MPs disturbed by 'serious failings' of ILA debacle

MPs have said they are disturbed by the "serious failings" of government officials in setting up and running the ill-fated Individual Learning Account scheme that collapsed amid fraud allegations last autumn.

A report on the Commons' education and skills committee's fast-track inquiry into the ILA debacle criticises the Department for Education and Skills for its failure to learn from past government mistakes in operating similar initiatives.

And it censures Capita, the department's private-sector contractor charged with delivering ILAs, for its "considerable shortcomings" in running key elements of the scheme.

ILAs were introduced in September 2000 in an effort to widen participation in learning. The scheme provided government subsidies of up to £200 for everyone aged 19 and over to help cover the cost of certain courses.

They were withdrawn suddenly in October last year as concern grew that the scheme's rapid growth had outstripped its expected cost, and as evidence mounted of abuse by some learning providers.

The government set itself a target of 1 million ILA learners by March 2002. But by the time the scheme was shut down, there were 2.5 million accounts logged on to Capita's computer system. This left the scheme overspent by at least £60 million in its first two years.

The report says that the DFES, faced with a manifesto commitment to ILAs and with a government target, paid "insufficient attention" to reasons for previous rejection of the scheme by Conservative ministers and to ensuring that quantity was balanced by quality of courses.

The DFES failed to heed a warning from its own advisers on the Further Education Funding Council three months before ILAs were officially launched of the risk to public funding if rigorous quality assurance arrangements were not put in place, it says.

The report adds: "The DFES confused quality assurance with registration. It is this confusion which lies at the heart of the ILA debacle. Without a quality threshold or any systematic audit, there was nothing to stop unscrupulous opportunists signing up as providers on the ILA database."

Capita, in failing to insist on or build sufficient anti-fraud measures into the system, was equally to blame, the committee concludes.

The report recommends that all legitimate learning providers who lost out when the scheme was axed should receive compensation from the government.

The Association of Colleges claims its member institutions have lost a total of £1.4 million.