Pounds 4.8m pledged to failed agency: Leaked document details bail-out plan

THE Government secretly pledged a pounds 4.8m bail-out to the failed Astra skill centre network in the run-up to the last election, confidential ministerial papers show.

The documents, leaked to Frank Dobson, Labour's employment spokesman, also reveal that on Whitehall's admission, deep cuts in the training budget brought about the collapse of the privatised agency.

A Department of Employment minute marked 'Not to be printed', produced by Mr Dobson yesterday, shows that in addition to the pounds 11m sweetener Astra received on privatisation, Michael Howard, the then Secretary of State, pledged a further pounds 4.8m six weeks before the 1992 general election to help the company pay unforeseen costs of the uniform business rate. In the event, only pounds 1.3m was paid out, the department said yesterday.

A ministerial briefing admits that the company's financial difficulties 'were not, for the most part, caused by the recession . . . A bigger problem was changes in the structure and funding of government training programmes, whose overall budget was reduced'. Headed 'Defensive briefing in the event the company collapses - lines to take', and drawn up by Department of Employment officials five weeks before Astra was placed in administrative receivership last month, the document spotlights a 40 per cent cut in funding between 1989-90 and 1993-94.

Astra Training Services was created three years ago via a management buy-out of the former Skills Training Agency. Vaunted by Mr Howard as the first successful buy-out by the civil service it was envisaged as a major contractor of training for work programmes for the 82 Training and Enterprise Councils (Tecs) that administer government training funds.

By the time it went into receivership two dozen of the 45 skill centres it acquired had closed. Eight more have closed since including two yesterday, at Norwich and Hillingdon.

Mr Dobson said there were now fewer than 30 centres, training 60,000 people compared to 110,000 before the sell-off.

Stuart Bishell, the company's managing director, has confirmed allegations that Astra temporarily employed jobless ex- trainees so qualifying for bonuses from public funds, but insisted in a letter to Mr Dobson that they amounted to fewer than 4 per cent of the 550 people placed in work since April.