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Skills Training Agency

Volume 175: debated on Wednesday 4 July 1990

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To ask the Secretary of State for Employment if he will list the total number of employees in the Skills Training Agency; (a) immediately prior to privatisation, (b) the number of redundancies announced since and (c) the current level of employment for the most recent date for which figures are available.

[holding answer 25 June 1990]: There were 2,363 staff employed in the Skills Training Agency immediately prior to privatisation. There are now 135 staff employed in the unsold units and the redundancies of 40 of these have been announced. A further 70 staff have been invited to apply for voluntary redundancy.

To ask the Secretary of State for Employment when he will publish the 1989–90 accounts for the Skills Training Agency.

[holding answer 25 June 1990]: The STA trading account 1988–89 stated at note 18:

"Separate STA Trading Accounts will no longer be produced. Accounts for STA activities from 1989–90 onwards, to the date of transfer or disposal, will be included in the Training Agency White Paper Accounts."
This decision was taken with the agreement of the Treasury and National Audit Office.

The White Paper account 1989–90 for the Training Agency will be published by my Department before the end of 1990.

To ask the Secretary of State for Employment if he will make a statement on the £8.6 million described as an extraordinary item of expenditure in the 1988–89 accounts of the Skills Training Agency; and what this item of expenditure has been used for.

[holding answer 25 June 1990]: The extraordinary item of £8.6 million in the 1988–89 trading accounts of the Skills Training Agency represented the estimated cost involved in operating a voluntary early retirement scheme as a means of reducing STA staff numbers to a level compatible with the then anticipated future business activities. This is described in note II of the accounts.In accordance with statements of standard accounting practice 2 and 17, and following normal commercial accounting conventions, STA management made provision for future early retirement and associated payments based on the best information then available. The £8.6 million represented the estimated cost of payments to be made in 1989–90 and in subsequent years.Payments of £4.088 million were actually made in 1989–90. The balance will be expended as payments in lieu of pension until those in receipt reach the age of 60, when they will receive their civil service pension.

To ask the Secretary of State for Employment if the new guidelines prepared for the clawback of development gain as part of the privatisation of the Skills Training Agency were discussed with the National Audit Office.

[holding answer 25 June 1990]: The clawback arrangements on any development gain were not discussed with the National Audit Office as the responsibility for policy in this area does not lie with it. However, full account was taken of the NAO's views on clawback, as stated for example in the report by the Comptroller and Auditor General: "Ministry of Defence; Further Examination of the Sale of Royal Ordnance plc" (June 1989).

To ask the Secretary of State for Employment if he will outline the role of Mr. Bishell, Mr. Kent and Mr. Wells in the Skills Training Agency between April 1989 and 19 February 1990; and if he will make a statement.

[holding answer 25 June 1990]: Mr. Bishell was head of skill centre operations, Mr. Kent head of financial services and Mr. Wells head of product development. Throughout the period April 1989 to 19 February 1990 they continued in these posts, but because of their declared interest in bidding for the business, special arrangements were made from the start of April 1989 to ensure that they were not allowed to authorise expenditure, or instruct others to incur expenditure, on behalf of the agency, or to take decisions affecting personnel. In addition, every care was taken to ensure that they were insulated from any knowledge of the STA privatisation which was not available to other prospective purchasers.

To ask the Secretary of State for Employment what was the total value of the building assets of the Skills Training Agency obtained in the period between the final accounts for 1988–89 and the preparation of the privatisation prospectus by Deloitte, Haskins and Sells.

[holding answer 25 June 1990]: The Skills Training Agency obtained no building assets in the period between the final accounts for 1988–89 and the preparation of the privatisation prospectus by Deloittes.

To ask the Secretary of State for Employment what approval was given in relation to the disposal of assets to bodies other than Government Departments at less than full market value in respect of the sale of the Skills Training Agency.

[holding answer 25 June 1990]: In accordance with the Government's objectives for the sale, all parts of the Skills Training Agency were offered for sale by competitive tender as training businesses on a going-concern basis. Their assets were integral parts of those businesses. The bids received reflected the current market value of the businesses as a whole.

To ask the Secretary of State for Employment what is the total expenditure involved in the privatisation of the Skills Training Agency for the most recent dates available.

[holding answer 25 June 1990]: Total expenditure directly attributable to the privatisation of the Skills Training Agency brought to account up to 31 May 1990 is £1.444 million. This figure covers fees paid to advisers and the departmental staff costs incurred up to that date.

To ask the Secretary of State for Employment what was the total value of the equipment of the Skills Training Agency obtained in the period between the final accounts for 1988–89 and the preparation of the privatisation prospectus by Deloitte, Haskins and Sells.

[holding answer 25 June 1990]: The STA privatisation prospectus was prepared in September 1989. The total value of capital equipment obtained by the Skills Training Agency between 1 April 1989 and that date was £104,000.

To ask the Secretary of State for Employment if the clawback procedure covering development gain is written into the contract agreements with METEL, Astra Training Scheme Ltd., the Training Business Group Ltd. and the Lakin consortium for purchase of the Skills Training Agency.

[holding answer 25 June 1990]: Clawback has been applied to all the freehold and long leasehold properties acquired by Astra Training Services Ltd. and is covered by contract. Clawback does not apply to METEL's purchase of Liverpool skill centre nor the Lakin consortium's purchase of Cumbria skill centre. The Government received professional advice that in each of these cases there was little or no potential for development gain so that clawback was inappropriate. The remaining Lakin acquisitions and the Training Business Group purchase of Lambeth skill centre involved short to medium-term leases and clawback was therefore inappropriate.

To ask the Secretary of State for Employment if he will make a statement as to the expenditure of £8.6 million included as an extraordinary item in the 1988–89 accounts of the Skills Training Agency; how many early retirements were to be covered by this expenditure; and how much had been spent by 31 March 1989.

[holding answer 25 June 1990]: The extraordinary item of £8.6 million included in the STA accounts for 1988–89 was intended, in accordance with normal accounting practice, to make provision for anticipated early retirement costs as a result of a reduction in staff numbers to a level compatible with levels of business.Out of the forecast surplus staff of 571, it was estimated that a reduction of 270 would be achieved by early retirement. No expenditure on these early retirements was incurred before 31 March 1989.

£ million
1984–851985–861986–871987–881988–891989–90
Fees from employers14·65·68·311·116·520·2
Adult training from Government271·363·165·460·138·417·7
YTS33·81·61·51·41·41·4
Income from others42·02·12·83·43·71·9
1 Covers fees from employers, ET placement providers, CITB and overseas customers.
2 Covers adult training contracted by Training Agency. The figure for 1988–89 includes residual job training scheme for the whole year and employment training from September 1988.
3 Covers YTS income from other managing agents and work placement providers in addition to the fees from Training Agency.
4 Covers sublet of property, sale of non-capital items and non-training income from Training Agency.
The figures for 1989–90 are provisional and subject to audit.
Provision was shown in the published estimates for each year from 1984–85 to 1989–90 as follows:
£ million
1984–851985–861986–871987–881988–891989–90
Fees from employers14·17·711·512·08·711·8
Receipts from Government297·273·965·964·930·329·8
Income from others31·50·72·22·31·72·1
1 Covers fees from employers and overseas customers, and youth training scheme receipts from employers and other managing agents but does not include employment training receipts from other training managers and placement providers.
2 Covers adult training and youth training contracted by Training Agency, also employment training receipts from other managing agents and placement providers.
3 Covers receipts from sublet of property, sale of non-capital items and non-training income from Training Agency.

To ask the Secretary of State for Employment if he will give the total amount of income received from the sale of the Skills Training Agency for the most recent date for which information is available.

[holding answer 25 June 1990]: The most recent date of information is 31 May 1990, at which point the total income received amounted to £65,000. While the sale of the STA as training business is complete, there are property interests which are about to be marketed for sale.

To ask the Secretary of State for Employment what was the total value of the land assets of the Skills Training Agency obtained in the period between the final accounts for 1988–89 and the preparation of the prospectus by Deloitte, Haskins and Sells.

[holding answer 25 June 1990]: The STA privatisation prospectus was prepared by Deloittes in September 1989. The only land asset obtained for the Skills Training Agency between 1 April 1989 and that date was the freehold interest in a leasehold site, at a cost of £297,000. The purchase of the freehold interest enabled the Department to avoid large expenditure on dilapidations on surrender of the lease.

To ask the Secretary of State for Employment what were the total appropriations in aid, broken down by (a) fees from employers, (b) receipts from Government and (c) income from others for the Skills Training Agency for each of the years 1984–85 to 1988–89, including provision and outturn; and what is the estimated total appropriation in aid for 1989–90.

[holding answer 25 June 1990]: I regret that information in the form requested can be obtained only at disproportionate cost. However, I can give the following:

Income

Total STA income appearing in the trading account for years 1984–85 to 1988–89 and internal management accounts for 1989–90 is as follows:

To ask the Secretary of State for Employment if he will make a statement on objective (III) contained in his Department's press notice dated 13 February entitled "Management Buyout of Skills Training Agency".

[holding answer 25 June 1990]: The key objectives for the sale of the Skills Training Agency (STA) training businesses were that as much as possible of STA's training business should transfer to the private sector, and that the training businesses sold should have good prospects of viability. Objective (III) was to maximise the net proceeds of the sale, consistent with these objectives. I am satisfied that this has been achieved. The disposal of the remaining property of the STA will help bring a positive return for the sale as a whole.

To ask the Secretary of State for Employment if he will estimate the total expenditure on the privatisation of the Skills Training Agency, inclusive of transfer of assets, financial assistance, administration costs and any other transfers of expenditure within the Department of Employment group budget.

[holding answer 25 June 1990]: It is not possible to estimate the total expenditure on the privatisation of the Skills Training Agency as the process is not yet complete; the Government's remaining property interests, for example, have yet to be sold. However, the total expenditure to date is approximately £14.94 million. This includes the payments to Astra Training Services Ltd., the Lakin consortium and the Training Business Group; advisers' fees; help with unsuccessful management buy-out costs and staffing costs.

To ask the Secretary of State for Employment how much was transferred from the employment training sub-head to cover the increase in expenditure and the reduction in income in the Skills Training Agency sub-head in the supply estimates between March 1989 and February 1990.

[holding answer 25 June 1990]: The spring supplementary estimates of the supply estimates class VII vote 1 published on 13 February 1990, introduction paragraph 3 (iii) stated:

"Transfer of provision from Section B1 (Employment Training) of £19,183,000 to Section G (Skills Training Agency) to cover excess expenditure on running costs and £19,227,000 to cover reduced income."

To ask the Secretary of State for Employment what was the total of (a) running costs, (b) capital expenditure and (c) expenditure on purchases of equipment, repairs etc. for the Skills Training Agency in each of the years 1984–85 to 1988–89, including both provision and outturn; and what is the estimated provision for 1989–90.

[holding answer 25 June 1990]: The totals of (a) running costs, (b) capital expenditure, (c) expenditure on purchases of equipment, repairs etc. for the Skills Training Agency in each of the years 1984–85 to 1988–89 and the expected outturn for 1989–90 are as follow:

a £,000b £,000c £,000
1984–8564,0776,01112,593
1985–8661,6558,36310,781
1986–8756,1554,60210–044
1987–8857,1733,2479,283
1988–8960,7231,2446,536
1989–9049,1619096,586

To ask the Secretary of State for Employment if he has received any representations from potential bidders and unsuccessful bidders about the process involved in the privatisation of the Skills Training Agency.

[holding answer 25 June 1990]: Ministers received correspondence from a small number of potential bidders and unsuccessful bidders about the sale process involved in moving the Skills Training Agency to the private sector.