"Incorrect and uncertain" payments amounting to Pounds 8.6 million were paid by the Department for Education and Employment to training providers in 1995/96, the Public Accounts Committee says in a report this week.
The department's financial controls over the provision of national vocational qualifications "have not been fully effective in ensuring that the public expenditure they administer is properly spent", the report found.
The Government spent Pounds 1.4 billion on National Vocational Qualifications-based training for work and youth training programmes in England in 1995/96. The money, contracted to the Training and Enterprise Councils, is sub-contracted to providers such as further education colleges and private training companies.
The DFEE admitted to the committee that "there was obvious scope for abuse in a system involving 74 TECs, some 5,000 training providers and 200,000 locations".
The committee expressed its alarm at the number of recorded irregularities and the DFEE's failure to investigate suspected fraud comprehensively. "We are concerned that as many as 71 cases have been recorded in the department's record of suspected and alleged irregularities since 1995," it reported. "We note that following investigation into 41 of these, only one case has been referred to the police. We look to the department to investigate rigorously the other remaining 30 cases."
The committee highlighted two "deplorable" cases where Pounds 381,000 had been overpaid by the DFEE to Cumbria TEC and County Durham TEC. NVQ providers had claimed cash from the TECs for trainees who had never been on a training programme. In one case allegedly forged certificates were used to make claims.
The committee was concerned that too few measures were in place to prevent such abuse. The report comes in the wake of a series of scandals involving the provision of NVQs, highlighting the abuse of the payment-by-results funding practice.
Following up a damning report last summer from the National Audit Office which highlighted the scope for abuse, the PAC took evidence from the DFEE to examine three areas of its vocational training provision - its handling of allegations of irregular payments; the financial control of payments to the TECs and training providers; and the measures the department has taken to ensure value for money from the training programmes.