Examination of Witness (Questions 360-379)|
WEDNESDAY 28 NOVEMBER
360. Minister, you will know, because you will
remember as a distinguished member of this Select Committee in
a slightly different form, that we have the power to request papers.
I wonder if you would accede to a request of this Committee to
have a record of any meetings that you had or your Department
had with any other Department on ILAs. In other words what we
particularly want to know is when you had the first meeting or
any meeting with the Treasury to discuss the ILA. Would you be
able to do that?
(John Healey) Chair, I am more content to prepare
for the Committee a schedule of the points at which we consider
we took particular decisions and in particular to identify the
points at which any discussions or notifications were made to
the Treasury in advance of that decision we announced on 24th
361. Minister, just coming back to the professional
management of the ILA scheme in its entirety. What has concerned
a number of us on the Committee is the fact that there is a deadweight
factor, some would argue. We had Chris Hughes, the Chief Executive
of the Learning and Skills Development Agency, tell the Committee
ILAs were enormously popular but there was inevitably a deadweight
factor in that they were going to people who were already involved
in the system. Has any assessment been undertaken with regard
to how many people were not in some form of structural educational
training and has there been any assessment of the deadweight factor
and take up of ILAs? I suppose the point is this, has this been
getting to those people it should be getting to?
(John Healey) I think there are two aspects, Mr Baron,
to your question. The first short answer is yes we have done quite
a significant study of people who have opened ILA accounts and
those who have used them. Just over one fifth who opened the accounts
and used them said they had not participated in any learning in
any form for at least 12 months. One in six of those who use their
ILAsone in sixhad no previous qualifications whatsoever.
That is an indication of the degree of targeting that has been
achieved through the ILA policy and scheme as a universal offer
and links to the discussion we had earlier on about whether or
not there is a case for redefining that universal offer to one
that is more tightly targeted. The question of deadweight is I
think less a question of who it goes to and more a question ofperhaps,
Chair, I can just lay my Treasury background herewould
those learners have covered the cost of that learning anyway and
done that learning without the offer of the ILA account? That
is I think the most important working definition of deadweight.
In one of our evaluation exercises we asked users to comment on
a proposition "With an ILA I would not have been able to
pay for my learning." 44 per cent either fairly or strongly
disagreed with that so in other words it gives you a hypothetical
feel for perhaps 40 per cent of those who have used ILAs who would
have pursued, or certainly could have afforded to pursue the learning
that they undertook without an ILA support. 50 per cent, however,
agreed they would not have been able to do their learning with
the financial help of the ILA account.
362. Does that not suggest there should be more
careful targeting with regard to who we offer these ILA accounts
to in order to ensure they are those who most need it.
(John Healey) Yes.
363. Is that going to be a factor or criteria
you use in any sort of replacement scheme?
(John Healey) It is one area, as I have explained
I think to the Committee, we are looking at very clearly and carefully
as part of the work we are having to do in terms of redesigning
the policy for a prospective relaunch.
364. In any replacement scheme that is going
to come forward, I know it is very early days but having said
that you must be thinking about a replacement or you should be.
How are you going to move us forward? How are you going to target
any replacement scheme to ensure it is aimed at those people who
most need the help?
(John Healey) You are right, Mr Baron, it is too early
to tell you that because we have not weighed up and looked very
carefully at what we can do. Just as an illustration. The current
scheme was devised and introduced in England being eligible for
anyone over 19 as long as they had not got a higher education
degree. Sorry, it was designed in England for training which excluded
higher education learning. In Scotland, Wales and Northern Ireland,
they took a slightly different criteria for eligibility which
shows the flexibility of the concept itself. Their cut off age
was 18 and they allowed learning to be funded by ILA accounts
for part-time higher education study. In other words, there was
an element of different decisions about targeting in the four
different areas. It is a very flexible concept. The decisions
that we need to make on how we design it and how we target it,
it is really, frankly, at the moment, as you suggest, too early
to give you a definite answer on.
365. It is going to be an intention in the future
that anything like this we are going to target more?
(John Healey) It is one of the areas for the redesign
of the policy that we are looking very closely at.
366. Minister, in terms of the overall picture,
what this Committee I think is trying to probe is, on the one
hand, I think every Member of this Committee is delighted about
the whole concept of individual learning accounts and all the
measures that show they were successfully taken up. We have our
reservations thatI do not know why it is called the deadweight
factorthe people you really want to put in ILAs, not enough
of those are being brought in by the scheme and of course that
makes it difficult for you in terms of meeting other targets in
terms of tackling adult literacy and skills. In a sense what we
are finding difficult, not just from your officers but from the
Department's officers, is here is a scheme and all schemes are
prototypes in a sense and you have to learn from them and if something
goes dreadfully wrong you go back to the drawing board and you
get it right and you manage again. What seems to be worrying the
Committee, it is certainly worrying me as Chairman, is this change
in the view of why it happened. I do not see what is wrong with
the Department saying "Look, it is an interesting prototype.
It was wildly too popular. It did not quite hit the target that
was agreed in the original vision. It was costing a lot of money
and on the margin there was a bit of fraud". I do not understand
the two voices coming from the Government about this. If you put
your cards on the table and state "These are the problems,
as a Select Committee understand that." I think the Committee
would understand it. We are getting a very strange message from
the Department. We are sitting here, you used to sit on this side,
we train some good people here. There is a potential one sitting
behind you smiling at the moment. The fact of the matter is can
you not see why you have had a session here dominated by the ILA
because we are discontent with the sort of answers not just from
you but from the Government on this flagship policy?
(John Healey) I completely understand and, if I may
say so, I think you are right to give this such close attention
but what I hope I have been able to explain is that there were
twin concerns at the time of the decision to withdraw the programme
but the principal concern was about the protection of the proper
use of public money, the protection of individuals who were putting
some of their own money into their ILA supported learning and
the fact that the steps we had taken clearly were not stopping
the minority of providers that were frankly not just abusing and
misusing the system but drawing down increasing amounts of public
money by doing so. That seemed to me the proper basis for the
steps we took. I have tried to explain how the two concerns perhaps
combine but that is the principal and proper overriding concern,
the misuse of the system by a small number of providers and the
amount of public money that they were drawing down as a result
of their activity.
367. Minister, you can understand that the Committee
is concerned, quite rightly, about the individual learning accounts
such that it has really dominated the whole session. I have made
a suggestion to the Committee, and I think we all agree, that
we will continue only on this subject today and we will invite
you back in the New Year to discuss the other aspects of your
brief. Is that acceptable?
(John Healey) I would be delighted to do that.
Chairman: Right. We have another 15 minutes.
368. I watched some trainees who are returning,
these are mums bringing up families they were going back. They
were keyed up by this opportunity, there is no question about
that. It provided a useful skill to come back part-time. There
was competence and confidence being pulled in. That competence
has taken a knock, certainly locally, and I would guess nationally,
how will we get that back? The second question, you have been
very shy about saying when the son or daughter of ILA might come
on stream. You must have an ambition or aspiration that you would
like to see it back and that would send out a stronger message
than you have been sending out already. Yes, it will come back,
cast iron guarantee, at some time. The Forth Bridge is being continually
repainted, we do not want to get into that in the future, so far
in the distance it is of little consequence.
(John Healey) I want to see this reintroduced as soon
as we can. That is the reason why despite the very heavy pressure
on the Department to deal with the current situation we are facing
I have insisted that some of our officials in this territory continue
to work on the plans and the development of policy for a future
ILA style scheme. The reason for that is just as you say, Mr Pollard,
this is actually a programme which has helped people with their
skills and knowledge. From the evaluations that we did 84 per
cent said as a result of using their ILA it has improved their
knowledge and 59 per cent said it has helped them grow in confidence
which was the other element. You placed quite proper stress on
this. In a sense it is almost ironic, the confidence that here
is a policy with a very important and positive impact which is
actually growing through this period of operational difficulty
as we hear more from a range of providers and a range of individuals
including constituents through Members of Parliament actually
we are getting a much better idea of the impact that their the
scheme has been having than perhaps we had a month ago.
369. I do not have to tell you, Minister, the
importance of a flourishing FE sector in places like South Yorkshire,
which we both represent, in terms of future regeneration of South
Yorkshire, particularly in light of the fact we have some of the
highest levels of poor adult literacy and numeracy skills. Looking
specifically at how the ILA scheme has operated, what proportion
of ILA account holders were pursuing courses of basic adult literacy
and numeracy, do we have statistics on that?
(John Healey) At the end of October of the 2.5 million
ILA account holders in England just around about 1.3 million at
that point had drawn down the discounts in order to pursue learning.
That was in part why when we took the decision and announced it
on October 24th we did not stop the scheme in its tracks at that
point because we wanted to give those other learners who had opened
their ILA account some opportunity to sign up for training in
order to be able to take advantage of their ILA account before
we had to end the scheme on December 7th. We gave them that notice
period. For ILA account holders they had until then to register
with a provider, decide what training they wanted to pursue, register
with a provider and make sure that provider booked that learning
with an ILA centre. It did not matter whether or not they had
started that learning because they could start it at any point
within six months from December 7th and still be able to draw
down that discount.
370. Do we know what the success rate of pursuing
that particular policy has been in terms of the continuing learning?
(John Healey) In what terms?
371. In terms of the number that are actually
(John Healey) I cannot give you figures for the number
following October 24th that have signed up or redeemed their ILA
account off the top of my head but we could find that information
out for you. I am happy to provide that.
372. Thank you.
(John Healey) We will be able to work on that as soon
as the operation of the ILA centre is restored.
373. Just one further point in terms of the
pursuance of basic adult literacy and numeracy skill courses.
I guess there will be the regional variation details in terms
of the take up of the type of course. I guess for South Yorkshire
it is probably higher than the national average. Do we have any
regional stats on that?
(John Healey) No, we do not, but for adult literacy
and numeracy, the adult basic skills that quite rightly you identify
as a big problem generally but tending to be even more concentrated
in areas like South Yorkshire where there is economic and social
disadvantage, the ending of the current ILA programme will not
affect provision of adult literacy and numeracy. That is an entirely
separate strategy and an entirely separate programme which is
fully funded and does not require the individual to contribute
at all to the costs of learning and does not require the application
of an ILA style top up in order to be able to pursue it.
374. Can I just come back very briefly to this
issue about fraud within the system. You stated to us this morning
that basically you were aware there was a small number of providers
abusing the system. Why did you not then just close down that
small number of providers and allow the majority, who were obviously
providing a very good job, as judged by the enormous popularity,
to carry on? Why did you throw the baby out with the bathwater?
(John Healey) We had tried that approach during the
course of the summer. The first learning provider we suspended
as a result of allegations and an investigation into fraud was
in June. What we found was that we simply did not have the wherewithal
to be able to take strong enough action to stop them simply by
applying the rules of the scheme as it was devised and undertaking
that course of action.
375. Can I come back to that? Surely if you
had evidence that there was fraud, why did you not have the wherewithal
to address those providers with the evidence that you had? I am
still unclear why you had to close down the whole scheme. How
was closing down the whole scheme going to provide that?
(John Healey) Let me try to help by getting a sense
of proportion and perspective. At the end of October, when I said
that we had 2.5 million account holders, we had received, up to
that point, 8,448 complaints just over a quarter of which were
about misuse of the system. Those 8,448 complaints related to
404 providers. Of those 404 providers the vast majority had maybe
one complaint raised against them and only a quarter of those
complaints were about misuse of the system. I am giving examples
of the other sorts of abuse that were registered. Those were the
providers of principal concern. By November 17 that list of providers
for whom there had been some complaint raised was 565 off the
back of just over 10,000 complaints. Those within that category
where either there were a number of complaints raised against
them or for which the nature of those complaints meant that we
had serious concerns number 86, and 60 of those were already investigated,
five of them referred to the police, the others we are preparing
to investigate, and of the cases of alleged fraud where we involved
the police in helping us investigate, during the entire operation
of the scheme for more than a year, that amounts to 39 arrests
connected with three learning providers, with one person charged.
So you have a span of activity which is an important context for
this, I think, which is the run-of-the-mill sort of complaints
you get from punters of any system or programme that you have;
you have a proportion that is just over a quarter of those complaints
that essentially are about non-compliance with the system, misuse
of the system, and then you have a very small extreme end where
you have serious allegations of fraud. This of course is all a
description of the position before the end of last week. We simply
were not able to control the activities, conduct the investigations,
protect the proper use of public funds and the interests of individual
learning account holders, by working within the system we had
set up. It was a regrettable conclusion we came to. We tried the
measures that we thought we could take during the course of the
summer and early autumn. We came therefore to the conclusion that
we had no other alternative than actually to withdraw the programme,
which is what we announced on October 24.
Mr Baron: I am conscious that time is ticking
on, but perhaps I can ask a question about, that very quickly,
Minister. As you were providing a lot of finance for all this,
why could you not have sent a simple letter explaining to those
providers that you had a serious doubt about that you were withholding
finance until you had time to undertake a further investigation?
That would have allowed the vast majority of providers who were
obviously doing a good job to carry on and not cause the maximum
disruption that this has caused. You had the power to do that,
because you were not implying guilt, you were providing the finance,
you had the power to say, "We're going to cut off finance
for the time being until, in your best interest," you could
have worded the letter, "these allegations are resolved."
376. Could you come back briefly on that?
(John Healey) Yes. Those were precisely the preliminary
stepsan inquiry, investigationthat we took with
providers that we were concerned about during the course of this
summer. It did not allow us to close down their operations sufficiently
within the way the system operates. We did precisely that, and
it proved to be not strong enough action to allow us to control
377. Even though you were supplying the money?
(John Healey) Yes.
378. Minister, had there been no allegations
of fraud, would you have suspended the scheme?
(John Healey) No, we would not have taken the decision
to withdraw the scheme if we had not had the increasing concerns
and increasing evidence of activity that was frankly a misuse
of the system and an improper use of public funds.
379. There were 10,000 complaints the overwhelming
majority of which were nothing to do with fraud?
(John Healey) Yes.
4 Ev. p. 98. Back