NAO: ‘Inadequate’ training company kept on because of its size

15 Dec 17

The government kept funding training company Learndirect despite it being judged ’inadequate’ because of fears over the loss of such a large provider.

That was the conclusion of a National Audit Office probe, released yesterday, into why Learndirect continued to receive substantial public money even after regulator Ofsted criticised its effectiveness.

The NAO’s report said that although the normal policy of the Education and Skills Funding Agency was to withdraw funding from providers rated as ‘inadequate’ by Ofsted, it “believed that the size of Learndirect Ltd made it an unusual case, to which special considerations should apply”.

It continued: “Specifically, ESFA concluded that continuing to fund Learndirect Ltd for the 2017-18 academic year would best meet the interests of learners, allowing the company to wind down and let learners complete their courses with minimal disruption.”

The NAO said it conducted the investigation because “Parliament and the media have questioned whether Learndirect Ltd’s performance was subject to proper scrutiny, and whether correct and timely decisions were made about its continued funding”.

Learndirect grew to be by far the largest provider of skills training, with some 70,000 people on its books.

In 2016-17, it received £121m worth of central government contracts.

Labour’s Meg Hillier, chair of the Public Accounts Committee, said the report showed: “The government backed itself into a corner by letting itself become dependent on Learndirect.

“At a time when many further education providers are struggling with funding restraint, it is disgraceful that the Department [of Education] should be continuing to spend millions of pounds of taxpayers’ money on an inadequate provider.

“I am concerned that it took Ofsted so long to investigate. It knew Learndirect was a risk from as early as Spring 2015, but the inspection took two years to arrive.”

The NAO said Ofsted inspected Learndirect in early 2017 and in March that year issued a ‘notice of serious breach’ of apprenticeships standards. 

It said Ofsted identified factors contributing to its ‘inadequate’ rating including poor management of subcontractors' performance and weak oversight of learners’ progress.

Ofsted also covered the Learndirect affair in its annual report this week.

This noted: “The case of Learndirect limited has shown that no provider is too big to fail.

“This raises a question for us and for government about failure in market regulation and whether incentives drive the right behaviour.”

It said the episode raised questions about when providers of any kind “grow too big, too fast”.

A Department for Education spokesperson said: “Our priority throughout has been the protection of learners and ensuring that they do not lose out - a point that has been acknowledged by the NAO.”

Ofsted, at the launch of its annual report, went on to warn that the new apprenticeship levy was “raising a very substantial amount of money to fund training, [which] carries the risk of attracting operators that are not committed to high-quality learning, as we saw, for example, with Train to Gain”.Learndirect has been approached for comment.

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