“Training company Learndirect should face an investigation after it was rated “inadequate” by Ofsted, the chair of the Public Accounts Committee says.
The firm is estimated to have received more than £600m of public funding since 2011, but Meg Hillier said the government must demonstrate there were consequences for failure.
Ofsted has told the BBC no training provider should be beyond scrutiny.
Learndirect said it had made strong progress in improving its provision.
Ofsted’s report, which the company tried to prevent being made public, rated Learndirect inadequate overall, with failings in apprenticeships and lesser problems in adult learning.
No termination of contract notice has been issued, which would normally follow a similar rating.
Officials have told the BBC that because there is a need to “protect learners and maintain other key public services run by Learndirect Ltd”, the contract will run its course until next summer with intensive monitoring.
But those officials will face questions about their handling of the contract when they next appear before the influential Commons Public Accounts Committee (PAC).
Labour MP Ms Hillier MP said: “It’s a very big contract and we’re concerned the way Learndirect is treated is a sign the government considers it is too big to fail, which raises wider issues about how we contract these things out.”
She said she had asked the National Audit Office to consider looking into the contract. “If something is failing, the government needs to take action,” Ms Hillier continued. “It needs to show there are consequences, and it’s a real slap in the face to providers out there doing a good job, who are rated good or excellent by Ofsted, who then see a failing provider seemingly getting away with it.”
Learndirect Ltd has dozens of subcontractors, and takes a share of the contract value in return for passing the work on. But this case raise may wider questions about the scrutiny of major public contracts.
The head of Ofsted, Amanda Spielman, spoke exclusively to the BBC and FE Week in a joint interview about the lessons that need to be learned.
“We have to make sure that we say what we have to say about quality, no matter what,” she said. “We have to do that as early on as possible in the life of providers so we don’t end up with more Learndirects where there are 20,000 apprentices not getting what they should be getting.” She refused to be drawn on her view of the response by the Department for Education (DfE) following the Ofsted report, saying: “It is not for us to decide what happens to Learndirect.”
But she added: “I hope that the lessons from Learndirect will really focus people’s minds on what can be done up front, especially with very large providers. “In any system there are always going to be some problems, some providers with difficulty, and making sure the system can cope with the failure of any provider is an essential part of a functioning market.”
There is a risk for Ofsted that if robust action isn’t seen to be taken following a critical report, its own authority is undermined.
In a BBC interview, Skills Minister Anne Milton said Learndirect Ltd was not seen by the government as too big to fail. “It is most certainly not untouchable, we have the learners’ interests at heart. “We will continue to act swiftly with Learndirect and any other provider that fails to do as their contract specifies.” She also gave an undertaking to recoup any public money for training not delivered – the first time the government has said this publicly. “We will claw back from Learndirect any bit of their contract they have failed to fulfil.” That could only happen after an audit of the contract, if it was found that some training had not been delivered.
This criticism of Learndirect comes at a time when a significant expansion of apprenticeships is about to unfold.
The prospect of the new employer-funded apprenticeship levy has led to around 2,000 potential providers joining a new government register.
Ms Spielman said: “There are very clear risks. One is about people who shouldn’t be providing training at all, making sure they don’t get onto the register, or recognising that at the earliest possible moment before lives are disrupted.
“One is about making sure that people who have the potential to do it well stay in control of their business model and don’t lose sight of apprentices through layers of subcontracts that aren’t managed well.”
The new system will be very different, because employers will commission as well as fund the training.
Learndirect said it was making improvements to its adult training. “We remain committed to working with current employers and apprentices to ensure they receive the training and skills they need to succeed,” it said.
“Our focus is on delivering the highest levels of service and outcomes, and we will continue working closely with the DfE and ESFA [Education and Skills Funding Agency] to ensure its requirements around quality measures are met.”
A separate company Learndirect Apprenticeships Limited has been set up for business under the new apprenticeship levy.
A spokesman for that company said Ofsted had recognised it had prepared well for the new system and that corporate apprenticeship customers were happy with the standard of learning.”