Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 380-399)



  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.

Mr Chaytor

  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 PPPs—and I do—are 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.

Mr Chaytor

  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 more accurate.
  (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 public?
  (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 earlier.

  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 magic figure.

  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 1 million?
  (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.

Mr Chaytor

  399. I would not necessarily have put it in those terms, Chairman, but that is exactly what I am trying to get at.
  (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 seen.

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