Examination of Witnesses (Questions 84-99)
1 MARCH 2005
Mr Martin Trainer, Mr Jeff Wilson, Ms Kate Roy
Q84 Chairman: Mr Trainer,
would you like to introduce your colleagues?
Mr Trainer: I am Martin Trainer
and I am the Chief Operating Officer for our Claims Outsourcing
Business. To my left I have John Tizard, who is our Group Director
of Corporate Affairs; to my right I have Kate Roy, who is the
Operations Director for the IRISC Operations which run the Coal
Health Scheme, Claims Handling and to my far right is Jeff Wilson,
who is the Technical Director for the IRISC Operation.
Q85 Chairman: I would
like to start off much the same way as we did with the previous
group of witnesses. Can you describe to us the basis and terms
of your contractual relationship with the DTI?
Mr Trainer: Certainly. Capita
has been involved in the scheme now for just over 12 months. We
acquired the IRISC business, which has been acting as claims handlers
on the contract now for some time, from Aon in February 2004.
In April 2004, we again acquired a business from Aon, at that
time—called Aon Health Solutions, which handles the medical
assessment in the VWF services element of the scheme. So from
February of last year, and then subsequently from April in the
case of the Health Solutions business, we have been working closely
with the Department and other stakeholders on delivering business
as usual and improving the programme to make things better and
more effective for everybody. Our contracting relationship is
direct with the DTI, we are not instructed jointly. The DTI sets
the priorities and the terms under which we engage with all parties.
Q86 Chairman: You have
got targets to meet in reference to the work which goes through
and the speed of the claims and things like that, is that correct?
Mr Trainer: Absolutely.
Q87 Chairman: Does that
have incentives for you to try harder?
Mr Trainer: Yes. The essence of
our contract is that we agree our resourcing plans with the Department
in advance and most of the costs which we incur on the scheme
are directly recoverable from the Department. Our reward is based
almost totally upon achieving targets which are agreed and set
with the Department.
Q88 Linda Perham: We have
heard from other witnesses that the administration of the schemes
was poor from the outset, but things are improving now. Do you
have any explanation of the underlying reasons for the bad impression?
Mr Wilson: When we go back to
when the schemes were formulated, with the Claims Handling Agreements
in 1999, there was an estimation that there were potentially 100,000
claims which would be dealt with over five years. What has happened
throughout time is more and more claims have come into the pot
to the extent that when the COPD—that is the chest disease
scheme—cut-off was applied in March 2004, in the 12 months
prior to that there were 250,000 claims which were submitted and
of these approximately 150,000 claims submitted in the final quarter
of that period, so volume and scale has increased significantly
from the original projections.
Q89 Linda Perham: It was
really the sheer size of the problem rather than poor planning
or poor project definition on behalf of the customer?
Mr Wilson: The sheer size has
taken all parties by surprise. As far back in the days of British
Coal, they employed statisticians to try and predict the potential
numbers. The DTI and all parties have constantly tried to predict
the number of claims throughout this process. In fact, in the
12 months prior to the cut-off, we spent a lot of time with solicitors
and other parties trying to get a feel for the scale of the numbers.
Ultimately it is the sheer scale of the numbers involved.
Q90 Linda Perham: We may
come on to the specific problems in a moment, but how do you assess
your performance compared to one, two or even three years ago?
Ms Roy: In relation to performance
targets, which for both schemes are predominantly linked to the
progression of claims and ultimately the payment of damages within
the scheme, we have year-on-year, since the signing of the claims
handling arrangements, increased the throughput on both schemes.
To date, we have paid over two and a half billion pounds worth
of compensation out to claimants within the scheme. We have consistently
increased our full and final offer outputs over the last three
years. For COPD alone, we moved from 50,000 offers to 60,000 offers
to 70,000 offers last year and we anticipate somewhere in the
region of 120,000 offers including the fast-track system, which
went live yesterday, to be able to take claims out of the system
this year as well.
Q91 Linda Perham: How
have you managed to make those improvements? Has it been more
efficient? Are there more staff?
Ms Roy: It is a combination of
staff recruitment and ramp-up. We have increased our staffing
numbers consistently to some significant level over the last four
to five years. Four years ago we had somewhere in the region of
150 staff involved in the claims handling process, we have almost
1,400 staff now across four sites across the country in mining
areas managing throughputs on both of these schemes.
Mr Trainer: Since Capita acquired
the business last year, we have engaged with the Department and
set in place a Continuous Improvement Programme which is designed
to improve efficiency, effectiveness and value for money across
the piece. We have put in a significant investment which has been
going on now for something like eight months which is designed
to and is already delivering significant results, which will increase
productivity, throughput and quality. A continuous improvement
culture is very much the message. We have got a great team in
IRISC, they have been working very hard for a long time and they
understand the concerns which are utmost to all of us, the Department
and other stakeholders, the claimants and the claimants' solicitors.
We are very proud of what we do and our sole mission in life,
as it were, obviously is to pay the right amount of money to the
right person as quickly as possible. We are proactively engaging
with all the stakeholders to try and drive forward, as far and
as fast as we can, the estimates of when the schemes will ultimately
be closed.
Q92 Sir Robert Smith:
Whose initiative was it to bring the Business Improvement Programme
forward?
Mr Trainer: When we were in the
process of discussing with the Department and Aon the possibility
of Capita acquiring the business, there was discussion, which
had already been initiated between the Department and Aon, about
a Business Improvement Programme. Capita made the point that we
would normally expect to do a Business Improvement Programme on
a business which we acquired, therefore we were absolutely very
supportive of the idea. We have maintained that concept and enhanced
and invested significantly in it over the last 12 months.
Q93 Sir Robert Smith:
To follow up, there are 14,000 staff now?
Mr Trainer: There are 1,400 staff.
Q94 Sir Robert Smith:
The question we had from one of the witnesses we had last week
was how much expertise and training those staff had, particularly
the claims adjusters. There was a concern by the witnesses to
the feeling that they did not have enough. How do you respond
to that?
Mr Wilson: We have bespoke training
schemes and we have invested a lot of time and money in training
new staff. Most staff spend between six and nine months on a training
programme which is accelerated depending upon their progress and
their level of skills which they bring to the claims. We have
mentoring and coaching systems in place and we have 40 technical
staff who are ex-British Coal people who give mining information
and expertise. In addition to that, in the Group 3 claims we have
61 staff who have a considerable number of years of mining experience.
In fact, one of our problems is our technical staff training is
particularly so good that we lose people to other solicitors in
the process. We go out and we train solicitors, we go out and
we give them calculators, so ultimately we spend a lot of time
and investment on training, but in any new process when you train
it takes time for it to bed in. Also, it is accepted that when
staff are being trained, in some respects their experience only
progresses to the point where they are fully trained over a period
of time.
Q95 Sir Robert Smith:
You mentioned that you train them and then they move on and that
was the second concern which was raised, that there was a high
turnover of the workforce. The suggestion was in 2004, it was
as high as 25%. Is that accurate?
Ms Roy: It is important to remember
that we are currently on plan for all of our staffing targets,
we are ahead on the overall staff numbers this year against last
year. You are absolutely right, we recognise that we have to manage
the turnover issues within the business. No one should be really
surprised at the level of turnover we are seeing, which is currently
at around 25%. Our four key operational sites are situated within
very buoyant employment markets. In Sheffield, in particular,
we have a high degree of employment for this type in this sector
of job and, as my colleague has already mentioned, particularly
in Sheffield, nearly 28% of our leavers have gone directly to
solicitors who operate within the scheme. This has been brought
to the attention of the judges within the process. We are aware
of it and we have managed to those constraints. This is almost
a naturally inflated number of staff turnover within these schemes
by the very nature of its uniqueness.
Q96 Sir Robert Smith:
Would it be worth resourcing them more to try and stop the turnover?
In a sense, which is better: keeping the person you have trained
or putting the effort into training a new person?
Ms Roy: Clearly the effort of
investment, both in time and resources in training new staff,
would be far better spent, in our view, by retaining them in the
first place. Under the Business Improvement Programme, which my
colleague has already mentioned, we have a number of initiatives
which we are looking at to ensure we can retain greater levels
of staff. Specifically, and not surprisingly to the Committee,
we are looking at reward and recognition packages, ensuring that
we are paying competitive market rates to not only attract the
best staff but to make sure they stay with us. We are looking
at the performance targets and rewards and bonuses involved within
that process and we are looking at the environment within which
they operate. When you are in a buoyant employment market, our
surroundings, in terms of air conditioning, the desks, the circumstances
that they will work in, can all be instrumental in encouraging
people to look elsewhere. We are addressing each one of these
areas under our Improvement Programme.
Q97 Chairman: Maybe the
lawyers are getting more money than you are?
Ms Roy: It would not be for me
to comment.
Mr Wilson: We take the view that
if people at least go to lawyers in this process, they are still
in the process and, certainly, we would meet with our ex-colleagues
and other solicitors in certain instances to share and compare
notes.
Q98 Mr Clapham: Can I
ask a question about the Occupational Group Procedure because
some of the submissions we received, and particularly taking evidence
from the solicitors last week, they were critical that the process
was first introduced to speed up the claims, but now you have
introduced various new aspects—for example the adjusters,
the mining expertise—and it has slowed down the claims.
In particular, they were critical about the Group 3 claimants.
How would you respond to that criticism?
Mr Wilson: The Occupational Group
Procedure sets out the level of evidence which must be submitted
by the claimant and it was negotiated between the DTI and the
CSG. The DTI look to be satisfied that the claimants did handle
vibrating tools in jobs which would not normally be perceived
as being exposed to vibration. Capita's job is to assess the evidence
to make sure the employment criteria are met. It is important
that when information and evidence is submitted in the Occupational
Group Procedure, it follows the form of proper evidence in terms
of claims, questionnaires and witness statements. There will be
instances where we will have to quality check that information
and return it to the solicitors. I understand the concerns regarding
the Group 3 adjusters, but what we have employed are 61 individuals
who have got 1,500 years of mining experience. Ultimately, what
they are trying to assess is the evidence before them. What we
try to do is encourage our adjusters to look for ways to pass
a claim rather than fail it. We should be alive to the fact that
approximately 50% of the claims which they have assessed have
been accepted. The issue remains about the level of those claims
which are denied and that is a process which is refined and constantly
reviewed. Over the last 12 months we have tried to continually
improve the process. We have had audits from external parties,
like Ernst & Young, and we have listened to the concerns of
the monitoring groups and other people. As a result of that, we
now give out more detailed information to solicitors. We have
enhanced the quality checking where people who are new to the
job have 100% checking of their decisions and even the experts
have something like a one in ten check. We brought regional experts
in who were recommended to us by the unions to also assess this.
Month-on-month last year, we increased productivity and output
but there is still some way to go to do that.
Q99 Mr Clapham: Given
some of the criticisms, and bearing in mind what you have said
about the mining expertise, there comes a point when perhaps mining
sense rather than the expertise is required if we are going to
move some of these cases on. Is this one of the issues which has
been discussed with the adjusters, but the adjusters have perhaps
been told to focus a little more and use some mining sense rather
than merely the expertise which relates to the book?
Mr Wilson: We constantly review
that and we encourage people to look at things in the balance
of probability and try and find in favour of the claimant. What
happens is the senior expert team have regular monthly workshops
with the adjusters themselves and we do measure the outliers and
the decisions which they make. For example if someone may have
a high proportion of denials that might look unusual or a high
proportion of acceptances. We move the claims around constantly
to different adjusters and we measure the decisions which they
take.
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