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Mr. Andrew Turner (Isle of Wight): The Chairman of the Select Committee refers to commercial organisations. Does he agree that it is not only the potential learners who suffer from the delay in introducing a new scheme, but also the many—and in particular, the small—learning providers?

Mr. Sheerman: I was about to come to that, and the hon. Gentleman is right.

In terms of being even-handed—and the report was unanimous—we went to the heart of the lessons that must be learned. The closing speeches in the last debate seem

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appropriate to our discussion, which also involves the relationship between a Department and a private sector partner. There are many forms of such partnerships and it is important to have the right one. The more we explored the relationship between the Department for Education and Skills and Capita in relation to individual learning accounts, the more we thought that that relationship was not right, and that there was something wrong with the contract. It seemed to us that here was a relationship with a major, well-known FTSE 100 company, with great experience in delivering services of this type. We looked beyond whatever went wrong with the wording of the contract. Sometimes we became rather irritated about commercial confidentiality; I am not sure that commercial confidentiality in these contracts was as important as was claimed. We said in our report that there should be a bit more transparency on what the deal was. Why should not the public know? It is their money. Why should we not have more knowledge?

Mr. David Chaytor (Bury, North): I am extremely glad that my hon. Friend has made that point, because it strikes me that whereas in the past few weeks we have been able to read in the financial pages of the major newspapers full details of the accounts of Enron, and more recently WorldCom, in minute detail, we cannot find out how much the Department has paid, out of public funding, to Capita, or what penalties have been incurred as a result of the failure to deliver the skills training.

Mr. Sheerman: My hon. Friend makes a fair point, which needs no reply from me.

I was saying that, yes, we do criticise the Department for probably getting the relationship with Capita wrong. I thought that it was refreshing that the Department came back and said that we had been right—that in renegotiation of that contract it would hope to get, if Capita—

Jonathan Shaw (Chatham and Aylesford): Does my hon. Friend agree that one of the reasons why the relationship was not right may have been the pressure on time, as reported in the special internal audit review? That review says that the time pressures contributed to the problems experienced by the programme and that the Department was under severe pressure to deliver, leading to problems in setting up the contract with Capita?

Mr. Sheerman: There is a strong element of truth in that too; I believe that there were time pressures. However, we should also take into account the fact that the commitment to set up individual learning accounts was made in the Labour party's May 1997 election manifesto. The ILA experience developed over a very long time, and it is the responsibility in one sense of the Government and the Department that, when they decided that they had to get the programme up and running, they were under great pressure of time.

To finish my criticism of Capita, it seemed to me that the contract was not right for that major company. It seemed to the Committee that if one has a private sector partner, it should take a fair share of the risk, and it should be very clear that the private sector partner is taking a fair share of that risk; that should have been in the agreement.

Capita has great experience and knowledge across the piece and has entered into many contracts with the public sector—including, I admit, with the House of Commons

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and the Select Committees, because it handled some of our recruitment—and with various Government Departments, including the Department for Education and Skills. The company claims grandly that its delivery goes beyond the terms of the written agreement and beyond the written word. We were therefore surprised that Capita was not able to flag up at an early stage the problems that might occur in this type of programme, devised and constructed as it was, or to give early warning when things started to go wrong.

Some people were blowing whistles. Some were pointing out that the programme would be prone to abuse; they tended to be the little people—the small companies that were the training providers. They gave a lot of evidence to our Committee to the effect that they were worried about the laxness of the structure, and very soon after about the way in which it was operating. We have tried to ensure that our criticism of Capita is fair, and I believe that we all agreed that there were severe shortcomings on Capita's part. We also criticised the Government for not getting the contract right in the first place, but we wanted to go beyond that and say that there were lessons here for all Government Departments. We do hope that this knowledge will not remain in the Department for Education and Skills silo. Everyone should read about problems that can arise in relationships with the private sector.

My colleagues on both sides of the House know that I am not the sort of person who is averse to private sector partnerships. In fact, I believe that they are a very creative way to deliver policy and I have no qualms about that; but they must be right. They must be businesslike, and the people in the various Departments must know what they are doing when they are signing up. I believe that a reading of our recommendations will do all Departments good if they are about to embark on a relationship and a contract with a private sector partner, however complex. This contract was not rocket science; it was quite simple, and if it could go so wrong, it is no wonder that it is so difficult to get right very sophisticated contracts such as that discussed in the Chamber earlier. That is what our colleagues on the Transport Committee have argued as well. Let us use the experience creatively and learn the lessons.

We have criticised the Department, but we support the general principle of the light touch. There should not be so much bureaucracy that it prevents people having access to the programme and kills excitement and innovation. We said strongly that the criticism of events surrounding individual learning accounts should not force any Government Department, especially the Department for Education and Skills, to cease being innovative and flexible and exercising a lighter touch. Departments can still do that and take the precautions suggested by the Committee.

Our message to the Department is strong and clear: do not be deterred from being innovative and trying to avoid a vast bureaucracy every time a programme is introduced, but bear in mind the fact that there are people out there eager to learn and to get the skills for this century, who want to be more productive in their employment. They are waiting for the programme to come back, and it has

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been a long time a-coming. There are also, as the hon. Member for Isle of Wight (Mr. Turner) suggested, many small providers who have been hurt by the experience.

Without being too negative, I end on a note of warning. It is good to see my hon. Friend the Member for Wentworth (John Healey), who is now the Economic Secretary to the Treasury, with us. We got good value from him as a Minister in the Department for Education and Skills, in terms of his willingness to come back to the Committee time and again and to supply a great deal of information. We were very grateful for that.

I understand that the National Audit Office has almost completed its investigation. The ombudsman is also looking into the matter. We never argued that everybody who had been hurt by the cancellation of ILAs should receive compensation, but if the Government are to be true to their word, they should be honourable. They said that they would pull the plug on the programme on 7 December, but they pulled it three weeks early, on 23 November, and people were hurt by that process. We said clearly in our report that if the Government are honourable, the people hurt by that three-week change of mind, whatever the reason, should be compensated if they can prove—yes, if they can prove—that they were harmed financially by the change of date.

The Government replied that they could not give compensation across the piece. Of course they cannot. We do not expect the Government to give compensation for training that was geared up for but never delivered, but they can give compensation for a three-week period to providers who were geared up and able to supply the training, which was no longer paid for.

I shall not prolong my remarks, as I know that many other hon. Members wish to speak. I hope that people will read the report as an exemplar of a good Select Committee report and as reflecting the right relationship between a Department and a Select Committee. We achieved a balance between scrutinising a good programme that went wrong, and making sure that we drew the general lessons from the mistakes that occurred. That is what the House is about.

If there is to be a renaissance of interest in our debating Chamber and in what Parliament does, and if the Select Committees play their cards right and we do the job well, we can be at the heart of the regeneration of the life of Parliament. I know that all my fellow members of the Committee worked extremely hard on the report on a cross-party basis and are proud of it—and they have every right to be so. I am very proud to be their Chairman and I commend the report to the House.

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