Threat of ‘shocking fraud’ in new apprentice system

Call for robust safeguards as figures reveal over 100 cases investigated in three years

Julia Belgutay

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The switch to a new system for funding apprenticeships alongside the introduction of the levy could lead to “shocking and prevalent examples of fraud” unless robust safeguards are put in place, experts have warned.

The levy on the payroll bills of large employers is expected to generate £3 billion a year by 2019-20, triggering concerns about the risk of some employers and training providers using “questionable work-arounds” to access public funding.

The warning was issued as new figures revealed that 114 cases of suspected fraud or misappropriation of funding were investigated by the Skills Funding Agency (SFA) over a three-year period.

The statistics were published in response to a parliamentary question tabled by Baroness Wolf, the Sir Roy Griffiths professor of public sector management at King’s College London and author of the 2011 Wolf report on vocational education.

‘Too little information’

The government’s response also revealed that funds were identified for recovery in 35 of the cases, with seven being referred to the police and four resulting in criminal charges.

Baroness Wolf told TES: “There is extraordinarily little information available to the public about a sector which is receiving huge amounts of public money.”

According to the 2014-15 SFA annual report, 81 allegations of financial irregularity were made that year, resulting in 27 investigations.

Businesses with a payroll of more than £3 million will pay the levy from next spring, and will be able to access funds to pay for training provision for apprentices.

Matt Garvey, managing director of West Berkshire Training Consortium, argues that the levy could “result in some shocking and prevalent examples of fraud”. He also warns that the government’s decision not to allow employers to be paid for delivering any part of the training could prove to be a mistake. Rather than instigating a “transparent and audited approach”, he writes that this could lead to “some questionable work-arounds – and not just from reputable companies”.

“There is huge scope for money to change hands if this new landscape is not policed properly,” he adds.

Unionlearn director Liz Rees voiced concerns about the levy earlier this year, telling TES she was worried that there could be a situation where “the rules are bent to access the kind of resource that will be available”.

Policy analyst Mick Fletcher said routing public money through tens of thousands of employers would increase the scope for fraud.

“More importantly, it will give considerably greater scope for error, particularly when combined with a wholly new IT-based system which has to operate in real time,” he added. “The biggest threat of all, however, is neither fraud nor mistakes but just poor value for money as people learn how to get rich within the rules of the scheme, just as they did with Train to Gain or adult apprenticeships.

“All of these threats will be magnified as the pressure to reach the 3 million [apprenticeships by 2020] target discourages officials from looking too closely at activity that delivers the right numbers.”

Mitigating the risks

Mark Dawe, chief executive of the Association of Employment and Learning Providers, said that all funding systems presented opportunities for fraud. “But we don’t believe that the proposed new system is any more risky in this respect than the current one, provided that it is furnished with the appropriate and proportionate controls,” he added. “We do think, however, that potential risks could be mitigated if we retained funding rates instead of the proposed caps.”

Carolyn Fairbairn, director general of the business lobbying organisation the CBI, said companies were “trying to do the right thing”.

The Association of Colleges said that payments would be made on the basis of official student records from established training providers. “However, the government must not be complacent and must keep a close eye on the levy payment system to ensure that the money is used correctly,” a spokesperson added.

The Department for Business, Innovation and Skills said the SFA was “working closely with colleagues from across government to implement counter-fraud measures for the new funding system”.

“Levy funds and government support can only be spent on apprenticeship training and assessment delivered by approved organisations. To be eligible, training providers and organisations will need to show that they meet or exceed key measures identified by the SFA and employers,” a spokesperson added.


This is an article from the 13 May edition of TES. This week's TES magazine is available in all good newsagents. To subscribe, click here. To download the digital edition, Android users can click here and iOS users can click here

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Julia Belgutay

Julia Belgutay

Julia Belgutay is head of FE at Tes

Find me on Twitter @JBelgutay

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