Scandal and fraud in the apprenticeship business – again

Education Is A Right2

Despite its silly name (which would fail a seven-year-old a Sats test), Learndirect is a training and apprenticeships ‘provider’ with a seriously large contract worth £158m a year from the Education and Skills Funding Agency (EFSA). It was privatised in 2011 in a £36m transfer to Lloyds Bank, which was 40% owned by the government at that time. An investigation by the Financial Times revealed that in the four years following privatisation the company spent 84% of government-provided cash on payments to managers and financiers, loaded itself with £90m of debt and diverted £20m in dividends from its operating company as profits dwindled. In 2012, it spent £500,000 on sponsorship of the Marussia Formula One team (Financial Times, 15 August 2017).

There is a direct line from Learndirect right back to the New Deal promoted by Blair’s Labour government in 1998, a year after its 1997 election victory, which resulted in the biggest House of Commons majority ever. Renamed the Flexible New Deal from October 2009, it was a cornerstone of Labour policy which seized on the openings by Conservative governments to bring the private sector into state education and then expanded it to all provision including apprenticeships.

In government Labour dropped its demand that 50% of 18-year-olds should attend university and looked to apprenticeships instead to bolster Gordon Brown’s vision of ‘world-class global competitiveness’. In other European countries, particularly Germany, 30% of companies offered apprenticeships compared to 6% in England. In 2008 the ‘Strategy for the Future of Apprenticeships in England’ document led to the establishment of the National Apprenticeship Service (NAS). The National Skills Director of the Learning and Skills Council was put in charge and took over central government funding for apprenticeships from local authorities.

Two additional steps were needed for the policy to be implemented and for disbursement of government funds. First a huge number of training provider businesses were approved to teach job skills, with secured finance from central government. Second, because apprenticeships are demand-led, the government provided employers with financial support and administration costs to encourage them to take on apprentices. Today the minimum apprentice wage is £3.50 per hour for those under 19 and is fully funded by the government. Older apprentices get the National Minimum wage of £7.05 for those under 24, and £7.50 for those over 25.

This outsourcing has created a quasi-business economy which flourishes through patronage and close ties between ministers and their friends in the private sector. The string of government contracts, with high pay at the top end and low pay at the administrative end, extends throughout the employment industry including Jobseeker Mandatory Activity, Community Work Placements etc. The entire set-up is impenetrable and unaccountable. On 1 April 2017, the Department of Work and Pensions instructed staff to stop making referrals to the Work Programme. Learndirect looks to be next.

What about the adult training and apprenticeships that Leandirect is paid to provide? What about the futures of adults in search of employment and the prospects of jobs for young people? A recent report by Ofsted, the government inspectors, found that 70% of Learndirect’s services are well below the expected standard. There are currently 73,000 people on training courses which are supposed to lead to employment or training on the job. These programmes are contracted out, sometimes repeatedly, to smaller companies and Ofsted found them to be inadequately monitored and planned. Learndirect tried to block the publication of the Ofsted report on the grounds that it could lose government contracts and be bankrupted. Exactly so. The outsourcing of education, like that of health, means that the privatised services of state welfare can disappear at any time there is a downturn in profits, leaving thousands of people adrift. In this case the government could not face the loss of its flagship apprenticeship policy and has chosen to support the sub-standard courses with £45m funding for 2017-18. So Learndirect, the private equity-owned company, will be bailed out because the Department for Education does not ‘have the resources to pay other providers’ (Financial Times, 7 September 2017).

Readers of FRFI will remember that the ‘Welfare to Work’ provider A4e was also exposed for embezzlement. There were nine investigations into the organisation’s conduct from 2009 onwards. In 2013 four people were arrested and charged with fraud and forgery, largely for taking credit for jobs they didn’t find. This was institutionalised robbery with falsified signatures and incentives in the bonus system that encouraged staff to make false claims.

David Blunkett, now Lord Blunkett, former Labour Home Secretary and Minister for Work and Pensions, earned £30,000 a year as advisor to A4e. The Ipswich Unemployed Action newsletter reported on Blunkett’s many consultancy jobs including work for property and construction company RLF for which he earned £1,500 for four hours’ work a week. In 2009 Blunkett was instructed by the Office of the Parliamentary Commissioner for Standards to amend his entry in the House of Commons Register of Interests to include a trip to South Africa paid for and organised by A4e after he failed to do so. Blunkett’s standards can be deduced from the fact that he held an advisory post for ‘corporate social responsibility’ at the Murdoch press.

Conflict of interests, lobbying, accountability and transparency are all just words to the ruling class and their beneficiaries. They steal from the state and the working class without shame.

Susan Davidson


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