£11m for bosses in training fiasco

FOUR directors of a contractor slammed by MPs for 'considerable shortcomings' in running a Government flagship training programme have shared in an £11 million pay bonanza, Financial Mail can reveal.

The cash and shares windfall at Capita, a FTSE 100 company, is far higher than previously reported and emerges just days after an all-party Select Committee rebuked the outsourcing giant for failing to say that the Individual Learning Accounts (ILA) scheme was 'a disaster waiting to happen'.

Capita had a £55 million contract to run the ILA's computers and call centres. More than one million adults signed up for the £260 million scheme, entitling them to subsidies of £150 in computing or other basic training.

But Education Secretary Estelle Morris scrapped the scheme last year amid mounting evidence of widespread fraud and abuse. Bogus operators were able to tap into the system and claim the subsidies for themselves. The scheme attracted 18,000 complaints, many from people who tried to open accounts only to find their names were already being used. MPs heard that the total loss suffered by colleges is estimated to be £1.2 million while up to 5,000 jobs were threatened by the scheme's closure.

MPs concluded that the ILA project was a debacle, wide open to fraud and a 'licence to print money'. So far there have been 45 arrests and one conviction.

In last week's report, the Select Committee highlighted Capita's 'culpability' in the shambles.

Committee chairman Barry Sheerman told Financial Mail: 'I was deeply unimpressed with Capita. Here they were, earning all this money, but they didn't say to the department that this scheme was open to fraud and was going to be exploited. Capita says that wasn't in the contract, but they also handled the complaints system that was staffed by untrained people.'

But the fiasco did not stop Capita's executives from lining their own pockets.

Paddy Doyle, the operations director who gave evidence before the Labour-dominated Education Select Committee, earned a total of £3.6 million last year, including £2.2 million from cashed-in share options.

Chief executive Paul Pindar picked up £3 million in salary, bonus, free shares and options gains while finance director Gordon Hurst scooped £2.4 million, half of which came from exercised share options.

Executive chairman Rod Aldridge, a regular supporter of £500-a-head fund-raising dinners for the Labour Party, collected a total £1.9 million. He also owns shares in Capita worth about £70 million.

All told, the quartet picked up performance-related bonuses totalling £505,000. Capita's directors-have grown rich on the back of winning numerous public sector contracts. They include:

A £500 million deal to collect the BBC licence fee over the next ten years.

A £400 million deal to manage the Home Office's criminal records over ten years.

A £230 million deal to operate London's congestion charging scheme over five years.

A £100 million deal to run the Government's education smart card contract over seven years.

Capita has also captured a large slice of work outsourced by local authorities, especially in the north of England.

Profits last year grew from £40 million to £53 million.

Capita admitted that it should have been 'more proactive' in bringing 'matters of concern' to the Education department's attention. Finance director Hurst told Financial Mail: 'We did exactly what the client asked us to do, but we would do things differently. We've learned from that.'