E-university bosses defend bonus payments

The men in charge of the UK's ill-fated e-university, which has folded with a ?50m loss to the taxpayer, today strongly defended the bonus payments they received and blamed the funding council Hefce for pulling the plug on the venture too early.

Sir Anthony Cleaver, the former chairman, told members of the Commons education committee: "We didn't fail - we were not given the time to succeed." His words were echoed in the hearing by the former chief executive, John Beaumont, as MPs tried to get to the bottom of the debacle of the body set up to delivery British university degrees online around the world.

The operating company, UKeU, which rented offices near Buckingham Palace, is now being wound up after recruiting only 900 students worldwide - at an estimated costs of ?32,000 each. Despite the company's failure to meet its target of 5,600 students in its second year, Mr Beaumont collected a bonus of nearly ?45,000 on top of his ?186,000 salary.

He told MPs he had met the criteria for his bonus targets set by non-executive directors and approved by a remuneration committee. The targets met had been a "massive achievement", he said.

Barry Sheerman, the committee chairman, said he was not in charge of a "buccaneering" risky enterprise where they did not know if they would be paid next week - all the money (a total of ?62m) was put up by the taxpayer. "You have a very serious salary in a non-risk business and yet you take nearly ?50,000 for a bonus, but the [online] platform and marketing had serious problems," he said to Mr Beaumont.

Commenting that the non-executive directors seemed "pretty tame", Mr Sheerman said: "I don't understand why there should be a bonus system for the e-university when there isn't in any other university in the land."

Sir Anthony insisted: "I have absolutely no qualms about the process or the outcomes of the bonuses."

In a session last month, Sir Howard Newby, chief executive of Hefce, and his chairman, David Young, admitted they were "uncomfortable" about the bonus scheme, which they only learned about when the company was being wound up after a devastating consultants' report last December. They said they received legal advice that the bonuses to Mr Beaumont and other members of staff had to be paid.

Sir Anthony said he was "surprised" to be told by Hefce that it was pulling the plug on the e-university. UKeU had been on the point of signing up an online MBA from City University's business school, a service to update GPs, called doctors.net, and an English language course from Cambridge.

Mr Beaumont commented: "If we had been allowed to continue, the benefit to higher education institutions would have been a first class platform and, commercially, shared costs in developing courses."

Mr Sheerman asked: "Did you get fixated with this super duper, all singing, all dancing platform? You could have got on with the job much more quickly if you hadn't had the ambition to have this fantastic platform."

Mr Beaumont, who said the cost of developing the platform with Sun Microsystems was ?9.5m - not the ?20m stated by Hefce, replied that it was needed to provide a 24-hour, seven days a week service to students around the world. It would have been difficult to operate with 15 different platforms for 70 universities, he added.

He regretted that UK universities would not now get the benefit of the platform, which was "hibernating" under Hefce, and it would be even harder to restore the trust of universities at home and overseas. "I am sad that the massive opportunity we have seen has potentially been missed," he added.

UKeU's marketing abroad also came under fire from MPs. When Sir Anthony said they had discovered demand for "blended" learning - a mix of online and personal face to face teaching - as opposed to pure e-learning, Labour MP Valerie Davey, commented: "The Open University and the British Council could have told you that from day one." Sir Anthony said he had taken their advice and recruited the best expertise available for UKeU.

Mr Beaumont explained there were language barriers in some of the countries they looked at. "When did you learn that the Brazilians spoke Portuguese?" asked another Labour member, David Chaytor, sarcastically.