What's the real story behind the Government's abrupt decision to suspend Individual Learning Accounts? Labour's 2001 manifesto promised to "extend ILAs", so what exactly is the future for the aim of empowering learners and breaking the grip of institutional providers?
The Government - and most commentators - have concentrated on a number of alarming claims of fraud that are now being investigated by police and Trading Standards inspectors. But aside form the straightforward criminal scams, ILAs have also been dogged by the unacceptable behaviour of some learning suppliers. At Inclusion, we were on the receiving end - with our office building stalked by dodgy salespeople flogging "free" computer training and offering to open ILAs for our staff.
The Government is now investigating 279 providers about whom they have "substantial evidence of aggressive mis-selling" following complaints by 6,000 people. In the most extreme cases - particularly where - bogus companies forged people's signatures to claim cash - the police have already arrested 30 individuals and prosecution decisions are pending.
The probity and security of the ILA system was compromised because Ministers specifically wanted a light, self-regulated regime. To be approved, providers simply had to sign a declaration and supply a range of documents attesting to their quality - in stark contrast to the substantial inspection regime faced by most established providers like LSC funded FE colleges and established training providers. Ministers essentially thought that the existing infrastructure of learning providers needed a shake-up and the ILA floodgates would bring in a wide range of new suppliers. A big mistake. As a result we got what Estelle Morris says was "low-value, poor-quality learning".
But, in a development that further underlines the growing divergence between the administrations across the UK, Learning Accounts will continue to flourish in Wales, Scotland and Northern Ireland. Indeed the Scottish Executive has recently decided to re-fund the ILA budget and continues - albeit for a short time only - to offer a £150 grant in addition to discounts on eligible training. From the start, the Scottish Executive had required all ILA providers to be registered with the Scottish UfI. This basic quality precaution has insulated Scotland from the frauds seen in England - although the Executive issued a warning on November 1st alerting providers and learners that a number of non-registered providers were seeking to subvert the system by subcontracting from authorised suppliers.
But these probity problems were not the only weaknesses. Although the programme had exceeded the Government's expectations and expanded beyond its original capacity, many accounts have lain dormant whilst significant numbers of ILA learners already have high levels of skills. And as we argued in last month's edition of Working Brief, the Government's intention to create incentives for employers to contribute towards their employees' learning was not implemented. We were astonished to discover that the Inland Revenue ignored Gordon Brown's pledge to adjust the tax system and give NI and corporation tax rebates to participating employers.
These more fundamental weaknesses really lie behind the Government's decision to abandon the current ILA model.
So what should be done? We agree with the Association of Colleges who have called for the current scheme to be abandoned and the Government to start again. However, we disagree with the FE community's fundamental disagreement with the account concept - David Gibson, chief executive of the AOC has argued that "next time around, the money should be targeted to [excluded] groups through colleges". There is strong potential demand for the kind of short, work-specific learning that ILAs have encouraged - witness the success of the LSC's short "bite sized" courses during the summer where 80,000 people took up some 18,500 courses and were oversubscribed by 60%.
So what should be the key features of a new scheme?
Firstly a clearer set of goals and rather less hype. Ministers originally launched ILAs in 1998, claiming far too much. ILAs would tackle barriers to learning; bring-in for the first time disadvantaged, low skill workers; overcome skill shortages; trigger new levels of investment jointly by employers, Government and individuals. By the end - after the £150 incentive was abolished in August - ILA was really just a discount card.
Secondly, a system founded on the concept of the "learner-purchaser" needs a fundamental review of information, advice and guidance (IAG) services - and its failure to offer comprehensive outreach services. It is unrealistic to expect potential learners to make informed choices when purchasing training without decent information. Until the chaotic structure of IAG services is rationalised and services improved, many potential learners will be grasping in the dark. Ask any economist: a market system in which purchasers have imperfect information will be a market characterised by failures.
Thirdly, there needs to be a better system of regulating and quality-assuring providers. One of the bizarre features of the LSC's funding regime is that its 16-24 provision (college courses and work-based learning) is over-inspected to the point of catharsis. Yet adult provision - which forms more than half of the LSC's expenditure - is subject to extremely limited quality assurance. This needs to change - preferably without replicating the excesses and duplication of the 16-24 provision.
Lastly, the new ILA system should be universal but also seek to target particular groups of learners, neighbourhoods, industry sectors and types of courses through a structure of top-up grants and discounts.
Most of all the Government should be more ambitious - not less. Learning accounts should have a scope that is far wider - covering much more of the vast array of learning that the LSC funds with its £5billion+ of annual spending.