Tec fails with liabilities of £5m

South Thames yesterday became the first Training and Enterprise Council to go into receivership amid signs that the whole system for delivering the Government's £2bn programme for the unemployed is under increasing strain, writes Barrie Clement.

The Tec, covering the boroughs of Lambeth, Southwark, Lewisham and Greenwich, called for receivership under the weight of £5m worth of liabilities. Ministers last night insisted that the other 73 employer-led Tecs in England - they are new-style quangos with private company status - are financially sound.

James Paice, the employment minister responsible for Tecs, said there was no question of fraud. "It was simple bad management. They were entirely overstretched." South Thames had been the subject of three concurrent investigations into its financial management. It had found itself unable to supply sufficient financial information to the Government and in October, ministers issued a breach of contract notice. It is understood less than half of the £5m debt involves taxpayers' money, the rest is owed to contractors.

Mr Paice said the Government had issued a letter legally guaranteeing continued training for the 7,000 students presently on courses and payment for the colleges and other training providers.