At the end of 1995 Don Foster, the Liberal Democrat education spokesman, raised his concerns about ELS, in a series of Parliamentary Questions.

He subsequently raised a number of points with Geoff Lennox, chief executive of ELS. The MP’s main worry was the presumption that ELS was a device to enable colleges to circumvent employment legislation. Mr Lennox, in a note to Mr Foster, emphasised that this was not the case.

Mr Foster had raised concerns about ELS as a non-profit-making organisation. Mr Lennox prepared a reply. He said that ELS was a company limited by guarantee and therefore required to be non profit-making. “Protocol National Limited, the payroll and IT support company established to service aspects of ELS contracts with colleges, is a normal company and will, therefore, seek to make a profit. This close linkage between ELS and Protocol has never been hidden.

“The financial investment which established ELS is one of the largest private-sector investments underpinning a service specifically designed to meet the needs of colleges. I am sure you will agree that it is wholly unrealistic to think that any bank or financial backer would have committed Pounds 5.8 m to establish a non profit-making organisation. As you know the directors of ELS and Protocol are coterminous and this has always been clearly stated.”

Mr Foster had asked about hardwaresoftware supplies. Mr Ward said Hewlett Packard had recommended Open Systems Design to them, a software company based in Nottingham. “We interviewed them and they subsequently completed a great deal of the early work ‘at risk’. OSD subsequently developed all our software. There have never been any links between ELS or Protocol directors and OSD. The relationship is a purely business relationship.”

As The TES has established, a representative from OSD was a member of the six-strong working group, including Mr Lennox, which discussed the formation of a staff agency in 1994.

Mr Lennox said that ELS was referred to the CEF “by college principals who originally conceived the concept of an ‘agency’ to meet college needs”. He added “ELS does not have any formal business ties to the CEF and contrary to popular rumour, Roger Ward has not been offered a position on the board of ELS nor is he on our payroll.”

Not everything in the garden was lovely. Some principals were concerned about the possible relationship between the CEF and ELS. There were grumbles in the system. Janey Rees, then principal of Coventry Technical College (now retired), wrote to Keith Scribbins, (copy to Mr Ward), chairman of the CEF. She was concerned: “The gist of the comments which I’ve received is roughly ‘what is CEF getting out of ELS?; is there a tie-up between the two organisations?; has CEF put money into ELS?; and if the answer to these is ‘No’, then why is CEF promoting ELS?’ Mr Ward replied to the letter: “There is no connection between CEF and ELS other than we recommend them over the other agencies because they alone satisfied Melanie Tether’s (legal adviser) legal criteria. We have told all the other agencies that all they have to do is satisfy Melanie and then they receive the same commendation.

“ELS offered to sponsor CEF but I declined as I was concerned that there should be no financial link-up between a private company and CEF.” He said CEF offered the use of agency staff as part of the solution to the rising costs of part-time staff. Agency staff were inexpensive, flexible, and did not acquire employment rights.