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Education Maintenance Allowance

My right honourable friend the Minister of State for Schools and Learners (Jim Knight) has made the following Written Ministerial Statement. Ensuring that learners are able to access education and training post-16 is a key priority for this Government. I would like to update the House on the current situation in regard to the delivery of education maintenance allowances (EMA). There have been processing and other related problems since Liberata won the contract to deliver helpline, assessment and payment functions for EMA and other learner support schemes in July 2007. The Learning and Skills Council (LSC) has been closely monitoring the situation and has been regularly providing me with updates, which I have shared with the Children, Schools and Families Select Committee. As of Tuesday 18 November, 794,655 applications (237,826 more than 8 October, the date of my previous letter) have been processed. This has resulted in 485,396 young people (201,516 more than at that time) receiving notifications that they are entitled to EMAs, which means they can begin claiming the allowance. There are currently 12,016 applications in the process of being finalised (down from 111,000 on 8 October). Despite this progress, the LSC’s view has been that in order to preserve the best interests of learners a change in contractor was necessary.  The LSC has been in talks with Liberata about the future of the contract for over four weeks and yesterday informed me that it intends to discontinue the Liberata contract. I have been clear from the outset that these delays have been totally unacceptable and I therefore fully back the LSC’s decision to change contractor to Capita. The transfer of the EMA helpline, processing and payment service from Liberata to Capita will take effect from Friday 28 November. With effect from that date, Capita will bring in a new senior management team to oversee the staff and operations in Coventry, Manchester and Darlington. The transfer will place us in a stronger position to fix the helpline and processing problems, enabling us to improve the future service for young people, colleges and learning providers. The migration of the learner support service programme contract from Liberata will have resulted in Liberata losing future revenues of more than £60 million over the remaining term of the contract. In addition, in addressing the issues caused by the failure of their proposed IT system, Liberata rightly took the decision to employ significant numbers of additional temporary staff to deal with the backlog in applications. In doing so, it has incurred extraordinary additional costs and it has been judged inappropriate to impose further additional penalties. In order to ensure a smooth and orderly transition to a new service, the LSC has secured the transfer of the interim payment service to the new service provider and the transfer of physical IT assets and applications software at a cost of £4 million. The cost of this is significantly lower than the extraordinary additional costs which Liberata has incurred. These arrangements are within parameters approved by the Permanent Secretary in his principal accounting officer role, and by HM Treasury. The Permanent Secretary, in his principal accounting officer role, has reassured me that this agreement represents value for money for the taxpayer and protects the interests of learners. The payments being made to young people will continue, and during the transfer period outstanding applications will continue to be processed. As I have made clear before, all delayed payments will be backdated in full. Throughout this period of unacceptable delays, our main priority has been to ensure that learners get their payments. I am confident that the new arrangements the LSC has put in place are the best way to improve EMA delivery. I am placing in the House Library copies of correspondence from me to the chairman of the Children, Schools and Families Select Committee, to me from Mark Haysom, chief executive of the LSC, as well as the relevant statements from Liberata, the LSC and the department.