Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 336-339)




  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.

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