Examination of Witnesses (Questions 80
WEDNESDAY 23 JANUARY 2002
80. A question for Roger, but possibly James
as well. To go back to the question of accounts that were not
registered by the 7 December deadline, because that is what training
providers were working towards. When they suspended the scheme
on 24 October they said categorically that you had got until 7
December. They then wrote out on 29 October, presumably to all
2.5 million account holders, saying that you had got until 7 December,
do not be rushed by people pressing you to sign up quickly, just
keep to the deadline, make sure it is the right course, etc. They
wrote to everybody involved saying you had got until 7 December
and you do not need to rush, make sure you are doing the right
thing here, and yet they then pulled the plug late on a Friday
two weeks before the deadline. Emma has already said they have
got some people who they had not registered by the previous deadline
of 7 December. There is a company in Chesterfield in my constituency
with nearly 200 people who were not registered because they were
working to their usual monthly accounting and that would have
been the next week after 23 November. How widespread is this?
How many companies are affected by losing money because they had
not registered people by 23 November when they had been told quite
clearly they had until 7 December? Secondly, has any legal advice
been taken so far whether this is a breach of contract and the
Government could effectively be sued? It seems to me absolutely
outrageous. John Healey has said to me three times now "There
is no way we would consider paying for anything that was not registered
by 24 November" and yet it seems to be a clear breach of
(Mr Tuckett) I will go fairly light on the last question
of legal action because I believe James O'Brien may have a little
bit more to say on that. On the first question, it represents
at the very least two lost weeks but I think a lot more than that,
it represents people clearing the cupboard out in order to put
everything in and make sure they have got everything in at the
end, so probably it represents a lot more than two lost weeks.
In my organisation's case it represents lost numbers. If you read
the brochures that came from the ILA they issued numbers in seven
to ten days. I wish it was seven to ten weeks. Despite seven to
ten phone calls per week most people took two months, three months.
I was getting numbers in a week or so before closure of the scheme
which had been lodged by the learner concerned in July or August.
Unlike many other centres we had let people start their learning
even though the number had not actually arrived. Some people were
a bit more careful. Because the scheme enabled you to, if you
like, book in advance for courses starting up to six months ahead,
either there were amounts left outstanding on the number or else
the numbers leading to the following year. There could well have
been quite a batch of people who were going to make registrations
in the few days leading up to 7 December. I think it said normally
in terms of Government tenders for contract very, very few are
deposited in the postbox more than 12 hours or 24 hours before
the deadline, so one would expect it to be a lot more than two
weeks. Although there was this breach of contract, as you have
said John Healey has said there was no contract, which I find
very, very difficult to believe. Everybody who was regularly involved,
those 1,400 people who were putting in claims on a weekly basis,
that money corresponds to January's salary for staff and we are
coming up to pay day. We were told this morning a little bit is
going to arrive for those two missing days. Certainly the lost
two weeks is a serious concern.
(Mr O'Brien) The important thing is, as you pointed
out, the timescale of events. We understand why the system had
to be closed down on 23 November but it did not mean that the
process had to stop, and that is what we believe could have happened.
As Roger has mentioned, if you are told by the Government at the
end of October you have got until 7 December and do not rush,
what happens? We know if there is a sale that the last days of
the sale are always the busiest. Lots of learning providers, ourselves
included, promoted Individual Learning Accounts and learning providers
generally were responsible for the success of the Individual Learning
Accounts because it was the learning providers' money that was
marketing and promoting the scheme, it was the learning providers'
time and effort that was going into promoting that. In that six
week period, or what was supposed to be a six week period, a lot
of marketing effort was going into promoting the ILAs. What then
happened with the sudden withdrawal of that was people were turning
up at training centres saying "Well, fine, the Government
says I can start until 7 December" and as learning providers
what could we do? What we decided to do in many cases was say
"Fine, you can start your learning" because we need
to mitigate our loss, because it is our reputation as well as
the Government's reputation. We actually accepted those people,
they paid their contribution, a minimum £50 or whatever it
may be, to complete their training on the expectation that the
ILA would be honoured at some point in the future once it was
resolved. We have taken advice to see if the contract, if you
like, between the DfES and the learning providers is valid. In
terms of this you can get opinions either way, the most important
thing that we have discovered is that the Government had set a
legitimate expectation for individuals to be able to access that
learning up until 7 December and they should honour that commitment.
We have done a sample and we can see names, Individual Learning
Account numbers, never mind the people whose accounts never came
through in time because of poor administration up in Darlington
at Capita. I can supply names of 5,000 people across 200 training
centres, so not a big number per centre, not as high as in your
own constituency of 200, of people who want to access learning.
In some cases they have started their learning and will hope to
regain the fees that are due but in some cases they have prolonged
it and said they are not going to commence their learning. That
is a problem, that is not helping the economy agenda generally,
getting people skilled, moving into the IT area. There are big
issues here for us. That two week period needs resolving for those
people who have started learning, or want to start learning, based
on the Government's promise that they could commence their learning
by 7 December.
81. A general question but I would be happy
if you could take just one or two responses to the question, Chairman.
The witnesses are indicating that they felt the system was open
to abuse from day one and potential fraud was inbuilt into the
system. Do any of the witnesses feel that there has been an organised
element to the fraud that has been built up or is it just individual
people taking advantage of a flawed system from the start?
(Mr Tuckett) I think the first point to make is that
the system is very, very flawed in its design and construction.
Everybody I have talked to, even with a modicum of computer security
expertise, say that it just was not built in in the first place
and lots of things could be done. The fact that you could enter
a single number and not even have to cross-relate it to the surname,
for example, was crazy. The fact that the number was a numeric
number rather than alphanumeric meant that there were ten options
rather than 26 and so on. The level of computer security was pitifully
low. I can also say that I have heard numerous accounts of numbers
being offered for sale and numerous stories, none of them substantiated.
One is that these come from the printers, secondly that these
come from insider information and, thirdly, these come from people
hacking into the system. I certainly have no firm, definitive
information which of those it is but I always look at that in
the context of a computer system put together under a £50
million contract. To me it is a very, very modest investment.
I would hate to come out with a figure, but a few tens of thousands
of pounds may have gone into the development of that computer
system. To say simply that we should have been able to trust the
8,000 people who filled in a one page form not to misuse their
capability to look at it simply does not wash water.
(Ms Lambie) I do not know who actually commissioned
the database that was running via the website but in terms of
having a basic knowledge of IT and how databases work, people
who typed in the wrong number three times should have been shut
out of the system in the same way if you are trying to register
with your online banker. People who were registering more than
1,000 students per week per centre should have been shut out of
the system because there is no way any training centre could train
that many people in a week. There are simple things that databases
can do and it does not take an IT expert to understand that. I
do not know who commissioned it or what consultancy they received
on designing databases but certainly it was a very simple system.
(Ms Solomon) You were asking was this organised. If
you think about it, if someone wants to defraud the system they
are not just going to take £200, are they? If they have found
a way to get in they are going to take as much as they can get.
It has got to be people who have decided quite seriously that
is what they are going to do. As Roger said, there is an awful
lot of Chinese whispers around about 80,000 numbers in Kent, all
sorts of things that people cannot substantiate.
82. Eighty thousand numbers in Kent?
(Ms Solomon) There was some story about somebody putting
80,000 ILAs through from Kent.
Chairman: Kent is well known for its enterprise.
83. Absolutely right.
(Ms Solomon) There are a lot of these stories. We
do not have the full stories, we do not have the names, but I
think all training providers could give you an example of some
nutty story. The fact remains if you are going to defraud it you
are not going to just take £200.
(Ms Lambie) Just a quick point. In any new scheme
that comes in there should be a number that people can call that
is a fraud line and if they are unhappy with their experience
there should be some place to report that. There was not anything
like that. If you phoned Capita you got people in the call centre
who were just there to put information into the system, they were
not there to deal with any complaints. There was no complaints
mechanism at all.
84. A question to Mr O'Brien to give us an overview.
From evidence given to us it does appear that we all agree that
whilst ILAs were a very good idea the structure and the systems
put in place were a complete shambles which almost beggars belief.
The Department for Education and Skills seems to be wanting to
exacerbate this shambles by refusing to compensate learning providers,
which I think is personally scandalous and I know the Parliamentary
Ombudsman will be looking into this. How do you think that decision
alone is going to affect the long-term future of your industry,
something that we are going to depend on very heavily if we are
going to move this initiative forward?
(Mr O'Brien) That decision to compensate the learning
providers is critical for the long-term survivability of small
training providers as well as medium and large providers. The
compensation is due in two parts. One is up until 23 November
people who were registered on to the learning system, those monies
are still outstanding. A payment was made for the week ending
21 December but it was a part payment and we cannot find a way
to reconcile that. Secondly, those providers who have not been
paid have been advised there is going to be a verification check
but no timescale of when that verification check will be undertaken,
no information on what that verification will comprise of, has
been forthcoming. Up until 23 November, first of all, those monies
are outstanding. The DfES this morning said there will be a further
payment made this week for the final parts. If that is full and
final payment of that, that is a step in the right direction because
in small business cash flow, as in many businesses, is very, very
important and those businesses will not survive. As Roger said,
people are not going to be able to afford to pay their staff wages
this month, and that is very important. The second issue in terms
of compensation, again, is that it means people in the training
industry in the longer term can reinvest and go out there and
market to learners to come back into the learning environment,
take up life long learning and get the skills which will help
them, whether it is to get a job, get a better job or communicate
with their grandchildren by e-mail in terms of training people
from the ages of 18 to 88. It is very important that compensation
is decided on but it has to be checked and verified and all legitimate
training providers will have no issue with that. It is very important
for the long-term future of the business.
85. We are running out of time. I want each
of our witnesses to briefly say what is in store. We are hopefully
going to get the ILAs back on track, what would be the characteristics
that you would want the new scheme to embody? What do you want
out of the new scheme?
(Ms Lambie) A vetting system that is much tougher
and people actually come and visit us, see what we are doing,
talk to people that we have trained. I think that is probably
the best evidence you can get. Consultancy on a new database system
so that it is more secure, it can block people out more easily.
They are the two main things.
(Ms Solomon) I would add, I think, the element of
personal choice in the new scheme is very important. This is something
that came up for us particularly at Hairnet because what people
choose to do is have personal one-to-one instruction. Many people
need to do that if they are going to get into IT because they
simply do not want to or cannot get to a class. If we get a new
system that tends to push learners through Government favoured
training organisations I think it is worse than not having a new
system because that element of personal choice is very important
to retain. If I can just say something on the back of what John
was asking about compensation. I think if the compensation issue
is not sorted out it becomes as good as the Government saying
"we actively consciously now penalise you for having joined
us in the ILA scheme in the first place". In terms of our
faith in the Government to stick to what it says it is going to
do and play fair, it is very damaging to be left in that position
thinking "Okay, ILA mark 2, do we go in, do we not go in?
What is going to happen this time?" I think that is tied
up with the way they deal with the compensation issue. Lastly,
I think we have all said here, just get on and do it. It is really
imperative, as James has said, that we know we are dealing with
a date. Even if they say it is April or June at least you know
what you are working towards. If you do not know what you are
working towards it is very difficult.
(Mr Tuckett) Three things. One is build on the flexibility
of the old scheme. The second is introduce one or both of quality
assurance or monitoring of achievement. The interesting comment
was made earlier that both seemed to be lacking from the first
scheme. A little rider to that is in a non-bureaucratic way. The
third is the question that is in vogue, joined-up Government,
please. Not only join up the ILA initiative, which has primarily
funded computer training, or a lot of the money has gone there,
with the digital economy, digital society initiatives, join it
up with that but, secondly, join it up with the whole funding
of adult learning generally through the Learn Direct Scheme, through
the Learning and Skills Council funding, who gets it and who does
not, because it has become clear there is much disjointed thinking
and disjointed initiatives and objectives that seem to conflict.
(Mr O'Brien) I support all of the comments made and
I do believe in the accreditation of learning providers but I
do believe that needs to be open to all learning providers, existing
and new coming into the marketplace. I would not support the comment
by the DfES earlier to possibly make that open to tendering because
you may get just specific groups. I think it has to be open to
providers who have to go through some quality thresholds and if
you pass those thresholds you should be invited into the scheme.
We believe strongly, the Association of Computer Trainers, that
it should be done at a local level. Use the framework that is
out there already. The Learning and Skills Council is ideally
suited for this, so please consider that. It needs an adequate
regulatory and compliance framework but do not make it overly
bureaucratic. There has to be some bureaucracy but it needs to
be a simple scheme. Learning providers need clear guidelines which
are unambiguous, put a version number on them so we know which
one we are working to but issue those so that everybody knows
what the rules are because the rules were lacking in the first
instance, so make that clear.
86. Can I thank all of our witnesses for their
contribution today and thank Members of my Committee who have
stayed the course. I must finish with one last question, I see
it is only 11.59. Why Hairnet?
(Ms Solomon) Because you would ask us that question
and remember the name.
Chairman: Thank you very much.