Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 640 - 659)



  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 paradox there.
  (Mr Doyle) I absolutely appreciate where you are coming from; the logic is there.

  641. Was that a reason why you did not shout louder earlier?
  (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 route.

  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 as this?
  (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.

Mr Chaytor

  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 expecting.

  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 it.
  (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 particularly.
  (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 "only".

  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, does she?
  (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 world—no criticism of him because he does a certain sort of job—but perhaps you ought to start recruiting more history graduates.
  (Mr Doyle) I am not joining in this.

  654. But you take my point.
  (Mr Doyle) I do take your point.

Paul Holmes

  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 coming back?
  (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 break-in?
  (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 categorically.

Mr Holmes

  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.

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