Enterprise and Culture Committee, 27 Jan 2004

Meeting date: Tuesday, January 27, 2004

Official Report 273KB pdf

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Individual Learning Accounts

We move on to agenda item 2, which is individual learning accounts in Scotland. We have in front of us the Deputy First Minister and Minister for Enterprise and Lifelong Learning, Mr Jim Wallace. I am sorry that you have been kept waiting, minister. Do you wish to say a word about individual learning accounts?

Indeed. I am grateful to you. Perhaps I should begin by introducing the officials who are with me today. Dr John Rigg is the head of the funding for learners division in the Scottish Executive Enterprise, Transport and Lifelong Learning Department. Laura Barjonas is head of the ILA policy team in the division.

I am pleased to be able to brief the committee on my plans for introducing a new ILA scheme in Scotland. Good progress has been made in developing the scheme and we are on track to meet the partnership commitment to introduce the improved ILA scheme in 2003-04. It is fair to say that the Enterprise and Lifelong Learning Committee expressed strong support for the principles of ILA and I know that members will want to understand how we plan to build on the positive elements of the first scheme while tackling rigorously the flaws that led to its closure.

I refer at the outset to the recently published Audit Committee report on the first ILA scheme and the department's response to the report. I certainly welcome the publication of the Audit Committee's report. The process of audit and scrutiny of the first scheme has been a lengthy one. I think that Audit Scotland initiated its review in September 2002 and the Audit Committee's report was published just over a couple of weeks ago. It is crucial that we understand all the lessons that have been learned and, understandably, it has taken time to complete that process.

My department will respond formally to the Audit Committee in the next few weeks. I make it clear that it is not my intention today to pre-empt our proper full and final response, which will set out in detail how we are tackling the problems and flaws of ILA 1 and make clear how the Audit Committee's specific recommendations are to be addressed. It will become clear, as I outline my plans for the new scheme, that the Audit Committee's recommendations on what needs to be done to ensure an effective and efficient new ILA scheme chime closely with our own view of the key requirements for the scheme's success.

I think that it was April 2002 when Wendy Alexander updated members of the Enterprise and Lifelong Learning Committee on the position after the first ILA scheme closed. Therefore, I crave some indulgence from the committee if I take more time than usual to set out the key features of the proposed successor scheme. Afterwards, I will be happy to answer members' questions. It might help if I give a brief overview of the essential policy and operational elements.

I hope that members have received draft copies of the proposed new ILA regulations. I understand that some members received them only earlier today. We have also provided draft operational rules and guidance. Just in the past week or so, there were intensive workshops with groups of providers to road test the draft guidance. The draft that members have was updated and amended in the light of the productive discussions with providers. I hope that it provides a useful context for what I have to say on the policy and the operational plans. Obviously, the regulations for the new scheme will be formally laid before Parliament and the committee will be able to consider them formally at that stage. I can certainly confirm that officials will be more than willing to provide an additional detailed briefing as and when required.

In looking at the successor scheme, I do not want us to lose sight of the positive aspects of the original scheme. ILAs were beneficial for a significant number of learners and they stimulated a welcome increase in business for reputable learning providers, who formed the majority of providers who participated in the scheme. It is fair to say that there has been widespread support among learners and providers for the principles of individual learning accounts. There is now a strong demand from learners, providers and intermediaries for a new scheme to be put in place without further delay. I note that the Audit Committee expressed in its report the hope

"that an effective and efficient scheme can now be established as swiftly as possible."

That is certainly our intention.

I want to ensure that members have a clear understanding of our policy aims, and I want to outline the main actions being taken through detailed operational planning to ensure that the scheme delivers on its objectives and that the problems that were encountered in the previous scheme do not recur. I also want to give members a sense of the timetable for introducing ILAs.

We have decided to call ILA mark 2 ILA Scotland because it will have a specific Scottish theme. It will directly address Scottish needs and build on the particular strengths of the lifelong learning landscape and infrastructure in Scotland. The evaluation of the first scheme provided a solid and positive basis for developing our policy thinking. We conducted our own internal review of the lessons learned and those lessons, together with the findings of the Audit Committee and external audit and review processes, have provided us with a comprehensive checklist of required policy and operational improvements. To test policy and operational plans, a number of workshops have been held with learning providers and intermediary organisations, and samples have been taken from focus groups of potential ILA learners. Those have been reflected in the model that we are discussing.

The policy aims and priorities in relation to learners are that we should retain a fundamentally learner-centred approach, with funding being allocated to an individual through a virtual account for use with the provider of the learner's choice, and that we should encourage individuals to establish a greater sense of personal ownership of their learning. That will be achieved by learners having their own account, which they can use to support learning and learning progression over an extended period, and by the retention of the principle that all learners will make a personal contribution to the cost of their learning.

In relation to learning providers, a top priority is that there should be high-quality standards throughout the scheme. We do not intend that ILA Scotland should seek to stimulate any significant growth in the overall size of the provider base, but we hope that the reintroduction of an ILA funding stream will encourage quality providers to develop a wider range of short, flexible courses to help to make learning more attractive and more accessible.

We want to ensure that we provide better added value. The previous scheme had dead-weight—people who benefited from the support but would have undertaken the learning without it—which was estimated at something like 53 per cent of participants, and we are keen to ensure that we reduce the dead-weight and get better added value from the investment. We will do that by targeting funding at learners on lower incomes, for whom funding is the real barrier to participation in learning, and by focusing funding on skills needs. The scheme will target basic skills in information and communications technology. Funding will be limited, initially at least, to ICT courses leading to qualifications or certification up to and including the equivalent of Scottish credit and qualifications framework level 5, which is Scottish vocational qualification level 2.

We want to ensure that ILA learners have a good-quality learning experience and that active use is made of the ILA funding entitlements. That will be tackled principally by learndirect Scotland developing on-going learner contact. We will look to intermediary organisations, such as the Scottish Trades Union Congress, Careers Scotland and voluntary bodies, to play an important role in encouraging uptake in conversion by providing informed and focused advice and guidance to learners.

On the scheme's operation, I want to ensure that we take full account of all the lessons that have been learned from the first scheme and that there are robust, clear, accessible and user-friendly mechanisms for learners to apply for and use the ILA funding and robust, clear, accessible and administratively manageable mechanisms for learning providers to use the scheme. I am sure that many of you will appreciate the underlying tensions between aims and objectives that have had to be resolved in the design of the new scheme, and I think that we have struck the right balance between rigorous controls and the necessary ease of use for learners. We want to widen participation in adult learning by increasing interest in uptake. The scheme is an opportunity to introduce new learners to adult learning, to provide an opportunity for those who have not recently participated in learning to do so and to encourage individuals to invest in their own learning and therefore take ownership of it. It is also an opportunity to prioritise the learning needs of certain groups of learners, to encourage more learning progression and, which is important, to support the development of a quality learning-provider base in Scotland.

I will discuss the scheme's key features. First, the feedback from an early evaluation of the previous scheme in 2002 indicated that, for learners, the ILA brand name was not particularly tainted by the problems that arose from the misuse of the first scheme. A clear distinction was drawn between the positive aspects of the concept and its weakness in delivery. Therefore, the new scheme has been developed to address specific Scottish circumstances, and we believe that the individual learning account name continues to have solid promotional value.

With regard to the target audience—or, more accurately, target audiences—although we intend to maintain a universal approach to learner eligibility, which will be an important element in building up momentum for positive attitudinal change to learning through ILAs and enabling a wide range of people from various backgrounds to benefit, the main thrust is to make a real difference for non-traditional learners with low skills and on low incomes. That potentially includes people on benefit but, although there will be a number of passported benefits that will provide ready access to eligibility, people who are on benefit will in many cases already be able to apply for free learning through fee waivers, for example. We will aim to steer such learners towards the type of funding that suits them best.

Our main target group is people who are in work but on lower incomes, who often have lower levels of skills and qualifications, whose disposable income will not readily cover the costs of learning and for whom ILAs can provide a crucial incentive to take the first steps into or back into learning. We will therefore offer priority ILA funding to learners on low incomes. Learners in our priority group will be those who earn less than £15,000 a year, who will be able to claim up to £200 per year in ILA support, which they will be able to use for a course of their choice. The income assessment process will be managed by the Student Awards Agency for Scotland. The process has been designed to be light touch and as accessible as possible, while meeting the necessary standards of learner income verification and auditability.

For low-income learners, the types of eligible learning will generally be defined by exclusion, to allow learners in that priority group to choose from a wide menu of learning. For universal learners, eligibility will be much more broadly defined than for the low-income priority group and all individuals who are over 18 and who are ordinarily resident in Scotland will be able to apply to open an ILA account. To ensure that we target skills needs and maximise added value, the universal offer will, at least initially, be focused on ICT courses at the basic skills level that lead to qualifications or certification. Universal learners will be able to claim up to £100 per year.

The personal contribution element of the first scheme received considerable support because it encouraged greater ownership of the learning, and the recent consultation was also positive on the issue. A key change in the new scheme is that we will have a flat-rate minimum personal contribution for learners that will be set at £10 per learning episode. That contrasts with a general minimum contribution of £25 under the previous scheme. I believe that the measure will make the ILA offer more attractive and will make ILA Scotland funding more readily understandable for learners than the percentage discount model that applied under the previous scheme.

In order to focus on low-income, non-traditional learners, intermediary bodies will have a role in helping to encourage participation. We envisage the STUC, Careers Scotland, local authorities, the voluntary sector and Jobcentre Plus all being much more actively and systematically involved with ILAs than they were before.

A phased approach will be taken to implementation. When we consulted learners, providers and intermediaries in the summer of last year, we received a strong message of concern about introducing both the low-income and universal elements of the scheme at the same time, as that might risk losing the impact of the scheme for the target group because of the likelihood that provider efforts and budget resources would be more focused on universal learners. For that reason, we will launch the scheme for low-income learners only and roll out ILA funding to universal learners from April next year.

Finally, with regard to the operational framework, the delivery partner arrangements will be different from those in the previous scheme. The scheme will be delivered jointly by the Student Awards Agency for Scotland, replacing Capita, which was the ILA service provider under ILA 1, and by the Scottish university for industry, which is known to the public as learndirect Scotland. SUFI will have responsibility for marketing and promotion and on-going communications with learners, learning providers and intermediaries, including the provision of scheme information and guidance. SUFI's other key focus will be on quality: it will be responsible for learning-provider and course registration, quality assurance and compliance monitoring of providers. SAAS will have responsibility for processing learners' applications for membership, including the income assessment process for low-income learners, and for overall learner-account management. SAAS will also manage the booking of learning by learning providers and be responsible for making payments to learners.

We have been working intensively for some months with ILA project teams in both SAAS and SUFI to design and develop a fully integrated range of services for learners and learning providers. We will build on the existing strengths and experience of the two organisations. As I said, it is imperative that we have good-quality learning providers and courses. The department will address that issue thoroughly in its response to the Audit Committee. We think that features of the new scheme will assure quality, such as the stringent learning-provider registration process through SUFI; the formal contracts between learning providers and the delivery partners that cover the provider's legal obligations; a clear, single complaints process; on-going learner contacts through SUFI to monitor learner satisfaction; and a rigorous and risk-weighted compliance monitoring process, including site visits to providers. A key component will be the provision of clear and timely rules and guidance. Members will notice from the draft text that has been provided that the guidance for learning providers is well developed. Learner guidance will be similarly clear and comprehensive.

I want to highlight key milestones in the process before the scheme goes ahead. As has been made clear on a number of occasions, we will go ahead only when I am satisfied that the necessary improvements have been taken into account and are in place. Therefore, the timetable includes an extended period for testing prior to launch. We are planning a gateway review process for ILA Scotland. A team of experts from outside my department has undertaken regular reviews of the project's progress and a final gateway review will take place shortly before the scheme launch, which will involve a rigorous and comprehensive assessment of the scheme's overall readiness for service.

Finally, on the timetable, we hope to lay the new regulations in the near future, perhaps early next month. Learning-provider engagement, with a series of workshops, is scheduled for the latter part of March. During late spring, we will liaise with intermediary bodies and we plan to launch the scheme for learners in early July. It is a challenging timetable, but I have made it clear that it will be subject to necessary testing and review at milestones.

I am grateful to the committee for bearing with me on this important series of points about the operation and the objectives of the new ILA scheme in terms of quality assurance. The scheme is important to the support of lifelong learning and to the stimulation of skills and work-force development. The previous scheme was an innovative policy initiative. ILA Scotland remains highly innovative in terms of what it is trying to achieve and how it is trying to achieve it. We will monitor, review and adjust as necessary but, at the moment, I will be happy to take questions from members of the committee on the draft documents before them.

We have seen the Audit Committee report to which you referred. Obviously, a number of lessons could have been learned from ILA 1. What overall lesson that has gone into the thinking on ILA Scotland would you highlight?

The main lesson is the need for quality assurance and close, rigorous scrutiny and management. I will give more detail in my response to the Audit Committee, but I hope that I made it clear, albeit in a truncated form, that it is important that proper scrutiny and assurance of the scheme is being delivered on the mechanism and quality of the learning.

My fellow members can speak for themselves, but I think that they would agree with me that it is encouraging to hear that. You have talked about rigorous controls, quality assurance and close scrutiny. Irrespective of your answer to my first question, I want to ask about monitoring. We have not had all that long to go through the operational rules and supplementary guidance and the regulations, but I have had a look and I cannot see the word "monitoring" mentioned at all. I also see no evidence of the close scrutiny to which you refer. It seems to me that that will be fundamental to the success of ILA Scotland, and we all want to see that. Why is there no mention of that up front in the documents? Are there other documents that committee members have still to see?

The provisions in the operational rules and supplementary guidance go a long way towards ensuring rigorous levels of quality. It would be a brave person who would put their hand on their heart and say that they had eliminated all scope for abuse. However, the provisions go a long way towards limiting any prospective abuse.

There are several processes. The registration process for providers will be much more robust than it was for the first scheme. It will be handled by SUFI and the information that any prospective learning provider has to supply will be far more comprehensive than in the first scheme. SUFI will actively check and verify key elements such as the quality standards that the applicant learning provider claims to have.

Once its application is approved and it is claiming ILA funds, the provider will be subject to regular and ad hoc checks. I certainly seem to recall reading in the rules that that can include visits to premises to monitor compliance with the scheme's rules. Learning providers that are assessed by SUFI as being acceptable but presenting a higher risk, possibly because they have a shorter track record and financial information indicates the need for closer monitoring, will be subject to earlier and more frequent checks. The learning provider will have signed a registration and payment agreement with SUFI that will give us a contractual basis on which to pursue any action on non-compliance or a serious abuse of the scheme.

I accept and welcome what you say. You have given more detail than is in the documents that we have, which are about what the provider must do rather than the role of SUFI. There is little mention of SUFI as an organisation in the guidance. However, I take your point.

It is important to put the emphasis on the individuals to ensure that they are complying with all the regulations. I was concerned about the monitoring and what was being done to follow that through, because the Auditor General for Scotland's report stated:

"Responsibilities for scheme monitoring were unclear and not fully agreed".

The report goes on to talk about the holes in the net. I am pleased to see now the robust monitoring and audit arrangements that the report said could have been considered at earlier stages. However, it would be helpful to know how those arrangements will be enforced, rather than simply saying to individuals, "You must do this." What if the individuals do not do that? That is the point that I was trying to get across.

There will be contractual arrangements, which will be much easier to activate than was the case under the initial scheme. Laura Barjonas can elaborate on the details.

One of the other main lessons arising out of ILA 1 was that it was not any one thing that was a weakness in the scheme, but a combination of different things all coming together, which meant that the problems were magnified. One of the key issues relating to the documentation and the regulatory and contractual framework is the need to understand how all the different elements fit together. The documentation that we have before us—the regulations and the draft guidance—represents the top level of a whole suite of documentation that sets out exactly what the different arrangements are.

The minister mentioned the registration agreement and the payment agreement, which are crucial documents in the whole process. Specific processes and procedures will also be set out in considerable detail in respect of the registration process. How the compliance monitoring process will be carried out and who will be responsible for it will also be detailed. An additional element that was not in the first scheme is learner tracking, which will aim both to track learner satisfaction and to pick up on learner feedback to inform a sense of learning-provider compliance.

There are a number of additional detailed elements, which will obviously be covered in the response to the Audit Committee. Those elements sit below the regulations and the operational rules, which set out the top-level framework from which that flows, who the authorities are and what is delegated to the administrators, SAAS and SUFI, in carrying out the more detailed responsibilities.

Paragraph 25 of the operational rules and supplementary guidance considers the audit requirements. Paragraph 31 says what may not happen, and paragraphs 33 to 36 say what might happen if there were a failure to comply with the rules. That includes investigations involving SUFI, visits to premises and the requirement for documentation to be maintained for a period of years.

My point is that the guidance does not say when that will happen and on what basis. Would there be unannounced visits? Would SUFI representatives just turn up? I would like to think that the providers were on their toes and that they would not just be told by SUFI, "A week on Tuesday we'll be there. Get your books in order."

It is certainly intended that the providers should be kept very much on their toes.

On what Ms Barjonas said about the various checks and balances, one of the problems was said to be the fact that, to some extent, the Scottish system had piggybacked on the English one in round 1. You may say that, for very good reasons, you are not looking at what is happening in England. Are you conscious that the mechanisms that you outlined go beyond what is happening south of the border, or are you simply looking at the Scottish experience and saying, "We'll learn from our mistakes and go forward from that"?

The new scheme has been designed in Scotland for Scotland. I understand that, in England, it has been decided not to have a stand-alone ILA scheme. Northern Ireland has the position under review but no successor scheme planned. The National Assembly for Wales launched an ILA successor scheme last summer. We are monitoring that scheme and liaising with colleagues in the Assembly to share their experiences and their lessons, given that they are a number of months ahead of us. That has clarified some of our thinking, but the scheme that we propose is very much a Scottish scheme.

My final question is really to do with the financial aspects of the scheme for each individual learning account. In the first round, up to £150 was available, with those participating liable to pay £25. I note that, this time, the figure has gone up to £200, with those participating liable to pay £10. You said in your opening remarks that you wanted to make the scheme more attractive and more understandable. Perhaps it is more understandable, but I would not have thought that it needed to be made more attractive. There was huge interest in round 1. After all, the target of 100,000 that was supposed to be achieved within two years was reached in a far shorter time. Why does it have to be made more attractive? Is it because of the problems that were experienced the first time round rather than the scheme's educational aspects or the job opportunities that might emanate from it?

I said earlier that we carried out some focus group work with potential learners, and that information has helped us to shape our plans on setting various monetary figures.

You are right to point out that we did very well with the numbers in the first scheme. However, 53 per cent might have been described as dead-weight. In other words, those people would have accessed learning even if funding had not been available. Moreover, there was some evidence that much of the learning provision was being targeted at that group, which—to put it frankly—made it easier to get the numbers in. One important distinction is that the new scheme will be far more targeted than the first scheme.

Market research indicated that most people expected to make a contribution. However, we also found that the main issue on the need for a personal contribution was confusion about the amount of that contribution where it was calculated as a percentage of total cost. That is why we have tried to keep things simple with a flat-rate contribution.

We have listened to potential learners and have taken into account the fact that not only was there a lot of dead-weight in the first scheme but actual registration did not follow through into activation—if that is the best way of describing the matter. We are anxious that people should not only register but take up the course.

I see the benefits of targeting the scheme. However, you also said that universal introduction will take effect from April 2005. Will the targeting that you mentioned remain when that happens?

I should draw two distinctions in response to that question. First, the scheme that is targeted at people on low incomes covers a broad range of courses. Secondly, universal introduction—which we are delaying—has a lower funding rate of £100 as opposed to £200 and will be limited to ICT up to SVQ level 2.

I appreciate that you are not here this afternoon to respond to the Audit Committee's report. However, it is clear from the report that ILA 1 was not a success partly because of management failures in the department. What assurances can you provide that those failures have been addressed? Are you confident that they will not be repeated as we proceed towards ILA 2?

I am as confident as anyone can reasonably be. I should say that the points that you have raised are undoubtedly the internal departmental issues on which the Audit Committee will require a response and on which we will respond fully.

Some institutional arrangements also relate to management. For example, the fact that we are using SUFI and SAAS, both of which have proven track records in the areas in which we are asking for their involvement, should also give people confidence that we are taking a systematic approach. Furthermore, gateway reviews to test the scheme have taken place outside the department and we will carry out a final test to ensure that it is ready for implementation.

My second question is about timescales. The original scheme was wound up in December 2001 and—if I understand you correctly and if all goes according to plan—the new scheme will be introduced this July. That means that we have been without an ILA scheme for at least two and a half years. During that time, many people who could have benefited from some sort of training have not had the opportunity to access it. Moreover, many training providers have lost a good and secure source of income. Are you disappointed that it has taken so long to get a replacement scheme up and running? Why has it taken this time to get the scheme into place?

I am disappointed, but that should not be interpreted in any way as being a criticism of those—either Audit Scotland or the Audit Committee—who are engaged in the audit process. In terms of learning lessons, we conducted an internal departmental review, which was important, and we now have an opportunity to consider the findings and recommendations of the Audit Committee. We might have been open to criticism if we had launched into the new scheme while we were awaiting the Audit Committee's report.

There is a question of balance. I would like to think that we have put our time to good use by working up the scheme that we have, by market testing it to find out whether it fits with what the client group wants, by engaging in workshops with the learner providers and by testing the mechanics of the system.

You spoke about targeting a particular group and one area of competence, which was ICT. Is it your intention to target other areas of skills shortage at a later stage? Do you intend to manage the tension between courses that folk might wish to do for their own gratification and courses that will address areas of skills shortage in Scotland?

The courses that will be available to the targeted group will not be limited to ICT, although ICT courses are what will be available on universal roll-out, when that happens. We intend that a much broader menu of courses will be made available.

But you will be specifying those courses that are available.

The menu will be available to those who wish to learn.

So, it will not be the case that anyone can apply for any course that takes their fancy.

People will not be able to apply for any course that takes their fancy; some courses will have to be approved.

The definition of eligible learning sets out the types of excluded courses. The scheme is broadly comparable to the first scheme, but it has been significantly tightened up in certain areas. Only courses that would not be excluded by that definition would be covered by the low-income offer.

In ensuring that you have dealt with all the issues that the Audit Committee commented on in relation to the first scheme, are you confident that you have done so without making the new scheme overly bureaucratic either for providers or for learners?

I hope that we have not made it so. Our intention has been to strike a balance between ensuring that the necessary safeguards are in place and making the system user friendly and accessible. For example, as I said in response to Mike Watson, having a flat-rate contribution instead of a percentage contribution is one of the ways in which we have tried to simplify the system. I hope that, by consulting and engaging with stakeholders, we have managed to strike the correct balance.

In response to the previous question, I draw the committee's attention to paragraph 7 of annex B of the draft operational rules, which sets out the kind of learning courses that would not be eligible, including things like private flying lessons, scuba diving lessons and so on, as well as some other full-time higher education courses. The list is quite comprehensive.

I was thinking more of targeting areas in which there are specific skills shortages. For example, there are well-documented shortages in areas such as engineering. Rather than specify courses that are excluded, will you give direction on courses that might be recommended?

That might be the next stage in the evolution of the scheme. However, I have talked about the importance of the learner's personal ownership of the ILA. Part of that personal ownership will come about through the fact that a personal contribution will have to be made. We think that the choice of learning for which an ILA is used should rest with the learner. The learner will be able to identify within a local skills market what skills are needed, but the scheme is meant to have that element of choice.

I will follow that point up because a theme that we have picked up in one or two of our meetings is that there are definitely specific skills shortages. Has consideration been given to doing it the other way round and specifying a list of courses that would qualify?

Not so far. The important principle is that we are trying to target people who do not necessarily have a tradition of learning. We want to try to make the scheme user friendly for them. If we had been over-rigid in saying that they could do only certain courses, that might have defeated our purpose. We hope to get people back into—or perhaps into for the first time—a learning culture and a learning environment.

As a member of the Audit Committee, I acknowledge that much of what you said in your opening remarks indicates that certain elements in the new scheme are being developed to respond directly to much of what the Audit Committee said. I am sure that the Audit Committee will explore that in greater detail; I look forward to it.

I will go back to the question that Murdo Fraser asked about the timescale for development of the new scheme. It is now in excess of two years since the previous scheme was suspended. I think that I am right in saying that it is more than a year—in fact, by the time the new scheme is introduced it will be between a year and 18 months—beyond the initial intended relaunch date.

I note what you say about waiting for the outcome of the Auditor General's report and the Audit Committee's report. However, as you acknowledged, an awful lot could and should be done in the interim. You said that the time—the two years since suspension of the previous scheme—had been used well. Can you elaborate on how the time was used? For example, when were stakeholders brought together to review the experience of the previous scheme? I am aware, for example, that some of the seminars on developing risk assessment procedures and so on took place only a matter of months ago. I acknowledge and respect the fact that you would want to examine the findings of the audit process, but it strikes me that that seemed to be given a great deal of weight—which I did not quite recognise—in your reason for the delay.

Obviously, there was an internal review of what had happened. Apart from any Audit Committee or Audit Scotland considerations there was our own internal assessment of where things needed to be tightened up. The next stage was preparation of the policy position which—if my memory serves me correctly—was discussed by ministers before last year's election. I do not think that I am giving away secrets because we have at today's meeting already touched on some of the points that were discussed.

The balance between universal and targeted provision required debate. There is not necessarily a right or a wrong answer, but it took time to work up our policy position. Many focus group discussions took place last summer and we have been trying to test the system robustly. It is a new system that maintains many of the features and principles of the previous system; however, it is very much a new system. Earlier, someone spoke about piggybacking on the English system, but by no stretch of the imagination can we be said to be doing that. We have worked up our own self-standing Scottish system.

In answer to Murdo Fraser, of course I would like provision to have been in place earlier because people may have missed opportunities and I would regret that very much. However, I like to think that we have been able to test the proposals rigorously so that they will stand the tests of time and use.

I want to turn to a question of money that I raised with you when you came to the committee to speak about the departmental budget. Obviously, with each month or year that goes by without the scheme going live, budgeted resources are not being used. You have answered this question in relation to the previous financial year, but we are coming to the end of another financial year, so how are those budgeted resources being used? Will they be used for other aspects of training and development if a new ILA scheme is not in place?

For this financial year, the estimate for getting the system up and running and for the preparatory work is £3.4 million. As I said, there are plenty of pressures on my department's budget so I cannot—off the top of my head—give details on where other funding has been deployed. In the first month or two of 2004-05, there will be continuing development funding before we launch the scheme. The budget for 2004-05 is just over £18 million and for the final year of the spending review—2005-06—it is £18.5 million. I am certainly allowing for an element of funding in the next financial year to go into development. The system is, in many respects, demand led and I hope that the take-up is such that we can make progress.

I do not doubt that any resources that are not used will be put to good use somewhere in the enterprise budget, but I would like to receive more information on that at a later date. Will the resources be used for some equivalent form of training and development? You were not able to assure me on that the last time I asked.

No, I was not and I am not able to do so off the cuff this time. However, I can give you some indication as to where the balance has gone.

I want to ask a final question—the convener was looking away for a moment and was not quick enough to give me the evil eye to stop me. I want to play devil's advocate on the general policy. It is not necessarily a view that I subscribe to, but I have heard it said by people in education—in particular, in the further education sector—that the ILA scheme resulted in many people being paid to take up learning opportunities that they would have taken up anyway. It was said that, if we wanted to have a more significant impact on target groups, and if we wanted to address skills-gap issues, we would be better to do so through established means such as the FE colleges. Will you respond to that assertion? I am especially interested in whether some of the measures that you described to attract and target people who are on low incomes will go some way towards addressing that situation.

That assertion has some merit. Perhaps the term "dead-weight" is an unfortunate description, but we estimate that 53 per cent of people who signed up under the first scheme would probably have signed up for training even if the scheme had not existed. In designing the ILA Scotland scheme, we have been conscious of the criticism that you described, so we will target people on low incomes. Intermediary bodies will be important because they will promote the scheme and provide information to people who might benefit from it. That will ensure that the people who are targeted are those who might not have wanted to get into the learning environment without the incentive.

The roll-out of the more universal scheme will be limited to ICT learning up to a specified level. In that way, we hope to maximise the impact of the service and to provide a useful learning opportunity. I will not say that we will have zero dead-weight; that would be wishful thinking. However, we have gone a long way. In designing the scheme, one objective was to minimise dead-weight, about which the criticism to which Susan Deacon referred has been made.

I apologise for not asking my question earlier, which is to Ms Barjonas and is based on my reading of the Official Report of an Audit Committee meeting last September. I understand that all learning providers must now register directly with SUFI. In answer to a question from the Audit Committee, you talked about learning providers from south of the border—I assume that that means England. Do you expect English learning providers to register with SUFI and to be part of the new process?

That is possible. Such bodies would be eligible to apply for registration. They would have to follow the registration process and meet the required standards.

In other words, when the new scheme is up and running and advertised, you expect applications to come not only from Scotland.

That is correct, but all applications will be subject to the Scottish registration and quality requirements.

Specific changes to strengthen the distance learning requirements will be made. They might well be a disincentive for some providers that are not based in Scotland. However, if they met all the standards and requirements, providers from outside Scotland could apply to provide courses.

Those providers would be subject to the scheme's criteria.