'˜Inadequate' training firm may have been too big to fail, say MPs

A private education provider which was handed more than £100m in funding last year despite being rated as '˜inadequate' by a watchdog may have been considered 'too big to fail', a damning report by MPs said today.

Learndirect are contracted to deliver training to apprentices. Stock image.

According to the influential Public Accounts Committee, the failure of Learndirect in delivering quality training to apprentices whilst receiving millions of pounds of taxpayers’ money is “another stark example of a poorly performing contractor and poor oversight by Government and its regulators”.

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

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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. It was announced last summer that the Government is to end its contract with the firm due to concerns about standards.

The company is apparently receiving special treatment despite its failure to deliver quality training, suggesting it might be “too big to fail”, said the MPs.

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.

“It cannot be right that individual contractors should command such large sums of public money regardless of their performance.

“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.

MPs made recommendations, including urging Ministers to understand how many contracts they give 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.

A Department for Education spokeswoman said: “The Government is ending Learndirect’s contract to provide apprenticeships and adult education because of its failure to meet the high standards expected.” Learndirect declined to comment.