Foreword
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I am laying before Parliament under section 10(4) of the Parliamentary Commissioner Act 1967 this report, which contains the results of my office’s investigations into two individual complaints that the Department for Education and Skills (DfES) failed to establish and operate adequate controls and safeguards in respect of the Individual Learning Account scheme (the scheme), leaving the scheme open to misuse and possible fraudulent activity.
One of the complaints, referred by Mr Christopher Chope MP, was from a student who complained that he was unable to register his training course to obtain a discount under the scheme before its closure on 23 November 2001, because his account had been fully used without his knowledge or consent. As a result he was left responsible for the full costs of his chosen course. The other complaint, referred by Mr Boris Johnson MP, was from Mr Tuckett, a learning provider, who complained that DfES had, through the scheme, encouraged a substantial growth in the market for basic training in information technology (IT), but had unreasonably refused to accept any responsibility for the consequences on that market of the sudden withdrawal of the scheme. In particular, DfES had refused to offer any compensation to learning providers who faced hardship as a result of the withdrawal of the scheme. Mr Tuckett has given his permission for his name to be used in this report. My office has reported separately, under section 10(1) of the Parliamentary Commissioner Act 1967, to the Members who put the individual complaints to me. What follows in this report is a merged and edited version of those two reports. The individuals concerned are not identified by name in this report
I received two other complaints from students and ten others from learning providers who made similar complaints to those investigated. The individual cases investigated were chosen as representative of all those complaints.
For reasons explained in the report, I have found that DfES were guilty of serious maladministration. I have also found that DfES’s service provider, Capita Business Services Ltd, failed to work effectively with DfES to make sure that there were adequate safeguards built into the scheme and the supporting computer system to prevent improper access to individual learning accounts once the original requirement for prior accreditation of learning providers was abandoned. Those failings contributed to the need first to suspend and then to close the scheme prematurely. Ironically, however, the very success of the scheme in attracting new learners also led to a significant cost overrun which Ministers judged to be unsustainable and made it necessary anyway to close the scheme. I have further found that there was some delay in processing applications for account numbers following receipt, and that a number of applications for account numbers, which had been properly submitted in good time, were not actioned following the suspension of the scheme.
As to redress for the injustice caused by the maladministration I have identified, I have concluded that it was not unreasonable for DfES to rule out a national compensation scheme to cover the full business losses suffered by learning providers who made their business plans on the assumption that the scheme would continue indefinitely. I have, however, concluded that students whose accounts were misappropriated, and who as a result incurred course costs that would otherwise have been eligible for a discount under the scheme, should have those costs reimbursed by DfES. I have also concluded that learning providers who can demonstrate that some or all of their eligible students properly applied for account numbers before the suspension of the scheme was announced on 24 October 2001, but whose registration, because of administrative failings, had not been logged on to the scheme by 6.30 pm on 23 November 2001 when it was closed down, should be compensated for the loss of the due discount.
ANN ABRAHAM
Parliamentary Commissioner for Administration
(the Ombudsman)
April 2003
