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Wednesday, 1 May, 2002, 17:25 GMT 18:25 UK
Training fiasco payouts demanded
student using pc
Many smaller trainers went bust when scheme collapsed
There have been renewed calls for the government to compensate training providers who lost out when it scrapped its flagship scheme for adult learners, following a highly critical report on the scandal by MPs.

The Commons education select committee's report into the handling of Individual Learning Accounts (ILAs) condemned the Department for Education for "serious failings".

The shadow minister for adult learning, Alistair Burt, said the government was entirely responsible for the "fiasco".

"Warned when setting up the scheme that it was riddled with holes that could profit con-men at the expense of students and honest learning providers, the government ignored advice and continued with its policy," he said.

"The government cannot even now tell us how much money has ended up in the wrong pockets.

"The government should immediately offer a full apology, respond to our call, made months ago, to compensate those who have lost out because of its incompetence and deliver on a replacement scheme, which is now months overdue."


One of the biggest providers of training, Pitman Training, said the committee report showed immediate action was needed.

Its managing director, James O'Brien - who warned ministers early on of the potential for fraud - said: "The government's sudden withdrawal of ILAs had a massive impact on the whole IT training sector and as a direct result many training providers have already gone out of business.

"Money is still owed for training begun in November and if a decision is not reached quickly there is a very real risk that by the time ILAs are reinstated there won't be enough providers left to actually carry out the training."

The select committee made no comment on the general issue of compensation for training providers who had lost money or gone out of business as a result of the scheme being stopped.

But it did have a view on the way the scheme's impending closure was announced by the Department for Education - then brought forward two weeks, from December to November last year.

Early shutdown

"We recommend that the department should at least re-imburse those bona fide learning providers who can demonstrate that they have been financially disadvantaged by the accelerated date of closure of the scheme," the report said.

The department should appreciate that the way this was done "caused a great deal of difficulty for many learning providers, both large and small".

Roger Tuckett, of the newly-launched Federation of Independent Training Providers, said there was "huge anger" among training providers.

"It's in this area of the 'missing two weeks' that learning providers are particularly angry - that is the very minimum that the government should be paying," he said.

If ministers wanted to have a big impact on the situation for relatively little outlay they should target compensation on those two weeks, when providers had legitimately taken on trainees only to find the scheme suddenly halted on a Friday evening.

Another source of rancour, he said, was that " a significant number of companies" could not get paid because they were under investigation, but it was not clear to them what they were supposed to have done wrong.


For the government, the Adult Skills Minister, John Healey, said: "We have been determined to get to the bottom of what went wrong and the Committee's inquiry has helped this process.

He promised that lessons would be learned in designing the successor scheme - though still no date has been given for when that will be unveiled.

"We are now moving closer to settling the design," Mr Healey said.

Capita, the management and software consultancy group which ran the scheme for the government, was also criticised in the select committee's report.

New scheme

In a statement, Capita accepted that it should have drawn matters of concern to the department's attention "in a much more proactive fashion".

And it said any new scheme would need to have "robust verification, validation and auditing processes".

"Building on our experience of the initial ILA scheme, the committee asked us to provide some initial ideas of how a successor ILA scheme might be developed and we are continuing to work alongside the department to develop those ideas still further.

"We are also managing, with the department, the conclusion of the initial ILA scheme, processing outstanding valid claims and assisting with ongoing investigations regarding possible abuse of the scheme by unscrupulous registered providers."

The BBC's Sue Littlemore
"There were no checks on the trainers at all"
The BBC's Kim Catcheside
"It may be impossible to calculate the scale of the losses"
Shadow Education Secretary Damian Green
"Ministers should carry the can for this"
See also:

10 Oct 01 | Business
Tricksters target government scheme
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