More than 160 learning providers are under investigation by the police and the Department for Education and Skills (DfES) in the wake of substantial fraud in the Government's flagship £260m, Individual Learning Account scheme, John Healey, the minister for adult skills revealed last week.
The police are investigating 16 learning providers, while the education department's special investigation unit is looking into another 97, and holding talks with the police about a further 54, Healey told members of the select committee on education and skills.
The scheme was abruptly closed by the Government in November 2001 after questions were raised about the security of the ILA computer systems. Its failure has thrust Capita, the IT supplier for the project, into the spotlight, and has raised wider questions about the management of public-private sector partnerships.
Complaints from members of the public about the ILA scheme began to escalate in June 2001, reaching about 18,000 by January, a DfES spokesperson told the committee. About a third of the complaints were from customers who discovered that money had been taken from their learning accounts without their authorisation. The real total, however, may be much higher, with many ILA customers reportedly having difficulties getting through to the Capita-run ILA helplines.
"We started getting evidence of learning providers that were very much after a quick buck, very much after subverting the spirit and breaking the rules of the scheme," Healey said.
Some learning companies, for example, were claiming £200 subsidies for sending CD-Roms of training material to people who did not own computers.
Under pressure from MPs the minister admitted that he was unhappy with the quality of service he received from Capita in managing the scheme. "There were problems and shortcomings in the provision of security and the management of security once the system was up and running. That is a matter between the department and Capita, but clearly Capita was the expert technical specialist," he said.
Healey's evidence was at odds with claims by Capita that security weaknesses in the ILA Web site were the result of a last-minute decision by the Government to abandon plans to accredit training providers, following difficulties with database integration.
Under the original plans, the ILA learning provider databases would have been linked into databases for another government initiative, Learndirect. Capita group board director Paddy Doyle had suggested to the MPs in an earlier hearing that these databases would have ensured that only accredited, trustworthy learning providers would be allowed on to the scheme.
Difficulties integrating the Learndirect database with the ILA database and a last-minute change of policy by the Government to encourage untested learning providers to join the scheme, meant that the accreditation idea had to be abandoned with little time to improve the security of the IT systems, Capita claimed.
But Healey insisted that Learndirect's databases would have had no impact on the quality control of the ILA scheme. "Learndirect was not about providing quality assurance," he said.
Doyle, in turn, stuck by his story when he returned to give further evidence to MPs the following day. "We have a difference of opinion. Learndirect was an example of a way we could get some kind of method of making sure bona fide learning providers were on the system." Despite Capita's initial concerns that the change of policy would leave the Web site open to abuse, Capita said that the education department was convinced that the ILA system would be safe from abuse.
"For quite some time we had this open registration process and it seemed to be working. Our concerns backed off a little," said former DfES civil servant Denyse Metcalf, now divisional director of Capita.
When complaints began to escalate, Capita and the DfES attempted to improve the security of the ILA scheme.
The crunch came in November 2001 when a learning provider handed the department a disc, offered to it for sale, containing confidential details of 1,000 individual learning account holders, including their names, addresses, contact numbers, and UK residency status.
Despite these security failings Healey refused to rule out Capita as a partner in a new ILA scheme. "One option is for us to tighten up the rules of the scheme, introduce the quality assurance and to tighten up also the security in the operational system and therefore to continue our partnership with Capita," he said.