Cash to train jobless siphoned off in frauds

Fraudulent claims for funding phantom students by unscrupulous training companies have contributed to pounds 18m of misspent government funds in the last two years, a public spending body revealed yesterday.

The Public Accounts Committee condemned as "deplorable" evidence that money for training schemes to help jobless people back to work had been irregularly siphoned off by private training firms.

Citing cases in which companies claimed funding for non-existent students using forged qualification certificates, or for real students who had not yet qualified, the committee voiced concern that the risk remained of public money being wrongly paid out - despite attempts to clamp down.

Although the Department for Education and Employment, which funds work training, estimated it had reduced incorrect and uncertain payments from pounds 9.4m in 1994-95 to pounds 8.6m last year, the committee said the figure was still too high and called for action to cut it further.

It also urged the DFEE to speed up its investigation of the 75 cases of suspected and alleged false claims for training funding logged since 1995. So far, only 41 have been investigated, and just one of those referred to the police.

Government funding for work training programmes reaches training providers - which include private firms - local authorities and voluntary bodies, via 76 training and enterprise councils (local companies which contract out government training work).

To claim funding, training providers have to give TECs records of trainees' attendance and photocopies of certificates proving they have gained National Vocational Qualifications. However, TECs are allowed to claim money back from the DFEE up to four months before they receive the providers' evidence, to help cash flow.

The DFEE acknowledged the system was at risk of abuse by providers, but told the Public Accounts Committee that experience had shown only 5 per cent of claims needed to be adjusted. In a system involving some 5,000 training providers in 200,000 training locations, it was "difficult to prevent individuals who wished to perpetuate irregularities from doing so," the department said.

In one case, the DFEE overpaid Cumbria TEC by pounds 150,000 after a training provider allegedly claimed for trainees who had never been on a training programme. In another example, County Durham TEC was overpaid pounds 231,000 after another provider submitted allegedly forged certificates. Two people face trial later this year in connection with the case.

Out of about 130 awarding bodies offering National Vocational Qualifications, the awards taken by trainees on government schemes, only one provided TECs with lists of people who had been awarded certificates, allowing them to cross-check the names. The committee called on the DFEE to ensure all major awarding bodies did the same.