Examination of Witnesses (Questions 588
WEDNESDAY 27 FEBRUARY 2002
588. Good morning, Ms Metcalf, Mr Doyle, Mr
Pilling. Thank you very much for coming back for a second round
of this. I hope you realise that this Committee does try to take
a positive attitude to its witnesses. We got a lot of information
from you last time and in a sense we were doing a forensic job
two weeks ago. A lot of the things we shall be asking this morning
will be in the frame of every member of this Committee very strongly
believing in the ILA principle and wanting to see an ILA Mark
2 and a very successful one as soon as possible. This is the last
oral evidence session of the Committee in this inquiry. We want
to get our report out and written just as soon as possible because
we want it to influence that next phase. A lot of our questions
will be looking forward. You are the people with a great deal
of expertise and we want to learn from your experience and expertise
how we make the ILA 2 one which gets that balance which the Minister
kept referring to yesterday, the balance between being light of
touch, being not too bureaucratic, but having quality assurance
and secure in its architecture. Thank you for your attendance
again and that is the spirit in which we shall be asking questions
today. Mr Doyle, do you want to say anything to start off?
(Mr Doyle) No, I do not think I do really.
We are quite happy to get straight into it.
589. Excellent. What about your colleagues?
Are they happy?
(Mr Pilling) Fine.
590. I am conscious, Mr Pilling, that you had
less chance to contribute last time than your two colleagues.
(Mr Pilling) That is fine.
591. I do not know whether you have seen any
of the transcript of yesterday's meeting with the Minister. On
the negative side he said that he thought some aspects of your
performance were not up to scratch, but on the whole he was reasonably
positive about the relationship with Capita. Give us some overview
of where you are in terms of working with the Department to build
a new ILA? What is the main thing?
(Mr Doyle) It is still early days in terms of building
on what ILA 2 will look like. It is true to say that quite a lot
of time has been spent in the early weeks going back over some
of the issues which occurred in the early days. We are working
closely with the Department now in two areas really: one is around
what we might do around technology and systems in the IT sense,
in terms of how we might tighten up those sorts of areas to bring
up the quality assurance as much as we can so that we get a balance
between a freedom at the front end of the scheme and tightening
up systems as best we can and looking for new areas where systems
might be able to be tightened to help in that front-end openness.
In the coming weeks and at a meeting taking place today we are
looking to talk about Capita being more involved in the overall
make-up of the scheme and the business plan around what any new
scheme might look like along with others.
(Ms Metcalf) The difficulty is that obviously we have
not yet had a further steer from the Department about the exact
shape of any ILA 2, but in our discussions with them we were clear
that we would want to reinforce the controls around the provider
element. To me, what is emerging is that it is likely that there
should be some involvement perhaps on a local level, perhaps with
the Learning and Skills Councils, perhaps moving into the public
sector that pre-accreditation process might involve FEFC. So in
effect there is a pre-registration process and then the quality
assured providers could move towards a national database which
we would hold. In a sense it would be much more of a public/private
partnership in that we would bring more stakeholders in terms
of how it is set up. It is also clear that we need to look and
explore more carefully the point at which payment mechanisms come
into play. It is clear that at the moment in the public sector
payments are not always made up front and of course with the ILA
it was at the point of registration on the course. It might be
more appropriate to look at phasing those payments. We are certainly
in discussions with the DfES about that. Also perhaps more training
for some of the providers in terms of IT skills, in terms of them
as providers understanding their responsibilities, understanding
the need to change ID user access and put in a few more requirements
around that side. Moving on in terms of the individual, again
we have learned the lesson that perhaps individuals should recognise
more of the value of the ILA membership. Some individuals have
not considered that an ILA membership is a licence to have some
money. We need to look very carefully at how we can get and instil
in them the value of their ILA membership, instil in them the
need to treat it as a secure number, instil in them the notion
that perhaps they should provide supporting evidence in terms
of their application and on the other side, to feed back more
regularly how they are spending that money. Those are the sorts
of mechanisms we want to bring in. I suppose also, alongside that,
we would start to look more to the Department than ourselves in
terms of the course eligibility. We have quite a wide definition
in terms of acceptance criteria for courses and the new ILA scheme
might want to target those courses more carefully and perhaps
put something round them again in terms of quality assurance so
that it is not just the provider which is quality assured but
also the product. One of the lessons for me in this is that a
number of people who were entering learning, which was very laudable,
were people who had not had experience of learning and therefore
with hindsight they were perhaps not the right people to make
the judgement on the quality of the product. I know you had some
discussion yesterday in terms of how the product could be marketed.
I know reading the transcript that there was concern about the
notion of door-to-door marketing. One of the things I think was
very successful in ILA 1 and I hope we do not lose, was that the
market became imaginative and the market did actually capture
new individuals who were not previously accustomed to being involved
in education. It would be very sad if that went. What we have
to try to do is harness that balance in terms of imaginative marketing,
but with a quality product. Perhaps the quality product is the
area we need to focus on.
592. That is all very interesting and I am glad
that you picked up that at least the Chairman is not against doorstep
selling of products. It seems to be a very good and honoured tradition,
as long as the product is a good one. What I am worried about
a bit from what Mr Doyle and Ms Metcalf said was that it all sounds
a bit tentative. Yesterday when the Minister came here, he said
he wanted to pay tribute to his civil servants, they are burning
the midnight oil, they are toiling away, they are not only finding
out what went wrong with the scheme but remodelling the new scheme,
ILA 2. As far as we are concerned, the evidence we have had is
that there are many hurt people out there, people whose providers
have gone bankrupt, people who have lost their ILA opportunity.
This Committee really thought, certainly I as Chairman thought,
you would have been toiling away, Capita and the Department, burning
the midnight oil, getting ILA 2, working on what went wrong, building
the new structure. What you are saying is that you are having
a meeting today, but it all seems a bit slow considering the urgency
of the situation.
(Ms Metcalf) I am afraid that I have to say that although
we are in discussions with them, there are no dates in the diary,
there is no schedule yet as far as I am aware that we are actually
working to. Although we are exploring options with them, we do
not have a precise timetable of dates or a delivery plan at this
593. Mr Doyle, given what a pre-eminent position
you have in the market and you are such a well-known company,
would it not be good for your company profile if you were battering
down the door at DfES and saying, "Listen guys, we know what
went wrong, we know the mistakes, this is what you have to do,
get this show back on the road and get it back soon"? Surely
that is really in a sense your niche in the market as a private
(Mr Doyle) Yes and I believe we are doing that, but
there is always a balance in these things. Not to dwell on the
negatives, but we have said that there are things in this that
we have done wrong. Not to appear too arrogant and bash the door
down too quickly is the right thing to do. We have been working
very closely with the Department. We have always worked very closely
with the Department in terms of putting forward areas where we
think we can make improvements and we can get moving. There is
unfortunately a pace with these things that we have to move at.
I as an individual am a very impatient guy, and my colleagues
at Capita, and you do not build the company we have built without
cracking on and getting on and doing things. We are keen and we
do want to get on with things.
594. May this Committee just send that message
to you? Yesterday, the Minister was as hard hearted as a classic
Scrooge before his conversion. When asked whether it was possible
to pay any compensation to any of the providers, to any of the
people who lost their training, the answer was "No, absolutely
no question". It is interesting that no-one in government
has said to you no money, you are not going to get any of your
money because you failed to deliver on the contract to a certain
standard. In a sense here are these small and medium businesses
out there in the wilderness but not Capita. It just seems to me
unfair that the Minister has a good cosy relationship with you,
whereas the Government do not seem to care about the rest of the
small people out there.
(Mr Doyle) Some of the meetings I have been a party
to over recent months with the Department would not be described
as cosy. There have been some quite hard and quite difficult conversations
about all sorts of issues. It is not cosy for the sake of being
cosy, there has been some real heart searching, some real fundamental
information gone over as to our performance and how we performed
on this and where we stand and all the rest of it. I believe what
the Minister was expressing yesterday was the outcome of some
of that soul searching in that as evidence was coming to the fore
and more real evidence around as to what went wrong, as to what
our role in this was, how we behaved, the things we have got wrong,
the things we have got right, a balanced view was coming forward
yesterday that we may not be the complete ogre in this and that
we may have a lot to offer going forward. That is not to say there
have not been some very difficult conversations between ourselves
and the Department over recent months.
595. I do still come back to the sense of urgency.
I and this Committee would have thought that whoever plans this
Mark 2 would be well on with it. With the Minister telling us
to get our report in fast and we galvanising ourselves to do that,
why on earth can the Department and yourselves not get together
and get Mark 2 ready for launch?
(Mr Doyle) We have the message loud and clear, I assure
you. We are eager. We would love to be a part of ILA 2. We believe
we have lots of good ideas we can put forward. We are eager. There
will be nothing better for all of us than to get ILA 2 on the
road again. That would do all of us a great deal of good. Unfortunately
there is a pace at which these things have to move. I suppose
one of the concerns I share with Denyse is that what we must not
do because of the things that went wrong in ILA 1 is become ultra
cautious in ILA 2. Human nature is likely to do that. We have
to go through those early machinations of people swinging completely
to one side in terms of being very protective in terms of what
ILA 2 might look like because of the issues. You immediately jump.
If this is what happens when it goes wrong there is absolutely
no way on this earth that ILA 2 can be allowed go wrong so you
move right to one side of the pendulum and get ever so protective,
ever so tight on the scheme, You almost have to go that far before
people start to get the confidence to come back to get somewhere
in the middle where we reach the balance we are all searching
596. I am very happy to hear all that. That
is really positive in moving forward. I have two simple questions.
We heard yesterday that mis-selling in one month was 0.33 per
cent and in the subsequent month it was 0.61 per cent. There must
be a point at which you say 0.33 per cent is okay, we can live
with that or 0.61 per cent is okay. What would you say would be
the value you would feel was bearable but beyond that you have
to do something about it?
(Mr Doyle) That is a difficult question.
(Mr Pilling) It is not really our decision at the
end of the day. They are public funds and from our perspective
it is a departmental matter.
597. You could say you want zero, but that is
clearly not possible, is it? You get Jack the lad out there who
will look upon it as a challenge to get through and that is where
we have been. People were going around selling disks which cost
50p and charging £150.
(Mr Pilling) The aim surely should be to have fraud
zero. What we and the Department would always be trying to do
is achieve that. Through a process of continual monitoring, now
that we have more information about some of the issues, we would
continually look to close each and every loophole down. The problem
we have is how far to go and that is your concern as well and
you then start making the scheme so difficult for people to use
that they just walk away and the whole thing falls down. I cannot
give you an exact number because at the end of the day it is how
comfortable the Department feel about that money going into the
598. You are suggesting that it was the rate
of increase rather than the absolute value which was of more concern.
(Mr Pilling) Absolutely.
(Mr Doyle) If I lean on experience in other contracts,
if you are working in the finance sector, you do not work in a
bank or insurance company which actually says it is okay to get
it wrong up to this point as they will write off the money. They
never actually say that. But they do write off money because there
comes a point at which it becomes more costly to do. What they
want you doing all the time is concentrating on getting it down
to zero. What you are doing all the time is working hard on having
processes in place and you are reviewing those processes. If your
statistics start to tell you that the rate of increase is starting
to grow, you have a different kind of conversation and you may
have a spell where you work with your customer and the customer
says he wants you to get heavier about this or more difficult
about this or to write some letters or to take some action. You
will have an onslaught for a period of time to let everybody know
that you are on the case and you bring that back down again to
a point where the customer may say you can ease off a bit and
move on in a certain way. It is difficult to give you a number
but it is that constant working away at it. If the rate of climb
starts to go up, then you take action.
599. How much does it cost to administer each
ILA account? This is about getting things in proportion, is it
not? If it is worth £200 or whatever, you do not want to
be spending £450 checking, administering, following up and
whatever else you have to do.
(Mr Doyle) That is a number I feel I should have,
but I do not.
(Ms Metcalf) There are two factors there: one is the
actual cost of the administration and one is the value of the
account, so that the value of the abuse would hit the ceiling
in terms of the ILA allowance. Actually one does not look at it
quite as simplistically as that.