The Sleazy State: How the web of Patronage works / Day 2: 2bn pounds 'swallowed' by TECs: Training & Enterprise

THE GOVERNMENT'S vocational training programme for the unemployed, which costs more than pounds 2bn of taxpayers' money each year, has become a financial black hole, critics claim.

Grave concern has been expressed by Whitehall's National Audit Offfice about the employer-led Training and Enterprise Councils, the first of which were created five years ago. The TECs have also under fire from both sides of industry, voluntary organisations and independent researchers.

The NAO has expanded a routine study to investigate financial controls on TECs. Two years ago the organisation discovered that the councils had wrongly claimed at least pounds 55m from the Government. A recent study by the London School of Economics estimated that TECs wasted about pounds 250m of taxpayers' money each year - a figure disputed by TEC representatives.

TEC boards effectively appoint their own members with no local democratic input. A rule stipulating that two-thirds of board members must be company chief executives, virtually guarantees a Conservative majority and ensures criticism of government policy is muted. The situation is exacerbated by the councils' status as private limited companies, able to fob off inquisitors with the reply that much of what they do is 'commercial in confidence'. Questions in the Commons have been parried by ministers in the same way.

The Government's insistence on a strong employer presence has meant taxpayers' money has often been disbursed to companies represented on the TEC board. The biggest firms in the locality will be called upon to supply a TEC board member, but will also be expected to participate in government schemes by providing training for the unemployed.

North Nottinghamshire TEC appointed the chief executive of mining company R J Budge to its board at the same meeting which approved pounds 250,000 in training funds to the company. The money is being used to train miners at Clipstone colliery in preparation for privatisation. Critics point out that most of the miners worked at the pit for British Coal and require minimal instruction.

John Troth, chairman of north-east Wales TEC, says his council has funded projects in the region which would have been impossible under the old state-controlled area manpower boards. Under that system all surplus finds would have gone into training providers' pockets, he said. 'I've never been so accountable in my life. We have three or four sets of auditors going through our books every year.'

Nevertheless criticisms of inefficiency and mismanagement of the network persist. Two chief executives of Local Enterprise Companies - the Scottish TEC equivalent - resigned over alleged conflicts of interest. Recently the chief executive of the Bradford TEC stepped down after being suspended over accusations of mismanagement.

City TECs have paid the price for involving representatives of fledgling businesses on boards, leading to allegations of incompetence rather than embezzlement.

Northumberland TEC was criticised for spending about pounds 13m on a management training centre at a time when the county's last pits had closed and the unemployed needed reskilling.

Chris Evans, of the National Council for Voluntary Organisations, said that the Government is simply asking too much of the TEC network.' The original objective of TECs - to help regenerate the economy and reskill the workforce, basically hasn't happened.'