News Column

Watchdog to investigate private colleges's potential misuse of millions

May 23, 2014

Shiv Malik (contributor) Andrew McGettigan John Domokos,

The UK public spending watchdog has been asked to investigate potential misuse of public funds in the booming higher education sector after a Guardian investigation revealed that one college which had recently tripled in size was running classes with few students.

The chair of the public accounts committee, Margaret Hodge, said on Thursday she had asked the National Audit Office to draw up a report following what she said were shocking and serious allegations about the potential misuse of millions of pounds of public money.

She said there had been an "astonishing growth" in the private-college sector, which has increased from the use of £40m of public funds in 2010 to £900m this year after the higher education minister David Willetts brought in reforms which allowed the sector access to the student loans book.

Tens of thousands of students and around two dozen new private colleges have been major beneficiaries of the funding changes.

A four-month Guardian investigation revealed on Wednesday that senior staff at one college in Wembley, the London School of Science and Technology (LSST), alleged the institution was running classes with attendances which have been below 40%, and it was referred to locally as "the cashpoint" because it offered quick and easy access to student finance.

When the Guardian filmed undercover at the college it found a lesson which had a lecturer but not one student. Former staff alleged that people were recruited who "blatantly" did not have the skills to study at university level, and that candidates had been recruited from the street and as far afield as eastern Europe.

Speaking in her office at the House of Commons, Hodge said she was taken aback by the footage of students talking about how they could sign up for the loans and then not bother to attend classes.

"I'm pretty shocked," she said. "[The Guardian] has raised some huge issues. We're talking about many hundreds of millions, if not a couple of billions in taxpayer money which was set aside to support higher education."

She said it was potentially a misuse of public funds and that money may have been taken "out of the system to enrich individuals and colleges".

She said she felt sympathy with genuine students who expected better for their £5,000-£6,000 in fee payments and may not have been receiving the best education.

Willetts has previously said that opening up higher education to little-known private colleges would raise standards and create innovation throughout the sector.

However Hodge said there was now a pattern emerging in which the government opened up sectors to private institutions and only then set up proper regulatory frameworks to check public spending and "follow the taxpayer's pound".

"You've just got to look at the [growth] figures," she added. "The red light ought to go on immediately."

Hodge, known for her formidable questioning of civil servants and company executives, said she felt culpable for not acting more on warnings about the potential for the misuse of public money from Sally Hunt, the head of University College Union, which represent lecturers, when she wrote to the committee in 2013. "We didn't take her allegations seriously enough at the time."

Hodge said she also regretted not holding Willetts' Department of Business Innovation and Skills (BIS) to greater scrutiny. "At that time we should have said: 'Have you got the systems in place to monitor whether or not the money is going to the purpose intended?'"

She said that, after the NAO report, she would hold BIS civil servants to account for the allegations.

"They are accounting officers in government, and they will have to be brought in front of us to account for why they allowed this loose system to exist; why they didn't see any of the warning lights.

"I will ask the comptroller auditor general to prepare a report for my committee on the basis of which I will take evidence. It will take us a few months, but I think you have brought to our attention a huge issue … it may be one I've seen in other guises … there's an outrageous waste … misuse of public money."

LSST denied the allegations put to them and said the Guardian had visited the college at the end of term when students were submitting their coursework. The college said it had "robust procedures for recording and monitoring student attendance" and it employed a full-time attendance officer.

Willetts, who has compared the reforms to Michael Gove's free schools, said that while action to toughen up controls on private colleges was under way, the emerging private-college sector remained significant. "These colleges have an important role to play in providing students with an alternative to university. But students and the taxpayers who provide funding deserve to get a quality service," he said.

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Source: Guardian Web

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