Examination of Witnesses (Questions 240-259)
21 JULY 2004
SIR ANTHONY
CLEAVER AND
MR JOHN
BEAUMONT
Q240 Jonathan Shaw: What about with you?
Mr Beaumont: No.
Q241 Jonathan Shaw: At no meeting or
anything?
Sir Anthony Cleaver: No.
Q242 Jonathan Shaw: And Howard Newby
never said, "Flipping heck, what am I going to say to the
Secretary of State when he questions me about this?"
Sir Anthony Cleaver: I imagine
what he would say is, "I put in place what I believed to
be a competent board. I understand that they are operating to
all best practice. I understand that they have properly constituted
board sub-committees who review this, have set down the parameters
and are measuring them accordingly." That would seem to me
to be a very proper response.
Jonathan Shaw: When did things start
going wrong between yourselves and HEFCE?
Q243 Chairman: Before we move on to that,
Jonathan, as you have moved us on to the share of bonuses, I think
we should be allowed to continue that. Sir Anthony, we have been
listening intently and you have been very persuasive this morning.
On this bonus business, I do feel that you are a very experienced
industrialist; you have a lot of history at the beginning of this
and John Beaumont too. Surely you must have thought at some stage
that with the bonus system, however, it was worked and however,
independently, you were making yourself very vulnerable because
the taxpayers, the sort of people that we represent on this Committee,
our constituents, would look at this and say, "You have 900
students" and John's salary is £180,000 a year which
is quite a generous salary I would have thought, certainly my
constituents would have thought so, and then to have a performance
related bonus of £44,940 . . . That is a lot of money. Surely
one of you would have thought, we are sticking our neck out a
bit here! Perhaps you should have thought, I should not take this
bonus and should wait until its really showing that it is getting
somewhere. Did that not cross your mind?
Sir Anthony Cleaver: Not for one
minute because I believed and I still believe that we were succeeding
in developing something for the long term. Could I just address
the question of 40 million or whatever the number the press choose
on this occasion to use and 900 students and therefore that means
so much per student. That is rather like saying, I build a hospital.
After week one, I close the hospital. Therefore, the number of
patients who have been through have been X and it has cost us
£1 million a patient. It is a very foolish way of looking
at how you build up something for the long term.
Q244 Chairman: We are well aware in this
Committee that the tabloids will do that sort of thing. That is
what happens in life. We do not take much notice of that. What
we do take notice of is that we have to explain this expenditure
of taxpayers' money as ministers do and surely one of you must
have realised that it looks bad. Whether it was all done impeccably,
it does look bad at the stage you were at to take a £44,000-£45,000
bonus.
Mr Beaumont: No. I think what
we did in the first year which was inherit not a lot of detail,
get into service and offer the first set of courses in over 20
countries, was a massive achievement. We had to create an organisation
to deliver that service and that was the objectives that were
agreed by the non-executive members of the Remuneration Committee
and I think that, at the end of that year, they felt had been
a massive achievement.
Q245 Mr Pollard: Jonathan mentioned the
Secretary of State Executive and I remember you saying, Sir Anthony,
that you met regularly with ministers. Was there any indication
when you were meeting with ministers that they were unhappy about
the situation that was developing?
Sir Anthony Cleaver: I think it
would be fair to say that the first meeting with Margaret Hodge
was very early on, I think probably the month in which John Beaumont
joined. We went there to talk to her about where things stood,
this was right at the beginning, and she turned to me at one stage
and said, "This is a very high risk operation, is it not?"
and I said, "Yes, it is but I believe that is the only way
that we can build what we want to build for the future."
She was very pleased when we reported 6 months or so later where
we had got to and in fact she was at the meeting of Universities
UK at which I presented, to give a progress report to the heads
of all the universities and, at that time, we said that we had
the platform up and running etc, etc. We spoke to Alan Johnson
and gave him a progress report of where we had got to and where
we expected to be and we had one meeting with Charles Clarke in
December last year, at which again we simply gave him a progress
report and he listened and said that he hoped we were getting
the support we needed.
Q246 Mr Pollard: No worry from either
the Secretary of State or the two Ministers of State?
Sir Anthony Cleaver: I think "worry"
is the wrong word.
Q247 Mr Pollard: Concern?
Sir Anthony Cleaver: In each case,
they were interested in where we were and obviously they understood
that the proof ultimately was getting the number of students.
Q248 Mr Pollard: I am trying to get whether
there was any drive from the DfES or from the ministers that pushed
HEFCE towards the final pulling of the plug.
Sir Anthony Cleaver: That would
be pure speculation and I have no evidence for that.
Q249 Mr Pollard: Speculate. You have
been quite forceful so far.
Sir Anthony Cleaver: I have no
reason to believe that any impetus came from the DfES in this
context. I think they would view this as something where they
had agreed a certain sum of money to HEFCE in order for this thing—
Q250 Mr Pollard: And they had to get
on with it?
Sir Anthony Cleaver: And they
would let HEFCE get on with it. That would be my assessment.
Q251 Mr Pollard: A short while before
this, we had an experience with ILEAs where that all went pear-shaped.
Do you not believe there is any carryover of that that made both
the ministerial team and perhaps HEFCE themselves a little skittish?
Sir Anthony Cleaver: I think the
Government are very understandably generally risk averse and I
think one would anticipate that for exactly the reasons you have
just been referring to. You all have constituents, they all look
for things to be handled properly and for public money to be well
spent and effective in its use and I fully accept that it was
our responsibility to do these things responsibly. The difference
of opinion is that I believe we did just that.
Q252 Mr Pollard: You talked earlier on
about one of your first jobs being to talk to the Open University
and the British Council. It seemed to me that you were quite dismissive
of that because I think you said that they were involved in individual
universities but not doing anything on the e side of things.
Sir Anthony Cleaver: No, I am
sorry, I hope that is not what I said and it is certainly not
what I intended. The British Council did not have an e-learning
offering themselves, it was not their role. They were increasingly
developing higher technology capabilities in British Council offices
because they found that useful, but they saw their role as being
to facilitate the entry of individual universities into foreign
markets and I think that is absolutely proper. So, there was no
extensive e-learning experience as such there.
Q253 Mr Pollard: May I just pursue that
a little. I went to Russia with some of the Committee here and
we were very impressed with what the British Council were doing
in Russia all over the place. Going back to what you were saying,
they were not on the same wavelength as you were but they had
their feet on the ground and knew exactly what the Russians required.
Therefore, it would seem to me to be good marketing data that
you could actually use and yet you did not seem to follow that
through. Yet, you have already admitted that there was a weakness
in the market when you were talking to my colleague Jonathan earlier
on and it would seem to me that that is where you had stuff that
was there, ready on the ground, people knew what they were doing
and what the Russians needed, just using the Russians as an example,
and you push it to one side.
Mr Beaumont: In a number of countries
we worked directly with the British Council in identifying local
markets and using them to support it, so, for instance, in Brazil
and China our international business managers were located in
the British Council offices. In the British Council in India,
where the first knowledge and learning centres were established
for the British Council, we have been providing e-learning materials
and how to do e-learning to the British Council there. Some of
our courses in Singapore and Malaysia have gone through the British
Council. In Russia we had had discussions and we were partnering
with an organisation called Link which is the partner of the Open
University, and they were particularly interested in English language.
Q254 Mr Pollard: I think this is a brilliant
concept and I am really disappointed it is not happening. Is it
revivable at all?
Mr Beaumont: I think on a number
of fronts—if you look at marketing, the products and the
platform—the platform I believe is, let's say, hibernating.
Technically and operationally you could do that but it is not
straightforward. In the other two areas there is an enormous amount
of trust that has been developed with our partner in United Kingdom
universities and particularly partnering overseas universities,
including their governments. That is a much harder climb, and
it is very sad that the massive opportunity that we have seen
will potentially be missed.
Q255 Chairman: Let's stay with marketing
for a moment. Your first marketing director was a top marketing
person. What happened to him or her?
Mr Beaumont: We appointed two
at the outset, one to look after marketing to the corporate world—companies,
large organisations, both private and public sector—and
he was called Director of Business Development, and then the Director
of Marketing and Sales was targeting the individual students in
specific territories where we had the marketing channel strategy
to have overseas partners.
Q256 Chairman: One of them left quite
early?
Mr Beaumont: Yes.
Q257 Chairman: Why? Which one?
Mr Beaumont: The Director of Business
Development. In many respects it was a joint decision. The corporate
world particularly, which again I think is a big market, want
product. They do not want to talk about what is coming in six,
twelve months' time. Where is your MBA from? Which modules can
we take? Can we get it started next month across three countries
as a pilot? In many respects the person we appointed did not have
anything in his bag to do anything other than open doors about
the idea.
Q258 Chairman: So the notion that somebody
went out of your employment because they were giving you news
that you did not want to hear about markets is not true?
Mr Beaumont: No, I do not think
that is true. We all knew that the corporate selling to large
organisations is much more a relationship sale, it is about longer
lead times for decision-making, and that was not news to me.
Q259 Chairman: So you then had one marketing
director?
Mr Beaumont: Yes.
| 
