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Auditors uncover Pounds 76m funds error

Almost Pounds 76 million of public money paid to training and enterprise councils was either wrongly claimed or could not be properly accounted for, official figures reveal.

National Audit Office reports show how cash incorrectly paid out by the former Employment Department built up over the four years from TECs establishment in 1990.

Details of the scale of incorrect and uncertain payments - where there is inadequate documentary evidence of attendance by trainees - is published in Labour party evidence submitted this week to the Nolan Committee on standards in public life.

The TEC national council acknowledges the accuracy of the figures, but points to a downward year-on-year trend in incorrect claims as evidence that TECs have now tightened financial controls.

The Labour submission, compiled by newly-appointed training spokesman Stephen Byers, links the erroneous claims directly with a failure on the part of TEC board members to recognise their accountability to the body which funds them - either the Department for Education and Employment or their local community.

It accuses TECs of failing to advertise vacancies at board level, opting instead for "a closed and secret method of appointment" in which friends or business acquaintances of existing members are recruited. Mr Byers highlighted the issue of incorrect payments as "a matter for serious concern".

However Nigel Chilcott, secretary to the TEC national council, accused Labour of "scoring a cheap political point based upon out-of-date figures". Incorrect claims were almost Pounds 30 million in 1991-2 but had fallen to Pounds 6.6 million in 1993-4, indicating efforts by TECs to abide by the so-called "100 per cent plan" - designed to improve systems of financial control.

The national council, which is keeping its own submission under wraps until the Nolan hearing on November 28, also refutes Labour allegations that TECs are failing to observe its guidance concerning potential conflicts of interest for directors over the issuing of contracts.

The Byers submission lists examples of investigations by the Employment Department or National Audit Office into the issuing of contracts at five TECs - Stockport and High Peak, North Nottinghamshire, Essex, Sussex and Westec. No wrong doing was found in any of the five, but improvements were suggested in the recording of board decisions where a conflict arises and is declared.

Mr Chilcott said every TEC had agreed to abide by national council guidelines on standards. The Nolan Committee, a body set up a year ago, has turned its attention to local public spending bodies after reporting on standards in Parliament and the big-spending quangos earlier this year.

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