Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 360-379)



  360. Knowing that, did you not, as Val says, designing the form, consider that there might be the need to look at slightly more detail on the registration form and the requirements for those new providers, who had no track record, who had not been part of the pilot scheme, and when nobody really knew how it was going to work?
  (Ms Metcalf) In the early days of the design brief there was included a validation process, which proved not to be possible in so far as there was an accreditation loop before the provider came to Capita. For a number of reasons, it was not possible for that to go ahead.

  361. That is news to us. We do not know that.
  (Ms Metcalf) In very much the same way as in Scotland, the providers first registered with a third party organisation so that they became known to that organisation. It was not possible at the time to transfer the database across to this system, and indeed, the database was much smaller; it did not represent the new providers that came into the marketplace. But it is my understanding of the ILA scheme that it set out to encourage new providers to the marketplace and that there were concerns that if too many barriers were put in place, those new providers would not be encouraged to enter the marketplace, and that policy prevailed as we moved forward into the scheme.

  362. We understand that, and we have heard a lot of that from the officials from the Department, but what I am interested in is, are you saying that you thought there should be a validation or accreditation loop or whatever term you are using, and that was not agreed to by the Department, or are you saying that the Department was looking at that and then decided that they did not want to go ahead with that? I am not clear: was it you or them?
  (Ms Metcalf) Again, neither of the two. The Department, I believe, were looking at it, it was the intention to go ahead, but it proved not to be possible because the system links were not compatible, and in any event, that would have represented at that point a very small proportion of the providers that entered the marketplace. The idea was to transfer the providers across from one database to another, the existing providers trying the scheme.

  363. I am completely confused now. Is this a validation of their learning and doing it or are we talking about them having registered electronically on another database?
  (Ms Metcalf) More the latter, that they had existed and had a relationship. I was picking up your point in relation to the TECs having a local relationship; they were known organisations.

  364. So they were known in the sense that they had done some previous training or they were known because they had put their name on a database?
  (Ms Metcalf) I cannot comment on that. Suffice to say that, in terms of the ILA scheme, the idea was to encourage new organisations, new learning providers, so that one of the criteria could never have been that they had already previously provided education if they were to be a new provider, which was the intention, as I understand it.

Mr Baron

  365. Capita are very experienced in this field. Twenty per cent of your business activity comes from education-related projects, and yet we have seen a number of people who have pointed the finger at Capita, saying that controls were weak, security was poor and communication practically non-existent. We seem to be unable to find anybody willing to admit it was their responsibility to scrutinise the providers, which is terribly important in an initiative like this. Can you very briefly summarise why you think it was not your fault? We have heard one or two things about registration forms, but the submission you gave us seems to suggest, as the Chairman has indicated, that it was not your fault. It was somebody's fault. Why was it not your fault? You were at the centre of this whole initiative.
  (Mr Doyle) As I said to the Chairman, if our submission came across like that, I apologise. It was not intended to come across like that. There is no-one more disappointed than ourselves that the scheme finds itself where it is today, and we take our fair share of the blame as to why that is. When we work with our customers, we work alongside them, we work in partnership, as we did with the Department, and this is not a case of "Hands up, this is not our fault, guv." This is a case of the scheme is where it is, there are things that have gone wrong otherwise it would not be where it is, and we obviously take our part of the blame.

  366. May I be clear? What did go wrong from your point of view? What did you do wrong with regard to the scheme?
  (Mr Doyle) I think there were a number of things. As I said earlier, this was not a wake up one morning and "Oh, goodness, the whole thing has gone wrong." It was over a long period of time that things started to come to light that were going wrong. As I said earlier, we tried very hard to work with others who were involved in the scheme to try and fix those things as we went along and keep the scheme going, because it was a very successful scheme. It was seen as being a successful scheme, and nobody wanted to stop it earlier than was absolutely necessary. In the early days these things did not seem like issues that could not befixed.

  367. With respect, Mr Doyle, that is quite an ambiguous answer. You have not given me one clear example of what you were doing wrong. You have made the point that things went wrong over a period of time. Fine; we accept that, but what did Capita do wrong?
  (Mr Doyle) First and foremost, I think, taking the Chairman's point earlier, we did not shout loud enough. When the issues were coming to light, we were identifying issues, we were talking to people about issues, but we did not shout loud enough. The Chairman asked, "When did you get a cab and go down to the DfES?" meaning somebody at my level. I did not go. Looking back on it now, looking closely at the sequence of events, as we have done in our investigations, I believe we should have shouted louder and harder at that time about things that we were identifying.

  368. So are you suggesting that the only thing that went wrong from your point of view was that you saw a system going wrong but you did not shout loudly enough?
  (Mr Doyle) That is one thing.

  369. Go on. What was the second?
  (Mr Doyle) The second thing was that at the back end of the process, when we looked at some of the IT systems that were in place, we could have moved earlier to make those systems more robust in the light of some of this information that was coming forward. The system that was put in place was put in place as fit for purpose at the beginning in terms of the way that we believed the scheme was going to roll out.


  370. That is very interesting. Fit for purpose? You keep talking about your partnership. A partnership is a very close thing. Denyse Metcalf, indeed, was a civil servant in the Department of Education and worked for you for five years, so there was a high level of knowledge across the two partners. But when you say in your evidence, "In retrospect, we should have been more robust," the thing that leaps off the page is that you at no stage seem to have said to your partner, "How can you have a system where you want us to pay out for training that no-one can authenticate has taken place?" You are the great Capita, you have all this experience, and no-one in your organisation at any time said, "Come on, you are paying all this money for these people doing training and you are not going to have any authentication that it is actually being carried out." Is it not surprising that you did not do that? Is that what you mean when you say you would have been more robust with hindsight?
  (Mr Doyle) That is part of the way in which we would have been more robust. It is not correct to say that we were not having those discussions with anybody. Those discussions were taking place. Where we should have been more robust is that perhaps those discussions were not taking place at the right level.

  371. So there is a minute of a time when you said to the Department, "You cannot really get away with giving money for courses that you cannot authenticate have taken place."
  (Mr Doyle) I am sure we would not have used those words, Chairman, but we were having fortnightly and monthly review meetings with the Department. In those meetings those types of discussions were taking place, sometimes put forward by us and sometimes put forward by the Department.

  372. Who were you meeting with?
  (Ms Metcalf) I was meeting with Hugh Tollyfield and Derek Grover. As Paddy has said, it was really an ongoing dialogue to improve and to tighten the controls in the scheme, but we were aware, as were the Department, that it was a very large and a very successful scheme, and that implementing changes had to be done very carefully. So there were a number of changes to tighten the scheme when it became obvious that there were problems with it, and those discussions were happening all during the summer, and indeed, some of those things were implemented but obviously now too late.

  373. It was nothing to do with an impending general election which put you off telling the minister that something was going wrong in the run-up to an election? Earlier you mentioned Spring, not Summer.
  (Ms Metcalf) In the Spring the Department had already introduced the new registration process, which had come out of the dialogue over our concerns, as I said earlier, about providers, and we were in very close discussion and understood that the Department's staff were in discussion also at the very highest level within the Department. As Paddy has said, with hindsight, perhaps that channel was not the only channel that we should have used. That was my mistake. I was aware that there were discussions going on at the very highest level, and I was aware that changes were being sought. Timing perhaps has been the thing that has let us down on that.

Mr Baron

  374. On the second point, before you perhaps give us a few more failures, IT systems needed to be more robust. What exactly do you mean by that?
  (Mr Doyle) When the system was originally designed, at the start of the scheme, it was designed to be fit for purpose at that time, as I said.

  375. That is very open, not checking too much, making it very easy for people to apply.
  (Mr Doyle) Correct.

  376. So very little emphasis on security control.
  (Mr Doyle) The emphasis on security control was very much around people who had access to the system. In other words, people who we considered at that time to be approved providers, who were going to be enabled to enter the scheme by being issued with their own account number and password. The security was very much around that level. Once into the scheme, it was a very open scheme. The reference numbers that were used, which I should think everybody has heard about time and time again, were purely in the scheme as reference numbers. The point I am making about making it more robust, and where I believe we did make an error, is that as these things came to light and it became obvious that some providers were possibly not as bona fide as we would wish them to be, and possibly abused the scheme, we should have either closed the system at that time and made it more robust, or attempted to make it more robust at that time. It was only towards the very end when the scheme was being suspended that we started to look at that.

  377. What other failures do you admit to with regard to what went wrong?
  (Mr Doyle) I think they are the main ones.

  378. Was there ever from your point of view a conflict of interest with regard to allowing the scheme to be very successful and rolling out, but not putting enough security in place? How were you remunerated with regard to this contract? Was there ever from your point of view a conflict of interest?
  (Mr Doyle) No, I do not believe so. The way we were remunerated was against the base contract, and the volume of the scheme. If you mean that as a conflict of interest in terms of the more people who entered the scheme, the more we got paid, yes. I am not sure whether that is strictly true and whether it is done on that basis, but yes, there is a volume-related element to the contract, as there had to be. For instance, in the call centres we were employing far more people than we ever intended to in the early stages because we were taking at the peak round about 2,000 calls a month in call centres. We had to make the systems more robust in terms of the numbers hitting it. So there was an element in the contract which was volume-based. Is that what you were getting at?

  379. I want to try to understand why the security was not better from the outset, because there does seem to have been an element of fraud in the whole affair. Nobody seems to have been scrutinising the providers. I think I am correct in saying at the same time we have only had one prosecution of a fraudulent provider to date. There seemed to be this very grey area about lax security, yet we have not had a tremendous number of successful prosecutions. Can I come back to my original question? You have listed what went wrong from your point of view. The system clearly failed in the sense that it had to be wound up despite the success it was achieving, with 2.5 million account holders. Where does the fault lie with other people? Was there any fault with other people from your point of view? You are saying you were willing to say that you share in the blame. Who else was at fault here? You have said you had a lot of discussions with the Government, ongoing discussions, and one of the things that went wrong was that you did not shout loudly enough in a series of meetings during the Spring and the Summer. Are you saying that the brief you were given was too broad, that it is somebody else's fault that the control systems were not in place?
  (Mr Doyle) No, I do not want to say it was someone else's fault. We were working in partnership with the Department on this. We share our part of the blame in that the scheme has gone wrong. At the outset, there was work done before Capita ever bid for this contract. There was work done with other advisers in terms of the way the scheme was going to be rolled out and the basic way in which the scheme was going to be operated. That was what contractors were asked to bid against. At that time I do not think people were trying to design something which people were going to be able to shoot holes through. I think there was a genuine desire to develop a scheme which was open and non-bureaucratic.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 19 March 2002