Press Release - Individual Learning Accounts
25 October 2002
The innovative Individual Learning Accounts (ILA) scheme was
aimed at widening participation in learning and helping to overcome
financial barriers faced by learners, particularly amongst those
who lack skills and qualifications. The scheme, which subsidised
the costs of appropriate courses, was implemented too quickly and
inadequately planned. The Department for Education and Skills had
no detailed business model or quality assurance for courses and
there were weaknesses in security arrangements. In addition,
according to today’s report from head of the National Audit Office
Sir John Bourn, the Department failed to monitor closely enough the
escalating demand for accounts.
Concerns that some providers were abusing the system and over
the quality of some courses led the Department in October 2001 to
announce that the ILA scheme would be withdrawn the following
December. The Department acted promptly in November 2001 to close
the scheme immediately following evidence of significant potential
fraud and abuse: in particular, that the database holding details
of the accounts (operated by the Department’s private sector
partner in the scheme, Capita) was being improperly trawled for
unused accounts by a few unscrupulous registered learning providers
abusing their legitimate access to the system to make claims in
respect of these accounts without the knowledge of the account
holder. The Department estimated at the time that, had it not
closed the scheme immediately, the value of fraudulent claims could
have run into tens of millions of pounds.
According to today’s report the Department does not know
precisely how many accounts were opened and incentives claimed
without the knowledge of the account holders. The Department is
seeking to determine the extent of this problem through detailed
investigations and learner surveys. As at 1 August 2002, about 700
providers (out of a total of almost 9,000) were being checked. 133
of these, who had been paid a total of about £67 million, are being
investigated by the Department’s Special Investigations Unit; 98 of
the 133 had been referred to the police. Because of the volume and
complexity of the police investigations, it may be two years before
the full cost of fraud and abuse will be known.
The ILA scheme, introduced in September 2000, attracted much
more interest than the Department expected, with some 2.6 million
accounts being opened and expenditure amounting to some £273
million (against a budget of £199 million). About 65 per cent of
all learning was IT-related. Half of the learning booked (for which
data is available) was entry level training or level 1
qualifications. ILAs were a universal scheme to support lifelong
learning for all. Some nine per cent of learners were young people
with no qualifications, but many had A-levels or equivalent and a
quarter were graduates.
The NAO point out that the Department was under pressure to
agree the contract with Capita quickly. Instead of a risk-sharing
partnership, the relationship the Department built with Capita was
more like that with a contractor and most of the risks, in effect,
remained with the Department. The Department excluded Capita from
membership of the Project Board because its presence would restrict
open discussions of policy. In the NAO’s view, this was a major
factor that resulted in Capita having to act as a contractor bound
by the terms and conditions of the contract, executing decisions
made by the Department, rather than working together to develop and
operate the scheme as it would have preferred to do.
The Department also decided against introducing a quality
assurance system and expected instead that market forces would
ensure that new providers would replace inefficient ones. This
meant that the responsibility for identifying the most appropriate
and good quality learning fell on learners, some of whom are
amongst those least able to compare and contrast options and
determine what learning would suit them best.
The NAO further concludes that the operation of the scheme was
not monitored properly – with over a quarter of the learners
registered as having started training not doing any. There was no
requirement on Capita to make spot checks on the eligibility of
learning or to carry out basic validity checks to ensure the bona
fides of account holders. And, because there was no exception
reporting, the Department was unaware that some 13 providers had
registered over 10,000 accounts and 20 claimed payments of more
than £1.5 million.
The Government is committed to introducing a successor scheme as
soon as possible. The intention is to make the scheme attractive to
learners but with better expenditure controls and less potential
for abuse. The Department has agreed, in principle, to work with
Capita to develop the scheme. A decision on whether the company
will be involved in operating the scheme has not yet been made and
negotiations are continuing.
Sir John Bourn said today:
"In some respects, this was a very good and innovative
scheme: it was popular and encouraged many people to acquire or
update much needed skills. But the speed with which the Department
implemented the scheme resulted in corners being cut. Poor planning
and risk management by the Department led to weaknesses in the
system which made fraudulent activities possible. And the
Department did not keep their eye on the quality of the learning
and on the indications that a few unscrupulous providers were
taking advantage of the inadequate security
arrangements.
"I look to the Department to take account of these
lessons when devising and implementing the new
scheme."
Notes for Editors
Individual Learning Accounts were not like bank accounts.
Individuals registered with the ILA Centre and were allocated an
account number which they quoted to any provider from whom they
chose to undertake learning. At the time of registering with the
provider, they also paid the minimum contribution towards costs of
their chosen course. Providers were responsible for entering
details of the proposed learning on Capita’s database. The provider
was also responsible for confirming with Capita that the learning
had been started (which could be up to six months after
registration) and could then claim the balance of any fees due.
Fraud, abuse, mis-selling and poor value for money were possible
under the following circumstances:
- providers legitimately registered people as having enrolled for
courses, but subsequently accessed the account without the
knowledge of the account holder in order falsely to register them
as having started the learning. Individuals subsequently wishing to
undertake learning then found that they could not do so because
their accounts were empty;
- providers trawled the ILA database and improperly accessed
accounts which had not been used, ‘enrolled’ the account holders on
learning programmes and subsequently falsely registered them has
having started the learning;
- providers offered incentives to people to open accounts for
specific learning programmes and falsely registered them as having
started learning;
- providers packaged courses with others to justify higher course
fees reclaimable from the scheme;
- providers legitimately enrolled people and claimed for
learning, but did not provide any learning at all, or issued
materials of an inferior quality or not fit for purpose.
Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.org.uk/ Hard copies can
be obtained from The Stationery Office on 0845 702 3474.
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office employing some 750 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 60/02
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