Examination of Witness (Questions 1-19)
MR MARK
HAYSOM CBE
13 MAY 2009
Q1 Chairman: Could I welcome this morning
Mark Haysom CBE, the former Chief Executive of the Learning and
Skills Council, to this topical inquiry which the Committee is
having on FE college capital expenditure. Could I first, by way
of introduction, thank you very much indeed for coming this morning,
Mr Haysom. I realise that you are no longer the Chief Executive
of the Learning and Skills Council but we thought it was absolutely
crucial that we heard your view about events to be able to put
them into our inquiry. We are grateful to you. Could I start off
by saying the Foster Review has now been completed and I wonder
if you agree in principle with the Foster Review and its criticisms
of the way the Learning and Skills Council managed the FE capital
programme. Do you agree and where do you disagree?
Mr Haysom: Before I get into answering
the questions, can I just say, Chairman, I am very grateful for
the Committee finding the time to accommodate this session outside
of the timetable you had previously agreed. I am grateful for
this opportunity. I thought it might be helpful, if it is okay
with you, just to make a few remarks to set some context to the
questions that you have already started to ask.
Q2 Chairman: As briefly as you can,
please, because we are tight on time.
Mr Haysom: I understand that.
What I wanted to say was I enjoyed six very successful years at
the Learning and Skills Council. We were enormously proud of what
we achieved in that time. It was not the most robust organisation
when I joined, but working with a group of exceptional people
we turned it round and made a very great contribution to employers
and learners right across the country. We achieved an awful lot
of other things that this Committee will be very aware of, reducing
the costs of the administration and so on. That did mean that
making my decision to step down as the Chief Executive of the
Learning and Skills Council was very, very difficult indeed, as
you may imagine. It was a decision that I agonised over, and I
am sure the Committee will want to come back to my reasons for
making that decision. I thought it would be helpful just to summarise
very quickly the two key reasons, which takes me to the answer
to your question. The first is that, although I am not personally
culpable for what has happened in terms of the difficulties with
the capital programme, I am or I was ultimately accountable, as
the Chief Executive of the Learning and Skills Council. I put
great store by that accountability, I took that very seriously,
and I felt that the issues were of such seriousness that I should
step down. Those issues, as described by Sir Andrew, I recognise
as being fundamentally the right ones. The second reason I decided
to step down was that, if you are going to try and manage your
way through difficult situations, and it was obvious that there
were difficult situations to manage your way through here, then
it was very important that I felt that I had the support of ministers
and, in particular, of the Secretary of State to do that. And,
despite all of the achievements of the Learning and Skills Council,
I was not sure that I did have that support at that stage. I felt,
in fairness to the Secretary of State, that it was really important
that he could choose a Chief Executive to carry the organisation
forward and to manage the way through these particular issues,
so I wanted to give him that opportunity. The final thing in terms
of the capital programme is that, as many of you will be aware,
this is a programme that was incredibly close to my heart. When
I joined in 2003, I was, frankly, appalled at the physical condition
of the FE estate and I got very close to this programme and put
a lot of myself into that programme. We were very proud of what
had been achieved by what was, fundamentally, a well-managed programme
for five of the five and a half years that I was there. I always
saw, as the biggest and most enduring part of the legacy of the
Learning and Skills Council, what we had done in terms of the
physical estate. And it is a great sadness to me that that legacy
has been tarnished and that colleges have experienced difficulties
as a consequence of what has happened with this programme.
Q3 Chairman: But it, clearly, went
wrong, and the Foster Review said it went wrong, so can I bring
you back to that central question: do you agree with Foster's
conclusions and where, if anywhere, is he wide of the mark?
Mr Haysom: I agree with an awful
lot of his analysis. Where I would disagree would be at the margin,
and I could argue about individual, small things, but I cannot
see any value in that. I would not choose to express things in
quite the way he has on occasions, but, fundamentally, I agree
with him. I would put greater emphasis on some things than he
perhaps has done within that, and I can talk about that if that
is helpful.
Q4 Chairman: Well, we will come on
to some of that detail, but I think it is important just to establish
that you were in agreement, broadly, with the Foster findings.
Mr Haysom: In broad agreement,
yes.
Q5 Ian Stewart: Mark, the first thing
to say is that I do not think you should assume that this Committee
automatically accepts your analysis of your own culpability in
this. I think some of us actually think there is a good news story
about the LSC about the years you have been in charge, so our
questions are not necessarily a confirmation of how you feel personally,
but we do have to ask the questions. Now, could you help to clarify
when the potential problems with the LSC capital budget were directly
brought to your attention?
Mr Haysom: The major issue that
Sir Andrew Foster addresses was brought to my attention in December.
Up until that point we were dealing with other issues around capital.
There were in-year budget pressures that we were seeking to manage
and there were other issues with the Department about splitting
the budget and so on, but the fundamental issue about whether
there was sufficient money left in the budget to take the programme
forward only became clear in December.
Q6 Ian Stewart: What was your reaction?
What did you do at that point?
Mr Haysom: Well, we were pretty
shocked because where we had got to is that, if I can give a bit
of background here, the speed with which the situation changed
is one of the most extraordinary things about the whole episode.
Up until the summer of last year, the world was pretty much as
we had understood it to be for the previous five years where we
had a very successful programme that was running within budget
and where our biggest challenge was making sure that there were
sufficient projects in the pipeline that would come to fruition
in a timely fashion so that they could be delivered in future
years. And that was the situation right the way through the summer
of 2008. That was the situation, incidentally, that was confirmed
by a National Audit Office Report at that stage.
Q7 Ian Stewart: Did you have any
information in 2008?
Mr Haysom: We had an in-year budget
pressure of £110 million to manage and we were in active
discussion with the Department to manage that.
Q8 Ian Stewart: In hindsight, was
that information right or wrong?
Mr Haysom: The £110 million
was the right information and we could see that very clearly,
but the way that we had anticipated managing that £110 million
overspend was through end of year flexibilities. That was not
something that proved possible, but that situation was resolved
when the budget was brought forward from 2010/11. So that in-year
problem was resolved during that period. However, the bigger problem,
the problem that we are now here talking about, the first indication
that there may have been something that was worrying, in truth,
only came in November ... .
Q9 Chairman: Sorry, but just before
you go on to that point, in February 2008 the LSC commissioned
the Capital Affordability Review which clearly said, according
to Foster, that "the continuation of the current payment
profile of projects is unaffordable to the Council". Did
that not set warning bells off as early as February?
Mr Haysom: Sorry, I was asked
very specifically about when I was aware and that report was not
escalated within our organisation to the extent that it reached
my desk. So I was never aware of that report, and that meant that
neither I nor senior DIUS officials nor anyone else was aware
that that report existed.
Q10 Chairman: So a major report which
says that it was unaffordable never got as far as your desk, as
Chief Executive?
Mr Haysom: It did not, and that
is one of the big failures that has occurred here, that failure
to escalate that information.
Q11 Chairman: Was that the starting
point? Was that the key point?
Mr Haysom: The key point in?
Q12 Chairman: In terms that it had
been picked up in February 2008.
Mr Haysom: Yes, if we had been
able to identify the issue in February 2008, there would still
have been an issue to manage, but it would have been a very different
issue to manage.
Q13 Ian Stewart: We are trying to
work out what the implication of this situation that you found
yourself in was for colleges as well. Now, we are being told that
some colleges were aware of this problem as early as October 2008,
but others were not. Is that the case and, if it is the case,
Mark, why were some of the colleges left in the dark about that?
Mr Haysom: I am not clear how
some of the colleges could have been aware in October 2008. Alarm
bells may have started ringing for some colleges in November when
the Council met to consider applications and at that stage there
were concerns or not concerns, but there were questions about,
"Hang on, there's an awful lot of applications coming through
now and we need to be clear about long-term affordability",
so there were no real alarm bells ringing, as such, but there
was a genuine—
Q14 Ian Stewart: So you are not aware
of any private conversations between people from the LSC and some
colleges?
Mr Haysom: I am certainly not
aware of that in October.
Q15 Mr Cawsey: As I understand it,
for projects which were estimated to cost up to £10 million
where the Council's contribution was 50% or less, you had the
delegated authority to approve those.
Mr Haysom: Yes.
Q16 Mr Cawsey: What sort of value
did you approve?
Mr Haysom: In total, I am sorry,
I do not have that information to hand. I can find that for you.
Q17 Mr Cawsey: Could you write to
the Committee?
Mr Haysom: I can certainly provide
that. The LSC can do it on my behalf because I do not have access
to that information.[1]
Q18 Mr Cawsey: Whilst it is not on your
watch anymore, I think, as a Committee, we would be interested
to hear your views on what should now happen to put things right.
Mr Haysom: I think the recommendations
that Sir Andrew makes are, fundamentally, sound, and I obviously
discussed those with him at the time and I understand that those
actions are being followed through. It is probably more appropriate
at your meeting with Geoff Russell, David Hughes and Chris Banks,
I think, for them to describe where they have got to with that.
Q19 Graham Stringer: You have repeated,
not verbatim, but more or less, the sentiment of your statement
when you resigned: "No matter where those mistakes have been
made and no matter how many people have been involved in the capital
programme, as the Chief Executive of the LSC, I am, of course,
finally accountable". That begs a lot of questions. Where
were the mistakes made and who should have stepped in?
Mr Haysom: You will understand
perhaps that I am not really interested in pointing a finger at
individuals within the LSC; I do not think that is helpful at
all. What I would say is that I worked with a group of people
in the LSC who were extraordinarily dedicated and committed and
no one there who was involved in the management of this programme
set out to do a bad job, no one there was negligent, they were
just overtaken by events. Although, I am sure, they regret that,
I really do not want to talk about individuals.
1 See Ev 48 Back
| 
