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25 Nov 2008 : Column 223WH—continued

I like and respect Stephen Barnes, but he was led up the garden path like everyone else. Liberata was already delivering back-office functions for the local authority, and he and others must have thought that it could transfer that apparent competence to delivering a different programme, the EMA.

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One of Liberata’s directors, Rod Haig, said:

That was complete baloney. Some of my constituents were recruited by Liberata and sacked five weeks later. One had been employed in white-collar jobs all his life and told me that in those five weeks, he had had four hours of training. There was no management supervision or control at all, and if people chose to, they could phone up their granny and have personal conversations in work time. They could put in for time and a half working on Saturdays or double-time working on Sundays with no supervision whatever. Papers sent in by students were strewn across the place and not properly filed away. It was an absolute disgrace.

Many people were hoodwinked into thinking that the jobs would be permanent, but when I wrote to Webster, the acting chief executive, he told me on 3 November that the jobs were always intended to be temporary and short-term. He even went on to say that the jobs were not really Liberata’s and that the people were employed by the LSC. Perhaps the Minister would like to comment on that, as it is a very strange way of going about things.

I shall say a few words about the BBC “Newsnight” programme that was transmitted last week. It was an exposé of the company, in which it was made clear by whistleblowers—former senior executives of that dysfunctional company—that Liberata knew in October or November last year that it would not be able to meet the terms of the contract.

It is not just the EMA that has suffered because of the company. We learn that earlier this year, the Financial Services Authority fined Liberata £525,000, more than 10 per cent. of its profits, because it failed to send out documentation that it should have sent to life and pension policyholders. Such sloppiness characterises much of its operations. It runs back-office functions for about 20 local authorities, although I believe it has lost the contract from Sheffield, and no wonder.

What is to be done, as Lenin would say?

Jim Knight: Lenin or Lennon?

Mr. Prentice: John Lennon.

What happened was the very antithesis of good government. As you know, Lady Winterton, I am a member of the Public Administration Committee. We have a meeting tomorrow and an inquiry on good governance on the way, one of a number that we are running in tandem. A paper has been prepared for the Committee by the National Audit Office, and it sets out a template that we can use in various situations to see how something measures up to good government.

We need to know who was responsible for the failure and bring appropriate individuals to account. There should be an inquiry, perhaps by the relevant Select Committee, the Select Committee on Children, Schools and Families. I know that the Minister has been in touch with our colleague who chairs it, my friend the Member for Huddersfield (Mr. Sheerman). What we cannot do, or allow the LSC or anyone else to do, is let people shelter behind regulations and procedures and say, “We followed the regulations. We followed the procedures”, without acknowledging the bigger picture
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that the entire system was in meltdown, which should not have happened. In a reply to the shadow Secretary of State for Children, Schools and Families, a letter from the chief executive of the LSC, whom I have mentioned too often this afternoon, stated:

Liberata and Capita—

If that happened, if people were listening and there was competitive dialogue, how on earth did we end up in the situation that we are in?

I also want to hear from the Office of Government Commerce, which apparently waved the process through. There is a gateway review to test such things, and if everything is robust and fits together, the project is waved through. That happened in this case, so we need the OGC to explain itself.

I mentioned the paper produced by the NAO. Its foreword states:

I believe that the administration of the education maintenance allowance failed on all three counts and we need to know why.

1.20 pm

The Minister for Schools and Learners (Jim Knight): I congratulate my hon. Friend the Member for Pendle (Mr. Prentice) on securing the debate. It is an important topic that has affected many learners up and down the country. As he said, the experience has been wholly unsatisfactory.

The Government are committed to giving every young person the best possible standard of education, to bring out their talents and give them the skills for a prosperous and satisfying career. To achieve that ambition, we are committed to removing all barriers that hold people back from success. That is why we introduced the education maintenance allowance in the first place—to ensure that financial constraints are not a barrier to learning—and it has had some success.

Evaluation of the initial EMA pilots showed that the scheme led to increases in participation of 3.8 per cent. for 16-year-olds and 4.1 per cent. for 17-year-olds. That is why I am so deeply disappointed with the recent delays in getting grants out to students, and I can well understand their frustrations and the frustrations of my hon. Friend the Member for Pendle and my right hon. Friend the Member for Oxford, East (Mr. Smith).

Throughout this period, our first priority has been learners and ensuring that systems are put in place to process payments as quickly as possible. Paying the remaining grants continues to be my top priority. Since the beginning of September, I have received daily delivery statistics from the LSC, based on information provided by its contractor, Liberata. Last week, I wrote to the Chairman of the Children, Schools and Families Committee, my hon. Friend the Member for Huddersfield (Mr. Sheerman), and laid a written ministerial statement
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outlining progress and next steps, based on the information provided to me by the LSC, which was in turn provided to it by Liberata.

However, during the LSC’s work to migrate the contract and systems, it found that the method used by Liberata to calculate work in progress was not sufficiently accurate. I was informed yesterday evening by the LSC that the recent figure for outstanding applications provided by the LSC and cited in my letter to my hon. Friend the Member for Huddersfield dated 19 November and repeated in my written ministerial statement to the House is not correct. I am grateful for the opportunity to correct that now. A physical count by Liberata recorded approximately 26,200 applications that are in the process of being finalised as of 21 November—not 12,016, as stated in my letter to my hon. Friend the Member for Huddersfield.

That is unacceptable, but we are continuing to make progress. I am advised that 6,000 applications are being processed per day, with a net reduction of 3,000 per day. We expect the backlog of applications to be all but cleared in the next three weeks. I have written to the Chairman of the Children, Schools and Families Committee today to clarify the position. I wish to put those revised figures on the record now.

I have also written to the chief executive of the LSC—much mentioned this afternoon—asking for a full explanation why its contract monitoring did not reveal the problem sooner, and seeking reassurance that the new contract management arrangements that it is putting in place will avoid such problems in the future. I have asked it to review other figures and processes, to ensure that the figures that it provides me with are robust and accurate.

Mr. Prentice: In the light of that further inaccuracy, does the Minister not think it would be wise to revisit the question of penalties? How is it possible for a private sector company to give misleading information constantly to a Minister of the Crown?

Jim Knight: As I said, I have written to the chief executive of the LSC, who is the other party to the contract with Liberata. He will advise me what action he intends to take in response to the problems, and I will inform the House accordingly.

Our focus, first and foremost, is on dealing with the current situation. Notwithstanding the progress of recent weeks, the LSC has taken the decision to terminate the contract with Liberata, and to engage Capita to undertake delivery. I fully back that decision. The transfer of the EMA helpline, processing and payment service from Liberata to Capita will take effect from Friday 28 November. Capita will bring in a new senior management team to oversee the staff and operations in Coventry, Manchester and Darlington. The transfer will place us in a stronger position to resolve the helpline and processing problems, which will not only alleviate the current problems, but will help to provide a better service to students and learning providers in the future.

The LSC will work closely with Capita and Liberata during the transition period, to ensure that the transfer of responsibilities is as smooth as possible. In the mean time, we are continuing to encourage colleges to use the discretionary support funds, provided by the LSC through their local authority, to help students who need extra support while the problems are resolved.

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My hon. Friend the Member for Pendle raised the question whether Liberata faces a penalty for its failure to deliver. I repeat what was said in the written ministerial statement: the migration of the contract results in Liberata losing future revenues of more than £60 million over the remaining term of the contract. In addition, following the failure of its IT system, which is at the root of all the subsequent problems, Liberata rightly took the decision to employ significant numbers of additional staff, including in Pendle, to deal with the backlog of applications. In doing so, it incurred extraordinary additional costs.

The LSC has therefore not judged it necessary to enter into negotiations about the imposition of financial penalties. The permanent secretary, as the accounting officer, and the Treasury have confirmed that the deal that has been done is in the best interest of taxpayers. Perhaps, over time, my right hon. Friend the Member for Oxford, East and my hon. Friend the Member for Pendle will want to return to the matter.

The situation arose from the failure of IT systems developed by Liberata to process applications, which meant that applications had to be processed manually. Owing to a rise in applications in September, a backlog of applications built up. As a result, a huge number of calls were made to the helpline, which struggled to cope. In view of those circumstances, it became apparent that Liberata was unable to manage the problem sufficiently. As soon as that became apparent, we took action to put contingency plans in place to ensure that the outstanding applications were processed as quickly as possible.

The Children, Schools and Families Committee has already announced its intention to investigate the issue, and I welcome that decision. My Department and the LSC will be looking carefully at this case to learn lessons that can be applied to future outsourcing of contracts and contract management. As I said, I have asked the chief executive of the LSC to reassure me that the new contract management arrangements are robust.

I am unable to answer many of the specific concerns relating to working practices in Pendle. Temporary staff, such as those recruited in my hon. Friend’s constituency, were recruited to address the backlog of applications arising from the technical difficulties. It was always my
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understanding that those workers were temporary, and I am disturbed to learn that they might have understood otherwise. The use of temporary staff was a sensible short-term solution to speed up the processing of outstanding applications and payments, and has led to the progress that we have seen to date.

Liberata notified the LSC of its intention to dismiss temporary staff, including those based in Pendle, on 21 October. I discussed that with the chief executive of the LSC when we met two days later. Despite the efforts then made by the LSC, Liberata followed through on its intention to dismiss staff. Although it was ultimately a decision for Liberata, it was an extremely disappointing decision and was against the wishes of the LSC and my Department. On the question of staffing more widely, it will be for the new contractor to determine appropriate staffing levels in the long term.

Mr. Prentice: Why would Richard Webster write to me to say that the staff working in Pendle were LSC staff, not Liberata staff?

Jim Knight: Again, because I am not a party to the contract arrangements directly, it is difficult to give a precise answer to that question. It may be that at some point in the past few weeks, the LSC agreed with Liberata that, in order to get staff back and get the processing up to speed, it would underwrite or perhaps even employ some staff in Pendle, in order to ensure that that happened. I cannot say that with certainty, but it would be my best guess.

I would like to speak about the procurement process, but time is running out. No student should be prevented from learning because of financial barriers or other constraints. When systems and processes go wrong and another barrier is put up, we must act quickly and decisively to break it down. The decision to terminate the contract with Liberata was not taken lightly. I am confident that it was the right decision. We will now focus on getting the system, and students’ education, back on track, so that they are able to achieve all that they are capable of, safe in the knowledge of the financial security that they are entitled to.

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Supervision of Paedophiles

1.30 pm

Mr. Rob Wilson (Reading, East) (Con): I am pleased to have secured this important debate. I thank the Minister for her interest and engagement. We have already had discussions, and I am sure that she will do what she can to ensure that lessons are learned by the various agencies involved. My remarks today will focus on the personal experience that two of my constituents have had of the current system of managing a paedophile in their local area.

David Cullen was a high-risk, highly dangerous paedophile, and well known to all the local agencies, yet he managed on numerous occasions to offend and reoffend, imparting desolation and destruction on families as a result. I find him a sickening individual, and I want everybody to be in no doubt at all that he caused so much heartache and distress.

Due to the horrendous experience of my constituents, I shall protect their anonymity and refer to them as Suzie Smith and her son. Hon. Members can judge for themselves whether the system worked for them. What I would ideally like from the Minister today is a pledge that a review or inquiry will take place into what has gone wrong, if anything, in this case. I hope that, in due course, recommendations can be made to ensure better handling and monitoring of paedophiles in future.

I am not here today to attack the police, social services in Abingdon or the Crown Prosecution Service. The work that they undertake is complex and fraught with difficulties, and I have great admiration for what they do, but that should not stop questions being asked when things go wrong. My task is to ask those questions and to see whether we can come up with answers and solutions. That is the only way in which things can be improved. I am therefore delighted by the reaction of the CPS, which I shall come to later.

However, I have been slightly less delighted by the reaction of Thames Valley police. I usually have nothing but praise for their work, and I am one of their greatest advocates, but I was taken aback by their reaction to my involvement in the case. I shall not go into detail, because I do not think that it would be helpful on this occasion, so all I will say is that I am here to represent my constituents without fear or favour and to ensure that their legitimate concerns are heard. I have listened to the view of Thames Valley police and read their briefings, none of which substantially differ in detail from the view put to me by the victim’s mother.

I am in no doubt that the police did not fully disclose information about David Cullen to Suzie and her son. I am also aware of at least one other family to whom information was not fully disclosed, as it should have been. If the police have other information, I would be more than happy to look at it, but the bottom line is that they have to be accountable, as do we all—I believe that they accept that. I know that the police plan to undertake a review of the case, which I welcome. However, independent scrutiny across all the agencies involved is necessary.

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