Learndirect case highlights ‘too big to fail’ concerns over Government contracts

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The Government has been strongly criticised over its role in giving millions of pounds of taxpayers’ money to a leading training company accused of failing to deliver quality services to apprentices.

Learndirect has failed to address its under-performance and has not acted in the best interests of learners, according to a damning report by the House of Commons Public Accounts Committee (PAC).

The MPs said that, in the wake of the collapse of construction giant Carillion, questions were rightly being asked about how the Government manages companies delivering public services.

Learndirect received £121 million from the Government in the 2016/17 academic year and expects to receive more than £105 million from its main government contracts in the current year, said the PAC.

NHS crisis
Labour MP and Public Accounts Committee chairwoman Meg Hillier (PA)

Meg Hillier, who chairs the PAC, said: “Outsourcing is an abiding interest for our committee but recent events have brought concerns about Government’s relationship with its contractors into sharp focus.

“In the case of Learndirect, thousands of learners have been let down amid poor oversight by Government and at significant public expense.

“There has been disruptive legal action and, finally, a scathing Ofsted report. Yet still Learndirect appears to hold the whip hand.

“It expects to receive over £105 million of funding from its main government contracts for this year, a consequence of assessments made about the risk to public services should Learndirect’s funding be terminated.

“No commercial provider should be allowed to become so essential to the delivery of services that it cannot be allowed to fail.”

The MPs reported that education watchdog Ofsted had concerns about Learndirect in 2015, and carried out an inspection in 2017, rating it “inadequate”.

The Department for Education (DfE) would normally cancel an inadequate provider’s contract and withdraw its funding almost immediately, said the PAC, but Learndirect warned it would harm its learners and jeopardise its ability to deliver other government contracts.

The committee made a series of recommendations, including urging the Government to understand how many contracts it gives to a company and how well they are performing.

The DfE was also told it should develop a framework for identifying any risk that a commercial provider becomes so large and essential to the delivery of public services that it cannot be allowed to fail, or requires special treatment.

The MPs also recommended that Ofsted should “urgently re-visit” how it prioritises its use of resources and the different type of risk to a private sector failure.

“Our priority has always been to protect learners and make sure they do not lose out and get the opportunity to complete their courses, a point previously acknowledged by the independent National Audit Office.

“We continue to monitor Learndirect’s performance on a monthly basis and will respond in detail to the PAC’s report in due course.”

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