Welsh Assembly Government response to Audit Committee report 04-03 on the National Council for Education and Training for Wales: Accounts for the period 31 March 2003.

Llywydd, I would like to make a statement about the Welsh Assembly Government’s response to the Audit Committee’s recent report on the National Council’s accounts to 31 March 2002.

The Assembly Government accepts that there are important lessons to be learned from the Audit Committee’s report for all public bodies in Wales. The message from the Assembly Government is clear: it is completely unacceptable for a public body to behave with disregard for public sector rules. It is, therefore, right that weaknesses of compliance and control at the Council during its first year of operation should be investigated so thoroughly. Indeed, it was the Council’s own internal audit procedures that first brought the procurement irregularities to light.

We have been entirely open in reporting what has happened and what has been done to deal with it. We are committed to continuous improvement of standards, and to ensuring that lessons are properly learned. The Council has moved quickly to secure improvements in its financial business systems and we will continue to work with them to ensure that all issues are resolved. We will be no less rigorous in tackling problems associated with the Pop Factory or any other project which is subject to ongoing investigations by the Council and the NAO.

The Assembly debated the recommendations of the Post 16 Education and Training Committee regarding implementation of the education and training action plan in February 2000. The motion approved during that Plenary debate instructed that the necessary work should be put in hand with the Training and Enterprise Councils and Further Education Funding Council for Wales, so as to implement the new arrangements for post 16 education and training by 1 April 2001. This timescale took account of the prospective progress of the then Learning and Skills Bill towards Royal Assent, which itself duly conditioned the timing of the Council’s establishment. It also took account of the Committee’s recommendations that there should be a staged approach towards the assumption by the Council of the full range of its operational functions.

My predecessor and I received regular progress reports – indeed the project’s progress was fully charted through its newsletter ‘ Ymlaen – Ahead’ and other documents that were routinely made available to Assembly Members and the public on the Assembly’s website – and at no stage in this process were we or the Assembly’s Accounting Officer told by those involved that the timetable for transfer of functions was unachievable.

The risks associated with the transfer of functions to the Council were systematically recorded in the project risk register. The register was reviewed regularly and updated as well as being made public so that anyone with an interest in the project had an opportunity to comment. The Assembly Government regarded and still regards the approach taken as representing the best way of minimising the risks that were most evident.

It was the job of the transition team – which subsequently took on the job of sponsoring the Council - to ensure that the control documents specifying the Assembly’s requirements were in place at the start. And this was done some three months before the Council came into effect. The Council was required by the control documents to put in place proper public sector procedures and controls. Following its inception, the Council took important and valuable steps to identify and manage risk, and, as I said earlier, it was the Council’s internal audit controls that identified the procurement systems failures.          

Despite the difficulties identified in the Audit Committee’s report, the Council continue to meet or exceed its targets for learning and skills development in Wales. The problems, therefore, need to be put in context. In its first year of operation, it met inherited targets for Further Education, Individual Learning Accounts, Modern Apprenticeships, the Modern Skills Diploma and Work Based Learning for Adults. Over 25,000 young people and over 5,000 adults started work-based learning in 2001-02. Over 900 adults started the new Modern Skills Diploma for Adults, which is designed to raise skill levels in the Welsh workforce, against a target of 700.

The Council continues to build on this success and in 2002-03 the Council and its provider network have further improved their performance. Preliminary figures are very encouraging. For example, trainees in work-based learning are up against target by 14 per cent. Numbers of learners from the poorest Welsh wards on work-based learning programmes are up against target by 43 per cent. The Council expects to increase still further the total number of people in learning during 2003-04. And at the UK level, Wales is doing well. 42 per cent of adults in Wales are current or recent learners, compared with 39 per cent in England. Wales is the only country in the UK which has bucked the downward trend in participation between 2002 and 2003, increasing participation rates by 3 per cent during this period whilst participation in England fell by 3 per cent.

I welcome the Auditor General’s conclusion that the procurement breaches were acts of omission rather than commission; that Council staff had acted in good faith; and that fraud was not suspected. On the whole, the Council has done well in its first few years in difficult circumstances. That does not excuse what has happened but it is important to understand that the Council did nothing unlawful, nor can it be said that any expenditure was wasted. The Council was unable to demonstrate that it secured full value for money – but that is significantly different. The Council has since progressively strengthened its procurement operations with professionally qualified staff and its effectiveness will be closely monitored.

The Assembly Government is determined to set and uphold the highest standards in public life and to ensure that the orderly handing of business is conducted in accordance with due process and proper procedure. I commend to members the Audit Committee’s report and the actions that have been taken, and are being taken, by the Welsh Assembly Government and the National Council in our response.