Whitsun Adjournment

I am pleased to have the opportunity to speak in this debate. I want to raise concerns about management practices at Manchester College of Arts and Technology—better known as MANCAT—and in particular to highlight concerns raised by former members of staff. MANCAT is one of the country's largest further education colleges, and from August it will merge with its neighbour, City College Manchester, and become even bigger. I am concerned that investigations into management practices at MANCAT have been hampered because MANCAT destroyed auditable documents—the National Audit Office is aware of that—and also reached financial settlements with certain ex-members of staff on condition that those former employees signed confidentiality clauses in their settlement agreements. I have seen several documents, including some in which staff stated that they were under pressure from the college to falsify student attendance registers and other funding-related forms so that MANCAT could claim extra public money from the Learning and Skills Council. One key witness was planning to explain the extent of malpractice at an employment tribunal where she had been in the process of seeking redress for constructive dismissal. Instead, she was offered a financial settlement, to which she ultimately agreed, that was conditional on her signing a gagging clause. She was an administration manager who had blown the whistle in a letter to MANCAT's governing body. In that letter, she described in detail the active role she had played over three years in systematically falsifying paperwork at the request of MANCAT's senior management. I am aware of three investigations into MANCAT's affairs, including ones by the National Audit Office and the Learning and Skills Council. None uncovered evidence of systematic fraud. But while the college denies any wrongdoing, it is hard to see how the public can have confidence in such exercises when potentially crucial paperwork has been destroyed and important witnesses have been gagged through confidentiality clauses in settlement agreements paid for with public money. I fear that such gagging clauses are an all too common feature of employment arrangements when things go wrong. It is something that the Public Accounts Committee has deplored. We are talking about public money and it should not be used to shut people up. Moreover, I question whether such confidentiality clauses are legally valid if fraud, which is a criminal matter, has been alleged. Under the Public Interest Disclosure Act 1998, in the provision covering contractual duties of confidentiality, it states at section 43J:"““Any provision in an agreement to which this section applies is void in so far as it purports to preclude the worker from making a protected disclosure.””" The destruction of auditable documents came to light when the Learning and Skills Council's own investigator referred to it. In an e-mail, he wrote that an internal inquiry into allegations about paperwork relating to individual learners proved inconclusive because"““it was reported that the college destroys all paper records after the ILR audit””—" that is the individual learner record audit—"““and therefore there were no records to review to confirm or refute them.””" He went on to point out that such conduct is contrary to the financial memorandum, which stipulates that such records should be kept for six years. Then, significantly, he added:"““We have also since learned that they told ILR auditors that they do keep records for six years.””" This would appear to be untrue. The National Audit Office was aware that records had been destroyed, as I discovered on raising the matter in a session of the Public Accounts Committee on 18 April 2007, when the value for money director covering education and skills, Ms Angela Hands, said:"““They were destroying records, and I would have to check with the Learning and Skills Council, but it was quite swift, the destruction of records. I think it was within a year.””" Mr. Mark Haysom of the Learning and Skills Council added:"““I cannot recall whether it was within a year, but it was certainly quicker than is practice today””." At one stage MANCAT's external auditors, PricewaterhouseCoopers, were called in after another member of staff, a lecturer at the college, raised concerns about the manipulation of registers in the ESOL department—English for speakers of other languages—which teaches basic English to foreigners. He was sacked by MANCAT, but after starting employment tribunal proceedings for unfair dismissal was paid off on condition that he signed a confidentiality agreement, which he did. PricewaterhouseCoopers discovered something that greatly disturbs me, which was that MANCAT's funding claim to the Learning and Skills Council was based on a centralised set of student registers that had not been produced or signed by tutors. Someone else had created them. And in no fewer than 36 out of 39 cases which PricewaterhouseCoopers examined in the ESOL department, more attendances were recorded on this secondary system than on the originals. It would defy all rules of probability if that were simply down to pure inaccuracy. It sounds much more likely to have been deliberate manipulation to achieve an apparently higher attendance than took place. In all, the PricewaterhouseCoopers review of documents found 304 discrepancies. Although PricewaterhouseCoopers chose its words carefully, saying that"““the discrepancies do not provide evidence of systematic register manipulation for the purpose of inflating the college funding claim””," none the less, it became clear that PricewaterhouseCoopers's dealings with the college were extremely fraught. Indeed, six months later the company resigned as external auditors to MANCAT. The PWC partner involved, Lee Childs, wrote to MANCAT's principal, Peter Tavernor, telling of strained relationships with senior staff, and stating that"““frankly I don't believe it possible to audit effectively without trust from both sides.””" I have already raised these matters verbally with the Learning and Skills Council's chief executive, Mark Haysom. In my view, the Learning and Skills Council and, indeed, the National Audit Office should examine the matter further. They should not be content not to challenge gagging orders in the face of such serious allegations. I also suggest that they have taken too lenient a view of the destruction of auditable documents. They could be far more rigorous in examining the affairs of MANCAT. It is important that public bodies do not believe that such behaviour will go unexamined. In November 2003, the Learning and Skills Council had the opportunity to interview the principal witness after she first blew the whistle in her letter to governors. It knew of its contents long before she was paid off and gagged. Moreover, further details could still be tracked down by the Learning and Skills Council in a detailed statement that would have comprised her evidence at the employment tribunal, much of it corroborated in a statement from an ex-colleague. Interestingly, the chairman of MANCAT's audit committee would have liked an external inquiry but he was overruled by the principal of the college and resigned as a result. It is unfortunate that the Learning and Skills Council allowed MANCAT to conduct an internal inquiry into such serious matters, bearing in mind that senior management were said to be involved. During the inquiry process, the whistleblower said she had learned that the original handwritten documents that she had used to create the falsified records had been ““lost””. However, I have seen copies. Among the documents that I showed Mr. Haysom were a bundle of allegedly falsified student registers that appear to confirm the extent of the operation. They were all in one person's handwriting and covered a broad sweep of curriculum areas. That suggests that fraud was taking place on an industrial scale. Despite previous inquiries, I believe the public interest has been denied the rigorous investigation at MANCAT that it deserves. The events remain highly relevant both because of their seriousness and because the college's senior management team has remained more or less intact. Moreover, Peter Tavernor has recently been appointed principal of the new merged super college in Manchester, which will have an annual budget of about £130 million. I am concerned about the ways in which MANCAT has handled taxpayers' money in the past. It would be in the public interest to know how much MANCAT has spent on legal costs and financial settlements involving all the ex-staff who made allegations of irregularities. Moreover, it would be helpful to know what MANCAT's bill was for legal fees and costs in another hugely expensive employment tribunal that stretched over 16 days. That case, which MANCAT lost, involved all five staff of the trade union education department, whom the tribunal ruled were unfairly dismissed for union activity. In my view, running a college on such costly and adversarial lines hardly equates to good value for money. In conclusion, I believe there should be a thorough investigation of what appears to be institutionalised fraud at Manchester College of Arts and Technology.