Memorandum from the Capita Group plc (ILA
1. Capita welcomes the opportunity to present
this submission to the Committee and to have the chance to submit
oral evidence on 13 February 2002. As the service delivery partner
of the Department for Education and Skills, the Scottish Executive
and the Northern Ireland Department for Education and Learning,
we wish to contribute to learning the lessons from the scheme
in order that there could be an early re-launch.
2. Capita is a leading partner of central
and local government and in submitting the evidence is able to
draw upon 15 years experience in partnership working, with over
150 major service contracts currently in operation with public
sector bodies. Capita specialises in helping public and private
organisations to transform their relationships with customers
through improving their support services and customer interfaces.
We have developed, implemented and operate major IT and business
process systems for a number of central and local government agencies,
together with a number of private sector, including financial
3. We greatly value our partnership with
the three clients responsible for the Individual Learning Accounts
scheme and thus have been fully supportive of, contributed to
and co-operated with the inquires into the scheme.
4. Capita has been administering elements
of the ILA scheme since June 2000 and throughout the period has
maintained good relations with the clients.
5. This submission relates primarily to
the ILA scheme administered by Capita on behalf of the DfES, as
this is the focus of the Committee's Inquiry. Capita has administered
the scheme in accordance with the "Business Rules Handbook"
that prescribes the requirements of the DfES.
6. Although there have been some serious
issues, it should be noted that although the original target was
to have 1 million learning account holders by March 2001, by the
time the scheme was suspended in November 2001 there were in excess
of 2.5 million. The scheme also led to the development of the
learning provider supply market and to market diversity. This
was an indication of the value of the scheme and the importance
that people were attaching to learning and training.
7. The scheme represented a major change
in the delivery of adult learning and training, placing more emphasis
on personal needs and choice. The scheme did not prescribe what
learning was eligible for public support, although the scheme
excluded some courses which were ineligible under the scheme's
"Definition of Eligible Learning". The scheme removed
financial barriers for adults with an aspiration to participate
in further learning.
8. Capita's role in the administration of
the system and elements of the scheme in England was to:
Process account holder applications
and issue membership forms via a call centre based in Coventry
Process learning provider registration
applications at an administration centre in Darlington
Produce a "claim for incentive
payments" file for each learning provider for approval by
Issue forms for membership cards
and account holder "welcome packs" via a subcontractor
called Standard Group under Capita's direction
Develop, implement and operate the
computer system to support these processes via Capita Group's
Data Centre in West Malling in Kent
Allow access to the computer systems
by learning providers approved in accordance with the Business
Rules Handbook so that they could register account holder applications
for learning and confirm commencement and hence a claim for the
appropriate level of incentive payment
Produce management information and
audit reports to the DfES to agreed formats and agreed schedules.
9. Capita was not responsible for:
Verification or accreditation of
Verification that account holders
have received learning for which provider payments have been claimed
Evaluating the quality of the learning
Making the payments to the learning
providersthis was undertaken by the DfES
Pursuing fraud enquiries directlyhowever,
we passed on any suspicion or evidence of abuse or fraud to the
10. The computer and associated IT systems
that Capita implemented were discussed and agreed with the Department
to meet its service objectives and to enable access for a closed
community of learning providers for legitimate purposes, using
an individual User ID and a password.
11. One of the Government's principal policy
objectives required a rapid roll out of the scheme, requiring
a fast development and implementation programme. Capita met the
required set up and delivery programme targets and in so doing
we were able to ensure that the scheme was able to meet the expectations
of the learners and learning providers, as well as meeting the
specified requirements of our clients.
12. A further Government objective was to
minimise the bureaucracy associated with the ILA scheme in order
to encourage participation by ensuring a speedier and more responsive
scheme for account holders and learning providers.
13. Immediately prior to and in the early
weeks of the operation of the scheme, the DfES made some changes
to the original specification on which we had designed the system.
Requirements for validation of learning providers, approved lists
of courses, authenticating account applicants and the issuing
of statements of account to account holders were removed from
the scheme. We explain what these were in the paragraph below.
14. Originally it was envisaged that existing
databases available to the DfES would be used to accredit learning
providers and the learning courses they offered. This subsequently
proved to be impracticable since only traditional providers of
learning were accredited and traditional formal qualification
based learning. The Business Rules Handbook therefore had to be
amended by the DfES in order to achieve a workable solution that
could be implemented in the desired timescale. The scheme proposed
that learning providers would be a closed community of accredited
providers of learning. Without prior accreditation they were therefore
placed in a position of trust with respect to the appropriateness
of learning they offered and the way in which they could claim
incentive payments for provision of learning. The ILA Scheme operated
with a Definition of Eligible Learning (DEL) which gives a list
of learning that cannot be funded by the scheme and therefore
the onus was left to the learning provider to make decisions on
whether the learning they were offering could or should be funded
by the scheme. Other changes to the original scheme proposals
included removal of requirements to authenticate applications
to become account holders and a proposal to issue account holder
statements annually and when there was a claim against their account.
15. Capita was the service delivery partner
of the DfES and thus worked within the policy framework determined
by the Department. Capita worked with the Department to develop,
implement and operate a scheme based on a specification developed
by the Department and its advisors prior to letting a contract.
Capita also operated business processes in accordance with the
business service requirements of the Department. The system and
the processes of the scheme applied were agreed with the Department
and its advisors.
16. As partners Capita and the Department
discussed the operation of the scheme throughout the period of
the contract. This enabled changes to be made to the processes
but in hindsight Capita believes that it should have been more
robust in the manner in which it sought to persuade the Department
to make changes to improve effectiveness.
17. On 24 October, the Secretary of State
for Education and Skills announced the suspension of the ILA scheme
in England due to the requirement to assess value for money and
concerns about the promotion and sales practices of some learning
providers. In her statement she said that:
"The programme has attracted over 2.5 million
account holders and has been a great success in bringing down
the financial barriers to learning. The rapid growth of the scheme
has exceeded all expectation, causing us to think again about
how best to target public funds in this area and secure value
for money. I also have some concerns about the way some ILA's
have been promoted and sold. There is growing evidence that some
companies are abusing the scheme by offering low value, poor quality
18. This announcement led to significant
increases in activity in applications to the scheme as providers
sought to maximise their opportunities prior to the closure.
19. On 23 November, the DfES informed Capita
that there was an allegation of an incident concerning a breach
of the Capita IT system security and that account holders' details
were being offered for sale, possibly by a Capita employee. Capita
immediately complied with the DfES' instruction to close the system
in order to protect the public interest and to allow for the necessary
investigations, which focussed on this incident.
20. There is no evidence that any Capita
employee was involved in any illegitimate access to the system
or of supplying any account holder information improperly or illegally
to a third party.
21. Capita's own intensive investigation
and system tests have produced no evidence of any security breach
of or "hacking" into the system.
22. However some evidence of abnormal activity
by a small number of learning providers was identifiedthese
would have been identified in the month end auditin advance
of payments being made by the DfES. It would appear that some
of the learning providers may have breached the trust placed in
them to have access to the database. This information has been
passed to the DfES and to the Police.
23. Capita has fully co-operated with the
DfES and its Special Investigations Unit, its other clients and
the Police in respect of their inquiries and this continues. We
have supplied our computer system access tracer logs, audit and
investigation reports to the DfES and where appropriate the Police.
24. Capita believes that there are several
important lessons to be learned from the operation of the ILA
scheme and the subsequent abuse of information that has come to
light. We would wish to contribute to this learning process in
order to enable any re-launch of the scheme.
25. There should be:
Prior-accreditation and verification
of learning providers, particularly those who wish to be approved
for provision of distance learning
Authentication of an individual's
existence during membership applications
Guidance and advice for account holders
on the type of course available under the scheme and on the quality
of the training which they should have expected
Verification and monitoring of the
courses and the take upparticularly with regard to differential
and targeted take up
Regular account statements issued
to account holders when incentive payments are claimed to enable
them to check their accounts are not being improperly used
A review of the computer system and
business process requirements to balance speed and openness of
access with probity and control
Formalised partnership arrangements
to ensure regular dialogue at all appropriate levels within the
client and provider partner organisations in order to ensure that
areas of difficulty and improvement are recognised and addressed
jointly including the means for escalating concerns and proposals
from the client and the delivery partner.
26. Capita recognised the value and importance
of the programme and were pleased to have the opportunity to support
the Government's policy of Individual Learning Accounts through
the development, implementation and operation of the ICT system
and the administration of the defined business processes.
27. Capita's investigations have produced
no evidence of any improper or illegal activity by any Capita
employee, or any access to the scheme except by people undertaking
administration activities in accordance with the Business Rules.
28. We have and we will continue to co-operate
with all the investigations and inquiries on the ILA scheme. This
activity will be at our own expense and without prejudice. We
are willing to contribute to the development of the new scheme.
29. We would be pleased to supply any further
information that the Committee may require.