125. I accept that it is early days, but my experience in working with one particular prison previously was that the priority that is given to education over other aspects of the prison regime, whether that is discipline issues which clearly have to be maintained, is often down to particular prison governors and the way they approach that. Have you had discussions with the Home Office about the importance of developing a culture within the Prison Service which values education for prisoners specifically because it is so crucial to this issue of recidivism?
  126. (John Healey) Yes, those discussions are going on. You are right to point to it. It is key, not just providing it but being able to do so in a context where education is seen as part of the proper system in prison. It is also the case, however, that for many of those in prison education is not something that they readily want to embrace. In my view part of the challenge we have in embedding education more firmly in the prison system will be to embed learning in some of the other activities that prisoners are more keen to do, such as the gyms, the workshops and the catering. Particularly on the basic skills side, if we can embed some of the learning in those sorts of activities rather than simply as some prefab classroom that is a separate part of the prison and therefore requires a step which is taking up education from the prisoner's point of view, we have a much greater chance of having the sort of impact we need to have.


  127. Could not basic skills be emphasised by even being part of the sentence or a condition of parole - "If you do not get your GCSEs you do not get out of prison"?
  128. (John Healey) We had quite a fierce debate in the House in the summer about setting up the legal grounds for a pilot that would allow us to make it a requirement as part of the job seeking system. That is a step I had not considered, I must say.

    Chairman: When you think that the Home Secretary recently sent to every Member of Parliament data pointing out that 50 per cent of crime is carried out by 100,000 people, targeting 100,000 people with basic skills and giving them the opportunity of a job might be a very valuable investment.

    Mr Turner

  129. We have got the Home Office, the individual governors, the DfES and the Prison Service. Who does what?
  130. (John Healey) The Home Office with DfES are responsible for policy that we want to pursue and developments we want to see within the Prison Service. DfES is largely responsible for the funding stream to support those developments. The Prison Service is a crucial part of helping us make that happen and Martin Narey is a very strong advocate of this approach and this element of prison life. Of course individual governors are going to be quite critical in terms of what they want to see or are prepared to allow to happen within their establishments. Where they are good and they are keen on education it is a great deal easier of course than where they are not.

  131. That does not sound to me as if you have got the levers absolutely in place yet. I have got three prisons. Parkhurst has a splendid record on sports education, for example, but it seems to me that lifers benefit from full sentence planning; most other prisoners do not. They feel, and so do governors sometimes, that they are moved around more or less at random at the whim of the Prison Service and they can be halfway through a particular course of education (if they are lucky enough to get on one) and they go to a prison where that course is not available. Will you ensure that effective sentence planning takes place for every prisoner commencing with a baseline assessment of their educational needs and perhaps extending through a learning plan with clear outcomes into post-release follow-up?
  132. (John Healey) If I may say so, those are extremely perceptive points and questions. We do not yet have any levers in place. In a sense I think we are really taking the first steps in this field with the strategy that DfES wants to see pursued. It is called sentence planning. It is clearly easier to deal with those prisoners you know you are going to have in one place for a long time. To pick up the Chairman's point, where you have a relatively small group of people who repeatedly commit a large number of the crimes in this country they tend to serve short-time sentences. That makes the challenge of assessing them on entry and providing some support very much more difficult if their stay in an institution is relatively short, particularly if they have spent some time on remand before they get there in the first place. Part of what you might call levers or arrangements that we are now looking at putting in place to try and deal with this group is that we are trying different assessment procedures as part of the basic skills analysis of prisoners when they come in on entry. What we have to do is to ensure that any learning that we can get started on the inside is in some way continued in a similar way on the outside so that the links with the Probation Service on release and the learning provision outside on release is crucial. Secondly, the sort of advice and individuals who deal with a prisoner through their career moving in and out of custody are such that they are seeing different people all the time. One of the Cabinet special sub-groups on re-offending is very concerned to see whether we might not be able to tackle in some way this question of having somebody who might act as a single case mentor or case manager who might be able to follow an individual offender right the way through each stage of the system inside and out. If that is the case that can play a big part in helping us with the learning challenge and, on the other side, if we can improve the basic skills in particular of many of these offenders it will make it easier for them to get work, which will make it easier for them to avoid re-offending as we know from evidence and experience.

  133. Would it help if governors as well as the whole Prison Service had hard targets to improve the basic skills of their inmates? Secondly, do you have clear targets for the Prison Service, and what are they?
  134. (John Healey) The Prison Service itself has targets for Level 2 learning at present. We are looking as part of our planning for the next few years, because they do not yet have targets for basic skills, at to what degree Prison Service targets as a whole, aggregate targets, could usefully or reasonably be disaggregated down to establishment level. It is a very important suggestion and, if I may say so, I will take that as a small contribution to the discussions we are having.

    Paul Holmes

  135. In December some members of the Select Committee met with the Wattis(?) Foundation. One of the interesting projects they talked to us about was one where the gas industry are short of people they can train as fitters, and yet if you train as a fitter you have got virtually a guaranteed job and a good wage. They went along to a prison and worked with some young offenders who trained while in prison and at the end of it they could move out into jobs rather than re-offend because they cannot earn anything. The gas industry are happy; they are getting the trained workers. The Prison Service are happy because it does not cost them anything, and of course the prisoners are happy because they are getting a worthwhile job out of it. Are you aware of that sort of project and is it an area in terms of prison education which you could look to expanding?
  136. (John Healey) Yes, I am aware of it. In terms of expansion within the prison system I am not certain to what degree we could do that from other sectors but it is worth pursuing. It is very much a sector based initiative, dealing with gas fitters. The national training organisation responsible for that sector was heavily involved in that. What I am aiming to put in place with the new sector skills network, sector skills councils with an underpinning agency, is much more powerful bodies that can develop precisely those sorts of industry and sector specific skills initiatives.

    Mr Pollard

  137. As a magistrate some time ago I was at a young offender's centre and the prison governor there was telling me that 70 per cent of his guests could not read and write and his objective was to be able to get them to write a letter home and to read the response - a big job of work to do there. Following on from my colleague, Paul Holmes, are you aware of the FAST programme where Ford at Feltham have a Ka in the prison and they run an apprenticeship scheme where 20 young men are doing apprenticeships now and when they get to the end of their time in the young offender's institution will go and work at Ford approved garages and continue their apprenticeship to the end? Ford did have a difficulty in getting a Ka into the prison in the first instance because the first time they did it three of the guests decided that they would go for a ride outside, and so before it could go in the Ka had to be disabled. I think they have got over that problem. I just wondered whether you were aware of that scheme and perhaps other schemes like gardening or catering that could be included so that people could learn a real skill and it would be good for our economy certainly but, more importantly, good for the individual who would have the self-respect that normally goes along with that?
  138. (John Healey) No, I was not aware of that particular scheme at Feltham with Ford. I would hope, given the level of literacy and numeracy of his guests, that with the car maintenance and tuition they are building in reading, writing and maths as well, doing very much what I said earlier they need to do, which is not to treat education as something separate but to build it in and embed it into some of the other things that the guests might want to do during their stay.

    Chairman: We have had a bit of fun on that topic, but this Committee takes deadly seriously the 18th century conditions and environment in which many prisoners are kept int his country still today, deprived of education and access. Education must be really taken seriously and we would like to see a real vision transforming what happens to prisoners educationally whilst they are prisoners. Indeed this Committee is discussing looking in more depth at prison education. I was Shadow Home Affairs Minister for four years and visited many prisons and am still appalled by the way we treat them. If you track back the people in prison they will tell you that their educational experience is very much about the deficiencies of the educational sector. However, we now wish to move on and I want to ask you to concentrate your mind on TECs and LSCs. I am going to ask my colleague Jeff to come in on this.

    Jeff Ennis

  139. How has the transition gone, Minister, from the TECs to establishing LSCs? Have there been any teething troubles?
  140. (John Healey) There are two parts to that: how has the wind-up of the TECs gone and how has the establishment of the LSCs gone. Given that this was such a large transition from 72 TECs into a network of 47 LSCs, plus other functions of course that the LSCs have taken on in addition to that, I think it has gone very well. One of the first sessions I had when I became Minister in July was up in Norfolk. I sat down with a team looking at this and I was very impressed at how good a grip they had on it and how smoothly that has gone. I am pretty pleased with both aspects of that. I think it is still early days for the Learning Skills Councils but in a very short time most of them a) have established good relationships with the main providers in their areas, b) are beginning to establish a profile with employers in their area, and c) are in my judgement at a very critical point of their first year, which is that they are all at present, having done some consultation, confirming basically their business plans for the next year or two. That will be I think the telling point in terms of the degree to which they are going to be able to plan, fund and then shape the learning provision in their areas that is required for their areas. In some ways the degree of variation that we get in those plans will be quite an important yardstick for us in assessing how well the LSCs are beginning to establish themselves.

  141. It is the Committee's understanding that one of the main teething areas has been the cost of harmonising the IT and accounting databases for all the different forms of TECs and now the LSCs. Have you got a figure on the actual cost that has been involved in harmonising the systems?
  142. (John Healey) It is certainly true to say that one of the operational difficulties in the new learning skills network has been with their IT, and if the Committee would like a particular analysis or note on that I would be very happy to provide it. That can include, if it is the Committee's wish, what costings we are able to provide on that. In practical terms it has made it more difficult for the learning skills' national and local networks to set themselves up from day one.

    Chairman: That would be very useful.

    Jeff Ennis

  143. Turning now to the specific and to the South Yorkshire Learning Skills Council, as I am sure you are aware that has been established in a very posh new office in Sheffield. Given the fact that we have already talked about the high levels of adult literacy and numeracy problems, given the fact that the former coalfield areas in South Yorkshire have got some of the highest levels of adult numeracy and literacy problems, would it not have been a better signal from the Department to establish the new LSC office for South Yorkshire say in the Dearne Valley or perhaps in Barnsley East & Mexborough or even Wentworth constituency?
  144. (John Healey) In all honesty I have no idea what the process was for determining where the South Yorkshire Learning Skills Council should be headquartered.


  145. They did not get everything wrong, Minister. They have got a very good Chairman who is a great friend of mine.
  146. (John Healey) You have essentially pre-empted the one point I was going to make. I know there are concerns which Mr Ennis has expressed about other parts of South Yorkshire, but then I believe the composition of the board, and you have drawn attention to the Chairman in particular, is such that there are some pretty strong voices from the former coalfields areas elsewhere in South Yorkshire on that board, and I would expect them to -----

    Jeff Ennis

  147. I am referring to the signal it sends out to the people in South Yorkshire, particularly the ones who do experience adult literacy and numeracy problems, that everything is centring on Sheffield and not in the areas where it is needed most.
  148. (John Healey) Certainly it is true that some people see it that way.

    Mr Turner: Not only in Yorkshire. It is exactly the same in my area.

    Paul Holmes

  149. Both Government Ministers and the Chief Executive of the LSC have said that the LSC's admin budget is better value than that of the predecessors who administered these funds and that they also want to reduce it further. The budget for the LSC is 7.1 billion of which 218 million in the next financial year is for admin. Of the 7.1 billion, 4.3 billion, which is about 60 per cent, is for colleges. When the FEFC administered that money previously they spent about 16 million on administration, so that is 16 million of administration costs against 4.3 billion. That would be about eight per cent of the LSC's admin budget. That leaves 92 per cent of the LSC's admin budget to cover the other 40 per cent of its total spending. Have you any comments on that sort of distribution and how it might alter in the future?
  150. (John Healey) The LSC is doing, even within the narrow perspective of further education, more and different things than the FEFC did, so I think that the direct comparison is not legitimate. Secondly, the LSC has taken on responsibilities not just of the FEFC but of the network of TECs, functions also from the Department and also functions from Government offices. In terms of melding the responsibilities and the admin functions of those 78 or so different bodies that is the context in which to examine the admin costs of the LSC, and the undertaking that David Blunket originally gave that the admin costs of the new LSC network would be a saving of 50 million on what existed before would be met.

  151. But even if for some reason it costs more to administer the college money than the 16 million that the FEFC used to have, it still leaves 85-90 per cent of the total admin budget going on only 40 per cent of the total expenditure of the LSC.
  152. (John Healey) Mr Holmes, I do not accept the figures that you are trying to calculate. You are not comparing like with like and I do not regard that as a legitimate exercise.

  153. John Harwood told us that he wanted to cut bureaucracy by 25 per cent in the future as part of this improved administration. Is that a 25 per cent cut in the flow of paperwork, is it in terms of cost? Is that cost in terms of premises or staff or is it all three of those things?
  154. (John Healey) You will have to ask John Harwood that. I do not know the answer to that. I do not know what the LSC will do on that front. What I can say though is that along with the LSC we are aware, particularly in the arguments that have been made from providers, including colleges, that the degree of separate funding streams and the degree of paperwork and bureaucracy that that brings is something that is cramping the ability of the sector to operate. From our point of view as the Department in relation to the LSC you will have heard the Secretary of State before Christmas announce, for instance, that the standards fund will be from April a single unified pot of money that will have no ring fenced elements to it. You will have heard her also announce that in terms of the DfES budget lines to the LSC we will be cutting those down from 45 to nine and we would expect that to give the signal and scope to the LSC to do similarly with their provider, so it is not sufficient simply to be cutting down the red tape between the Department and the Agency. We expect to see some of that having an impact on the front line of colleges and some of the teaching staff as well.

  155. On the transition from the TECs to the LSC, the TECs employed about 10,000 people and the LSC say that they employ 4,757 people. Do we know what happened to the other 5,000 during that transition?
  156. (John Healey) Can I suggest I cover that in the transition note I promised to let the Committee have which can deal with IT? It can give you give you a breakdown of the staffing elements of the transition as well.

    Valerie Davey

  157. Another differential which your colleague Margaret Hodge mentioned, again in a letter to us, is that the TECs did not pay VAT and LSC does. Can you tell us why? The TECs were not liable in any account to VAT. One of the difficulties is the extra cost, we were told, to the LSC because they have to pay VAT and presumably they employ people to calculate it.
  158. (John Healey) I think, if I may say so, you are probably thinking of the question of funding for learning in school sixth forms being exempt from VAT whilst funding for other post-16 providers is not exempt from VAT. The reason for that is that with school sixth forms being funded via LEAs in the past the VAT legislation exempts them from paying VAT because part of the funding for local authorities is raised through local taxation. Margaret Hodge will have told the Committee in her letter that she has taken this up with the Treasury and we are looking for some decision and clarity on this because clearly it is complicating the sorts of moves that Mr Chaytor wants to see and that the LSC is trying to manage in terms of a common approach to funding and common levels of funding.

  159. I think "clarity" is the word and we would like to know, thank you very much.
  160. (John Healey) As soon as we have the clarity ourselves we will make sure you have that too.


  161. I am sure that Valerie Davey will keep you to that.
  162. (John Healey) I am sure she will.

    Chairman: Can I now turn to something that has very much interested the Committee and that is the financial support for adult students and the kind of equity or lack of equity between students in higher education and students in further education?

    Valerie Davey

  163. Can you give us your opinion as to whether FE students should have been included within the Government's recent review of funding for higher education? Your colleague again more or less indicated that would have been a good idea.
  164. (John Healey) I think that would be very difficult to do, I have to say, because the basis of funding for students in higher education is so different from further education that to try and examine the challenges that we wanted to sort out with higher education funding would be difficult to do with further education. The principal reason for that is that, unlike in higher education, in further education there are no entitlements to funding support. That is such a fundamental difference. We may be arguing the pros and cons and the policy consequences of that, but purely in terms of your question I think that would be very difficult to do.

  165. Difficult but important.
  166. (John Healey) We are at the moment in the Department doing a pretty far reaching review of the support for adult learners. I am quite content that we are doing that within the Department in discussion with others rather than having that part and parcel of a complex exercise that is going on at present with higher education funding and support.

  167. Can we turn then to specifics? Let us turn to the 16 to 18-year olds where we have not yet got a common formula for the institutions that they go to. What about a common formula for the support they get? A third of young people are entitled now to education maintenance allowances. Have you yet had the analysis of the benefit that that has given and is the Department again preparing a bid for February 18 on account of the EMAs for 16 to 18-year olds?
  168. (John Healey) I think the Committee has probably had the early evaluation that we have had on education maintenance allowances and the Committee will be aware that although there are different stages there are three years of evaluation set out for EMAs. That seems to suggest that there is probably an impact as far as we can see initially of round about a five per cent increase in participation in the 56 EMA areas. In terms of the spending review it is clearly one of the areas we are looking very hard at in terms of the context of what DfES will settle on as the priorities for the bid we put to the Treasury, what view the Treasury will take of our bid as a whole and the elements within it of course are a matter for discussion further down the track.

    Valerie Davey: Can I just check whether we have that evaluation already?


  169. We are not sure.
  170. (John Healey) If you have not had the evidence that we have then we will make sure you get it.

    Valerie Davey

  171. Clearly targeting funding is always good and there has been a very considerable increase in the access money that the colleges have. I think we have a note that it has risen from 36 million in 1999/2000 per year to 62 million in 2001/2002. Can you tell me what calculations you have as to how much of that has been taken up and of what benefit it has been to students?
  172. (John Healey) In terms of benefit, because it is a flexible fund that the colleges have been able to make decisions about largely according to the student demands and needs in their area it has been very useful. It has covered things that range from transport costs to overalls to learning books and equipment. We have an analysis of the precise number of people that have drawn down access funds. I do not have it with me today but I can let you have that.

  173. Included in that please could you tell us how much has actually been used?
  174. (John Healey) Yes.

    Mr Chaytor

  175. On the question of the review of support for adult students can you give us an idea of when that will be completed, and is it completely separate from the review of HE student finance?
  176. (John Healey) It is separate. We are doing it within the Department as part of our work to try and make appropriate decisions on where we might go in the longer term and therefore what sort of shape the elements of our bid for the spending review ought to have.

  177. So therefore this will be completed long before February 18?
  178. (John Healey) Much of the work that we are doing at the moment at least needs to give us a basis on which to make some judgements and decisions about priorities and some judgements and decisions about how strong our case at that point might be on any of these fronts.

  179. Has there been any consultation with outside interested parties about the future shape of any scheme for support for adult students or has it been entirely internal?
  180. (John Healey) We have discussions and meetings all the time, officials and ministers, with interested parties right across the piece on funding in the post-16 field as you know.

  181. But has there not been a formal consultation?
  182. (John Healey) This is not a formal consultation. This is work we are rightly doing within the Department as part of our own planning and prioritisation, particularly in the context of the onus on producing a DfES spending review bid.

  183. If the bid for this particular area were not successful in this year's CSR would the discussion of support adult students continue after that? Is it an issue worth considering after that or will you abandon it for the next three years?
  184. (John Healey) Let us wait and see what the outturn is, but in general terms I cannot see a situation where the discussion about funding support for students is ever going to be settled for any part of the education system.

    Mr Simmonds

  185. Mr Bryan Sanderson, to whom the Chairman referred earlier, was very strongly of the view that the disparity in pay between teachers in schools and teachers in FE colleges was unsupportable, to use his word. I wonder whether you agree with him and what you are going to do about it.
  186. (John Healey) There are difficulties, particularly in some areas, with recruiting and retaining staff in FE just as there are in other parts of the education system. If you look at the figures for the turnover of staff in FE, in general in FE colleges it is on average ten per cent. That compares pretty well with schools and higher education institutions. In about a fifth of general FE colleges it is as high as one in five. Some of the measures that we are putting in place will help that: the training bursaries, the golden hello's. Fundamentally pay may be a part of that but there are two other elements to this that the Committee might want to bear in mind as it tries to get a fuller picture of this. The first is that at present we still do not have the comparability of qualifications in the workforce, so of full time FE staff 52 per cent only have a full teaching qualification and ten per cent have a partial qualification. You would not find that in the school system. What that leads me to is that part of any long term solution has got to be able to deal first of all with the levels of professionalisation and qualification within the FE sector, and we can discuss some of the initiatives in the standards fund supported by the new teaching pay initiative that we have decided to try and re-introduce in order to create a career structure. Secondly, we have to deal with the degree of casualisation in the FE sector which again you certainly do not find in other parts of the education system. Part-timers make up 36 per cent, more than one in three, of the teaching force within general further education colleges. Thirty three per cent of FE colleges employ some of their teaching staff on term-time only contracts. Ninety per cent of their support staff are on term-time only contracts. This fragmentation and casualisation of the FE sector is one of our biggest challenges and I think myself is a big part of the problem of recruitment and retention in the sector.


  187. It is worrying, even if it is only ten per cent turnover in staff, if that ten per cent is many of your highly qualified people who are moving. This Committee has found, certainly in evidence from NATFHE, that like for like there is a 6,000 differential. If you are teaching IT in an FE college and there is a school up the road which has a vacancy you are likely to move. I am only talking about full time fully qualified, like for like comparisons, and that is a problem, is it not?
  188. (John Healey) There is a differential. I do not recognise the figure of 6,000. The figures that I have suggest that it is around 2,000. That certainly can create problems but then there are also these differentials in terms of the degree of qualification within the different teachers' workforces.

  189. I am just checking my papers here. The General Secretary of NATFHE, Paul Mackney, said that there was a 6,000 difference between further education and schools.
  190. (John Healey) I am not suggesting that Mr Mackney did not say that. I am just saying that I do not recognise that figure. The figures according to our analysis suggest that the differential is around 2,000. There is a differential, it can clearly cause problems, but there is also this differential which I think is important to bear in mind: the degree of qualifications that we have currently got in the workforce which we have to improve in FE and the degree of casualisation that many of the members that Mr Mackney represents have to put up with in terms of their employment within the sector.

    Mr Simmonds

  191. One of the issues as I understand it is that the pay structure within the funding for FE colleges used to be ring fenced and that is no longer the case. Certainly I have had representations from management in the FE college in my constituency, and I am sure others have as well, to try and bring this back. What is happening at the moment is that when the college finds itself short of money it is taking it out of what effectively would be the pay budget or not allowing the increase of pay to take place, even further exacerbating the problem.
  192. (John Healey) You are right to say that there is no ring fenced or national system. When FE colleges became incorporated independent institutions as a result of legislation in 1992 they then set their own terms and conditions for their staff. Although there are national pay bargaining arrangements it is a decision for the governing body of each and every college to make in terms of their staff. The latest NATFHE figures that I have seen suggest that seven out of eight colleges implemented in full the previous year's nationally negotiated settlement. It certainly does mean that you will see differences from college to area, from area to area, but that is because the colleges as employers are independent corporations.

    Mr Pollard

  193. In my own college the staff had not had a pay rise for two years and it was exactly the point you were making. I want to move on and say that Paul Mackney at our last session said that as well as the 6,000 (and you disputed that figure so that is up for argument) the sixth formers that colleges looked after were generally the ones that schools would not or could not look after and therefore there was a bigger job of work for them to do and, as well as that, they were getting less money for doing it.
  194. (John Healey) I would not like there to be any suggestion from those comments that somehow sixth form colleges were sink options for kids that schools could not cope with. In many areas, and it is probably the case in yours, Mr Pollard, many students go to sixth form colleges as a very positive option because they want to get away from the school culture. Sixth form colleges, as general FE, can offer them a range of learning that they simply cannot find elsewhere in the system. Though it is true to say that there will be some students that may require additional support that will put extra pressure on the staff, to some degree we have tried to recognise this in the formulas for the funding of students so that those who, for instance, come from particularly disadvantaged areas a proxy for perhaps extra support or extra incentive which might be needed to bring them into learning is built into the formula for funding student places.


  195. Minister, I appreciate what you say, but I have to tell you that in terms of sitting here on our top-up inquiry into FE, that if you compare the evidence that we had from the main teaching unions last week, there is a real change and you can see there is a real change and lift in positive feeling about what is happening in mainstream education, but we get a very different feel from the FE sector, that there is a lack of morale and there are some very deep discontents in the sector you are responsible for. I hope you realise that that is what we are picking up on and if you are not picking up on it we would be concerned that the Government was not aware of that situation at the very time when, as I have said elsewhere, the FE sector is being asked to play a very important role in your area and a tough role at that.
  196. (John Healey) Chairman, I do understand that and recognise it very clearly. I have said to audiences that I have either spoken to or had discussions with that in many ways I understand the view from FE that somehow from 1997 onwards the priority was for schools and then FE follows and I think that was the case. What we can argue is that we are only now starting to see the sort of investment in the FE sector that we were able earlier to make in schools and so the increase in the budget for FE of 527 million has been earmarked for this year as a significant real terms increase with more to follow next year. It is for the first time the sort of level of capital investment, particularly when we are introducing for the first time the teaching pay initiative and an increase in the standards fund, which has not been there in previous years. I do understand the pressures and the feeling there is in the sector. Also you would get many saying, "Well, we can see some signs now that perhaps things are changing".

  197. As the evidence showed last week, it takes time for it to be felt. The last point is on Sector Skills Councils. A lot of people - and we were talking about employers earlier - get a little bit dismayed by the Government's attitude to change: changing the name, changing the structure. It is quite difficult to keep the partnership that delivers the skills agenda and here we are, we have moved from TECs to LSCs, we are now having Sector Skills Councils and we are getting rid of the national training organisations. There is a price to pay, is there not, in terms of perpetual change? People get upset about it.

(John Healey) In this field the criticism would be justified if it were change for change's sake. My view when I took over this brief was the challenge of skills from the sector point of view of change over the years since the Government started consulting on this. What we needed were organisations that were able to make a contribution through increased skills sector by sector, not just in the level of qualifications that the workforce might have but also in productivity, in employability. You see in the policies that DWP are producing over New Deal, you see within the DTI over their concerns too about business competitiveness sector by sector, and also in the Treasury in their concerns about productivity generally, that the sector base has a very much more important part to play. We as a Government in my view needed organisations that were capable of doing that.. We had some very good NTOs. They were the minority. There were too many NTOs that had too little buy-in from employers in their sector and too little influence outside their sector, and that really is the basis on which we are looking to move from 70-plus NTOs to a smaller, stronger network in the future which will be based on sector skills councils.

Chairman: Minister, thank you for your attendance. We will seeing more of you. Thank you for your evidence.