Public Accounts Committee
Oral evidence: English language tests for overseas students, HC 2039
Wednesday 10 July 2019
Ordered by the House of Commons to be published on 10 July 2019.
Members present: Meg Hillier (Chair); Sir Geoffrey Clifton-Brown; Chris Evans; Caroline Flint; Shabana Mahmood; Stephen Morgan; Anne Marie Morris; Bridget Phillipson; Lee Rowley; Anne-Marie Trevelyan.
Gareth Davies, Comptroller and Auditor General, Linda Mills, Parliamentary Relations Manager, National Audit Office, Tom McDonald, Director, NAO, and Marius Gallaher, Alternate Treasury Officer of Accounts, HM Treasury, were in attendance.
Questions 1-144
Witnesses
I: Sir Philip Rutnam, Permanent Secretary, Home Office, Shona Dunn, Second Permanent Secretary, Home Office, and Mark Thomson, Director General, UK Visas and Immigration, Home Office.
Report by the Comptroller and Auditor General
Investigation into the response to cheating in English language tests (HC 2144)
Examination of witnesses
Witnesses: Sir Philip Rutnam, Shona Dunn and Mark Thomson.
Q1 Chair: Welcome to the Public Accounts Committee on Wednesday 10 July 2019. We are here today to look at the very knotty issue of English language tests for overseas students on the back of a National Audit Office investigation. I will go into that in a moment. I will introduce our witnesses, but first I want to ask Sir Philip a couple of questions about Windrush, because I notice the first payments have now begun to be made. I want to pick up on that before we get into the main session. Our witnesses from my left to right are Mark Thomson, the director general for UK Visas and Immigration at the Home Office. Is this your first time in front of us?
Mark Thomson: It is.
Chair: Welcome. We are a friendly bunch, as you will discover, although it depends on whether you give a straight answer. Sir Philip Rutnam is the permanent secretary at the Home Office. He is such a regular attender here that he hardly needs any introduction. Shona Dunn is the second permanent secretary at the Home Office.
Sir Philip, on Windrush, we noticed that the first payments have been made. Can you give us an update on where things are and how you feel they are progressing?
Sir Philip Rutnam: As you say, the first payments have been made. The Department has taken the view that it will not provide a running commentary on how many payments, the level of payments or what the grounds are for payments. We will report from time to time, but we will not give a running commentary. However, the scheme is now up and running. It is well staffed. We are actively engaged and have been for some time in promoting awareness of it and doing all we can to facilitate applications. So far as I can see, it has got off to a good start. There will no doubt be things that we can learn as we go along, but it is something that is now well under way.
Q2 Chair: Reports from organisations working with some of the people affected say it is quite complex sometimes to provide certain information in order to claim compensation. Do you recognise that description, and what are you doing to make sure it is as easy as possible for people who have spent most of their life in the UK, but perhaps do not have the paperwork to prove it, which is, let’s face it, part of the reason why we are here in the first place?
Sir Philip Rutnam: Trying to minimise complexity for the applicants has been one of the design principles from the outset, both in terms of trying to deal with this expeditiously, but also minimising the need for any intermediaries. When we looked back at other compensation schemes in the past, we found there had been too much reliance on intermediaries who are costly, so we are trying to make it as simple as possible.
In terms of the applications process, there has been a design principle. There is a necessary degree of complexity around applying for public money and then our accounting for the use of public money. The other point I would make is the importance of the approach we have taken towards tariffs. Instead of going for a whole range of categories of expense and for proof of actual costs incurred, we are taking a tariff-based approach. Provided people can pass the threshold for qualifying for that tariff, administration thereafter is much more straightforward. I thought Ms Dunn might want to say something about our approach to supporting applicants and outreach.
Shona Dunn: If we have time, Chair. What I would add to what Sir Philip has said is that, as we have reported before, a lot of activity is going on through community groups and our own volunteers within the Home Office to ensure that we are getting as much information out to people as possible. A toolkit has been provided, and there are people available to come along to help and support people through the process, both individually and through community groups. We are taking a very active approach to ensure that we are reaching the communities that might want to apply for the compensation scheme, and that we have as much support as we can put in place.
Q3 Chair: When this was being designed, obviously there was a debate about tariff and actual costs, so I exactly hear what you say, Sir Philip, that a tariff could be easier to administer. But that begs the question, why have the first payments only just been going out? Because once you have a tariff structure in place, with a simpler threshold, one of the benefits is getting money out to people a little quicker.
Sir Philip Rutnam: The scheme has only been open since early April—
Q4 Chair: It took a long while to design it, didn’t it—a year?
Sir Philip Rutnam: It took a while to design it, partly because we went through an extensive consultation process. Indeed, we extended the time for consultation on the advice of our independent adviser, Martin Forde, QC. He thought it was important that we put in more up-front effort to engage with potential applicants, community groups and the like on how the scheme would operate. It has been up and running since April. Of course, it might have been good if we had been able to make the first payment earlier than early July, but I have to say that I don’t think that is too bad from open for applications to first payment made.
Q5 Chair: These are all people who have already identified, but when we did our last report on this, Ms Dunn, there were about 160,000 or so non-Caribbean Commonwealth citizens or British citizens resident in the UK, or who have been in the UK, who would also qualify. You talk about all this outreach and advertising. Are you actively working to reach those groups as well?
Shona Dunn: Yes. As you will have seen in our response in the Treasury minute to your last Report, the Home Office has put a lot more outreach events in place. Those are designed absolutely to capture all—
Q6 Chair: You say a lot of “outreach events”, but we sometimes get a bit sceptical here—an outreach event can mean—
Shona Dunn: All sorts of things.
Chair: Exactly. What do you mean by an outreach event?
Shona Dunn: There are a variety of different outreach events: some are facilitated by local community groups, and some we are organising ourselves, in a number of different locations. We are specifically making sure that we are advertising those locations through print media, radio stations and so on to get to diaspora communities not necessarily from the Caribbean Commonwealth.
Q7 Chair: Of course, you have the records in the Home Office of these people, and you have been resistant to going through those records to find people who deserve compensation for the problems they had—not all of them might have had problems, but those who have.
Shona Dunn: You might want me to say something on that—I assume you are referring there to the position that we have taken so far on historical case reviews. Just to conclude on the outreach point, what we also said, which I think is really important, when we reported last time on this was that we would seek independent advice on whether we were getting to the right communities. We are going to seek independent advice from experts as to whether there are communities we are missing, and we will put additional outreach into places that need it.
Q8 Chair: Who are the experts?
Shona Dunn: I don’t think we have yet appointed that person. We are looking for the appropriate independent expert advice on whether we have reached the right people, or—probably the best way of putting this—on which communities we might not be reaching and how we can reach them. We must make sure that we do not miss any communities. On the historical—
Q9 Chair: I am just puzzled about who an independent expert on this sort of thing might be. You have local authorities out there dealing with it. In my own Borough of Hackney, we have the excellent Councillor Carole Williams, who is the first and we believe still the only cabinet member in the UK to deal specifically with Windrush cases. There are people at the local level who are already doing this—a whole network of local authorities, for example. Is it sensible to have one central person, or would it help to reach those people?
Shona Dunn: We will tap into all that. What I am saying is that we want someone to hold us to account—to look at the full breadth of outreach work that we have undertaken and really to hold us to account on whether there are gaps in it. Absolutely, we will tap into and listen to all that excellent advice and—
Q10 Chair: And then the case review?
Shona Dunn: On the historical case review point, the way we put it in the Treasury minute was that we would be returning to it and that we were still considering our approach to it going forward. As you know, the position that we have taken on the historic case review to date is that the historic case review was put in place specifically to answer questions from Parliament. When we looked at the cases that were affected, obviously the majority of pre-1973 cases were Caribbean and Commonwealth. Those are the cases that we have focused on because those are the cases that we were going to learn lessons from the fastest.
The historic case review, no matter what we do, how far we extend it and how many nationalities we cover, cannot give us full information on everyone who may or may not have been affected. As we explained, our key focus in terms of identifying those people and ensuring redress is still the taskforce and the compensation scheme, supported by our outreach.
Q11 Chair: Doesn’t it just underline that the Home Office data systems are not up to scratch? Some of them are obviously very historic. We expect some of them to be on the legacy systems, but isn’t the problem that you have no real understanding of who is in your case system, as this whole saga has rather thrown up?
Shona Dunn: We know that if we were to extend the historic case review out to all nationalities, it would bring about another 300,000 cases into the scope of what we needed to look at. Even if we did that, in terms of the likelihood of us being able to find everybody who may have been affected through that route, we don’t believe our data supports that.
Q12 Chair: But you might be able to find some of those people.
Shona Dunn: The question is whether that is the fastest and most effective way of getting to those people. It is essentially taking the historic case review, which was put in place for a particular purpose, and attempting to use it for a different purpose. As I said, and as the Treasury minute said, we are keeping this under review.
Q13 Chair: That is partly why I was asking you. So it is still under review.
Shona Dunn: Yes. The Home Secretary is still considering what he wants to do.
Q14 Sir Geoffrey Clifton-Brown: Ms Dunn, Sir Philip said that this is well resourced, with a good number of people operating on it. How much resource and how many people are currently working on it?
Shona Dunn: As of today, when you look across all the various strands of work associated with the compensation scheme, I believe that we have in the region of 100 people associated with it, but we still intend to increase that number as we get into the detail of the flow of the cases. I give you that as a broad estimate. There are people working through the taskforce and working through the operations. There are people working on a number of different aspects of this.
Q15 Sir Geoffrey Clifton-Brown: How much resource have you allocated to this?
Shona Dunn: To be frank, we will apply whatever resource is required to deal with the cases. I have not put a limit on the amount of resource that we will attach to this. That is true of all types of resource. The Home Secretary has given a clear commitment that we will do whatever it takes to deal with the cases that come through.
Q16 Chair: When do you expect to have concluded compensation claims?
Shona Dunn: When the compensation scheme was announced, we said that the intention was that it should be open for two years.
Sir Philip Rutnam: For applications.
Q17 Chair: Yes, for applications, but that is different from when you will conclude them. When do you think you will have got through them?
Shona Dunn: That depends on the complexity of the cases. It is extremely difficult for us to say.
Chair: Some of these people are not young.
Shona Dunn: I appreciate that.
Chair: Some have already died waiting.
Shona Dunn: I do appreciate your point.
Q18 Chair: Well, the other thing is, of course, that as you put a big resource into this—some of us have been in the Home Office and seen how it works—it is taken away from another part of the immigration system. What about the knock-on effects to, for instance, the Europeans who are applying, and other citizens who are going through the normal visa process? I don’t know whether Mr Thomson has anything to add here. Is there any extra pressure on other parts of the system because you are taking some of your best resource out to deal with this?
Shona Dunn: As you say, Mr Thomson might want to add something, but inevitably when you are managing a system at this scale and with this number of different elements to it, you are constantly making judgments about how you can get the best impact across the piece and how you can ensure that your productivity stays up. It is certainly not the case that I would be expecting to impact in any way negatively on European Union citizens in order to staff this. These are both very high priority and highly important routes for the Home Secretary.
Q19 Chair: Ms Mahmood and I are two of the largest customers to your Department on immigration cases, so we know of what we speak and what we deal with every week. It is certainly not the case that you are on top of immigration cases. There are so many delays in most bits of the immigration system, but you are saying that this is not adding to those existing delays, in your view.
Shona Dunn: That is a difficult question to answer because, as you rightly say, inevitably those people come from somewhere. Mr Thomson will want to say something about this, but what I am saying is that we constantly make sure, with the resources that we have available, that we are getting the best outcome that we can across the piece.
Q20 Chair: You have not seen a big spike in any particular area. The pain is, if you like, shared across the whole Department. Is that a fair summary?
Shona Dunn: Although, of course, we do have clear priorities. The EU settlement scheme is a very clear priority, and the service standards that we see there at the moment are unquestionably good. Mr Thomson may want to say something about that. The Windrush compensation scheme is absolutely a priority for the Home Secretary.
Q21 Chair: I wonder if it is having an impact on other parts. Mr Thomson, do you want to add something before we move on?
Mark Thomson: In brief, as Ms Dunn says, the settlement scheme is performing extremely well. Most applications are—
Q22 Chair: We have heard that bit. I was thinking about the impact on the rest of the systems.
Mark Thomson: The general backdrop of what I am running in visas, immigration and also the passport operation is a backdrop of very good performance. There are not general impacts where I would be particularly concerned. Of course, there are areas where we know we need to be better, but in the round of what are two very sizeable operations, we are performing very well.
Q23 Chair: You said that very positively, but I could spend another hour telling you about individual and group cases where things are not going well. People are paying a lot of money and not getting the service that you advertise, but I will take it offline or we will never get on to the subject at hand.
I thank the National Audit Office for doing an investigation—it is not a value-for-money Report—into cheating in English language tests. I pay tribute to the all-party group chaired by Stephen Timms MP, who has done very good work on this. He will put his own report out soon. A systemic failure in a private company led to real injustice for many students and visa applicants.
The Report says that the Home Office cannot be absolved of responsibility because the Government outsourced the English language tests. The Department did nothing to ensure accuracy, and its investigations—sending people to America and so on—left many questions unresolved, which we will go into. The minuscule fine that you wrung out of ETS, partly due to some of the errors in the Home Office, just adds insult to the injury done to so many people. This has been going on for such a long time now and the injustice continues with many people still going through the court system, let alone others who have been unable to. Justice has been slow and in many cases partial, and it has been down to individuals to pursue.
As the UK has been keen to welcome people from across the world through many routes, including the student route, this really seems to have dented the UK’s reputation. Sir Philip, this is an opportunity for you to say something to those people who have gone through the system. I don’t know whether you want to apologise for the system or whether you think it is all fine. Would you like to say something?
Sir Philip Rutnam: Shall I start with some reflections on it?
Chair: Do you have a simple message for the people who have gone through court?
Sir Philip Rutnam: I will come to that. The first point to make is that, as you have identified, Chair, at the heart of this was a very large-scale organised fraud or set of frauds, and that large-scale fraud took place within a wider system of student visas that was failing and abused in a number of respects. Since the fraud came to light and since the scale of the challenges in the system emerged, which was even earlier than the fraud, the Department has responded vigorously and effectively to both the problem of the fraud—getting to the heart of the fraud that resulted in 25 criminal convictions, with another set of individuals appearing before the courts next month—and dealing with the more systemic issues in relation to English language testing and the system of sponsorship in relation to visiting students. Everything that has happened since 2014 needs to be seen in the context of the need to deal with this large-scale fraud—a need that was emphasised very much at the time in the House.
Q24 Chair: No one doubts that it has to be dealt with, but it has taken a very long time and cost a lot of individuals a lot of money, and the taxpayer has not done very well out of it, either.
Sir Philip Rutnam: I think the fraud was dealt with very expeditiously at three levels. The organised criminals who were involved with it were the subject of—
Q25 Chair: We know that bit. We agree that fraud needs to be dealt with, and you suspended the licence very quickly, but the point is that it has been a long time between then and now, which has affected a lot of individuals. I wonder if you have any messages for them.
Sir Philip Rutnam: Let me turn, then, to the position of the individuals. The Department has consistently tried to make sure that we look at the evidence that is available in relation to the position of individuals. That started with the task that ETS—its US parent, not the UK company—performed in relation to reassessing the tens of thousands of tests in a way that involved three individual tests being applied, or three conditions needing to be met, before a test was regarded as invalid or questionable. Since then, I agree that there has been a long process, in many cases running through the courts, in relation to resolving the position of individuals.
The position of the Department has been consistently that, while in a system this large and complex we cannot rule out the possibility that some individuals who were innocent were treated as having invalid test results, none the less the evidence that we have had has been strong enough to justify the presumption that fraud—deception—took place. That position has been supported by expert evidence and by the courts.
I think it is important to set out these points of context, because they bear in a very significant way on the activity of the Department in dealing with this issue. If all that context is taken as read by the Committee—
Chair: We have the context of the Report.
Sir Philip Rutnam: Let me come to the point that may be of more interest to you, which is that of course we understand and recognise that there continues to be real concern that individuals may have been treated harshly in this whole process. There are some hundreds of individuals—possibly more—who feel that they have been treated harshly and continue to maintain their innocence. That is, of course, a subject of real concern to us. They have had a right of challenge; the nature of it has changed over the years, with the case law and the legislation, but they have had a right of challenge.
However, the fact that, as I say, there are some hundreds of individuals—possibly more—who continue to protest their innocence is a subject of real concern to us. It is a subject of real concern to the Home Secretary, who has been paying close attention to the representations received in Parliament, including from Mr Timms and the all-party group. He has also been paying close attention to and waiting upon the National Audit Office’s Report. He continues to consider the question of whether there is more that could be done by the Government, and he has asked me to say that he firmly expects to make a statement on this issue before recess.
Chair: You have anticipated my question.
Sir Philip Rutnam: This is not the end of the matter so far as the Government are concerned. You began by describing this as a knotty issue, Chair. I think that that is a fair description, but at the heart of it lies the very difficult question of how the Government—the Department—can effectively, vigorously deal with a systematic and large-scale deception.
Chair: There is so much there, but I will ask Ms Mahmood to take over. I should say, in case you have not seen it all, that we have had a lot of excellent evidence sent in—some of the best-quality evidence that we have had for a hearing, and in quite large amounts—that details some of the real human concerns. On that point, I will ask Shabana Mahmood to come in.
Q26 Shabana Mahmood: Thank you, Sir Philip, for setting out that context. I thought it was quite helpful that you did that, but of course you only started setting out the context from the moment when Panorama brought this fraud to light. I would like to go a few years in advance of that to begin with, if I may.
Chair: Figure 1 on pages 6 and 7 of the Report has a helpful timeline, for those who are following.
Shabana Mahmood: Thank you, Chair. This system, which was then subject to large-scale fraud, as was later discovered, is a system entirely of the Home Office’s making. It’s not as if your Department was not aware that it a frail system. Why did things go so horribly wrong in the construction of this system after the 2010 general election, when it was a clear policy decision of the new Government that they were going to crack down and tighten the system relating to student visas? What went so horribly wrong at the Home Office from that point onwards that you constructed a system that had such frailties within it in the first place?
Sir Philip Rutnam: I think you are right, Ms Mahmood, that the system had significant frailties in it. I have to say I speak here from the perspective of somebody who has tried to understand what was happening, rather than somebody who was around at the time.
Shabana Mahmood: I understand.
Sir Philip Rutnam: And I don’t wish to make any kind of political point at all—that is not my job—but I disagree with the statement, the implication, that all of this dates from 2010. The system that did not work or did not work as had been intended really relates to the reforms from the latter part of the previous decade, when a new system was put in place for student visas without—with the benefit of hindsight—sufficient checks and balances to ensure that the students genuinely were coming here to study and that the sponsoring organisations, the educational institutions, were of the requisite quality. This was indeed all exposed, or helpfully exposed, by among other things a National Audit Office Report in 2012 that estimated that in 2009-10, the first year of that new system, somewhere between 40,000 and 50,000 individuals had come to the UK as students but in fact with the intention of working.
Q27 Shabana Mahmood: Sir Philip, let me clarify. I was not suggesting that the system pre 2010 was flawless; in fact, it was the opposite. It had been an election issue that there were flaws within the student migration system from about 2007 onwards, when the new system was created. It was an election issue in 2010, and there was much discussion about the frailties when it came to student visas. After the 2010 general election, a policy decision was taken by the Government of the day that they were going to tighten the system up.
So the construction of the system pre-2010 was bad—we accept that—but then at the first point at which there was a political choice to fix that, everything still seems to have gone horribly wrong. You have referred to the National Audit Office Report of 2012. I thought it was striking that they said then that there were “predictable flaws” in the system from after the general election in 2010. I am trying to establish from you, Sir Philip—I appreciate you were not there at the time—why Home Office officials managed to construct, not simply before 2010 but immediately after the 2010 election, such a weak system.
Sir Philip Rutnam: There are a number of lessons that as the Home Office we would identify from the whole saga, going back to 2008, 2009 onwards, and I will go on to those, but before I do I think it is important, in this mode of taking a step back and considering the historical perspective, to recognise that the system now, after all the measures that have been taken in the intervening years, is in fact broadly compliant; that is our view. Nothing is perfect, but it is broadly compliant. The standard of visa compliance among people coming to study in the UK is actually high to very high. That is a very significant improvement in the performance of the immigration system.
Q28 Shabana Mahmood: And it has taken us perhaps a decade to get there, Sir Philip. That is the material point, isn’t it?
Sir Philip Rutnam: I think it had got there a bit sooner than now, but—
Chair: Can I just cut across you for a minute, because we could have a long and involved history lesson? We have on this Committee two people who were in the Home Office as Ministers and saw some of the challenges of the old system. I don’t think anyone is pretending it was perfect. We don’t need the history lesson. What we are trying to focus on is the Home Office’s handling of what happened when we found out about the problems with ETS. Ms Mahmood, do you want to continue?
Q29 Shabana Mahmood: Sir Philip, it was clear, at least from between 2011 and 2014, that this system had significant frailties. You had to revoke hundreds of licences for sponsors and you had to create an ongoing system within the Home Office—an ongoing programme to look at reducing abuse within tier 4. Why did it still take a Panorama programme in 2014 to uncover the scandal? Why were you missing signs that were evident from the action that you and your Department were taking?
Sir Philip Rutnam: From what I can see—I speak with the caveat I mentioned earlier—there were already some significant steps being taken that were heading towards the ETS English language testing system. Some significant steps were being taken earlier even than the Panorama programme. For example, the licences of many colleges that relied on the ETS testing system had already been revoked—well into double digits, I think.
Q30 Chair: The licences were revoked in 2011, 2012 and 2013. Which of those were revoked specifically because of their reliance on ETS? If you cannot answer, perhaps you could write to us.
Sir Philip Rutnam: We can certainly write to you. There were a significant number of colleges—tier 4 sponsors—who used the ETS system, which where revoked before the Panorama programme.
Chair: If you could write to us with that, that would be helpful.
Sir Philip Rutnam: I will. However, I agree with you, Ms Mahmood; the investigation undertaken by Panorama provided fresh and, frankly, shocking evidence of the scale of fraud. I remember it at the time even though I was not in the Department. I would much rather the Department had discovered that itself.
Q31 Shabana Mahmood: But Sir Philip, you had evidence to suggest that something dodgy was going on, because as you just said, you had revoked a number of licences that were relying on the ETS system. Why did that not raise a red flag, and get the team you had doing ongoing work on tier 4 compliance to look at what was really going on with ETS? Why was that missed?
Sir Philip Rutnam: My impression is that the process through 2011, 2012 and 2013 was one of trying to deal with what were seen as very low standards in the educational provision. What the Panorama programme revealed was systematic fraud on a large scale.
Q32 Shabana Mahmood: With respect, Sir Philip, it cannot have been that shocking that there would be attempts at fraud in this system. Coming to this country is considered quite a prize by some people. The idea that criminal enterprises would try to prey on people’s desperation and desire to better themselves is not something that anyone could not come up with by applying a common sense check to the facts before us. Again, why did that not raise the red flag that it was not just low standards but a probability of fraud, and a frailty for fraud to occur?
Sir Philip Rutnam: I repeat my answer: I would much rather the Department had identified the fraud. Could the Department have identified it earlier than Panorama? Well, presented with some intelligence, it probably could have. I do not know, though, whether that was possible.
Q33 Shabana Mahmood: You had people doing some level of compliance checks, though, in the pre-Panorama 2014 era. Clearly, they were not up to much. Do those people do any sort of common-sense check about whether fraud is occurring when they do those checks?
Sir Philip Rutnam: I will ask my colleague Mr Thomson to speak to that.
Mark Thomson: I would add a couple of facts to what Sir Philip said. Before 2014, 400 colleges had had their licences revoked. Interestingly, before Panorama, one of the exercises that we had underway had identified the two colleges—Eden and one other.
Sir Philip Rutnam: Leyton.
Mark Thomson: Leyton, which featured in Panorama. We had already revoked their licence before the programme. There was significant activity under way. As the Committee will probably be aware, subsequently just over 1,000 institutions have had their licences revoked, but 400 of those were done before the Panorama programme. I think it is fair to say that we did realise that there were many issues, and there was lots of investigation under way. I think the sheer scale of what was going became even more apparent with the Panorama programme.
Q34 Shabana Mahmood: With respect, Mr Thomson, it appears to have taken you three years to sort of almost get close to uncovering the possibility of fraud, while Panorama did it in a matter of months. That is a pretty damning indictment of the system that you were running.
Mark Thomson: If I may, I do not think it had taken that long. In intensive reviews that were underway in 2014 we identified the scale of the problem with many colleges. We also identified a very high proportion of people who had fraudulently taken the tests, and we acted very swiftly. At the time, Ministers were demanding a speedy and robust response, which is what we were doing during 2014.
Q35 Shabana Mahmood: The 400 licences that were revoked cannot all have been because of ETS cheating or fraud, so what were the other reasons that you were revoking licences in the period up to 2014?
Shona Dunn: Shall I come in there? The 400 licences that were revoked in advance of the Panorama programme were 400 out of 700 at that point. They were 400 that were specifically associated with ETS. But you are quite right: it certainly was not the case that those 400 licences were revoked because of an understanding that the ETS certificates—the TOEIC certificates that were being relied on—were all fraudulent; it was for a variety of reasons that were to do with general compliance with the expectation of sponsors at that point in time.
The other thing I would add in this space is that, of course, there are two additional answers to your question. First—this came through in the NAO Report—there was certainly some intelligence that the Department was receiving, in some cases directly from ETS, about concerns of fraudulent behaviour. ETS themselves had, for example, removed the licence to operate from eight of their test centres, because they had concerns about some of the test results. Some information was coming to the Department and the Department was acting on that information. Larger scale information was not coming forward.
Q36 Shabana Mahmood: It is interesting that ETS were providing you with intelligence about cheating within their own centres. Why did that not prompt a deep dive into ETS to work out what on earth was going on? It is a big deal when a company has to turn round and say to you, “I think there is fraud going on on our watch,” is it not?
Shona Dunn: As I understand it, the information that we had was being investigated. You are quite right that there was not a broader programme of activity put in place at that time; I cannot answer for why that was not put in place at that time.
Q37 Shabana Mahmood: This is the first time that I have heard that ETS were responsible for some of the intelligence that you at the Home Office received, so please could you write to us with details of what that intelligence was, when it was received, who was on the investigation, how long it was taking, and what the relationship was between that timeline and the 2014 Panorama programme? We would be grateful to see that. Why did you not have a contract with ETS?
Sir Philip Rutnam: As I understand it, the procurement arrangements that were put in place, which go back to 2007 when the first secure English language testing arrangements were put in place, not for student visas but for other visa types, did not rely on a standard commercial procurement process. A number of comments could be made about the quality of the process that was run between 2007 and 2011 in fact.
The principal reason for that, as I understand it, was that there was no exchange of value happening between the UK Border Agency and ETS or any of the other SELT providers. It was a licence to provide a service to third parties who would themselves be paying ETS and the other SELT providers. The view was taken that, because it was of that nature, it did not need to conform to the same standards as a normal procurement where the Government, or the UK Border Agency in this case, would pay the provider.
Q38 Shabana Mahmood: All these years later, with a system that has completely fallen apart, do you think that was the right assumption?
Sir Philip Rutnam: No, it was absolutely the wrong assumption, because what the Government or UKBA was doing in that case was conferring, through a commercial means, an ability or licence to operate that was, first, of significant value to ETS or other providers, which reflected the relationship it would have with the market; and secondly, of enormous importance in terms of its standards, integrity and other considerations to the Government for the running of the immigration system. It was completely the wrong model.
Q39 Shabana Mahmood: Please explain to me, Sir Philip, what happened in the Home Office in 2007 that allowed us to proceed on that assumption. To me, looking at this in 2019, it seems completely nuts that we chose to do it that way.
Sir Philip Rutnam: I’m afraid I cannot. It was in the UK Border Agency, as I understand it. I do not have an answer to that. I will see whether there is any light that we can shed on it—
Q40 Shabana Mahmood: It would be very helpful if you or the relevant officials went back and had a look, because that is a materially important point as to how we got into this mess in the first place.
Sir Philip Rutnam: Significant mistakes and misjudgments were made. Those have been corrected in the most comprehensive manner since.
Q41 Shabana Mahmood: Thank you for that, Sir Philip, but we would like to understand how we came to make those mistakes in the first place. That 2007 paperwork around the original assumptions based on licensing and not having a contract would be of real interest to the Committee, so I would be grateful if you could write to us.
Sir Philip Rutnam: We will find out what we can and we will write to you.
Q42 Caroline Flint: Could you let us know which Minister signed it off?
Sir Philip Rutnam: If I can.
Q43 Shabana Mahmood: We are happy to see papers on a confidential basis if necessary.
Sir Philip Rutnam: If we have not already done so, we will seek to track down the records from 2007.
Q44 Shabana Mahmood: The Panorama documentary happens and immediately, almost instantaneously, you accept their assessment that 97% of these tests are false, incorrect or dodgy; choose whatever adjective you like. Why were you so quick to assume that ETS were going to be so brilliant at detecting all of this mass cheating and fraud so very accurately when it had been doing these tests for three years and had not really flagged up, apart from this one bit of intel that Ms Dunne has told us about today, anything for us to worry about?
Sir Philip Rutnam: I will say something and then perhaps Ms Dunne might want to add to it. First of all, it did not happen almost immediately.
Q45 Shabana Mahmood: So what was the timeline?
Sir Philip Rutnam: As I understand it, there was a process that took several months, following the February airing of the documentary, to work out with ETS, who had the ultimate responsibility for assurance of the test results, what process would be put in place in order to test validity and provide corrected results.
Q46 Shabana Mahmood: What was that timeline?
Sir Philip Rutnam: I think it ran to May, June 2014.
Shona Dunn: It ran to June 2014, which was the point in time when the further licences were cancelled as well and the statement was made.
Q47 Shabana Mahmood: Okay. So it took a few months. It was not instantaneous, but you still totally assumed and relied upon ETS and their detection of this cheating and this scandal without really considering their performance over the previous three years. Why was that, Ms Dunn?
Shona Dunn: If I go through what I understand occurred during those months, as you know and as reported in the NAO Report, Home Office officials went to ETS in the States, which, as Sir Philip has already recorded, was a different company, a parent company, to ETS Global, who were the company that were actually providing and administering the tests in the UK. They went to the US to understand what they were doing and were taken through that process. They had their 97% consideration in the first instance, with the additional processes that they went through after that point to check that a second and a third time, and that resulted in the division of that 97% into the just under 60% that were invalid, and the just under 40% that were questionable. Essentially, that process was designed, as I understand it and from what I have read, to determine whether there was any cause for doubt, and if there was a cause for doubt it was identified.
The Department took that information and looked at it against its own record, and then went through a process of matching and confirming the degree to which it could match those records. So there was a process that went through before we got—
Q48 Shabana Mahmood: But that process was completed by June 2014. Is that what you are saying?
Shona Dunn: As I understand it, the first actions that the Department started to take with respect to invalid ETS certificates was in June 2014.
Q49 Shabana Mahmood: So what do we know at June 2014? That a mass fraud has taken place. You would not have been able to eliminate as a line of inquiry that not only were there organised crime groups at the lowest possible level in the testing centres where this cheating was occurring, but that people high up in ETS could at that point have been potentially also criminally involved. You would not have been able to rule that out in June 2014 as a line of inquiry. It seems to me that you have taken a lot on trust from ETS at a point in time when actually there were questions for them to answer in relation to criminal activity. Why was that, Ms Dunn?
Shona Dunn: My understanding is that at the time it was very clear that ETS Global, against which, as you say, the Department did consider whether there was a case for criminal charges, and ETS in America were very clearly separate companies, and it was clear that if there was a case to answer—
Q50 Shabana Mahmood: You are missing the point, Ms Dunn. In 2014, against either of the two ETS companies—ETS Global was doing the administering here in the UK—you would not have been able to rule out at that point that this fraud did not go right the way up the chain to people sitting in ETS offices. Yet it seems to me that you have taken a lot on trust from ETS right at the outset, and I am asking you why that was the case.
Shona Dunn: What I am saying to you is I don’t think there was a question about whether there was the potential for criminal action against ETS in America. ETS in America had the voice files, and was able rapidly to undertake the matching of voice recordings, which was necessary in order to determine the scale.
Q51 Shabana Mahmood: ETS in America would, though, have been relying on data from ETS here in the UK, would it not?
Shona Dunn: ETS in America had those voice files. I am afraid—I’m more than happy to confirm this after—I don’t think those voice files went from ETS Global to ETS America. I think they were already held by ETS America, but I would need to confirm that.
Mark Thomson: That is right.
Q52 Shabana Mahmood: But nobody at ETS Global would have uploaded those voice files on to the main ETS system. I am just trying to establish what the chain of individuals is here in a potential criminal conspiracy, which we could not have ruled out in 2014, of people behaving dodgily here in the UK, uploading files to the main ETS system in the US. You could not, in 2014, have ruled out that people in the US may have been in on a criminal conspiracy either, could you, Ms Dunn?
Shona Dunn: I think we had ruled that out at that point in time.
Q53 Shabana Mahmood: Straightaway?
Shona Dunn: Mr Thomson may want to explain it.
Mark Thomson: There are two points I would add to what Ms Dunn has said. There are distinct entities between ETS in America and ETS BV in Europe. The other point is that the whole reason that Peter Millington was sent over to the States—there was a senior delegation at the time—was to do the very thing that I think you are highlighting, Ms Mahmood, which is to investigate how ETS was going about analysing the data and what they were actually doing.
Q54 Shabana Mahmood: I am going to come on to that delegation in just a moment, but it would be very helpful if you set out in writing what you understood to be the relationship and the data handling between ETS here in the UK and ETS in the US. I am interested in the very senior delegation that you just referred to, Mr Thomson. I learned from the NAO Report, at page 22, paragraph 2.7, that there were five senior civil servants, but none of the people in the delegation “had expertise in the technology or techniques used.” What is the point of sending people to the US to investigate whether a criminal conspiracy has occurred if they do not understand either the technology or the techniques that have been used?
Mark Thomson: That is a fair challenge, but this was not a single point of how we were addressing the task. There was a general—
Q55 Shabana Mahmood: It is a fair challenge. I am asking you to answer the point, not just to say, “It’s a fair challenge.” You can put your hands up and say, “Total cock-up.”
Mark Thomson: I would not say that. What I am trying to say is I am not familiar with who the five individuals were. I am trying to highlight that it was a senior delegation in the organisation. It was one of a number of things that we were doing.
Q56 Shabana Mahmood: You don’t know who they were, but you tell me they were senior. I assume you cannot tell me much about the expertise that they did have.
Mark Thomson: We addressed the task in other ways in terms of bringing in—
Q57 Chair: We need to be clear: we are not trying to criticise individuals, but they were sent by the Home Office corporately in order to tackle this. As Ms Mahmood says, and as the Report clearly lays out, the technical expertise that they had was limited in this area. The civil service does this very well. It will find some people to do some bit of work, but they did not have the skills. You agree with that.
Mark Thomson: Indeed. I do accept that point, which is why we also called in various experts, like Professor French. I am anticipating that your next question is: why didn’t we do that at the same time? I think that is a fair observation, to try to head that one off. We do not have linguistic expertise inside the Department, which is why we were looking at bringing that in from other individuals and other organisations.
Q58 Shabana Mahmood: You did not do so until at least two years after the fact, so why the delay?
Mark Thomson: I would highlight that as one of the lessons learned in this episode.
Chair: This saga.
Q59 Shabana Mahmood: We can get on to lessons learned. We hear a lot about lessons learned in this Committee, but I am trying to understand how it is possible that nobody appears to be doing a common-sense check when a fraud has taken place. We are talking about tens of thousands of tests, mass fraud, and criminal enterprises. Yet it takes at least two years before somebody at the Home Office thinks, “We might need a voice recognition expert.” What on earth is going on?
Mark Thomson: I cannot make that right now. The impression that we are creating that we did not respond quickly is not true.
Q60 Shabana Mahmood: You appear to have responded quickly on things that were not necessarily helpful in establishing what had gone on and dealing with some of the fall out.
Mark Thomson: There were three strands to our response. First, we identified individuals who had fraudulently conducted tests. Secondly, we pursued the establishments that had been running the tests. There were several other actions regarding the institutions that needed to be closed down. As I mentioned, in the end 1,000 educational institutions had their licences revoked. All that activity was underway at the time.
Q61 Shabana Mahmood: Did you have enough staff looking at this at that time?
Mark Thomson: I cannot tell you how many staff were looking at it at the time.
Q62 Shabana Mahmood: Post-Panorama, I think some sort of gold command was created. I saw some reference to that. Could you tell us—in writing, if not today—what resources were applied to what was clearly a big scandal of mass fraud?
Sir Philip Rutnam: Can I come in here? Of course, we can share more information on the resources. I want to reiterate what Mr Thomson said. In hindsight we should have had more independent expert assurance before 2016. I accept that. For context, it is important to recognise that the system in which this took place put clear responsibility on the English language test provider to tell us whether the tests were valid. That is not an explanation or excuse, but just a bit of context.
Ms Dunn mentioned that earlier action was taken. Tests in Pakistan had been struck down by ETS after an investigation. We did not look to an independent source of assurance for that, because were taking the advice of the English language test providers as to which tests were valid. However, with fraud of this scale, we should have taken independent advice earlier than 2016, in 2014.
Q63 Chair: Had you done that, would the original voice records still have been at ETS in America?
Sir Philip Rutnam: The records were clearly available in 2014.
Chair: They had gone through a different system by the time you got there.
Sir Philip Rutnam: I cannot speak to the details of that.
Shona Dunn: Are you referring to the way ETS had to do certain things to the voice recordings to do the matching exercises? They created the voice files, as I understand it, to do that.
Q64 Chair: Had you got in sooner, would your voice experts have been able to listen to the original ones with all the date stamps of when they sat the test and then match it back better?
Shona Dunn: Our officials went to ETS around the time that they were using the data to do the data matching. They probably did that quickly, to do that data matching at our request. We made it a strong priority to get that information back as soon as possible.
Q65 Shabana Mahmood: Sorry to interrupt. When you say, “Our officials,” do you mean the five who went to the US?
Shona Dunn: I do.
Q66 Shabana Mahmood: How would they have been able to oversee the data matching, given that they did not have the skillset to do that?
Shona Dunn: I am sorry, but I was answering the earlier question. Had we taken Professor French along with us then, I do not know whether the files would have already been produced when we turned up.
Q67 Shabana Mahmood: Did the Home Office ever consider issues around chain of evidence and security of data? You are dealing with a corporate entity, both in the UK and in the US, which has been administering a system that has engaged the interests of criminal enterprises. There are big issues with chain of evidence in all the court cases that have flown. Did the Home Office ever consider, post-Panorama, that there were issues around chain of evidence, and that it needed to act?
Shona Dunn: As you rightly point out, questions have been raised about chain of evidence in subsequent cases. As you know, there was an item of evidence from Professor Summer, which the Committee will be familiar with, that raised questions about this and the metadata associated with the voice files. The Department, as you know, asked Kroll to have a look at questions around that, the point in question being whether other types of fraud were being perpetrated at the time—in order to have concerns about chain of custody and chain of evidence, it would be necessary for other types of fraud to be perpetrated at the same time. The evidence we received and the evidence that the courts have accepted, in general terms, is that the types of fraud that were being perpetrated were proxies and the reading out of multiple choice answers, not other types of fraud, which would have been necessary to raise questions.
Q68 Shabana Mahmood: Was legal advice taken by the Home Office in relation to chain of custody-type issues?
Shona Dunn: Mr Thomson might know more about this. I imagine it has been—
Q69 Shabana Mahmood: In 2014?
Shona Dunn: I don’t think in 2014, no.
Mark Thomson: I am not sure, I’m afraid. I will have to come back to you on that.
Q70 Shabana Mahmood: Could you check? Thank you. Also, was any legal advice taken in relation to where the data was being held? Obviously, you are dealing with a foreign jurisdiction, so foreign jurisdiction rules come into play as well—obviously, you know that there is also a clear relationship between ETS US and ETS UK. Did you take legal advice about the implications of the data being held in a foreign jurisdiction and what that could mean for security of data and access to that data?
Shona Dunn: My understanding is that we had legal advice to say that we could have reliance on the data being provided to us by ETS America. I don’t know what the specific components of that advice were, so I am very happy to go back and look at the components of that advice, of course.
Shabana Mahmood: Could you look? Thank you.
Q71 Chair: If you could send us a copy of that advice, we would be happy to receive it.
Shona Dunn: I will have to come back to you on—
Q72 Chair: If for any reason you couldn’t send it to us publicly, we would be happy to accept it on private reading room terms.
Shona Dunn: I have not seen that legal advice. As I say, I understand we had legal advice at the time that gave us confidence that we could have reliance on the ETS data. I have not seen that legal advice, but anything we can provide we of course will.
Chair: Other Departments have set a precedent by providing to us legal advice that we have not published but have seen in a secure environment as a Committee. We are a responsible Committee and we would be very interested in seeing that advice, given what the level of the settlement was as well.
Q73 Shabana Mahmood: How much money did ETS make from doing these UK tests?
Sir Philip Rutnam: I don’t know, I’m afraid. We can provide you with some information if we have some—
Q74 Shabana Mahmood: Surely you know how much money they charged for doing the tests.
Sir Philip Rutnam: We know how much they charged. I think the typical amount was £190 across the multiple different tests, but there are different tests involved, so that wasn’t the amount paid for each test. And it depended on whether it was a public test centre or a private test centre, because if it was in a private test centre, there was an additional charge on top. That was often the area in which the fraud tended to focus.
Q75 Shabana Mahmood: Is it possible for any one of you to give me a ballpark figure for how much money—in a range of hundreds of thousands, millions or whatever—that we think ETS made from this?
Sir Philip Rutnam: Well, there would have been something like 15,000 tests a year, I imagine—
Chair: We’ll do the maths.
Sir Philip Rutnam: So that times 200—
Shona Dunn: As Sir Philip has said, though, the issue here is that the majority of ETS centres in the country at the time were subcontracted and the subcontractors were allowed to charge money on top. We know that some subcontractors were charging £500 or £600.
Shabana Mahmood: Well, I am grateful to my colleague Ms Trevelyan for telling me that we’re looking at a ballpark figure of around £11 million—we think.
Chair: It’s good to know that one member of the Public Accounts Committee can do the maths.
Q76 Shabana Mahmood: Yes, we think we’re getting to a number of about £11.4 million, and the Department has obtained only £1.6 million in settlement of its civil suit. That’s a very big discrepancy. You also spent £21 million on dealing with the fall-out from all these issues. How did we arrive at a situation where you spent £21 million, the company in question appears to have made around £11.4 million and we got only £1.6 million back for the taxpayer?
Sir Philip Rutnam: I think the £11.4 million will have been a figure for the income to ETS across the four years, so it’s not a per annum figure. We are not talking about £11 million a year; it’s a smaller—
Shabana Mahmood: Well, in the absence of official figures from you, we are having to think on our feet, Sir Philip!
Sir Philip Rutnam: Us, too. It’s a smaller enterprise than that, but let me go to the question of the settlement. The key issue, to my mind, for the settlement was to compare the amount that we were able to extract with the costs that we had incurred, which we have estimated at about £21 million. I would dearly like to have got more than £1.6 million. There was a quite lengthy negotiation between 2017 and 2018 on that point. The key factors were, first, that it was absolutely clear to us that we had no claim, I am sad to say, against the ETS parent in the US. This is to do with the structure of the commercial arrangements and the relationship between the parent in the US and the European entity.
Q77 Shabana Mahmood: On that exact point, if you had a contractual relationship in place, rather than this licensing arrangement, do you think you could have got over that hurdle? That would have been clarified in the procurement process.
Sir Philip Rutnam: I think that would have depended, critically, on whether there were parent company guarantees or parent company support involved in the contractual arrangement.
Q78 Shabana Mahmood: We regularly see procurement cases before us where there are guarantees with parent companies. That is quite typical, is it not?
Sir Philip Rutnam: Typically there is a tussle between the customer, who wants parent company guarantees, and the supplier, who will want to isolate the risk in its offshoot. It tends to depend on market power and—
Q79 Shabana Mahmood: Okay. So you were forced to only go for the—
Sir Philip Rutnam: We could only go for the European entity, ETS Global BV. The actual economic activity had taken place in a branch of ETS Global BV in the UK, but that branch had ceased trading and no longer existed when we were seeking to bring this action to get compensation. The only thing we could look at was ETS Global BV, the entity in the Netherlands. We tried long and hard to get more but the sad fact is that the assets available were essentially only slightly more than the amount that we got. If we had gone down the route of litigating instead of settling, it is likely that we would have got nothing, or less than we got. The clear advice from our counsel and legal advisers at the time, on a value-for-money basis, was that the settlement was the best that we were going to get.
Q80 Shabana Mahmood: Thank you. Paragraph 3.12 on page 34 of the NAO Report says: “The Department reached a financial settlement with ETS Global BV in 2018 for £1.6 million after receiving advice that it did not have significant assets”—you have helpfully detailed for us—”and that Home Office estimates were extremely vulnerable in successfully demonstrating costs incurred.”
I appreciate the position in relation to assets. That is not something that you can control. However, you can control the vulnerability of your own estimates of the costs incurred. Why are we relying on an estimate of costs incurred in the first place? Why can’t you simply stand up the amount of costs you have incurred in dealing with this scandal?
Sir Philip Rutnam: That statement must be right. I didn’t quite recognise the “extremely vulnerable” statement. There is typically an argument in these things—
Shabana Mahmood: This is an agreed Report. You can’t resile from those words.
Sir Philip Rutnam: In that case, I will have to look into it. I imagine—unless one of my colleagues wants to add to this—that there would have been an argument about whether our costs incurred, on a causal basis, really were £21 million. However, I would have hoped that we would have been able to demonstrate with confidence that there was significantly more than £1.6 million. I take the point that this is factually agreed. Let me go away and see whether I can shed any more light on that. On the point about tracking costs—
Q81 Shabana Mahmood: Do tracking very quickly, and then I want to come back to what you just said. Why can’t you track your costs?
Sir Philip Rutnam: We were overwhelmingly focused on sorting the issue—finding the criminals, closing down bogus colleges and dealing with people whom we had evidence to suggest had their immigration status here on the basis of deception.
Q82 Shabana Mahmood: How hard is it to work out how much you are spending?
Sir Philip Rutnam: We put in place—Mr Thomson might be able to comment on this—some basic systems to try to track costs, but we did not create new cost codes or a whole structure of management accounting behind it, because that was probably disproportionate. That was my sense of what was going on.
Mark Thomson: I would not add anything to what Sir Philip has just said.
Shabana Mahmood: Perhaps you could write to us and tell us what these basic systems were.
Q83 Chair: I am slightly concerned that, if there is another problem in this area or another, you will quickly set up the gold group and all that, but tracking the costs will be a bit of an after thought
Sir Philip Rutnam: The learning point there, if there is one, is about looking ahead—
Chair: That is code for “something went wrong”.
Sir Philip Rutnam: Looking ahead to litigation from the outset, and how we bolster our case for litigation. That would be my observation.
Q84 Shabana Mahmood: When you come back to us, Sir Philip, on looking at this cost point and the wording used in the NAO Report, perhaps you could also specifically let us know in writing whether Ministers at the time were aware that one of the reasons for settling was that the Department could not stand up its costs, and was relying on vulnerable estimates instead.
Sir Philip Rutnam: I looked again at the relevant submission recently, and I think they were. Mr Thomson affirms that they were; we will confirm that in writing.
Shabana Mahmood: Thank you. That is very helpful.
Q85 Caroline Flint: I noticed on page 32 of the Report, in paragraph 3.9, that “the Department made £559,000 of confiscations and £65,000 of cash seizures.” Is there more money to come out of that with the 14 further suspects awaiting a charging decision, and how much?
Mark Thomson: Very possibly. These are individuals who will appear in court, I think, later on this month or in August. I cannot say for definite, but that would be part of our ambition in those cases.
Q86 Caroline Flint: For my understanding, and maybe for other people not expert in this area, given that some of those people who have been convicted had control of three colleges in Manchester, and they were running these test centres—I mean, given that they have been convicted, what is ETS’ responsibility in relation to those test centres and those colleges that were carrying out tests on behalf of ETS, as far as I can understand?
Mark Thomson: I am not sure, but I think that would be tied up in the answer that Sir Philip has just given on the general claim that we had against ETS B.V.
Sir Philip Rutnam: They did not have much responsibility under the arrangement that existed with the Department prior to the new procurement. As I recall it, they did not have significant responsibility for checking the quality of what was going on in the test centres.
Q87 Caroline Flint: Listening to all this, it is clear that under different Governments, there have been problems with validating colleges—bogus colleges that have been set up. We have been through that before. Now, we have this issue around English language. It seems to me that in the UK, we have an agency that does its job really well to make sure people are proficient to do a certain activity, and I refer to the Driver and Vehicle Licensing Agency.
Given that language is so important, both in terms of accrediting people for work and study and for community cohesion in terms of access to English language training, why on earth are we not establishing—I’ve come up with it, actually—the English Language Licensing Agency, shorthand ELLA, to do this sort of job? We have a model in the Driver and Vehicle Licensing Agency. Would that not help to coalesce this very big issue, which is a growing issue, not just in terms of those non-EEA individuals but also those coming from the European Union? There have been problems with language when enforcing the freedom of movement rules in relation to that as well.
Sir Philip Rutnam: That might be an interesting idea, but what I would say—this goes back to the point I was trying to communicate earlier—is that this system has been cleaned up. The level of compliance now is actually very high; the level of assurance that we have in relation to what is happening in secure English language tests is high to very high.
Q88 Caroline Flint: But you will appreciate, Sir Philip, that although we are on study, this goes beyond that to a wider issue about validating people’s proficiency at English in this country. It goes to community cohesion, which your Department has an in into as well—the number of people here who do not learn English. That is important to community integration and cohesion. Surely, this whole area needs to be looked at to bring it together, and I give you the DVLA as a model that actually does its job well.
Chair: There is a rare bit of praise from the Public Accounts Committee. Go and tell your colleagues in Transport. Sir Philip?
Sir Philip Rutnam: Actually, Mr Thomson was going to come in on this.
Mark Thomson: I think it is fair to say that we have learned an awful lot about the previous licensing regime that was put in place. The licence that is in place today is much, much stronger, so we have made many changes. There are fewer SELT organisations that are licensed; there are fewer colleges, and much tighter and fewer tests. We have put in place very stringent rules on validating individuals who turn up. We have put in very stringent tests on how the centres themselves have to conduct matters. We do mystery shopper tests ourselves and unannounced visits. The arrangements for how we are controlling the licensed operators today are much stronger. We have learned an awful lot from the sorts of things we are discussing this afternoon.
Q89 Sir Geoffrey Clifton-Brown: Sir Philip, before you undertook to expend this large amount of £21 million on trying to recover this money, did you do any thorough due diligence on this company, ETS, to discover how much you were likely to be able to recover? Before you started embarking on huge legal fees, appeals and everything else, did you do proper due diligence to discover how much you were likely to be able to recover?
Sir Philip Rutnam: There was a due diligence process. As I recall it, we first of all issued them with a notice that we were going to take legal action. That then triggered a process of negotiation. I do not think we incurred huge legal costs during the process. I think it was mostly done in-house with Government Legal Department colleagues, including litigation colleagues who are very good at this kind of process. Yes, there was due diligence at the beginning and during as to how much we might recover. As the process went on and as we discovered more, we realised that sadly the prospects were less.
Q90 Sir Geoffrey Clifton-Brown: Your due diligence at the beginning—
Sir Philip Rutnam: Some.
Q91 Sir Geoffrey Clifton-Brown: Some? That is just about the answer, isn’t it? It could not have been very thorough, otherwise you would not have proceeded with expensive legal costs when you knew when you were only likely to recover some £1.1 million.
Sir Philip Rutnam: I would not agree with that. I am sure we came out ahead, if you think about the costs we incurred in writing them letters, our own legal advisers’ time and a bit of management time. We definitely came out ahead receiving the £1.6 million. It was not as much as I would have wanted, but it was the right thing to do for the taxpayer to seek to recover and then to recover the money.
Q92 Sir Geoffrey Clifton-Brown: How much of that £21 million was spent on trying to recoup £1.6 million?
Sir Philip Rutnam: I can’t give you a figure for that, but it would have been small. Ms Dunn might be able to say something about that.
Shona Dunn: I will simply say that it was the vast majority of that £21 million. This might shed a little light on the earlier question, but £9 million was associated with immigration enforcement, £5 million was additional costs associated with challenges of various sorts, including appeals and JRs, and £3 million was associated with the criminal and financial investigations. It was a small amount of money—less than £1.6 million, as Sir Philip says. The majority of this money was in the additional activity associated with it, rather than in the litigation itself.
Chair: I just want to bring in the National Audit Office so we can be clear about the figures.
Tom McDonald: Just to explain where the numbers come from, figure 8 on page 33 breaks down the costs that were spent in the Home Office taking action, including where each part of the action came from and how much was spent on it.
Sir Philip Rutnam: This is all the action we have taken against colleges, including criminal investigations that have been undertaken by the Home Office, not by the police, as well as a very small proportion of it against ETS Global.
Q93 Sir Geoffrey Clifton-Brown: Ms Dunn, those figures that you have given us are not precisely broken down, but it looks as though there was £3 million or something over £3 million spent to recover £1.6 million. Is that correct? Is that a useful use of taxpayers’ money?
Shona Dunn: Apologies, but I am not sure that is the right interpretation of the numbers. We should probably write to you with the specific number associated with our legal action against ETS. The numbers here include the sums of money we would have spent defending appeals and judicial appeals more generally.
Sir Geoffrey Clifton-Brown: I accept that. Without getting a more detailed breakdown, it is difficult. Will you include in that response to the Committee what due diligence you did when and what estimates they came up with for how much you were likely to recover?
Q94 Shabana Mahmood: Paragraph 2.17 of the NAO Report states: “We could find no evidence that the Department had actively looked at whether innocent people were wrongly assessed as cheats.” When did the Home Office first realise that it could have expelled innocent people?
Sir Philip Rutnam: Let me say something about this. I accept the statement there; however, it has to be seen in the context of our reliance on and use of ETS’s own assessment of which tests were invalid and which tests were questionable, and the assurance process around that, including Professor French’s report.
Q95 Shabana Mahmood: With respect, Sir Philip, time is moving on and you have set out a lot of context already. We have all got the detail of the NAO Report, but my question was actually quite specific: when did you first realise that innocent people were getting caught up in this?
Sir Philip Rutnam: Mr Thomson might want to say something, but I think we have recognised throughout that there is a risk that some innocent people might be caught up in this, but the risk is numerically very small. I think the issue will have come up more specifically as soon as people started making appeals in relation to decisions that we were making. Those decisions started to be made in relation to individuals from mid-2014 onwards, so I think from mid-2014 onwards people will have been taking legal advice, making representations and then appealing or taking judicial review action, which will have asserted that they were innocent. Essentially, that has been an issue almost throughout. The courts have been looking at that issue, and the case law in relation to that issue has evolved.
Q96 Chair: Figure 1, which is a very useful summary, notes that in 2015 the National Union of Students began to commission their own experts—so they were questioning it. Our sister Committee, the Home Affairs Select Committee was very much on this in 2015 or 2016. By then, were you not getting a little bit worried that maybe too many innocent people were caught up? Did it escalate?
Sir Philip Rutnam: As I say, I think the issue will have started to be raised in the second half of 2014, I imagine. Certainly in 2015 the issue will have been raised, but the Department’s view throughout has been that the risk of people being wrongly caught up in this is very small. It is not zero—it is not possible for it to be zero—but it is small.
Q97 Shabana Mahmood: Sir Philip, with respect, the risk levels might have been small, and you might have considered the numbers to be small, but we are dealing with human beings here. The impact, even if it is on a small number of people, is not just a little bit bad; it is pretty catastrophic. Right at the outset, when the Chair pushed you on the impact on innocent people, you said that you have real concern. I put it to you that the impact that innocent people have faced, as a result of the decisions and the approach taken by the Home Office, is not just really concerning; it is shameful. That is entirely on you, isn’t it, Sir Philip?
Sir Philip Rutnam: The issues that you raise are right at the heart of this whole saga: are people being treated justly? Are they being treated fairly? You ask when we might have realised that people could have been caught up in this wrongly. My answer is that actually I think the possibility will have been recognised from very early on, and people will have started making representations from very early on. [Interruption.] Could I just develop the next point, which is critical?
The Department’s view has been that the risk is small, but that is not to say that it is not very important. It is very important that the risk is small, but critically, the right remedy for people in relation to this is their ability to challenge the decision made by the Department.
In this respect, the courts, which are overseeing the system, have played a critical role. They have repeatedly come to the conclusion that the evidence available to the Department, including ETS’s assessment of the test results, is sufficient to justify the Department’s finding, prima facie, of deception, and that it is therefore for the individual to demonstrate their innocence. That is the way in which the courts have seen this matter, which may or may not be—
Q98 Shabana Mahmood: I am going to stop you, Sir Philip. I am grimacing throughout this evidence, just for the record.
That is the cultural difficulty we have here, isn’t it? You have highlighted it in the answer that you have just given. The Home Office uncovers a massive scandal, which it could have unpicked itself, but failed to do so, based on a system it created, which has massive frailties in it. It moved from having a lax system to a harsh clamp down, and is not bothered or sufficiently curious, to use the wording from the Windrush report, as to the impact on innocent people. That is the material point.
Your defence is to say that they can go to court. Do you know how much money it costs to go to court? Thousands of pounds. These people are not all the children of billionaires or multi-millionaires who have come here to study in our country and put money into the coffers of our colleges and universities. They are ordinary people for the most part. Do you think an ordinary person has 20 or 30 grand lying in the bank to go to court?
That is the cultural problem. Do you accept that there is a cultural problem here, and that the Home Office is insufficiently curious and not that bothered about the impact on innocent people, and the costs incurred in getting justice?
Sir Philip Rutnam: I would not accept the claims made in the latter part of that statement about not being curious and not caring. I do not accept those claims. I was describing the approach the Department took through this period. The evidence available to us showed large-scale fraud and was sufficient to justify prima facie findings of deception in relation to these individuals, and that there was a remedy.
I do understand the concern that some people—as I said, some hundreds, possibly more—are still protesting their innocence and feel strongly that they have been treated harshly. The Home Secretary is considering whether the Government can do more, over and above the stance they have taken through this period. I cannot say more now, but he is considering that question. He has said, and asked me to convey, that he intends to make a statement on this matter before recess.
Shabana Mahmood: We look forward to that with great interest.
Q99 Chair: He is currently the Home Secretary, but before the recess we will have a new Prime Minister and we could have a new Home Secretary. As the permanent secretary—the clue is in the title—you will still be there.
Sir Philip Rutnam: I hope so.
Q100 Chair: You will be there across whatever change could take place. Can you guarantee today that there will be a statement from either the Home Secretary or a senior Home Office Minister before the summer recess, regardless of any reshuffle? Is it a Home Office position?
Sir Philip Rutnam: It is not in my power to guarantee statements by Ministers.
Q101 Chair: This is a bit of a policy issue, but it is a process issue as well.
Sir Philip Rutnam: I understand that. I reassure the Committee that this concern is felt not only by the Home Secretary and the Ministers, but by us as senior officials. We recognise the point and the echoes. We will do our best in supporting our Ministers to ensure an appropriate response is made. However, the Home Secretary is firmly the Home Secretary at the moment. He has asked me to convey what I have said.
Q102 Chair: I know it is difficult to predict timing, because it is in the hands of the business managers of the House, but “Before recess” can mean any time from tomorrow to the recess. Do you have any hint of when it might be?
Sir Philip Rutnam: That is a difficult question.
Q103 Chair: I am saying that it would be unfortunate if it was the last day before the recess, so there was no opportunity for colleagues to question the statement.
Sir Philip Rutnam: Okay. That point is understood.
Q104 Shabana Mahmood: Sir Philip, I want to add some of the evidence that we have received from innocent people caught up in this process. I was struck by the evidence of Bibi Rahima and her husband Kamrul Hasan. They have spent £45,000 on university fees, and then £15,000 on legal fees to clear Ms Rahima’s name, to prove that she is innocent and not a cheat. In this case of a husband and wife, do you consider the amount of money they have spent clearing their names and proving their innocence to be really concerning or shameful?
Sir Philip Rutnam: I cannot and will not comment on individual cases. I think that the amount that some people find they need to spend to make their case in the immigration system is a subject of real concern.
Q105 Shabana Mahmood: It is a subject of real concern, but that is the only remedy that you have left them in the system that you have created to deal with this problem.
Sir Philip Rutnam: I think that’s a little bit harsh, if I may say so. I know you are seeking to put the responsibility firmly on the Home Office, but we operate as officials within a system established by Parliament. It was Parliament, through the Immigration Act 2014, that made major changes to the remedies that are available to individuals in exactly this kind of case. I hear the concern, including in particular around legal costs.
Q106 Shabana Mahmood: Is that something that we can look forward to in the statement that may or may not come before the recess?
Sir Philip Rutnam: These are very large amounts of money for almost anybody, and certainly for, as you put it, ordinary people trying to make their way in life.
Mark Thomson: Can I add one point of detail to Sir Philip’s answer? One of the other remedies that was available to people was that those who were deemed to be questionable had the opportunity to resit another test. I do not recall Sir Philip mentioning that.
Q107 Shabana Mahmood: Thank you. I want to refer to the evidence that we have had in from Mr Nick Armstrong, who is a barrister at Matrix Chambers. One of the points that he makes is in relation to all the cases and work that had to be done to establish the position in relation to IT systems, and to get to the legal position that we have today. One of the charges that he lays at the Home Office’s door in his evidence is: “The Home Office and ETS were disinterested, relying instead on generic evidence, which failed to address the complexities of what had happened. Put simply, the Home Office took a knee-jerk reaction without addressing the nuances.” What do you have to say in defence to that statement?
Sir Philip Rutnam: I will say something, and Ms Dunn or Mr Thomson may want to add to it. I have not seen that evidence, but I would not accept the characterisation that this was a knee-jerk reaction. We have been talking about the multi strands of our response to this fraud—going after the criminals and closing bogus colleges.
In relation to individuals, it was a structured process. You may be critical of the structure, but it was a structured process in which three pieces of evidence needed to align in order to conclude that a test result was invalid. That needed to be the conclusion of the voice recognition system, and of two independent human assessors. All three pieces of evidence needed to align.
That was the process that was developed and put in place during the first half of 2014. I accept the point that we should have sought independent expert assurance on it earlier, given the scale of the issue. However, when we did get that it concluded that the likelihood of errors—of false matches—was very small: less than 2%. The system on the whole operated to give people the benefit of the doubt rather than the reverse. I do not think that characterising all of that as a knee-jerk response is fair.
Q108 Shabana Mahmood: But it is the case that the Home Office and ETS are unable to link individual voice recordings to individuals. That is the material point, and it goes back to the chain of custody issues that we discussed earlier in the hearing. The evidence from not just Mr Armstrong but other lawyers is that you appear to have just left it to claimants to try to get to the bottom of that detail and to bring out those issues in court cases when, actually, that is something that the Home Office could have done if it had chosen to do so. Why did you not choose to do so?
Sir Philip Rutnam: I will ask one of my colleagues to speak on that point, but just to correct what I said, the level of false matches, according to Professor French, who is the leading expert in this field, is likely to be in the region of no more than 1% rather than 2%. That accounts for my use of the term very small. Ms Dunn, do you want to pick up on the point about availability?
Shona Dunn: I will, briefly. Our understanding, as of today—and I think this has been checked very recently—is that anyone who seeks the voice recording that ETS relied upon in determining a match can get it from ETS. I think those have been provided. That is my understanding, and if you have a different understanding, or if any of the evidence that you have received suggests a different understanding, it would be very good to see that.
Q109 Shabana Mahmood: We could do with a written response to some of the clear and very salient points raised by Mr Armstrong at the very least.
Chair: I recognise that some of the evidence has come in in the last two days and you may not have seen it, but I highly recommend that you read it because it is very well put together.
Shona Dunn: Just to finish the point, as I understand it people can get the voice recordings that are being relied upon by ETS, or were relied upon by ETS. I think I dealt with the point about the metadata that underpins the voice recordings in my response earlier, in that the issue at stake there is around other types of fraud that may be perpetrated, and in the evidence that we have relied upon—the expert opinion of Kroll—there is no evidence of that.
Q110 Shabana Mahmood: Just to finish, Chair, as Mr Armstrong tells us in the final bit of his evidence, “As a senior Home Office witness said in the Mohibullah case”, which I think set a number of precedents for how case law was going to develop in this area, “there was a line to take and it was that they were all cheats”. Would you accept that there is at least some merit to the assertion that “a line” was taken—that these people are all cheaters—and basically, all these years on, not much has really changed in respect of innocent people caught up in the system?
Sir Philip Rutnam: I really wouldn’t characterise it like that. I think that was the case, by the way, that the Department lost; I don’t know whether that statement influenced that outcome. I wouldn’t want to see a broad-brush approach like that being taken in any circumstance.
The advice I have had is that in this case, following definition of the process with ETS for reassessing the results, decisions were then made by our caseworkers on the basis of those results in relation to what that meant for people who had applications pending or had leave outstanding.
Q111 Chair: Would you say you’re special handling?
Sir Philip Rutnam: No. There was an approach to taking decisions in individual cases that allowed caseworkers to translate—to take the findings of the ETS results and make decisions on individual cases. It wasn’t an automatic process; each case had to be judged. Mr Thomson might want to talk about this.
Q112 Chair: Sorry—can you just talk it through? Someone was listening to the tape. Can you just explain what happened, or how that was done by caseworkers?
Mark Thomson: Sorry, Chair, I was going to make another point, if I could.
Chair: Please do that first.
Mark Thomson: There are two distinct groups. There are the invalid, where we are highly confident that these were individuals who were cheating. Voice recognition has identified several matches, which shows that one individual has masqueraded as several individuals. There are the questionable cases as well, where no action was taken on those individuals; I think it is a really important point to make. As I said earlier on, they had the opportunity to resit the test, but we made no representations to these individuals and no removal action was taken against them, or closure of their leave to remain and aspects of their circumstances like that.
Q113 Chair: How did your caseworkers assess that these were—
Mark Thomson: We would have the information from ETS, which would classify people as either someone who was invalid—they had cheated—
Chair: Right. So, you are still relying on a readout of ETS data?
Mark Thomson: Yes.
Q114 Chair: You mentioned earlier, Mr Thomson, that you have much better licences now. Does that mean that you have got a better system of understanding the records and the technical systems that are used, and you have some better control of that? I will pick up in a minute, when Ms Mahmood has finished, on some of the technical issues.
Mark Thomson: We do. Part of the onus that we put on licensees these days is to provide us with data; that’s a very important point.
Q115 Chair: Is it the Home Office that will own that data? Who owns that data?
Mark Thomson: I will have to check. I wouldn’t want to—
Q116 Chair: How do you check it hasn’t been washed through—have you got a system to make sure that it’s not washed through and uploaded, and losing all this metadata—
Mark Thomson: We have got very robust tests of the licensees. We would be assessing how they are conducting their data holding and data transferring. Alongside what we have done to improve the arrangements for licensees and how they conduct tests, we have got a much more robust circumstance for students in general.
You made a point at the very start of the hearing about welcoming students. We are very pleased to welcome students. Last year’s numbers were 10% up on the year before. This is the highest number of student visas we have ever issued, and we can be very confident that students coming to study are the right sorts of individuals at the right sorts of establishments. Of course, we also have exit check data these days, to understand if these individuals are leaving the country when they should do. In the round, there is a much more robust circumstance around the whole of the student community.
Q117 Caroline Flint: Does that apply to others? There have been concerns about health professionals coming into our service who do not have proficient English, as well.
Mark Thomson: I am not sure of the individual cases.
Q118 Shabana Mahmood: Before we move on, Ms Dunn, you just said that ETS had made voice recordings available to people who had asked for them. However, paragraphs 2.20 and 2.21 of the NAO Report set out evidence that makes clear that this was not always the case, especially for the original audio files. That is actually why a lot of the cases have gone the way they’ve gone—because of these issues around data and recordings being made available. Would you like to revisit what you just said to this Committee?
Shona Dunn: Forgive me if what I said was not clear enough; apologies. We have been very recently checking in to make sure that all people who request voice files now are getting them. I fully accept and acknowledge, and the record from the time shows, that that was not always the case.
Shabana Mahmood: But it is from now on.
Shona Dunn: That is my understanding, and I know we have checked that precise question very, very recently.
Q119 Chair: While we are on this point, can I just check something? The all-party group and Nick Armstrong have both raised the point about how in some cases, there were allegedly twice as many students as could fit into a room, so physically they could not all have been there. There is some question over whether when you had cheats in the room—people had paid for a cheat; paid for the fraud knowingly—to make it easier, although voice files were uploaded, they were all inaccurate.
There is no easy way to prove it either way. If you got a voice file and something is not quite right with it, for whatever reason, it is very hard to prove individually that you were there and were doing it properly if there has then been some fraud elsewhere in the system. Do you not think the Home Office has some responsibility there? For the individual, that is really hard to prove if they have genuinely, honestly gone and sat the test.
Shona Dunn: What I would say, Chair, is that a lot of this was covered in the expert advice that the Department sought from Kroll. If the Committee are interested in more of the detail around exactly how it went about determining the different types of fraud that might have occurred and being clear that there was no evidence for that, I suggest we provide that for you.
Chair: If you could provide that, we would be very grateful. Thank you.
Q120 Shabana Mahmood: Finally from me, I want to think about the good will that this has cost on the international stage. If we look at the Windrush scandal, obviously that relates to parts of the Commonwealth—if I may say—that are largely not white, and the way in which citizens were treated and the catastrophic impact on innocent people caught up in that system. If we look at most of the people innocently caught up in this scandal, in many of these cases they will be largely from parts of the Commonwealth, and also from the not white bits of the Commonwealth. What impact do you think this scandal has had on good will between other nations and Britain, and the combination of this with Windrush?
Sir Philip Rutnam: You are inviting me to put this issue alongside Windrush, and I would not want to do that. I think they are profoundly different in a number of respects.
Q121 Shabana Mahmood: I am thinking more about the innocent people who have had catastrophic impacts on their lives as a result of decisions made by the Home Office, and the frailties in Home Office-constructed systems that have come to light.
Sir Philip Rutnam: Perhaps let’s not go back over the question of how many innocent people there may be, and what the level of remedy is.
Q122 Shabana Mahmood: No, I don’t want to do that. I am thinking about what this has meant for Britain on the international stage.
Sir Philip Rutnam: I regret anything that damages the UK’s reputation internationally, and if there are innocent people who have been caught up in the response to this, I would deeply regret that.
What I would say is that I think, in fact, if you take a step back and look at the system that existed for educational provision and immigration together 10 years ago, eight years ago or six years ago, and you look at it now, it is transformed. The level of compliance and quality of the immigration system is actually really good now—not perfect, but really good—and the UK as a destination for students, high-quality students for high-quality studies, is also really, really good. As Mr Thomson said earlier, we have the highest number of students coming into higher education ever. Those are positive points.
Q123 Shabana Mahmood: Indeed, but Sir Philip, these positive points operate in the real world of real people sitting in other countries. If I were a politician sitting in the legislature of any one of these countries—let’s say India, which has had a number of individuals affected who have then been able to, at some cost, prove their innocence—and Britain came knocking on our door looking for a trade deal, I might well argue, “Sod off. You treat our people like rubbish, and you seem not to care that innocent people are caught out by your rubbish systems and cost us a lot of money.” What conversations have you had with colleagues in the Foreign Office and the Department for International Trade about the impact that this has had on Britain?
Sir Philip Rutnam: We have active conversations, not just with colleagues in Government but with colleagues in India and other countries, about the UK, its immigration system, and its education provision. On the whole, I have to say that it is seen very positively. Ms Dunn has been in some recent discussions around that. One of the things that the rest of the world looks to the UK for is to have administrative systems like ours, and legal systems, that put things right when they go wrong.
Q124 Chair: Okay. Going on to the legal systems, is the approach of people taking the Home Office to court and the Home Office having to defend it a very cost-effective way of dealing with this? It is costly for the individual, as Ms Mahmood has already highlighted, and it is costly for you to defend the action.
Sir Philip Rutnam: That is quite a big question, because it gets into the question of how people’s rights of challenge operate, what rights of challenge they are granted, which is a matter of legislation, and the standards that are operated to, both in terms of our decision making and decision making in the courts. Would I like the volume of appeals in principle to be less? Yes, I would certainly like the volume of appeals to be less.
Q125 Chair: There could conceivably be group actions, but that does not seem to have happened massively. We talked earlier about Windrush, where a tariff model was implemented. You can argue about it either way, but a tariff model at least supposedly has the benefits of simplicity. Have you considered any sort of similar streamlined approach for those individuals who are trying to clear their name?
Sir Philip Rutnam: In this case or more generally?
Chair: In this case, but if you have a more general example in the Home Office, that would be useful too.
Sir Philip Rutnam: I will offer one more general observation if I may, which is something else that we are reflecting on at the moment. I will refer to a recent Court of Appeal judgment. Do the words “section 322” make sense? This was a set of cases where the Home Office had considered what individuals had said in relation to their income in visa applications. That had been matched with what they said in their tax returns, and we found some inconsistencies.
The Court of Appeal—this is the specific point that I wanted to pick out—recently issued a judgment saying that, before we made decisions saying that individuals had essentially deceived one authority or the other, we should have put that issue to the individual and given them an opportunity to rebut or provide other evidence. We are not appealing the Court of Appeal judgment in that case. We are reflecting on its more general relevance to the way in which we do business.
Q126 Chair: If you reflect on that and decide to take that approach, would you be able to apply it to any extant cases in this situation?
Sir Philip Rutnam: We would have to think about that. I have mentioned a couple of times the Home Secretary’s intention to make a statement before recess. The more general point about how we continue to adapt our processes—
Q127 Chair: But it is possible that he may take into account the Court of Appeal ruling in his statement.
Sir Philip Rutnam: I am sure he will take everything that is relevant into account. Can I just ask my colleagues whether they want to add anything, because they are experts?
Chair: Very briefly, because we are getting tight for time.
Mark Thomson: I would like to add something, Chair, if that is okay. Some of the things that you are hinting at and suggesting are things that we are doing outside of the circumstances under consideration today. We are putting in place improvements to a process where, instead of going to court, we might tell the individual that we are minded to refuse their particular case. If they have more evidence or data, they can share that with us at the time, and we avoid the costly circumstances for both sides of going into court.
We are actively testing and piloting those things as we speak, and we continually look at the reasons why we may not be successful in court. We are not relaxed about that. We are continually looking at the systems, the policy and some of the decisions that we may have made in our casework to improve the whole system, because, as you rightly highlighted, it is not a good outcome.
Q128 Chair: At the moment, you have a little pilot going. Would that be fair to say? What you are doing is a pilot.
Sir Philip Rutnam: Yes, to test the impact. We are working closely—
Chair: We are now in 2019. That pilot is going. If that pilot works, when would that—
Sir Philip Rutnam: I am not talking about English language testing; I am talking about things we are doing more broadly across the visa system.
Chair: It’s funny how things come full circle, because we used to do that and then we tightened up the rules, but I will not go into the history of the immigration system.
Sir Philip Rutnam: Sometimes the old ideas are still good ones.
Q129 Chair: I wanted to ask Ms Dunn or Mr Thomson to what extent you have contacted people who are caught up in this. For instance, you have given us some information about how you might be changing things. How much are you giving people the chance to know they can get their voice files? You have told us today, and I am sure we have a huge audience, but this is not the best way to reach the people concerned. How are you proactively doing that? I don’t know whether that goes to Ms Dunn or Mr Thomson.
Mark Thomson: As Sir Philip said, the onus is on the individual to bring evidence to us to show that our decisions may not be the correct ones. As I said, it is not about us reaching out to them; I am afraid it is about them reaching and contacting us.
Q130 Chair: So they have to know to contact you, often from overseas, to request their voice file.
Mark Thomson: Yes.
Q131 Chair: Is that very fair?
Mark Thomson: Whether it is fair or not, that is the circumstance at the moment. As Sir Philip was saying, a lot of this is founded in the legislation and the appeal rights that people have.
Q132 Caroline Flint: I just wondered whether you think there is a problem here. When Government Departments outsource a task to be done by companies, if something goes wrong with that company, it is not the company that is taken to court, but the Government Department. We take on all the risk for their failure. In this, 25 people have received total sentences of 70 years and there are 14 others pending. There was clearly an organised scam going on here. There were many thousands of people involved in this, from looking at the figures, who clearly had failed the tests but wanted the badge of approval. Some would say that they saw the UK as a bit of an easy touch when it comes to this sort of infrastructure that exists. We have had it before with bogus colleges.
Is there any discussion across Whitehall about the liability for when the private sector fails to deliver Government programmes? Who should therefore be responsible for being taken to court and by whom in these circumstances? We seem to just pay the price every single time. The taxpayer pays the price every single time.
Sir Philip Rutnam: There are always discussions in Whitehall about outsourcing and the right business model. When you are talking about English language testing, I don’t think that having that done by private sector providers or third-party providers is in itself wrong in a sense. I think it is a model that can work very well, provided—
Q133 Chair: Will you answer the question about where the risk falls?
Sir Philip Rutnam: The model can work well, provided—this is the critical point—you manage, as the ultimate customer, the risks. You identify the risks, manage them effectively and recognise that they are something that has to be managed. All these business models, whether direct provision by the Government or third-party provision, have risks, and you have to manage them. On the liability issue—
Q134 Caroline Flint: I go back to the DVLA. There are lots of people who set up as driving instructors, and they go through an agency that works on behalf of Government, and it seems to work pretty well.
Sir Philip Rutnam: I used to be permanent secretary at the Department for Transport, and I remember the DVLA very well and the DVSA, which oversees the system for driving tests and driving tuition. Driving tuition is done by thousands of people in the private sector.
Caroline Flint: I know.
Sir Philip Rutnam: It is small firms and big firms and sole practitioners, but there is a system of supervision and regulation by DVSA and an attempt at a continuous cycle of improvement and an active approach to the detection of fraud.
On the liability issue, it comes down to the commercial dynamics between the Government as a purchaser and the third-party provider. Of course I would like to be able to get more compensation and transfer more liability. There is a question of what risks it is efficient for them to hold. As you say, ultimately when things really go wrong, the buck always comes back to Government.
Q135 Chair: I don’t think that is a very revealing statement. In this case, part of the reason the buck came to Government was that this was a company with a whole structure with an overseas parent. There was no money and it disappeared like that when things went wrong, hence you could only get the £1.6 million out of them. Has that been reflected on in the Home Office and the wider civil service? As the permanent secretary, will you now be looking much more carefully at any companies that take business on to see where they are based and whether, if there was a problem, the British taxpayer would end up footing the bill?
Sir Philip Rutnam: I’m going to ask Mr Thomson to speak to the specifics of English language testing, and then I can make a more general comment.
Mark Thomson: That would be a function of, as I mentioned earlier, how we have tightened up the licence procedures. There are fewer organisations—
Q136 Chair: Just be specific. You would look very carefully at the structures so that they were not in overseas companies.
Mark Thomson: Yes.
Q137 Chair: So basically, even if they are not a British company, they will be British-based with assets here.
Mark Thomson: Not necessarily British companies, but—
Q138 Chair: I said that. They have a location in the UK, so they have a stake here.
Mark Thomson: Yes, but we would have remedies that would avoid the circumstances that we have been talking about today.
Q139 Chair: Sir Philip, on the wider point, briefly.
Sir Philip Rutnam: I agree. I used the words “market power” earlier. The Government should have significant market power, and should look at the way they design these contracts to be able to enforce meaningful liability and meaningful penalties, which means a counterparty who has some assets.
Mark Thomson: To that point, the new contracts have penalty clauses that were not in previous licensing arrangements.
Q140 Chair: I am sure that we will look at this again. One last question. Migrant Voice sent in some evidence. One of the things that they raised was very concerning. They said, “Students who have cleared their names in court are still trapped in the UK visa system with 60 days to find a new sponsor, and some students who have applied to universities across the UK have been rejected due to being too high risk after checks with the Home Office showed that the student was still found to have cheated on the test.” I throw that to you Mr Thomson. If you can answer that now, that is great, but the simple question is: who do those students go to in order to make sure that, having had their name cleared in court, your systems are up to date with that information?
Mark Thomson: I would be very happy to look at the circumstances that have been brought to your attention, and I would emphasise that that should not be the case. If someone has cleared their name, that should not be an issue with either our database or—
Q141 Chair: If people go through their MP, can they raise that directly with you, Mr Thomson? Would that be the easiest way?
Mark Thomson: I am very happy for people to go through their MP, but I am also very keen that we stop burdening MPs with having to deal with those sorts of issues. It should be something that we deal with, and our systems make sure—
Q142 Chair: So they can write directly to you—Mr Mark Thomson at the Home Office.
Mark Thomson: I will come back to you. I am very happy for people to write to me, but what I would quite like is—
Q143 Chair: We can go around the system forever. That is why I suggested MPs, because we at least have some hotlines. If you are not the named person, can you let us know who the named person would be?
Mark Thomson: I will do, but it would be really helpful to see the evidence.
Q144 Caroline Flint: Perhaps you could get something out to all MPs saying which is the relevant email that they should use to follow this up for their casework.
Chair: And the all-party group, no doubt.
Mark Thomson: We do a lot of MP engagement and events, and we have a specific—
Chair: Just a simple mailshot. If you send it to the Committee we can circulate it, just to save you a bit of work and to make our contribution to this.
Thank you very much indeed for your time. We have obviously been very concerned about this. We have heard about great changes, so I am sure we will come back and look at this at some point. This was obviously an investigation. I think there are huge issues around value for money in the immigration system but, luckily for you, we do not have time to go into that today. This is an area of the Home Office’s work that we, as a Committee, I warn you, Sir Philip, are keen to keep a closer eye on in future.
Thank you very much indeed. The transcript will be up on the website uncorrected in the next couple of the days. Our report will be out in September some time—maybe October.