Examination of Witnesses (Questions 380-399)|
WEDNESDAY 13 FEBRUARY 2002
380. Whose responsibility was it to ensure security
from the outset? Why was it not your responsibility?
(Mr Doyle) Security around the IT systems?
381. Security around the fact that the whole
initiative was very open to abuse. Whose responsibility was that?
(Mr Doyle) I am not trying to be difficult, but I
think we do need to break it down into two things. If you mean
abuse the system or abuse the scheme in terms of a learning provider
going out on to the street and canvassing for learning account
holders to sign up, that was not in our brief; that was not a
part of our security to make sure that did not occur.
382. Whose was it?
(Mr Doyle) That must have been the Department's.
383. You assumed it was the Department's?
(Mr Doyle) Yes. That was not our brief.
384. That was clear from the outset of the contract?
(Mr Doyle) It was clear from the outset.
385. Mr Doyle, John is trying to extract information
from you. Here you are, as we keep saying, a very big company,
with a lot of knowledge and expertise. You mentioned yourself,
and we did not ask you to mention it, that you handled some of
the areas where the most abuse and fraud takes place, housing
benefit. So you are pretty streetwise in what happens to schemes
that do not have security checks. Indeed, I see from your own
report that you have won the contract to do the Criminal Records
Bureau. For goodness' sake! If you cannot get the security right
on an Individual Learning Account, which is relatively modest
compared to criminal records, we will be worried, will we not,
as to who is going to be accessing the criminal records system?
(Mr Doyle) The security that is required around the
Criminal Records Bureau contract is a far higher level than was
ever asked for here.
386. But a lot of housing benefit fraud is by
ordinary people taking a main chance to make a bit of money. It
must have crossed your mind to say at some time, "Minister,
all our experience points to the fact that this is full of holes
and open to fraud."
(Mr Doyle) In the early parts of the scheme, and when
we bid for this contract, I do not believe it crossed our minds.
I believe we were going along with and a party to the fact that
we were trying to design a scheme which was very open and non-bureaucratic.
Where I sit today, that looks like not a very sensible thing to
have done. I would agree with you.
387. It sounds a bit naive.
(Mr Doyle) That is a word that can be used, yes, but
that was the whole aim of the scheme, not just from a Capita point
of view, but it was a wish on the part of the Government and a
wish on the part of the Department to design a scheme of that
nature. Today, the sad thing and the thing which we have to look
forward to going forward is that that obviously cannot be the
case, and therefore any new scheme will not be as open and as
non-bureaucratic. It is a question now of how we go about that
and how we still manage to attract the number of people to the
scheme as was attracted before.
388. Mr Doyle, can I come back to the contract
and ask you if you think now in view of what has happened that
the contract ought to be made public?
(Mr Doyle) I am not sure what that would achieve.
389. It seems to be at the heart of the issue
in respect of the division of responsibility between yourself
and the Department, and unless this Committee and the public at
large can see the terms of that contract, how can we then judge
where the division of responsibility lies?
(Mr Doyle) Again, I do not wish to be awkward, but
I am not sure I could answer that question today.
Chairman: Mr Doyle, what David is getting at
is that too often, the fact of the matter is that even those of
us who support PPPsand I doare often told that the
original contract is commercially sensitive so we cannot see it.
But the thread that is running through what you are saying to
us is that the reason you did not do things or could not do things
was because it was not in the original contract. What David is
quite rightly saying is we should in future see these contracts
so that we know the basis on which you are responsible and other
people are responsible, so that when we make these investigations,
we can actually find out what went wrong.
390. That is exactly the point. As long as the
contract remains secret, it is impossible to judge whether your
version of events or the Department's version of events is the
(Mr Doyle) I do understand that.
391. Therefore, should it be made public?
(Mr Doyle) Personally, yes, I am all in favour of
openness and open contracts, and this indeed is an open book contract
in terms of costs and profits and all those kinds of things. What
I am not an expert in is the legal aspect, and there are two parties
to commercial and in confidence agreements.
392. If the Department were happy for the contract
to be made public, would Capita be happy?
(Mr Doyle) If these legal people that I have around
me on occasions say that that is a reasonable and sensible thing
to do, I personally would not have any problem.
393. Would you go back and ask Capita's lawyers
whether they would have any objection to you making the contract
(Mr Doyle) I will do that.
394. The value of the contract was in the order
of £50 million. How many learning accounts were specified
in the original contract?
(Ms Metcalf) There was a forecast number of 1 million
by the 12-month date, and forgive me but I cannot remember what
the next forecast was, because it was not a milestone we ever
hit in duration terms. We obviously exceeded the milestone much
395. But what was the payment triggered by?
Reaching the threshold of 1 million?
(Ms Metcalf) It was an activity-based contract, yes.
It was volume-driven. There was no particular milestone at any
396. What is important, of course, is the scale
of the financial incentive within the contract to increase the
numbers of ILAs beyond 1 million, and this is what is of critical
importance, because between the early Spring, say March, to May/July
2001 the number of ILAs increased by 100 per cent. There was a
month on month increase up to that point, and suddenly, within
this three-month period there was a 100 per cent increase. What
I am interested in finding is what was the scale of the incentive
for Capita to generate that increase.
(Ms Metcalf) I am sorry. We were not generating that
increase. The increase was coming. We had no hand in the marketing
of the ILA or in promoting the take-up of the ILA, or any part
in that. We were, if you like, recipients of the activity, yes,
but it was not in any way driven by us. We shared in the delight
of the Department that it had been an extraordinarily successful
scheme as it appeared at that point, but we did not market it
against any incentive base at all.
397. Was there a ceiling in the contract to
the number of ILAs that you were expected to deliver?
(Mr Doyle) I do not believe there was. The purpose
of the volume was a protection mechanism. No contractor would
sign up to a contract which basically said, "Here is a fixed
price and it does not matter whether the volumes treble or quadruple."
You would not do that. It was not an incentive to us to see more
accounts opened, because, as Denyse has said, we were not a party
to making that happen or not.
398. What David is asking you is did you get
more money if there were 2 million account holders rather than
(Mr Doyle) Yes, we did, because it was a volume-based
contract, and therefore the more accounts that opened, the more
processing that is happening, the more telephone calls that are
being taken, the more people you are employing.
Chairman: A cynic might say you would not want
to blow the whistle because every day you were earning more money.
399. I would not necessarily have put it in
those terms, Chairman, but that is exactly what I am trying to
(Mr Doyle) I would hope that we still have some reputation
left. I do not think that is the way that we would like to be