Examination of Witness (Questions 60-79)
MR MARK
HAYSOM CBE
13 MAY 2009
Q60 Mr Marsden: But you never sat
down with senior officials at DCSF or met with them informally
or discussed informally any of the aspects of the capital programme?
Mr Haysom: We discussed the split
that had occurred in the budget and the actual pressures that
had happened as a consequence of that and we discussed the fact
that we could have been in a situation where there was potentially
pressure on one side of the budget and underspend on the other,
but, beyond that, we did not have any discussions.
Q61 Mr Marsden: I want to quote to
you something from Andrew Foster's Report where he says that DIUS
monitored the LSC during the period, as you have said, and most
of the information was actually collected and held centrally by
the LSC. "Senior staff", this is what Foster says, "in
DIUS could have probed more actively the robustness of the forward
projections of future funding commitments". Who do you think
the senior staff were that he was referring to there?
Mr Haysom: I do not know who he
was referring to there. You would have to ask him.
Q62 Mr Marsden: So let me come on
to the ministerial meetings that, we are told, you held, according
to Foster, on 16 June, 21 October and 16 December 2008, and only
at the 16 December 2008 one was the capital programme discussed.
I am picking up, I am afraid, what Graham Stringer and the Chairman
have said. Given that this was such a significant part of your
overall activities, why were there no discussions at the meetings
with DIUS prior to 16 June and 21 October? Did it not occur to
you that, since this was a major part of your overall programme,
it might be reasonable to put it on the agenda and raise with
ministers even the fact that this all appeared to be going well?
Mr Haysom: I think the truth is
that, because this programme had been going very well for a very
long time, it was felt that there was no need to discuss it on
agendas which were always very full. There is a huge range of
issues, and you know, as a Committee, the range of issues ...
..
Q63 Mr Marsden: I am aware of that.
Mr Haysom: The agendas were always
very, very full.
Q64 Mr Marsden: I understand that,
but let us just take one, 21 October. By 21 October, you had had
the Capital Affordability Review, you had had the management board
paper, you had had the LSC Council in July, you had had all of
these areas and in all of those areas warning signs were coming
up. You are telling us that no one in your organisation at any
stage indicated any issues there which made you, or made the people
putting your agenda together, think, "This might be something
we should raise with ministers, even if it's only to clear our
backs"?
Mr Haysom: We were talking with
ministers about the in-year pressures.
Q65 Mr Marsden: Well, I just want
to come to a couple of other points then, if I may, because on
November 17 you gave evidence to the Public Accounts Committee,
and you gave that evidence alongside Susan Pember, your Director
of FE and Skills Performance Group, and also alongside Ian Watmore,
the Permanent Secretary, and we have a number of extracts from
the uncorrected transcript both of what Ian Watmore said and of
what you said. You said, and, in the light of what you have told
us today, perhaps it is not surprising, "I think that at
the moment we are content, given the scale and nature of this
project, that we are in good shape". Now, clearly, you said
that in good faith, but again, in preparing for your evidence
session with the Public Accounts Committee, did you not discuss
it because you must have realised that you would be asked questions
about the capital project, so did you not go back to your line
managers and say, "I want to know everything about this,
the good and the bad. I'm not just there to tell them everything
is wonderful, but I need to be prepared for difficult and probing
questions; the Public Accounts Committee is not a patsy"?
Did you not do any of that? Did you not get any of that in time?
Mr Haysom: Forgive me, yes, of
course I did all of that and there were no warning signs and,
if there had have been, I would have answered in a very different
way. I think I did refer in the Committee to the fact that there
had been a very dramatic increase in the number of projects coming
forward. I seem to recall that, but I have not gone back to that
since.
Q66 Mr Marsden: Again, Mr Watmore
gave evidence on that occasion, so did you not have any informal
conversations with Mr Watmore before the evidence session? Did
he not ask questions about the robustness of the situation? Did
that not also act as a prompt within your organisation to ask
about where the capital programme was up to?
Mr Haysom: I think, from recollection,
that I had one preparatory meeting with Ian when we went through
what were identified as the `major issues' and went through the
work that had been done to help us to prepare and to consider
that.
Q67 Mr Marsden: I have referred to
the regional assessment process and the strength that you put
on the regional structure. Did you never at any time ask your
regional directors to give you region-by-region reports on the
state of their programmes in terms of the committedness of the
funding and any potential over-committedness?
Mr Haysom: Yes, you will be aware
from Sir Andrew's Report that we did that on a regular basis,
and one of the things that had happened was that we had gone round
all of the regions, asking what was in the pipeline and for their
best estimate of future demand. And in 2007, I think, the figure
that came back was that there was £8 billion worth of activity
in the pipeline. One of the things that happened in 2008 is that,
when that came back again, and I think that was in the September,
having reviewed it, that number had leapt to £16 billion.
So we were very anxious about that and started to talk about how
feasible that was, and it obviously was not going to be manageable,
but the NAO Report had looked at the overall affordability of
this project within the £8 billion over a period to 2016—
Q68 Mr Marsden: But, Mark, you are
a businessman and you ran a highly successful business, I think
it was Trinity Mirror, before you came here. If someone comes
to you and says that it is £16 billion when they have added
up all that aggregate, despite what the NAO or anybody else must
have said, did that not lodge a warning light in your mind to
ask about some of these issues?
Mr Haysom: Absolutely, and we
were saying at that stage, but, forgive me, you are now in a situation
where you are in September, I think, but I do not have the information
in front of me, and at that stage we were saying, "Well,
that is obviously not affordable. We've got to go back to the
regions and we've got to work that through to get back to a much
more sensible number", so that is what we were saying.
Q69 Mr Marsden: Finally, can you
tell me who was at the ministerial meetings in October and December?
Mr Haysom: Which ministers?
Q70 Mr Marsden: Yes.
Mr Haysom: Not off the top of
my head, no. I would have to ask the LSC just to confirm that
as there was a different cast of ministers at different times.
Mr Marsden: Can you come back to the
Committee with that confirmation?
Q71 Chairman: You can ask the LSC
for that?
Mr Haysom: Yes.[2]
Q72 Mr Boswell: Briefly, Mark, I think
you will appreciate that the main interest of our Committee is
not raking over the past, but looking, in this case, for your
take on lessons for the future. I have four rather targeted questions
and, if I sound to lead, it is in order to try and get a conclusion
or response from you. Firstly, it seems to me, from your evidence,
that this was seen as a tactical, in-year adjustment situation
rather than a strategic or systemic risk to the activities of
the capital programme. Is that your understanding and, further,
would you say from that that it may well have spooked any later
consideration of this as having escalated into a serious risk,
that it had been read as one type of problem, but in fact it was
another?
Mr Haysom: As I have said, we
were entirely focused on trying to resolve that in-year issue
and it was seen to be an in-year issue. In terms of the longer-term
strategic issue, and this is the point earlier that I touched
on with the Machinery of Government, I think actually that the
way we were thinking about the future had changed pretty dramatically.
We were in the business of steering the organisation towards an
end point of April 2010, and that kind of longer-term strategic
thinking, I have been thinking about this a lot since I stepped
down, suffered. As a consequence of that the whole organisation
becomes focused on that end point rather than managing the way
that you would previously.
Q73 Mr Boswell: Secondly, are you
disturbed historically by the time-lags between the different
levels that you have described in your evidence, and is that an
important point for the future, that at least, as issues escalate,
they escalate reasonably promptly? You are talking about, even
on your account, a two-month delay between one level and another.
Mr Haysom: What should happen
in any well-run organisation is that, if there is a serious issue
which emerges, then it should escalate very quickly indeed, regardless
of what the governance structure within that organisation might
suggest.
Q74 Mr Boswell: Thirdly, in terms
of risk analysis and the boards I sit on, we spend all our time
on this, but do you have, or did you have, or should you have
had, a traffic light system which is green, steady state, amber,
"We need to be looking at this", and red, the bells
are flashing? Do you need a graded assessment?
Mr Haysom: Yes, absolutely, and
we revisited our whole risk management approach during 2008 because
it was not as robust as it should have been previously—and
the Audit Committee were doing a very good job for the LSC and
flagged that up. So I put in place very prompt action to address
that and we put in place, what I considered to be, a pretty robust
risk management approach. Next question: why was the capital programme
not on the risk register? I think, well, I know, because it was
seen to be a success, that flipping into, in record time, a situation
of over-demand was not seen to be an issue on the radar. I am
sorry, but it was not.
Q75 Mr Boswell: That is helpful.
Lastly, clearly, and you will appreciate that I have sat on the
other side of the table from your predecessor in the FEFC on this
matter, there is a very complex set of relationships between NDPBs
and their sponsoring ministers and also, of course, the stakeholders
in the sense of colleges and so forth. On reflection, have you
got any messages to relay to the Committee about the ideal future
structure of that tripartite relationship? Was there historically
a communications problem within the three? Could messages have
been sent from the Minister more effectively? What sort of frequency
or other mode of communication change is required to effect a
quicker readjustment if a situation like this arises in the future?
Mr Haysom: I think that the lessons
that I would draw on, in particular, from this is that the relationship
with the two departments that we were involved with, from the
Machinery of Government changes onwards, changed pretty dramatically
and, not surprisingly—
Q76 Mr Boswell: Do you mean they
crawled all over you after this particular thing?
Mr Haysom: Yes, but they had a
perfectly legitimate cause for doing that because they were going
to have to pick up responsibility, one way or another, for everything
the LSC did from an end date, so it was a perfectly legitimate
`crawling all over', if you like. But the impact of that was a
kind of paralysis in terms of the ability of the Learning and
Skills Council to take its own decisions, so I think—
Q77 Mr Boswell: You went from a sort
of autonomy to becoming a colony.
Mr Haysom: Well, "autonomy"
may actually be overstating it because there has always been an
intense level of scrutiny, but there was certainly a much greater
feeling of being in control of your own destiny. Whereas, from
that point on, everyone was then working towards this end date
and towards a pretty complex transition process, and it did change
the nature of the whole relationship and it had to, it was inevitable.
I do think that, if it were not for the Machinery of Government
changes, the situation would have played out in a very different
way. I think the Machinery of Government changes had those kinds
of impacts in terms of the relationships with the departments,
but they also had a huge impact in creating a surge of demand,
which is at the root of all of this. Colleges were so anxious
to get their projects through in the lifetime of the Learning
and Skills Council that the projects came through much more quickly
than we had anticipated, and that would not have happened, I do
not think, otherwise.
Q78 Chairman: Can I just pick up,
finally, one or two very, very brief points, and it is picking
straight up from your last comments. In the Westminster Hall debates
and questions in the House, I think, it has been fairly clear
that many colleges that had modest capital programme aspirations
were encouraged to beef them up into mega capital programme aspirations
and were given the green light to do so. Was that as a direct
result of you, as the Chief Executive of the organisation, telling
the organisation, "Get out there and build up these bids"?
Mr Haysom: No, not—
Q79 Chairman: Where did it come from?
Mr Haysom:—not to build
up the bids. I was giving very clear messages, as were ministers
at the time, that this was a once-in-a-generation opportunity
to rebuild the capital estate and that what we wanted to do, where
it was possible, was to create great buildings and what we did
not want to do was to just put up buildings that replicated the
existing buildings, just a bit more modern.
2 See Ev 47 Back
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