Colleges face crackdown on fraud

April 30, 1999

Ministers have promised "very aggressive action" against fraud and malpractice in colleges with a raft of anti-sleaze measures that threaten college autonomy, writes Phil Baty.

The measures, which include new powers for the funding council to intervene directly in college governance, were announced this week in response to the multi-million pound scandal at Halton College in Cheshire and to a string of embarrassing control failures in the lifelong learning sector.

The initiatives were confirmed by Department for Education and Employment permanent secretary Michael Bichard in a tense session on the Halton scandal at the House of Commons Public Accounts Committee this week.

Asked repeatedly by PAC members "how on earth" such a scandal could have happened and gone unnoticed for so long, Mr Bichard said the new measures would "make sure it doesn't happen again".

The measures include plans to give the Further Education Funding Council greater powers to intervene in college management and governance.

The FEFC will be given powers to nominate its own governors and "assessors" to college boards whenever it "considers it necessary".

There will also be compulsory training for governors and a compulsory qualification for principals.

"We will also review the FEFC's inspection and audit arrangements," said Mr Bichard.

Mr Bichard said that the government will ban the practice by which colleges hire the same firm of accountants to act as both internal and external auditors.

It will also give the FEFC powers to take away external audit responsibilities from colleges.

The plans come alongside measures already announced, which come into force in August.

These include rules to ensure the clerk to governing bodies is independent from college management and to reduce the influence of business on governing bodies.

Sir John Bourne, the comptroller and auditor general of the National Audit Office, said he hoped the new measures would guard against similar incidents.

"I would not rule out that there are further cases in the system and more whistleblowers will come out of the woodwork, and I will have to bring more cases before the committee in the future. If you have a strong principal with governors in their pocket and a weak audit process, problems will occur however good the regime is," he said.

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