Examination of Witnesses (Questions 360-379)|
WEDNESDAY 13 FEBRUARY 2002
360. Knowing that, did you not, as Val says,
designing the form, consider that there might be the need to look
at slightly more detail on the registration form and the requirements
for those new providers, who had no track record, who had not
been part of the pilot scheme, and when nobody really knew how
it was going to work?
(Ms Metcalf) In the early days of the design brief
there was included a validation process, which proved not to be
possible in so far as there was an accreditation loop before the
provider came to Capita. For a number of reasons, it was not possible
for that to go ahead.
361. That is news to us. We do not know that.
(Ms Metcalf) In very much the same way as in Scotland,
the providers first registered with a third party organisation
so that they became known to that organisation. It was not possible
at the time to transfer the database across to this system, and
indeed, the database was much smaller; it did not represent the
new providers that came into the marketplace. But it is my understanding
of the ILA scheme that it set out to encourage new providers to
the marketplace and that there were concerns that if too many
barriers were put in place, those new providers would not be encouraged
to enter the marketplace, and that policy prevailed as we moved
forward into the scheme.
362. We understand that, and we have heard a
lot of that from the officials from the Department, but what I
am interested in is, are you saying that you thought there should
be a validation or accreditation loop or whatever term you are
using, and that was not agreed to by the Department, or are you
saying that the Department was looking at that and then decided
that they did not want to go ahead with that? I am not clear:
was it you or them?
(Ms Metcalf) Again, neither of the two. The Department,
I believe, were looking at it, it was the intention to go ahead,
but it proved not to be possible because the system links were
not compatible, and in any event, that would have represented
at that point a very small proportion of the providers that entered
the marketplace. The idea was to transfer the providers across
from one database to another, the existing providers trying the
363. I am completely confused now. Is this a
validation of their learning and doing it or are we talking about
them having registered electronically on another database?
(Ms Metcalf) More the latter, that they had existed
and had a relationship. I was picking up your point in relation
to the TECs having a local relationship; they were known organisations.
364. So they were known in the sense that they
had done some previous training or they were known because they
had put their name on a database?
(Ms Metcalf) I cannot comment on that. Suffice to
say that, in terms of the ILA scheme, the idea was to encourage
new organisations, new learning providers, so that one of the
criteria could never have been that they had already previously
provided education if they were to be a new provider, which was
the intention, as I understand it.
365. Capita are very experienced in this field.
Twenty per cent of your business activity comes from education-related
projects, and yet we have seen a number of people who have pointed
the finger at Capita, saying that controls were weak, security
was poor and communication practically non-existent. We seem to
be unable to find anybody willing to admit it was their responsibility
to scrutinise the providers, which is terribly important in an
initiative like this. Can you very briefly summarise why you think
it was not your fault? We have heard one or two things about registration
forms, but the submission you gave us seems to suggest, as the
Chairman has indicated, that it was not your fault. It was somebody's
fault. Why was it not your fault? You were at the centre of this
(Mr Doyle) As I said to the Chairman, if our submission
came across like that, I apologise. It was not intended to come
across like that. There is no-one more disappointed than ourselves
that the scheme finds itself where it is today, and we take our
fair share of the blame as to why that is. When we work with our
customers, we work alongside them, we work in partnership, as
we did with the Department, and this is not a case of "Hands
up, this is not our fault, guv." This is a case of the scheme
is where it is, there are things that have gone wrong otherwise
it would not be where it is, and we obviously take our part of
366. May I be clear? What did go wrong from
your point of view? What did you do wrong with regard to the scheme?
(Mr Doyle) I think there were a number of things.
As I said earlier, this was not a wake up one morning and "Oh,
goodness, the whole thing has gone wrong." It was over a
long period of time that things started to come to light that
were going wrong. As I said earlier, we tried very hard to work
with others who were involved in the scheme to try and fix those
things as we went along and keep the scheme going, because it
was a very successful scheme. It was seen as being a successful
scheme, and nobody wanted to stop it earlier than was absolutely
necessary. In the early days these things did not seem like issues
that could not befixed.
367. With respect, Mr Doyle, that is quite an
ambiguous answer. You have not given me one clear example of what
you were doing wrong. You have made the point that things went
wrong over a period of time. Fine; we accept that, but what did
Capita do wrong?
(Mr Doyle) First and foremost, I think, taking the
Chairman's point earlier, we did not shout loud enough. When the
issues were coming to light, we were identifying issues, we were
talking to people about issues, but we did not shout loud enough.
The Chairman asked, "When did you get a cab and go down to
the DfES?" meaning somebody at my level. I did not go. Looking
back on it now, looking closely at the sequence of events, as
we have done in our investigations, I believe we should have shouted
louder and harder at that time about things that we were identifying.
368. So are you suggesting that the only thing
that went wrong from your point of view was that you saw a system
going wrong but you did not shout loudly enough?
(Mr Doyle) That is one thing.
369. Go on. What was the second?
(Mr Doyle) The second thing was that at the back end
of the process, when we looked at some of the IT systems that
were in place, we could have moved earlier to make those systems
more robust in the light of some of this information that was
coming forward. The system that was put in place was put in place
as fit for purpose at the beginning in terms of the way that we
believed the scheme was going to roll out.
370. That is very interesting. Fit for purpose?
You keep talking about your partnership. A partnership is a very
close thing. Denyse Metcalf, indeed, was a civil servant in the
Department of Education and worked for you for five years, so
there was a high level of knowledge across the two partners. But
when you say in your evidence, "In retrospect, we should
have been more robust," the thing that leaps off the page
is that you at no stage seem to have said to your partner, "How
can you have a system where you want us to pay out for training
that no-one can authenticate has taken place?" You are the
great Capita, you have all this experience, and no-one in your
organisation at any time said, "Come on, you are paying all
this money for these people doing training and you are not going
to have any authentication that it is actually being carried out."
Is it not surprising that you did not do that? Is that what you
mean when you say you would have been more robust with hindsight?
(Mr Doyle) That is part of the way in which we would
have been more robust. It is not correct to say that we were not
having those discussions with anybody. Those discussions were
taking place. Where we should have been more robust is that perhaps
those discussions were not taking place at the right level.
371. So there is a minute of a time when you
said to the Department, "You cannot really get away with
giving money for courses that you cannot authenticate have taken
(Mr Doyle) I am sure we would not have used those
words, Chairman, but we were having fortnightly and monthly review
meetings with the Department. In those meetings those types of
discussions were taking place, sometimes put forward by us and
sometimes put forward by the Department.
372. Who were you meeting with?
(Ms Metcalf) I was meeting with Hugh Tollyfield and
Derek Grover. As Paddy has said, it was really an ongoing dialogue
to improve and to tighten the controls in the scheme, but we were
aware, as were the Department, that it was a very large and a
very successful scheme, and that implementing changes had to be
done very carefully. So there were a number of changes to tighten
the scheme when it became obvious that there were problems with
it, and those discussions were happening all during the summer,
and indeed, some of those things were implemented but obviously
now too late.
373. It was nothing to do with an impending
general election which put you off telling the minister that something
was going wrong in the run-up to an election? Earlier you mentioned
Spring, not Summer.
(Ms Metcalf) In the Spring the Department had already
introduced the new registration process, which had come out of
the dialogue over our concerns, as I said earlier, about providers,
and we were in very close discussion and understood that the Department's
staff were in discussion also at the very highest level within
the Department. As Paddy has said, with hindsight, perhaps that
channel was not the only channel that we should have used. That
was my mistake. I was aware that there were discussions going
on at the very highest level, and I was aware that changes were
being sought. Timing perhaps has been the thing that has let us
down on that.
374. On the second point, before you perhaps
give us a few more failures, IT systems needed to be more robust.
What exactly do you mean by that?
(Mr Doyle) When the system was originally designed,
at the start of the scheme, it was designed to be fit for purpose
at that time, as I said.
375. That is very open, not checking too much,
making it very easy for people to apply.
(Mr Doyle) Correct.
376. So very little emphasis on security control.
(Mr Doyle) The emphasis on security control was very
much around people who had access to the system. In other words,
people who we considered at that time to be approved providers,
who were going to be enabled to enter the scheme by being issued
with their own account number and password. The security was very
much around that level. Once into the scheme, it was a very open
scheme. The reference numbers that were used, which I should think
everybody has heard about time and time again, were purely in
the scheme as reference numbers. The point I am making about making
it more robust, and where I believe we did make an error, is that
as these things came to light and it became obvious that some
providers were possibly not as bona fide as we would wish them
to be, and possibly abused the scheme, we should have either closed
the system at that time and made it more robust, or attempted
to make it more robust at that time. It was only towards the very
end when the scheme was being suspended that we started to look
377. What other failures do you admit to with
regard to what went wrong?
(Mr Doyle) I think they are the main ones.
378. Was there ever from your point of view
a conflict of interest with regard to allowing the scheme to be
very successful and rolling out, but not putting enough security
in place? How were you remunerated with regard to this contract?
Was there ever from your point of view a conflict of interest?
(Mr Doyle) No, I do not believe so. The way we were
remunerated was against the base contract, and the volume of the
scheme. If you mean that as a conflict of interest in terms of
the more people who entered the scheme, the more we got paid,
yes. I am not sure whether that is strictly true and whether it
is done on that basis, but yes, there is a volume-related element
to the contract, as there had to be. For instance, in the call
centres we were employing far more people than we ever intended
to in the early stages because we were taking at the peak round
about 2,000 calls a month in call centres. We had to make the
systems more robust in terms of the numbers hitting it. So there
was an element in the contract which was volume-based. Is that
what you were getting at?
379. I want to try to understand why the security
was not better from the outset, because there does seem to have
been an element of fraud in the whole affair. Nobody seems to
have been scrutinising the providers. I think I am correct in
saying at the same time we have only had one prosecution of a
fraudulent provider to date. There seemed to be this very grey
area about lax security, yet we have not had a tremendous number
of successful prosecutions. Can I come back to my original question?
You have listed what went wrong from your point of view. The system
clearly failed in the sense that it had to be wound up despite
the success it was achieving, with 2.5 million account holders.
Where does the fault lie with other people? Was there any fault
with other people from your point of view? You are saying you
were willing to say that you share in the blame. Who else was
at fault here? You have said you had a lot of discussions with
the Government, ongoing discussions, and one of the things that
went wrong was that you did not shout loudly enough in a series
of meetings during the Spring and the Summer. Are you saying that
the brief you were given was too broad, that it is somebody else's
fault that the control systems were not in place?
(Mr Doyle) No, I do not want to say it was someone
else's fault. We were working in partnership with the Department
on this. We share our part of the blame in that the scheme has
gone wrong. At the outset, there was work done before Capita ever
bid for this contract. There was work done with other advisers
in terms of the way the scheme was going to be rolled out and
the basic way in which the scheme was going to be operated. That
was what contractors were asked to bid against. At that time I
do not think people were trying to design something which people
were going to be able to shoot holes through. I think there was
a genuine desire to develop a scheme which was open and non-bureaucratic.