Examination of Witnesses (Questions 640
WEDNESDAY 27 FEBRUARY 2002
640. You appreciate the point I am trying to
raise and that is that the nature of the contract which had no
ceiling on payments, in which there were incentives for the contractor,
whoever the contractor had been, to increase the numbers continuously,
meant by definition that there was less pressure to monitor the
quality of those numbers. You appreciate there is an intrinsic
(Mr Doyle) I absolutely appreciate where you are coming
from; the logic is there.
641. Was that a reason why you did not shout
(Mr Doyle) No; absolutely not. In fact that is not
how we go about making our profit, it is not the way we work with
our customers. Somebody will come up with one that proves me wrong
but I am almost certain that, if not all, nearly all government
contracts that we run are open book. Therefore the customer can
look at the books, the purpose being that it is a protection mechanism
against suppliers running away and making super profits or going
along the lines you are talking about now. The sustainability
of our company and the credibility of the company is built around
doing the right things for our customers not going down the other
642. May I move on to the wider implications
of the contractual basis? What becomes clear from all the hearings
we have had and the documentation we have seen is the hugely complex
infrastructure which was constructed to deliver something which
in essence was quite simple. Had the Government decided to administer
the scheme through the TECs originally or LSCs or local authorities
and simply issued a voucher for £150 to each student, how
would that have been different? What is the value added by a company
such as yours through a scheme with such complicated infrastructure
(Mr Doyle) I am certainly not an education specialist,
so I do not know what the result would have been. I can suggest
that in doing that
Chairman: It is very unusual for my colleague
to advocate a voucher scheme, I have to tell you.
643. Cutting-edge out-of-the box thinking.
(Mr Doyle) I probably should not say this, but we
got involved in a voucher scheme once before and that also came
to an abrupt end. In conversations I have had the suggestion would
be that if it had been taken locally we would never have got to
the kind of numbers of people. I do not know what evidence there
is and how factual that is. In terms of the complicated infrastructure
we put in place, it was not complicated. I would suggest the infrastructure
which was put in place was fairly simple. It was reasonably big
because of the volumes involved here. To be dealing with those
volumes we had to have a reasonably large slick call centre which
had some very sophisticated software behind it to allow people
to do their jobs. If you look at the actual elements involved,
if you come away from contracts and documentation and walk around
the elements involved in delivering this, they were not complex
in terms of the way they were linked together. They were reasonably
large and had to be set up to take the kind of volumes we were
644. I accept the point about size, what I am
interested in is the added value of doing it through this kind
of contract with the private sector rather than just giving it
to the LSCs and telling them to get on with it and administer
(Mr Doyle) My understanding of that is that it was
purely about getting to large numbers of people and also through
increased numbers of providers.
645. There is an LSC in every part of the country.
There are 47 Learning and Skills Councils covering the whole country.
(Mr Doyle) I am not specialised in that area. I am
told that in doing it that way they did not think they would get
to the numbers of people they wanted to get to. That may be wrong.
In terms of what we brought to it, the reason why we bid for the
country and why the Department brought it to us was that our specialism
is in providing large-scale, back-office administration set-ups
of this nature. If people want to set something up quickly of
that nature, that is the heart of our business.
646. Speed and scale are the things you offer
(Mr Doyle) It is speed and scale.
647. Are you interested in history at all?
(Mr Doyle) I quite like history but I am not sure
where this is going.
648. It is not one of your hobbies.
(Mr Doyle) I would not say it was a hobby.
649. It just worried me when Mr Pilling said
we only learn from doing. As something of an historian, it worried
me. When you got involved in this contract a bit of history of
the Department for Education would have been quite useful. As
was pointed up in the meeting yesterday with the Minister, there
were some very interesting parallels between the fraud elements
here that we have seen in ILA 1, compared with the franchising
schemes of 1997. When you were scoping the relationship with the
Department I wondered whether you had someone who complements
Mr Pilling's learning-on-the-job chap, someone with a bit of historical
background, interested in history, they might have said perhaps
we had better look at what happened only four or five years ago
in the Department and make sure it does not happen in this scheme.
(Mr Doyle) I was right to wonder where that was going.
(Mr Pilling) I think I was slightly misquoted with
650. Did anyone ever pick that up?
(Mr Doyle) I own up, straight up front, we cannot
suggest that we did not know the Department well. We did know
the Department well and we have people amongst us who have worked
for the Department over the years so that history must be there.
651. Ms Metcalf knows where the bodies are buried,
(Ms Metcalf) No comment.
(Mr Doyle) Did we make the link? No, I do not think
we did. I do not believe we did.
652. You do not believe you did.
(Mr Doyle) No, I do not believe we did.
653. It is interesting, is it not, that people
giving evidence have said that this is just like franchising?
What was even more worrying was when the Minister said to us that
he never actually spoke to the Minister who ran this before. One
did have an impression of no-one speaking over time. The Mr Pillings
of the worldno criticism of him because he does a certain
sort of jobbut perhaps you ought to start recruiting more
(Mr Doyle) I am not joining in this.
654. But you take my point.
(Mr Doyle) I do take your point.
655. One or two question arising out of the
quality service reviews you provided us with. In the June to August
quarterly service review you say that 504 providers were taken
off because they did not return the re-registration form you had
sent out. You also say ". . . another reason for suspension
of learning providers has been the non-compliance of providers"
but you do not give any figures for that. How many training providers
over the various quarters were struck off because of non-compliance
as opposed to not returning registration forms?
(Ms Metcalf) From memory, in the preceding quarter,
that would be the quarter up to the end of May, we had had three,
four or five, something like that, which had been under review
and all bar two were actually reinstated after a review so the
numbers were very, very small. Then as we moved on those numbers
started to increase, not dramatically during early June, but then
the numbers did subsequently increase.
656. We have already talked quite a lot about
the quality assurance or lack of it at the start and whether training
providers were accredited and checked out. If a training provider
was taken off for non-compliance or whatever reason, what would
stop them coming back on again two months later under a new name
or a new address? Was there any check to stop previous companies
(Ms Metcalf) That was actually one of the difficulties
and we did have discussions with the Department about the speed
of re-registration. That was one of the reasons why in the late
summer we stopped new registrations so that organisations under
investigation could not simply open up somewhere else. That was
one of the things we would want to tighten up much more. As you
are well aware, it is easy for people to buy a company, set up
some directors and effectively operate without any of the names
from the first company appearing on the second company. That was
one of the difficulties.
657. In the September to November quarterly
service review, you talk about a couple of incidents which disrupted
the work of the centre. One of those was an intruder break-in
on 30 October. The reason the scheme was suddenly suspended on
23 November was that a CD was available which Mr Healey said yesterday
was a CD which had a sample of 1,000 account numbers for sale
for misuse. It was merely a sample so it was giving the impression
of others being there as well. One of the big questions is where
those numbers came from. You told us previously that your internal
inquiry says it was absolutely not a Capita employee who had done
that. You seem to be saying it would have been one of the training
providers who had misused the system once they were on it. Is
there any chance that it relates to this break-in on 30 October?
(Ms Metcalf) The answer is no, but Simon will take
you through the details.
658. This was in the early hours. Was it a Hallowe'en
(Mr Pilling) Yes, there was a break-in and the intruders
were there for a very short period of time, a matter of minutes,
removing chips and they could not have taken the data in that
time; it was impossible. All our investigations have proven that
659. Are we any further on? If you say you have
absolutely cleared Capita employees and it could not have been
one of them, are we any further on in police investigations into
which learning provider misused the system to get the information?
(Mr Doyle) My understanding is that Simon's team,
who are extremely technical, went through the information on the
diskette which the police actually provided for us to look at
for them. Our technicians were able to get a lot of information
from that diskette. We provided that back to the Department and
to the police and that did point at certain learning providers.
They were the four I alluded to the last time we were here. My
understanding is that those investigations are proceeding.