Examination of Witnesses (Questions 336-339)|
WEDNESDAY 13 FEBRUARY 2002
336. Can I welcome Paddy Doyle, Simon Pilling
and Denyse Metcalf to our deliberations. You will know that we
have been inquiring into what happened with the Individual Learning
Accounts programme for some time. We are in the midst of the inquiry
and we have been looking forward to meeting Capita, as you played
a very important part in the running of the programme. This Committee
has made no decisions and have not expressed any views yet about
what went wrong with ILAs. You may well have read earlier transcripts,
and some people have said some rather nasty things about Capita.
We take a very balanced view. We are here today to find out what
you know about what went wrong, and indeed, whether it can be
put right and we can get ILAs back on track in one form or another.
Do feel that this is a Committee which is objective and trying
to assess what happened and find why it happened. Can I ask you
to make a short opening statement?
(Mr Doyle) I would like to introduce our team here
today. I am Paddy Doyle. I am the Group Operations Director, with
ultimate responsibility for our operational obligations to our
customers. I also sit on the Group Board. On my right is Denyse
Metcalf, who is a Divisional Director responsible for the operational
delivery of local and central government contracts. On my left
is Simon Pilling, who is the Executive Director responsible for
Capita's Professional Services Division, encompassing the IT services
business, which operates the ILA computer systems. I would like
to summarise the written evidence which we submitted to the Committee.
We are delivery partners to the DfES and we carry out similar
tasks for the Scottish Executive and the Northern Ireland Department
of Education and Learning. Whilst we operate in three countries,
today we are concentrating on England, as that is the Committee's
focus. We are pleased to be a partner in this innovative and important
scheme, and we welcome the opportunity to contribute to this inquiry.
As the service delivery partner of the DfES, Capita developed,
implemented and operated the ICT system for ILAs. We also administered
defined elements of the business process for the scheme. We also
advised the DfES on operational and technical issues. In running
and administering the scheme, our responsibilities covered such
areas as account holder call centre operations, based in Coventry;
learning provider call centre and administration operations, based
in Darlington; and centralised computer processing, based in West
Malling in Kent. In introducing the ILA scheme we were involved
in a rapid roll-out programme. However, the implementation requirements
were met and on target. The take-up of the scheme was much greater
than expected. We must remember that instead of the original target
of 1 million account holders, there were 2.6 million by the time
the scheme was suspended. Due to this exceptional increase in
volume, we experienced some service issues and dipped below our
service level agreement on occasions. Unfortunately, at around
the same time we started to see rising evidence of mis-selling.
We were increasingly receiving complaints in the call centre from
individuals claiming that their accounts had been used without
their knowledge. We were also analysing multiple names at single
addresses and anecdotal evidence was appearing regarding street
selling. The nature of the scheme, being innovative and open,
coupled with unforeseen volumes and abuse of the scheme meant
that changes to the process became necessary almost from launch.
It was announced on 24 October that the ILA scheme was to be suspended
from 7 December. This led to a major increase in activity. For
instance, the calls to the centres went up by almost 50 per cent.
The Secretary of State in her suspension announcement said that
the rapid growth of the scheme was exceeding all expectations
and it was necessary to think again about the scheme due to issues
concerning value for money and poor quality and mis-selling of
training. We understood the concerns that the Department had at
this time, and appreciated their need to suspend the scheme whilst
these issues were examined. On 23 November Capita were advised
of an alleged breach of the IT system. This was two weeks earlier
than the planned scheme closure. The system was shut down immediately
at the request of DfES. Capita has fully and openly cooperated
with the DfES and the police. Our investigations identified no
evidence of a breach of security nor hacking of the system in
place. However, there was evidence of possible abuse of the system
by a few registered providers. There is no evidence of any Capita
employee being involved in illegal or illegitimate activity. During
the running of the scheme so far there have been a number of lessons
learned. This was a pioneering, non-bureaucratic and open scheme.
Any re-launched scheme will need to balance being non-bureaucratic
with the need for tighter systems and business process, along
with new verification, validation and auditing processes. There
are a number of specific recommendations in our written submission,
and I will not go into those now. Going forward, Capita will continue
to cooperate fully with the investigations. The cost of this will
be met from our own resources. We want to learn the lessons too.
We are very willing to work with our clients to contribute to
the design of the new scheme. We recognise the value of a training
scheme such as the ILA and want to help get the scheme back up
and running as fast as possible. We are, of course, willing to
supply the Committee with any relevant further information. We
wish to answer and assist the Committee to have a better understanding
of the lessons that should be learnt in order to support any re-launch.
I would like to thank the Chairman and the Committee for the opportunity
to make this introduction, which I hope has helped the Members.
337. Can I open the questioning by saying to
you that many people would have expected, with Capita at the heart
of this programme, that you would have been the people who we
would have looked to to cry foul or blow the whistle or point
out that something was going very wrong with the scheme. We would
have thought you would have been the very first people to have
noticed something was going wrong. The sort of evidence we have
been getting so far suggests that it was people outside the system,
some of the smaller providers, who were picking up that things
were going very wrong. When did you first understand that things
were going wrong, who did you tell, and when?
(Mr Doyle) I think it was back in the late Spring/early
Summer of last year that we started to see evidence of some things
going wrong. I think we are sitting here today with a lot more
information than we had at that time. This was not a situation
where we suddenly became aware that there were many things going
wrong. It was a creeping thing that crept up on us over a number
of months. Both ourselves and the Department, and indeed some
of the learning providers and some individuals were passing through
information which led us to believe that things were not right.
We were working very hard with our partners in the Department
to try and correct those issues as they came along and to make
changes to the scheme and the process to try and make sure that
we could keep the scheme going.
338. Could you give the Committee details of
the first time someone senior, at your level, said, "Heck,
something is going wrong here. We had better tell the Department."
When did you do it? Would there be a record of that?
(Ms Metcalf) Perhaps I can come in because I was more
closely involved at the time. There were a number of incremental
things that were brought to the Department's attention, and that
were acted upon. As early as October 2000 we were aware that some
of the courses had not got a capped limit, so prices were rising,
and we brought that to the attention of the Department, and they
acted upon it and a ceiling was put upon course values. Moving
on, during the Spring, in conjunction with the Department, we
recognised that there were perhaps some providers who we were
not comfortable with. I do not want to go any further than that,
but at that point the Department introduced a new registration
process, so that all providers had to re-register, and as part
of that process came an obligation to refund any monies if they
had been claimed inappropriately. So as we went through, it was
very much an incremental process as things came to light, either
directly or, on occasions, through anecdotes, and we tried to
pick them up and work with the Department to introduce changes.
There were some major changes in process as the scheme closed.
339. What worried you? Was it something wrong
with the scheme? Was it people providing poor courses? Was it
fraud? Was it the sheer numbers that you had not anticipated?
Which were the concerns?
(Ms Metcalf) To some extent, none of those. The scheme
itself was working very well, but there were incidents, though
not a large number; we are talking about in the Summer a matter
of some 30 or 40 providers which we thought warranted further
investigation. So the numbers were not large, but the press had
obviously got involved. There was a concern that it could grow.
We did not have to point it out to the Department; they were as
aware of it as we were. We worked together to try and tighten
the arrangements, which resulted in things like the taking away
of the non-personalised application form. That announcement had
already been made during the Summer.