15 February 2002
Capita representatives told the Commons education select committee that although the firm was responsible for the development of the controversial computer system at the centre of the row, the Department for Education and Skills had to take responsibility for demanding an easy-to-access scheme, which was ultimately too easy to defraud.
The DfES set up ILAs in the summer of 2000, as part of the government's adult education initiative. But the department suspended the scheme in November 2001 after its special investigations unit unearthed evidence that training providers were abusing the system.
It was later revealed that the government is investigating evidence of providers making false financial claims by hacking into the computer programme controlling the system.
Since the revelations, the DfES and Capita have been at pains to distance themselves from responsibility for assessing how easy it would be to manipulate the scheme.
Questioned by committee chair Barry Sheerman on February 13, Paddy Doyle, Capita's group board director, said that although the company became `increasingly aware' of the potential for fraud in the early days of the scheme, `its [£50m] contract did not stipulate that it must scrutinise training providers'.
Sheerman argued that Capita's submission added up to a case of `it's not me, guv', and that the company had a responsibility to be more active in making the DfES aware of the problems with its system and the provider registration scheme.
But Doyle said that Capita had been `naïve and not negligent' in its actions. `We could have shouted louder when the issues came to light and to people higher up in the department,' he added. `But we are not in a position to determine government policy.'
Capita representatives also revealed that its contract with the DfES contained a provision for further profits to be paid if the number of ILA holders reached certain levels.
But Doyle ridiculed suggestions that the company had a financial incentive to ignore fraud. `The rapid build-up of account holders actually caused us problems.
We struggled to keep up and couldn't meet our service delivery targets, which carry penalty clauses,' he said.
PFfeb2002
