NAO apprenticeship report warns of history repeating itself over fraud

NAO apprenticeship report warns of history repeating itself over fraud

The apprenticeship reform programme risks repeating the fraud that plagued Individual Learning Accounts without more robust risk planning, the National Audit Office (NAO) has warned.

The stark message came in a damning report from the NAO, published today, on delivering value through apprenticeships – which revealed the Department for Education (DfE) has still has no contingency plan for if levy and funding reforms do not work out as planned.

The failure of the Individual Learning Accounts scheme – which was scrapped in 2001 after abuse by unscrupulous providers led to a reported £67m fraud – was blamed on poor planning and risk management by the government.

But today’s NAO report raised concern that lessons had not been learned — as it warned the DfE had not done enough to identify how providers, employers and assessment bodies might react to the apprenticeship reforms, raising the risk of “market abuse”.

It said: “DfE now needs to expand its work on behavioural risks, and also ensure it learns lessons from previous initiatives which have not turned out as planned, such as Individual Learning Accounts.”

Phil Hyde, one of the team behind the report, told FE Week: “We’ve flagged this [behavioural risk] up as a separate section, because we do think from past experience that this is something that’s very important for them to be on top of.”

The report found that although a delivery team had been set up to “consider the risks of fraud and gaming” it was “too early to say what impact this group will have”.

It urged the DfE to “do more to understand how employers, training providers and assessment bodies may respond to ongoing reforms, and develop robust ways of reacting quickly should instances of market abuse emerge”.

The report urged the government to develop contingency plans for key parts of the reforms – particularly the introduction of the levy.

As previously reported by FE Week, the government has so far been silent on the matter of contingency planning if the levy systems don’t work out as planned.

But according to the NAO report the “DfE believes that, in general, initiatives are progressing sufficiently well that no contingency plans will need to be drawn up before October 2016”.

It said that in July a team had been commissioned “to prepare contingency plans if elements of the programme should not progress as expected”.

It continued: “However, the contingency planning for funding reform, including the introduction of the levy, needs to continue to be developed.”

Mark Dawe, chief executive of Association of Employment and Learning Providers, said: “The NAO is right to highlight that further progress is needed to manage the risks involved in the reform programme because if we don’t get the transition process right, there’s a real danger that quality of apprenticeships will be adversely affected.”

Sally Hunt, University and College Union general secretary, said: “We have to avoid the unfortunate scandals of private for-profit firms ripping off the taxpayer that we have seen in higher education.”

Apprenticeships and Skills Minister Robert Halfon said: “Our apprenticeship reforms give young people a ladder of opportunity, provide employers with high quality apprentices and deliver real benefits to the economy.

“The new Institute for Apprenticeships will ensure that apprenticeships are even more closely tailored to the needs of employers.”

A DfE spokesperson said it would consider the NAO’s recommendations.