Learning lessons from LearnDirect
The scandal unfolding at LearnDirect appears to be truly shocking.
Following a characteristically forensic investigation from FE Week and the Financial Times, LearnDirect — the UK’s largest provider of adult apprenticeships and training — stands on the brink of failure, six years after it was privatised. Not only has LearnDirect been found by Ofsted to be inadequate and to be failing its learners, it has been accused of trying to frustrate the inspection and of taking legal action to prevent the publication of the report.
The picture of service failure and financial mismanagement at LearnDirect is truly shocking. Performance deteriorated rapidly, and Ofsted found many of LearnDirect’s apprentices weren’t getting the off-the-job learning they were supposed to be providing. Its financial position deteriorated rapidly too. LearnDirect was debt-free when it was privatised, but just four years later, it had debts of £90m, over 10 times its cash flow. Over the same period, its owners had taken tens of millions of pounds out of the company, and sponsored a Formula 1 team. You could not make this up.
Four things need to happen now. First, and most urgent, with LearnDirect (according to its own warnings in court) looking like it might go to the wall, Government must step in to ensure that the learners they are supposed to be responsible for are not disadvantaged, and that they can continue their learning.
Second, if LearnDirect does collapse Government should look in to whether public money was misused, and seek to get as much of it back from their parent company as possible. After years in which the parent company extracted tens of millions of pounds from LearnDirect, we now face the prospect of the UK’s largest adult learning provider going into administration, leaving contracts unfulfilled, and leaving 1,600 staff in the lurch. Government should urgently seek to claw back public money from the owners who have made huge profits then left this company on the brink of collapse.
Third, this sorry saga needs to be thoroughly investigated. The Education Select Committee would probably want to look into this, though this may be complicated by the fact that their new Chair — Robert Halfon MP — was until June responsible for the system as the Apprenticeship Minister. Given what appears to be an outrageous misuse of public funds, the Public Accounts Committee should investigate too. According to my caluclations, Learndirect raked in £631 million of public funding through the SFA/ESFA between 2012/13 and June this year. This was more than any other provider over that period.
Finally, government must seek to learn wider the lessons from this scandal. This sorry mess has lessons both for how our companies are run, and for how our adult education system works.
Following the failure of BHS, this appears to be yet another example of vulture capitalism. This was a state asset, flogged off to a private buyer which loaded the company with debt, extracted tens of millions of pounds, and left it on the brink of ruin. All the while, the service that they were paid by the state to deliver, with tens of millions of public money, deteriorated rapidly.
But this is not just a failure of a private business. It is a devastating failure of public policy and it points to wider systemic problems. Government created the conditions in which this scandal happened. It was government which privatised LearnDirect in its effort to streamline the state. It was government which de-regulated the training sector, and pushed competition, in the belief that this would drive up standards. It was government which reduced controls on quality of apprenticeships in a headlong rush for quantity. It was government which slashed funding for adult skills, in its effort to slash public spending.
Government allowed this to happen. It must learn the lessons from LearnDirect and make sure it never happens again.
