Select committee inquiry

Funding of Learndirect Ltd inquiry

Closed

Public Accounts Committee · Opened 19 December 2017 · Closed 19 December 2017

What the inquiry looked at

“In March 2017 Learndirect Ltd, the UK’s largest commercial further education provider, was rated inadequate by Ofsted. As a result the Education and Skills Funding Agency (ESFA) will cease funding Learndirect in July 2018. In 2016–17 Learndirect received £121 million from contracts with central government. Much of this came through ESFA. Although Learndirect had previously been rated good by Ofsted and its financial health satisfactory by ESFA’s predecessor organisation, its financial rating was downgraded to inadequate in the autumn of 2015. On 13 March 2017, after a failed attempt by Learndirect to sell its apprenticeships business, ESFA issued the company with a Notice of Serious Breach, citing falling standards in apprenticeship provision. Ofsted performed a full inspection on 20–23 March 2017 and concluded that the company’s provision was inadequate. Learndirect attempted to challenge the decision legally, but failed. It will receive no further ESFA funding from July 2018 onwards, but is due to receive £95 million from ESFA during the 2017–18 financial year. As well as the cost implications, there are concerns about the number of learners affected by inadequate provision and by the possible gap following the removal of funding of Learndirect. We will ask representatives from the Department for Education, ESFA, Ofsted and Learndirect how provision was allowed to slip, whether the Government could have done more to save money and better monitor their contracts with Learndirect, and what will be done to ensure that the removal of funding from Learndirect does not leave apprentices and others without courses.”

The committee's words, from the inquiry page on parliament.uk ↗.

What it found

In the committee's words, from the summary of 22nd Report - The monitoring, inspection and funding of Learndirect Ltd. ↗

With the collapse of Carillion, questions are rightly being asked about how Government manages companies who deliver our public services. The failure of Learndirect in delivering quality training to apprentices whilst receiving millions of pounds of taxpayers’ money, £121 million in the 2016–17 academic year alone, is another stark example of a poorly performing contractor and poor oversight by Government and its regulators. And another contractor with contracts across several Government Departments.

Learndirect Ltd’s performance on apprenticeships has been in steep decline since 2013.

Learndirect failed to address its under-performance, and has failed to act in the best interests of learners. Ofsted had concerns about Learndirect Ltd in spring 2015, but despite the company’s 75,000 learners making it the UK’s largest commercial further education provider, Ofsted decided not to inspect until November 2016.

Even then, Ofsted accepted the potential sale of part of the company as a reason to postpone its inspection, and only finally inspected in March 2017. When Learndirect Ltd found that it had been rated as ‘inadequate’, it launched a legal challenge which delayed publication of the inspection report. The judge ruled fully in Ofsted’s favour, and the report was finally published in August 2017.

The Department for Education would normally cancel an ‘inadequate’ provider’s contract and withdraw its funding almost immediately. But Learndirect Ltd threatened that such a course of action would harm its learners and jeopardise its ability to deliver other key government contracts. The company continues to function, and expects to receive over £105 million of funding from its main government contracts in 2017–18.

This apparent special treatment clearly begs the question of whether Learndirect Ltd was too big, and too important to government, to be allowed to fail.

The Government needs to learn lessons from the failure of its contractors and, particularly where a company holds contracts across several Departments, ensure it has a grip on how these companies are performing.

4 The monitoring, inspection and funding of Learndirect Ltd.

What the government said

No government response is linked to this report.

Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 19 December 2017 to 2 March 2018.

Oral evidence 15 Jan 2018
Report 2 Mar 2018
Correspondence 4 letters
Dec 2017Mar 2018

What it recommended

The committee's recommendations are not listed here yet. Read them in 22nd Report - The monitoring, inspection and funding of Learndirect Ltd. ↗ on parliament.uk.