In 2018, the Times (paywall) reported the verdict of MP Meg Hillier, chair of the Public Accounts Committee: “The apprenticeship levy is not working. It was meant to incentivise large employers to invest more in apprenticeships by requiring them to pay into a central fund from which they can claim back some or all of their training costs.
Instead it has led employers to recoup the cost of existing in-house training schemes by relabelling them as apprenticeships.
She noted that more companies are setting themselves up as training providers and that Ofsted says that it will struggle to keep tabs on these. The following year her report pointed out that too many apprentices were still being trained by sub-standard providers.
Around a third of apprentices covered by Ofsted inspections in 2017/18 were being trained by providers rated as ‘inadequate’ or ‘requires improvement’. The poor quality of some contributed to a situation where over 30% of apprentices fail to complete their apprenticeship successfully each year.
A letter to the Times editor added: “The Learndirect scandal serves as a stark case: an organisation was allowed to take on more and more learners (reaching 75,000) when warning signs of inadequate training and poor financial management were already being issued”.
The Financial Times reminded readers that Learndirect was privatised and sold to the private equity arm of Lloyds Bank in 2011 but is still reliant on government funding. When the Public Accounts Committee questioned Learndirect and Ofsted, Ofsted revealed the findings of Learndirect’s “inadequate” performance and the ‘legal shenanigans’ used to prevent earlier revelations. The findings included:
The National Audit office’s 2019 report focussed on the cost of apprenticeships and the low rate of uptake. In its first full year of operation, the apprenticeship levy raised £2.7 billion and this is expected to rise to £3.4 billion by 2023-24. However, there have been repeated warnings in recent months that the funding pot generated by the levy is about to run out
Earlier this month the Financial Times reported on an Education and Skills (EDSK) report, based on official data, which has investigated what is happening with the apprenticeship levy and the apprenticeship system in England more broadly.
It found that 50% of apprenticeships funded by the levy are ‘fake’, citing figures which relate closely to those reported by the Public Accounts Committee, recorded in the FT box above:
- Some £1.2bn of the £2.4bn money raised since the levy was introduced in April 2017 had been spent on “fake” apprenticeships, rebadged MBA courses and low-skilled jobs training,
- £550m of levy funding had been spent on management training courses for experienced employees, which previously would have been funded from professional development budgets.
- Highly qualified academics, many of whom already have PhDs, had been relabelled as apprentices in order to put them through levy-funded professional development courses.
- And £235m had been used to teach people in low-skilled jobs, including working at a shop checkout or serving in a bar, often requiring minimal training, which pay low wages and do not meet any established definition of an apprentice.
Last July Boris Johnson said that, while he will always “defend and extol the advantages of having a degree, there are far too many young people who leave university with huge debts, and no clear sense of how their academic qualification has helped their career.” He has pledged to “elevate practical and technical qualifications” to “recognise their immense value to society and to the individual” and to raise funding for apprenticeships.
As – regrettably – Learndirect has re-emerged in the apprenticeship sector under a new name: Learndirect Apprenticeships Ltd., EDSK reflects that government pays private providers taxpayers’ money to deliver public services but can fail to monitor the results or truly penalise those that do not deliver. It recommends the Department for Education to tighten rules to stop financing of rebadged MBAs and low-skilled training and introduce a new definition of apprenticeship, benchmarked against the world’s best technical education systems.
As journalist David Hencke reminds us:
“One of the oldest tricks in the Whitehall playbook is to use a major event as cover to publish unpalatable or embarrassing news.
“It means the media are diverted by the event and don’t notice the announcement or report”.
In his recent post Hencke noted that the Ministry of Defence and the Treasury use of the US elections to hide two bad news stories.
On the day before Trump‘s victory, the Ministry of Defence slipped in a very embarrassing announcement about war veterans pensions and disability payments (£438,193,000 in the Armed Forces Pensions and Compensation scheme) for which the Treasury had apparently not budgeted, commenting: “As a result they will have to raid the contingency reserve for emergency payments to make sure these veterans have the money”.
On ‘results day’, the National Audit Office’s less than glowing report on the new Defence Equipment and Support agency was released to the media. Though the agency was set up to address MoD cost overruns on equipment, bad spending decisions and lack of control, the NAO has qualified its accounts and made profound and widely based criticisms of its performance
On the day of publication, few noticed that Amyas Morse, the Comptroller and Auditor General, reported: “The DE&S has again been unable to provide sufficient evidence to support certain costs, or demonstrate that all costs it has incurred have been included in the financial statements. The C&AG has therefore limited the scope of his audit opinion . . . I believe this situation has arisen because the Agency’s financial management systems, processes and controls for these transactions and balances are not yet sufficiently well developed to meet the Agency’s needs.”
Hencke also reports that Anne Marie Trevelyan, Conservative MP for Berwick on Tweed and a member of the Public Accounts Committee, said: “At a time when we are seeing a lot of change in the Ministry of Defence, causing a great deal of anxiety for those who are serving, it is very disappointing to see Defence Equipment & Support has not got to grips with financial management”.
See also Hencke’s news article for Tribune magazine.
Parliament’s own website heads the summary of the Committee of Public Accounts report on Revenue and Customs: “HMRC still failing UK taxpayers”.
Its lamentable performance in simple tasks such as answering the telephone is on record and its failure to collect a reasonable amount of offshore tax evaded was published in November. It spoke of 11,000 job cuts since 2010 & 40,000 since 2004. Read the summary by the chair, MP Meg Hillier, here: http://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news-parliament-2015/hmrc-performance-report-published-15-16/
“HMRC must do more to ensure all due tax is paid. The public purse is missing out and taxpayers expect and deserve better.
“We are deeply disappointed at the low number of prosecutions by HMRC for tax evasion. We believe it is important for HMRC to send a clear message to those who seek to evade tax that the penalties will be severe and public. It’s also important that the majority who play by the rules, paying their tax on time and in full, see that those who don’t will face the consequences.
“Tax avoidance also remains a serious concern. Too many avoidance schemes run rings around the taxman, operating legally but gaining advantages never intended by Parliament. If tax law is to be improved then HMRC must as a priority provide Parliament with comprehensive details of avoidance. HMRC must also rapidly improve its customer service, previously described by the PAC as abysmal and now even worse – to the extent it could be considered a genuine threat to tax collection.
“It beggars belief that, having made disappointing progress on tax evasion and avoidance, the taxman also seems incapable of running a satisfactory service for people trying to pay their fair share.”
- Report: HMRCs performance in 2014-15
- Report: HMRCs performance in 2014-15 (PDF)
- Inquiry: Report: HMRCs performance in 2014-15
The FT reports that people of Crickhowell agree: the town’s traders have submitted tax plans to HMRC, using offshore arrangements favoured by multinationals. They hope that their ‘tax rebellion’ will spread to other towns forcing the Government to tackle how Amazon, for example, paid £11.9million tax last year on £5.3billion of UK sales. Their rationale: High street coffee shop owner Steve said: ‘I have always paid every penny of tax I owe, and I don’t object to that. What I object to is paying my full tax when my big name competitors are doing the damnedest to dodge theirs.’
Margaret Hodge, who chaired the Commons’ public accounts committee in the last parliament, attacked an unaccountable Whitehall “freemasonry” while speaking at Policy Exchange in February, alleging that the PAC has been threatened with break-up if it did not moderate its treatment of civil servants.
Mrs. Hodge’s tenure has been marked by penetrating criticism of civil service management of big projects [a search on this site will find several instances] – also shining a light on big companies, such as Google, whose tax affairs her committee exposed.
A researcher at the Institute for Government think-tank was said to have passed on comments from senior civil servants, one accusing the PAC and the National Audit Office of being “modelled on the red guards”. Another asked: “Should the PAC be broken up?”
In the past, Total Politics has commented: “Aircraft carriers, IT projects, border checks – the slippery Sir Humphreys are forever hiding behind their department’s ministers to avoid proper accountability for the sometimes very expensive decisions they make”.
The FT reported Margaret Hodge’s statement that the sad truth was – in a battle between Whitehall and politicians – civil servants were most likely to win because whereas we are here today and gone tomorrow, they are there for the long term.
As 26,000 civil servants in the Home Office had not been able to keep up with an era where services were delivered by “a plethora of autonomous health trusts and academy schools” and private providers were delivering public services through “a range of fragmented contracts”, Ms Hodge suggested the principle that had worked when there were 28 civil servants in the Home Office was no longer sustainable.
As noted on this site under the ‘reward for failure’ category, Ms Hodge stressed that those responsible for “dreadfully poor implementation” were rarely held to account for their failures and all too often showed up again “in another lucrative job paid for by the taxpayer”.
Next post: an insider’s view from a civil servant
News broke today that the Kings Fund is paving the way for further privatisation of the NHS and Capita formally takes over the Food and Environment Research Agency next Wednesday, despite a string of privatisation scandals; these include the ATOS debacle and the revelation that G4S and Serco, two big outsourcers, had overcharged on electronic tagging contracts. (Left: Kings Fund: 11-13 Cavendish Square, London)
MP Margaret Hodge: “the most important public policy issue of our time”
The Serious Fraud Office investigates Serco and G4S, the National Audit Office has called for tighter scrutiny of government contracts and Margaret Hodge, who chairs the public accounts committee, has called the privatisation of public services – with around half the government’s £187bn annual spending going to private contractors – “the most important public policy issue of our time”.
Capita formally takes over FERA next Wednesday after paying £20m for a 75% stake
Professor Tim Lang, who heads City University London’s food policy unit and advises Westminster and World Health Organisation, said: “I think it’s absolutely scandalous. This is selling the state, and the moment a state loses its access to science it’s in trouble.” He claimed many food policy experts shared his view but were unwilling to speak out about their concerns.
Capita track record in Birmingham – just four of many complaints
- David Bailey, professor of industrial strategy at Aston Business School has received a large amount of correspondence from distraught and seriously ill constituents who have been waiting months for Capita to carry out an assessment for their claim for disability benefits, many of whom are now facing serious financial problems because of these delays.
- Professor Bailey has repeatedly called for the contract to be market-tested, and said: “If the contract had been cancelled in 2012, at my estimated cancellation cost of £25 million, then there would actually have been a net in-year financial benefit for the council given the £28 million saved.”
- Birmingham City Council handed over its council tax collection department to Capita Service Birmingham in 2011 with a commitment to raise collection rates, but in July the Post reported that Council tax arrears in Birmingham have risen by 15% in the last year with the local authority owed more than £105 million.
- MP Roger Godsiff, who has questioned Capita closely about its costs and profit margins (a taxpayers’ subsidy) said the contract for IT, call centre and pay roll services is an “egregious misuse of Birmingham citizens’ public funds”.
Capita has already outlined plans to almost double sales by making the unit’s work more commercial; Professor Lang warns that the agency will now be under pressure to ignore low-paying projects vital to public safety and the environment in favour of more lucrative research – no one will pay for evidence about food and biodiversity, or food and pesticide residues.