Examination of Witness(Questions 500-518)|
MBE, a Member of the House of Commons, Minister of State for Lifelong
Learning and Higher Education, Department for Education and Skills,
Wednesday 12 December 2001
500. It is a new animal, Minister, but we were
told by the Secretary of State at the time that there would be
£50 million savings, and already there is an additional £25
(Margaret Hodge) There are savings. The expenditure
under the old TECs and the FEFC was in the region of £270
to £280 million. The commitment given by Ministers at the
time of the Bill that created the LSC was that we would save £50
million on central admin costs. Even with this additional £25
million we are saving more than the £50 million we promised.
501. The FEFC, I understand, was much more efficient
in terms of the amount spent on its administration costs; they
spent £15 million on a £3.5 billion budget.
(Margaret Hodge) I do not think that figure is right,
but what we have to look at is the admin costs across both the
FEFC and the TECs. Our best assessment of that is that it is in
the region of £270 to £280 million.
502. You can understand the concern. We do not
want to see huge amounts spent on admin. You say it is a new beast,
as it were, but what we do not want is it turning into a monster
that breeds red tape.
(Margaret Hodge) I agree. They promised a 25 per cent
cut in bureaucracy and we join and support them in that endeavour.
503. On 12 November John Harwood, Chief Executive
of the Learning and Skills Council, was giving evidence and we
were asking him about administration costs. He was saying that
£188 million (which has now been agreed) was good value and
so forth. He never mentioned to us, on 12 November, that he had
put in a bid to increase those administration costs, yet within
a few days it was in the newspapers and he confirmed to the newspapers
that that bid was in. What day did you receive the bid from John
(Margaret Hodge) I think that is the way of the world.
We have been in discussions with him for sometime over the difficulties
he is facing in financing the operation within the administration
budget framework that we set him. It would have been inappropriate
for him to have said anything becausesurprise, surprise,
as these things gohe wanted more and we settled on this
figure of £25 million. He is a servant of government
504. So he can be frank on the Today
programme but not to the Select Committee?
(Margaret Hodge) I think he was edited on the Today
programme. We all went on and we all said about the same thing,
it was just a little five-second clip that they chose.
505. He was quite willing, within a few days,
to admit he had a bid in, yet on 12 November he, effectively,
seems to have misled this Committee when he was saying what good
value the £188 million administration cost was.
(Margaret Hodge) Can I be honest? I have not read
the transcript of what he said, but from what you tell me of what
he said, saying that £188 million was good value is not in
conflict with saying "and I want more, please".
506. He did not say to us "But I need more";
he totally failed to mention that, even though he knew that he
was in negotiation and even though within a few days he was telling
the newspapers "Yes, I have got a bid in for more money".
That does appear to me to be misleading this Committee.
(Margaret Hodge) I can understand that. There are
negotiations over those sorts of budgets (ones that usually take
place in confidence) and we announce them when we announce the
letter. I think that is fair enough.
507. Could I ask another question on the admin
costs, which Jonathan has partly touched on already? John Healey,
in answer to a Parliamentary question on 8 November, said that
the figure he had just given was that the administration costs
for the predecessors to the LSC were about £270 to £280
million, but the FEFC say that they only spent about £15
million administering their share of the budget and that the TECs
spent about £150 million. That adds up to £165 million
admin costs from the TECs and the FEFC. Where does the other £110
million appear from?
(Margaret Hodge) I have not got the details here.
I am really happy to bottom this out by letting the Committee
have the way in which we calculate it.
508. So you can give us a detailed write-down
of what you say the FEFC spent and what the TECs spent and where
the rest of the money comes from?
(Margaret Hodge) If that will give you the confidence
that it is above board, we will do that.
509. Can I change tack? Minister, Jowanka Jakubek
is an intern working in my office from Warsaw University. She
comes on the ERASMUS Scheme, and I am really pleased about that.
I wonder if you could say something about how we might encourage
more students to come across here because they are then ambassadors
for how we operate. The other thing is, she comes from Warsaw
University, which is their equivalent of Cambridge, and goes to
Middlesex University, which is not our equivalent to Cambridge.
I know that is not your responsibility but I wonder if you could
just say something about that.
(Margaret Hodge) She comes because she comes from
an aspirant EU country. I think the ERASMUS scheme is great. What
rather disturbs me is that for every two that come here to the
UK only one goes abroad, and I am really keen, given the lack
of propensity of our UK young people to learn languages, that
we should have far more people spending a year abroad. I am looking
at how we can encourage a higher take-up of the available facilities
for our British students to go abroad.
510. We are drawing to a close in this session.
It would be wrong of this Committee not to, in the closing minutes,
mention one area where we are deeply concerned, and you are the
Minister for Lifelong Learning. There was a large lobby in this
Parliamentary building yesterday by people who are losing their
businesses and their income, and much else, because of the chaos
over the ILAs. It did seem to us, in our interview where we spent
nearly all the time with John Healey, your colleague, on ILAs,
there was awe thoughtdismissal of the pain and,
also, the undermining of the concept of lifelong learning amongst
a lot of people that we are going to rely on over the years to
come back into the system and to deliver their training and deliver
very important trainingIT training. The vast percentage
are honest companies and honest people who have put together a
business, some of them in the voluntary sector, some in the private
sector. We were deeply unhappy about what we discovered in terms
of what is occurring, both in terms of the accounting the fact
that they did not know how much it was costing, did not know the
figures; nobody in the department knew how much money had been
lost. On the one hand we were very worried about that and, on
the other, we are very concerned about the businesses and the
people who are being laid off and made redundant across the country,
with a verywe thoughtglib dismissal of any claim
(Margaret Hodge) I think right across the whole of
the team, Chairman, this is the most difficult issue we have probably
had to deal with since we became a team at the General Election.
We are all taking it very seriously. John Healey, I think, is
doing terrific work in trying to sort out the issues as they arise,
and things are changing in relation to ILAs. It is extremely difficult.
We share with you your concern, we share with you the concern
that we should not, in sorting out the problems associated with
ILAs, lose two things: first of all, the real enthusiasm for learning
which has come out from the very high take-up (the 2.6 million
people who put themselves forward for ILAs); we want to capture
that and retain it and build on it. Secondly, we clearly will
require the contribution from the private and voluntary training
providers over the coming period. Nevertheless, you would have
been the first to criticise us if when we started discovering
problems with the way in which the ILA itself was running in the
current regime we did not take strong and firm action to ensure
that we got systems in place that we could properly account to
you and Parliament for the money we have spentand confidently
account for that money. You would have been the first to criticise
us if we had not done that. So it has been a really difficult
situation. I know John is working incredibly hard at trying to
sort it out, and it is causing pain to private providers, to the
individuals who thought this was opening opportunities for them
and to the broader economy.
511. Minister, you are right that we would criticise
you if you did not take speedy action when you knew something
had gone wrong, but we also now are critical of the fact that
people out there deserve, at the very least, some timetable very
soon. Is ILA mark II coming back? We have had that promise from
the Secretary of State and from John Healey. When is it coming
back? What steps can the department, meanwhile, take to keep these
people with good companies in business as far as they can? If
they were told that they had a certain amount of time that they
have to manage for before the new system comes on stream, I think
even with the hardship that would bring there would still be some
great relief amongst that community. I have to come back to this:
you have just told us that because of TUPE all those staff in
the TECs are being looked after, very comfortable lives, in the
transition, although we know some of them are inappropriate and
will have to be diverted into other occupations over time. So
a nice comfortable scenario for the public service, but with the
private sector you have got really good people losing their jobs.
As a Committee we feel this is a worrying scenario.
(Margaret Hodge) I do not think it is fair to juxtapose
the two because you would also criticise us, Chairman, if we did
not properly stick to the employment rights of individuals who
find that their jobs have changed because we have decided to change
structure. I do not think it is fair to juxtapose the two. We
want to move forward as fast as we can. Equally, we want to make
sure that we have a robust and appropriate replacement for the
ILAs that will deliver the objectives we have for it. So we have
not got a clear timetable yet, but we are moving as speedily as
we can because we do not want to have a gap between the ending
of the one scheme and the introduction of the new. The final thing
I would say to youand, like you, I have probably spent
quite a bit of my life doing things in the voluntary sector and
in the private sectoris that it is just one of the tough
realities of life; if you are engaged in contracts (whether it
is with a public body or anybody else) those contracts can go
wrong. There has to be a limit to where the responsibility of
the contractorin this case the public sectorcan
elude their responsibility in picking up the undoubted difficulties
that creates for a range of voluntary private providers. The best
way forward is to get a new system up and running as fast as we
can, and we are working on it.
512. Minister, I have to say, I find that last
part unacceptable, in that I would have thought there is a clear
responsibility; the Department has got this wrong, and it is the
Department's responsibility to get it right fast. Your teams should
be working, burning the midnight oil through the night to get
this done and to get some assurance out there, because I find
this quite different from anything I have seen in the voluntary
sector, which is for a government department to cancel a major
programme overnight, putting a lot of people out of work, without
coming through with some explanation as to why it went so badly
wrong and how they are going to fix it. Getting it fixed is what
I think this Committee would like to see happen very quickly.
(Margaret Hodge) Absolutely. We need to have a replacement
in place, but it has got to be robust, it has got to be sustainable
and it has got to meet the objectives that we want of it. Where
there is the potential for abuse or fraud, you have, if you are
a public sector body, to act very swiftly to ensure that you close
off any of those potentials as quickly as you can.
513. Speaking of the replacement for the ILAs,
can you confirm, I understand that Bryan Sanderson, of the Learning
and Skills Council, suggested that the Learning and Skills Council
are working on a new version of the ILAs?
(Margaret Hodge) I am sure that we will be working
with them as a delivery partner, on a new version.
514. Also you were talking about contracts between
Government and voluntary sector and private sector and so forth.
Quite a number of the small training providers who were here last
night are sacking staff or are on the verge of bankruptcy or having
to say to their bank managers in terms of overdrafts, "Well,
we don't know when we'll have a cashflow coming back again,"
and the bank manager is saying, "Well, that's it." A
lot of them are very angry because they are saying that in terms
of contracts they are actually owed money by your Department,
all of which at the moment is frozen because the computer is down,
the website is closed and so on, and their cashflow has gone midstream
because they are owed money by your Department. They are talking
about breach of contract. Do you have any comment on that?
(Margaret Hodge) Obviously legitimate claims for money
will need to be met.
515. But they are sacking staff now, as of this
(Margaret Hodge) Yes, but what would you rather we
didthat we left the system open to further opportunities
for abuse and fraud?
516. But how quickly will they get the money
that is owed to them?
(Margaret Hodge) As quickly as we can possibly ensure
that we are paying those to whom we legitimately owe money, if
appropriate learning has been delivered. Nobody is trying to keep
money back just for its own sake. We just have to make sure there
is no abuse and no potential for fraud.
517. Can I clarify, did you confirm that the
LSC are looking into a new form of ILA?
(Margaret Hodge) We talked to the LSC. They have a
group of people who are evolving some work on policy development
and no doubt they will be looking into this. My understanding
is that the work is being done within the Department.
518. Minister, we have had a good, frank and
(Margaret Hodge) Thank you. I look forward to coming
Chairman: Thank you very much for your contribution.
I do not know whether you are a poacher or a gamekeeper these
days, but thank you again.
2 See Ev. p. 117. Back