Learndirect Ltd: Too big to fail?

At what point does a company supported by public money become too big to fail?

Last week the UK's largest training provider, Learndirect Ltd, was rated inadequate after an extensive inspection by the watchdog, Ofsted.

As the BBC reported, the inspectors were worried about a decline in standards that meant too few people were getting the skills they needed to work.

The findings were strongly disputed by the company, but thanks to the efforts of the newspaper FE Week their failed court attempt to block publication came to light.

In court, Learndirect's lawyers argued publication would lead to swift termination of their contract, with dire financial consequences for the company.

In response to the overall rating of inadequate the Department for Education said the Learndirect Ltd contract was being "gradually wound down rather than immediately terminated" as that would protect people learning with the company.

This created an impression of a diminishing contract, wrapping up unfinished training, which went unchecked.

Officials have now confirmed to the BBC it means the Learndirect Ltd contract will be allowed to run its full length, the contract won't be terminated early and the standard three-month termination notice won't be issued.

New learners

Throughout that time new people will be able to start courses paid for out of the adult education budget, or funded by loans, as long as they finish by July 2018.

As the courses are generally short this doesn't seem to restrict new people starting as usual with Learndirect Ltd in the next year.

After three years of decline, Ofsted says new senior managers are tackling the main weaknesses.

There will, the DfE says, be "intensive monitoring" on a monthly basis to make sure efforts are made to improve quality.

There is a strong public interest in good adult training whether through apprenticeships or other courses.

It helps the individuals gain confidence and skills, it helps employers with a qualified workforce and it helps the taxpayer by getting people back into work.

But in this case it seems another set of concerns are also strong - it seems Learndirect Ltd is too big a public contractor to be allowed to fail.

The company has a string of government contracts in England that are nothing to do with those inspected by Ofsted, and about which no concerns have been raised.

For example, it is the only provider for a test would-be teachers in England have to take to allow them to start teacher training.

The company is also runs the Life in the UK citizenship test under contract.

Both are described by officials as "key public services" that were a consideration in deciding whether the company could be allowed to go into administration.

It is a decision that in itself might raise questions about how any one contractor can be allowed to win so many public contracts that, when it is found failing in one area, the usual sanctions can't be applied.