Exclusive: The company paid £8m by government ‘for doing nothing’

Patrick McLoughlin
Patrick McLoughlin
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THE Government paid £8m to a private company contracted to run driver theory tests even though the deal collapsed and the company never provided a single test to the public.

The pay-off to Learndirect was made in April after former Transport Secretary Patrick McLoughlin agreed to cancel a 10-year deal worth £300m because of fears the company couldn’t deliver the terms of the contract.

Ministers had previously refused to disclose the amount paid when asked in Parliament, citing commercial confidentiality, but details of the botched procurement have now been released following a Freedom of Information (FOI) request.

The payment – described as “novel and contentious” in ministerial briefings – was approved by Mr McLoughlin and signed off by the Treasury after it was decided to scrap the contract, which was due to begin last month.

Instead, the Driver and Vehicle Standards Agency (DVSA), which is overseen by the 
Department for Transport (DfT), hastily agreed a new contract with the existing operator 
Pearson to continue for another four years, without any re-tendering.

The contract had initially been awarded to Learndirect as far back as 2013, and due to begin in 2014, but then had to be postponed for two years after a legal challenge by Pearson, at a further estimated cost of £2.5m to the public purse.

The DVSA said it expected new terms agreed with Pearson to fully offset the cost of the Learndirect settlement but shadow transport secretary Andy McDonald accused the Government of costly bungling.

“Taxpayers are having to foot the bill for Ministerial incompetence at the Department for Transport yet again,” he said.

“It was only in 2014 that we learnt that the decision over who should manage driving theory tests for learners had been bungled, costing the public £2.5m, and now we learn that we have to cough up £8m more.

“I’ll be seeking answers urgently in parliament as to how the DVSA have been able to haemorrhage public money.”

The response to the FOI request included redacted ministerial briefings on the deal’s collapse.

A memo from the DVSA to the Transport Secretary, dated March 3, highlighted officials had been concerned about Learndirect’s ability to fulfil the terms of the contract ever since preparations began for the planned handover from Pearson 10 months previously.

It said: “The driving theory test implementation project was remobilised in May 2015, since when [redacted] DVSA and DVA (Northern Ireland) have been concerned about the ability of Learndirect to deliver in accordance with their contract…”

It highlighted concerns learndirect wouldn’t meet a target date to have more than 200 test centre addresses confirmed and approved by April 24, wouldn’t be in a position to allow test bookings to be accepted from July 5 and wouldn’t be able to provide full From Page 1.

operational service delivery from September 4. The same memo refers to a letter from DVSA to Learndirect on January 22 this year about progress on the provision of test centres that had received no response.

On February 29, DVSA sought approval from the DfT to cancel the Learndirect contract and retain Pearson.

The briefings revealed the impending start of the new contract meant it was logistically impossible to draw up grounds to exit the Learndirect deal on grounds of “cause” without losing the

alternative of continuing with Pearson.

Instead, a pay-off was pushed as the only realistic option.

A subsequent ministerial briefing on March 23 firmed up the plan to cancel the Learndirect contract and requested consent from the transport secretary.

It added: “Urgent – we want to make a payment to Learndirect this financial year. We will need to secure HMT (Her Majesty’s Treasury) agreement as it is a novel and contentious payment.”

It requested authorisation of a payment of between £8m and £10m and referred to negotiations with Learndirect being led by the Cabinet Office.

The payment was subsequently agreed by the transport secretary the following day and a written agreement with learndirect to pay £8m signed on April 4.

In a statement, DVSA’s Director of Corporate Affairs, Adrian Long said: “DVSA’s priority is to ensure the quality of the theory test service for its customers.

“Since the award of the original contract to learndirect in 2013, demand for the test has increased by over 50 per cent to 2.4 million, and is now forecast to reach 2.8 million in 2017/18. Against that background, and because continuity of service is of primary importance, it was decided that the Pearson VUE would continue to provide the service.

“Over the next four years the contract is expected to lead to more than £8m worth of net benefits to the theory test service and its customers.”

The DfT said it had nothing to add to the DVSA statement while Learndirect declined to comment when approached by The Yorkshire Post.