Page last updated at 13:58 GMT, Thursday, 20 November 2008

Liberata 'was warned about EMAs'

By Siobhan Courtney
Interactive reporter, BBC News

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BBC Newsnight's Siobhan Courtney reports on Liberata

Liberata was warned by its own senior staff it would face problems paying students their education maintenance allowances (EMA), the BBC has learned.

The firm, which has just lost the EMA contract to Capita, knew a year ago it would be unable to fulfil the contract, a whistleblower has told Newsnight.

Thousands of students are still waiting

for their payments, more than two months after the beginning of term.

Liberata has denied covering up the problems it faced.

A former senior company executive told the programme: "I believe they knew from the early days of the deal [they would be unable to fulfil the contract].

"I am aware that a senior colleague of mine presented a report stating the technical and non-technical problems he had identified and said they needed to employ more staff and make technical changes - this was in October 2007."

Independent inquiry

Asked if he was saying bosses were warned by a senior colleague a year ago that the contract could go off the rails, he replied: "Yes I definitely am. The report he had put together made clear that in its current form the thing was not going to work."

Liberata told the BBC reviews were carried out and denied any concealment of the difficulties, saying technical issues were raised at the appropriate time with the Learning Skills Council.

But David Collins, president of the Association of Colleges, said he was upset it was known problems were looming and that no solution was found.

He said: "Well there are hundreds and thousands of students who have suffered because of that, and I think they should have owned up a lot sooner.

"I think if we could still shoot people at dawn, it wouldn't be a bad thing to start doing."

Nick Gibb MP
Nick Gibb supports outsourcing, but wants the system examined

Speaking on Newsnight shadow schools Minister Nick Gibb called for an independent inquiry into how the organisation first won the contract.

"These are major government contracts, worth £75m, and they should look at the companies getting these contracts.

"A quick search on Google would have discovered the problems with Liberata, the problems in Sheffield."

He added: "We need to have an inquiry, an independent inquiry, to find out how this company got through the procurement process."

'Empty envelopes'

Liberata last week lost a £200m contract with Sheffield City Council, after a 10-year deal.

The whistleblower also alleged it had had problems producing council tax bills.

He said: "In 2007 one particular local authority, the problem became so great that Liberata ended up sending to the Post Office for delivery 10,000, at least 10,000, empty envelopes without any council tax bills in them."

He added: "It was to show local authorities they had produced enough bills, when they fell short they just sent out empty envelopes."

A statement from Liberata said: "This is the first time that allegations regarding empty envelopes deliberately sent out have been brought to our attention and we will of course investigate further into these accusations."


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