Deborah McGurran Editor, Politics Show East

Career Development Loan scheme flawed?

In 2007 the Politics Show exposed major flaws in the government's Career Development Loan scheme. We report on the measures taken to counter the problems.

Some companies, approved by the Learning and Skills Council to receive the loans as payment for training, had either been going bust or disappearing completely, leaving large numbers of students without training.

Back in March 2007, Trevor Fellowes, of the Learning and Skills Council said: "We make this absolutely clear from the beginning, it is for them to choose which training provider they go to and they must take the responsibility for paying back the loan, no matter what the circumstances."

The problem is, that the banks hand over the full costs of the training course up front to the learning providers, anything up to �8,000.

They must take the responsibility for paying back the loan, no matter what the circumstances Trevor Fellowes, Learning and Skills Council

So when more than �250,000 was given, upfront, to a company run by Michael Threapleton - a man convicted of corruption, who subsequently disappeared leaving students without any training at all - the students still had to pay back the money.

In March 2007, Scott Smith, an ex student said:

"They are aware that they have got problems like this and they were aware this potentially exists, and it's only now that they are thinking of doing something about it.

...they were aware this potentially exists, and it's only now that they are thinking of doing something about it. Scott Smith, ex student

It's just really sickening... completely."

Remedial action

In June, Bill Rammell, the Minister for Lifelong Learning, did offer some words of comfort to affected students:

"What I have done is instruct officials in my department and in the Learning and Skills Council, to do three things:

"If the individual is taking legal action against a provider who has gone into liquidation, we will provide a freeze on their repayments for up to 17 months.

"We will provide additional top up loans, up to the limit of �8,000, for someone to complete their training with another provider.

"And we will ensure that their credit rating is not affected."

Following our report in 2007, the Learning and Skills Council underwent a comprehensive review of its learning providers.

Bill Rammell offered words of comfort

Providers slashed

Last summer there were more than 2,000 companies registered to receive Career Development Loans.

However, once the Learning and Skills Council underwent a slightly more stringent process of checking and asked all existing providers to re-register, just 700 were left... that is a reduction of around 75%.

Colin Steed of the Institute of IT Training, who was highly critical of the scheme last year, spoke about the effect of our report on the IT training industry.

"It has had a massive effect," he said, "Since the programme, we get loads of inquiries through parents asking where they should spend their money on getting their children jobs in the IT training industry where, as you know, there's a big skills shortage, and we advise them only to go with companies that have our accreditation.

The impact has been quite remarkable and the number of complaints we receive now has dropped dramatically. Colin Steed, Institute of IT Training

"The impact has been quite remarkable and the number of complaints we receive now has dropped dramatically."

The Learning Skills Council does not accept that the previous registration was fundamentally flawed.

However, as part of the new registration process, the LSC has taken the opportunity to clarify its requirements for registration and has introduced a more robust level of checks.

The Politics Show East

The Politics Show with Jon Sopel and Etholle George on Sunday 10 February 2008 at 12:00 GMT on BBC One.

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