Examination of witnesses (Questions 141
- 159)
THURSDAY 21 MAY 1998
MR PETER
MATHISON, MR
STEVE HEMINSLEY
and MR TONY
EDGE
Chairman
141. Good morning, ladies and gentlemen.
I am sorry to have kept you waiting; we had a little bit of work
to do before the commencement of the public session. Peter, you
are very welcome; thanks for coming. It would be very helpful,
I think, if you said just a bit about what Steve and Tony do in
the course of their professional duties in the Agency, and then
if you have got anything to say to us by way of an opening statement
that will be very helpful. We have been struggling a wee bit because
the Minister of State gave us some supplementary evidence that
we have been asking for[1],
to try to inform the session this morning; it is nothing to do
with you but we have struggled with it over the last ten or 15
minutes, trying to make sense of what he has given us, and we
will need to try to feed that into the questions as they evolve.
That is just by way of a reason for the slight delay to the start
of the proceedings. But I think that we will be taking our own
opportunities to say to him that it makes it very, very difficult,
on some of these technical areas to try to make the best sense
overnight of these very big and important questions; but we promise
not to take it out on you too much. Would you like just to make
an opening statement?
(Mr Mathison) Thank you. Steve Heminsley, on my
right, his title is Strategy and Planning Director; he is the
main interface corporately with headquarters, both on policy and
with Jonathan Tross, Director of Corporate Management, DSS, and
also within the Agency he is then responsible for all the planning
process and management of that. Tony—and he chose the title
himself—is known as DoFO, Midlands, South and Wales (Director
of Field Operations); he covers an area broadly from the Dee across
to Grimsby and south of that, and the other parts of the country
are covered by John Lutton, who gave evidence previously. So he
runs all the operations side, all the field offices, and links
in with Steve. On opening statements, I have not really got anything
prepared, on the basis that I have learned from office visits
that I cannot read people's minds, and I will then rabbit on for
ten minutes about things which are of no real interest to them
rather than what people are really concerned about, so I think
I would like to leave it at that, really, and open it to you.
142. Thank you. I think that we are particularly
interested in the whole new idea of Active Modern Service and
where that leaves the Agency and all its works. I think that in
the work of the Committee over the past year we have had signs
and symptoms of some pressure that the Agency has been under,
in terms of the impact of the Change Programme; it would be very
helpful to know just exactly where we are in the Change Programme.
The Minister of State said that some new resources had been put
into the administration budget in order to try to finance some
of the gateways, and that is all recognised, understood and very
welcome, but I myself am still a bit concerned that the pressure
that the front-line staff are being put under, by year three of
what is a very challenging cut in administrative budgets, may
actually be affecting the quality of the service. I would like
to ask you to comment on that, but particularly I would like to
ask Tony Edge to comment on it because he is supposed to be responsible
for front-line services and they are, obviously, under some considerable
pressure?
(Mr Mathison) In overall terms, there is no doubt
that the whole organisation has faced the pressures of containing
what we do within cost limits. I think it might be helpful to
give some figures, because the original quote, which was a 25
per cent reduction in costs, was a 25 per cent reduction in a
four-year period, compared with what we originally had said we
would need at the end of the period. And this is difficult to
explain; when it was explained to me originally I felt like somebody
had three cups and a pea under one of them.
143. And you are an accountant?
(Mr Mathison) And I am an accountant, as well,
professionally qualified, so you can understand it. But, basically,
what we said at the beginning of that was, our requirements in
1996 would be £2.7 billion; with inflation and other factors,
by the year 2000 it would be £2.9 billion; and the allocated
money at the end of that period was then £2.150 billion,
which gives a reduction of 25 per cent. The actual figures that
we have had through that period, in fact, have been different,
and the starting-point was, in 1995-96 £2.4 billion; 1996-97
we spent £2.514 billion; in 1997-98, the year just finished,
we spent £2.426 billion; and in this year that we have just
started the allocation, plus the end-year flexibility that is
carried over, is at the moment £2.474 billion, and there
may be possibly some money slightly on top of that. So, in absolute
terms, the total amount of money has remained virtually the same
throughout that period.
144. Are these all current prices, or 1996
prices, or what?
(Mr Mathison) They are actual money.
145. It is cash?
(Mr Mathison) I prefer to deal in real money;
real money, cash.
146. That is unusual, for an accountant.
(Mr Mathison) I am a different type of accountant.
It is real money, it is actual money, in those years, incurred.
However, of course, in that period we have faced additional workloads,
we have had pay and prices to cope with, so it has presented a
real challenge to the Agency, in terms of how we manage that allocation.
The additional factor is that there is ring-fenced money which
was provided for Security and Control, so the ring-fenced money
throughout that period was showing increases in each of those
years. I have not got the figures readily to hand. So it did mean
that we had to transfer people into specific activities around
Security and Control on ring-fenced funding, and that has created,
particularly in the last year, some anomalies around how we actually
do the work; and Tony can expand on that in a minute. In one particular
situation we ended up that people were spending more time following
up on the claim after it was initially received through the Security
and Control Programme than we did in the first place. I am a firm
believer in putting the resource in at the front and getting it
right first time. And, of course, we had to cope with pay and
prices, which most organisations do this year, but it has undoubtedly
put pressure on the field staff, and I see that on my visits,
and increasingly in the last few months I have seen clear signs
of that, which does worry me. Tony, if you want to comment.
(Mr Edge) It is tough out there, and it always
has been tough out there in BA. I think, in the last year particularly,
we had the pressures with JSA implementation and the conversion
of the IS cases to JSA; but overall the staff work extremely well
out there, with very difficult and complex rules. I think you
will find that in a lot of places the pressures are different
than in others, and where they are at the worst is where we have
turnover of staff, wastage, and we have the training that goes
with that for new staff. And the problem with our benefits system
is that they are so complicated that, in fact, to get efficient
in any one of the benefits the training lasts something like 15
weeks, and that is training people basically; and I am sure colleagues
who have been to offices will, in fact, have recognised that.
And where we get a big turnover, especially in the London areas
and other parts of the west particularly, west London is particularly
difficult, and big conurbations, we have something like 15 per
cent wastage in the last year, which is quite a lot, and at A4
grade, which is the grade at which most of the actual work is
carried out, the clerical officer grade, where they do the main
benefit processing, that is the key grade really for that. But
the training commitment is such that when you get that turnover
you spend a lot of your budget actually on retraining new people.
The people that have been there a long time, particularly in places
like Wales, and the West Midlands is quite good for that as well,
to some extent, actually manage the job obviously more efficiently
and better and they know the way round benefits and they get more
skilled at it; when they are new at benefits they take more time
to actually understand dealing with the customer and also to get
through the work processes.
147. This is a new Active Modern Service,
how are you going to measure the success; what is different about
now from what went before against the background of these problems?
It seems to me to be stone mad, for example, both Patricia Hewitt
and myself have had individual direct experiences about the madness
of Jobseeker's Allowance being shared between yourselves and the
Department of Employment. I am not saying it is not working, I
am not saying that the staff are not doing a great job in keeping
the show on the road, but how can it make sense, in an Active
Modern Service, to have split benefits and the kinds of staff
pressures that you have got; what is going to be different about
the Active Modern Service in these kinds of areas?
(Mr Mathison) I certainly see Active Modern Service—it
may be a dangerous analogy—as an umbrella with six strands
in it, and each of those strands can be worked on at the same
time, and it will be progressive improvements against achieving
the outcomes against each of those, and many things are already
in place and commencing, a lot of them in pilot form. I think
the key issue that I see is that we are not starting with a green
field, we have actually got a massive infrastructure in IT, estates,
and most importantly we have staff who are trained, who do have
considerable knowledge, and are deployed all over the country.
There some some big clusters of people, particularly in the Fylde
and in Newcastle, and in the conurbations, Edinburgh, Glasgow,
Manchester, Liverpool, the Midlands, and obviously around London.
So that if we look at JSA, it was inherited, for me personally,
because I came in after it had started; there are issues around
how we would get all the resource, for instance, if that were
the case, into Jobcentres, because a large part of the work is
carried out in the back room and is carried out currently in BA,
so I think there are issues about the site and location of premises,
how you can get the staff into different buildings, and things
like that. On Active Modern Service, it is recognising around
the active strand, which is predominantly policy, around how the
thing moves, from ensuring that people get the right benefit,
and then stay on benefit, to active involvement in helping people
off benefit into whatever they want to do. Customer Focused is
a variety of things, some of them are policy issues around that
but a lot of them around integrated working and closer working,
and I think it is important that we pilot some of the methodology
to see what actually works. Because we tried, I think it was called,
One Stop, which was one person, one place, one time, and just
could not cope with that; the variety and range of benefits that
we have, the complexity of what we do, we could not train one
person to be able to answer all those queries and carry out that
work. So it is trying to look at it, particularly in that area,
I call it, from the other end of the periscope, and we are doing
a lot of work around looking at how things look from the customer
end, rather than from our end, because we organise to suit our
processes and organise to suit ourselves, not from the customer's
point of view; and a piece of work is currently going on around
information, I cannot remember what it is called, the title, where
we actually approached it in that way. All our information, all
our leaflets, all our training, is benefit-specific, and, talking
to people I know, when they either come out of work or their relative
dies—my mother died last year—you do not automatically
think it is that benefit. Because a lot of people we deal with
do not deal with us other than at a few times in their life. A
lot of people deal with us throughout their life and deal with
us frequently, but for the large majority of people they may deal
with us on about three occasions in their life; if something happens
to them they have not got a clue which of the 24 benefits refers
to them. So it is that sort of thing, it is actually starting
from that end and saying, "In your circumstances, what information
do you need to have and how would you like to have it, in order
to be able to understand what you may be entitled to?". So
it is that sort of thing, of completely looking at it, as I call
it, from the other end of the periscope.
148. Are you taking any steps to try to
simplify this whole process? I understand what you have just said
and it is important that you do that. Twenty-four-ish benefits;
there is some doubt about how many benefits we have actually got,
different area offices give you different answers, which says
a lot itself, in terms of the experts, sometimes, are unclear
about how many. Who is taking the initiative, is there any pressure
coming from the front-line staff to the policy experts in Richmond
House and The Adelphi to try to get Ministers to address workability
and simplicity in the Active Modern Service?
(Mr Mathison) Yes. In the summer of last year
we carried out a number of workshops around the country, which
was drawing staff in, we did it on a geographical basis, we had
a series of workshops where staff who actually do the work were
involved, rather than other people, like myself, who do not know
that much about it, or never really deal with customers on a day-to-day
basis. So there was a series of workshops, it was completely open
book, part of it was tailored around Active Modern Service, of
what the aims were we were trying to achieve and what it would
mean, but that inevitably went into the policy area, around the
benefits themselves, how difficult are they to administer and
what behaviours does that gather. And we produced a summary out
of that, put it back through all the staff involved, to get them
to assure that that was what the outcome was from those sessions,
and then presented that to Ministers.
149. Are you confident that people in the
front line feel that their ideas are finding their way to ministerial
desks?
(Mr Mathison) I think a number of them are. I
think, with over 75,000 people, if you were to go to ask members
of staff in that large group, I am sure that a lot of them may
not be aware that that actually went to Ministers.
150. Do you manage to get round the area
offices yourself much?
(Mr Mathison) Yes. Every Friday, apart from one
in a month, which is the departmental board, I have reserved for
visits, and the majority of those Fridays I am very adamant about
not getting interfered with; but I must admit, on occasions, people
down in Whitehall insist I appear. But I do try to visit at least
once a week, and not just local offices but other staff in other
areas.
151. Do you always make a point of asking
to be shown the storage area for the manilla folders?
(Mr Mathison) Not necessarily ask, I cannot miss
it; every office you go into, I cannot believe the amount of paper.
152. The people who work in the basements,
are they let out at night?
(Mr Mathison) I believe so.
153. I am pleased to hear it. Do you believe
that an Active Modern Service can be deployed with computers that
were built in 1986?
(Mr Mathison) Not completely, but I think we can
make progress. I have worked in organisations where we had no
capital investment and we made significant improvements through
using a quality programme approach, and that is what we are doing
in BA, we are using something called, and it sounds like jargon,
Business Excellence Model, which comes out of the European Quality
Foundation, which is a European organisation, to which most of
the big commercial players in IT, cars and everything else, are
involved, and we are deploying that through the organisation.
I am actually on the governing committee of that, I was asked
if I would go on to that to represent the public sector. John
Lutton, whom you have met before, is on the executive committee.
John plus two other directors are trained assessors and actually
assess companies from throughout Europe who are going for the
European Quality Award, and we are deploying that through the
organisation. And that, I believe, is a major step forward, in
terms of having a balanced way of trying to do everything we are
trying to do. And the drive I have had around, the key thing is
around correctness, that is what we should be aiming for, is doing
things properly.
154. But the front-line staff are spending
all their time using work-arounds to get the computer system to
do things it was never designed to do, they spend a lot of their
time doing that; how do you expect them to get it right first
time when they have not got pieces of software applications that
do the job that they are being asked to do?
(Mr Mathison) We will not be able to get to the
levels of inaccuracy I personally have a goal of, which is less
than 1 per cent, without replacing the technology that we have,
it does not support it.
155. How long will it take to get there,
with the technology?
(Mr Mathison) With the technology, I think it
is no less than five years and it is probably more than that,
and that is from experience of other large organisations and considering
where we start from. What we do is more complex than any company
I have worked for. And I think the added thing I have found is,
because we do not make something physical, it is a lot more difficult
to manage because there is nothing to sort of see or hold. I think
the other thing is, that I am realistic about, we have 80,000
people dealing with probably a million contacts every week. Where
people's benefit money is involved, and a large number of those
people are in stressful situations; that is probably the most
complex, difficult thing to manage.
156. But do I understand, what you have
just said is, that by the year 2003, the five plus 1998 is 2003,
your staff will still be using 1986 computers?
(Mr Mathison) No; sorry. We have a programme—and
Steve is probably best to come in here on the timing—of
trying to replace the technology; one of the planks is ACCORD
(Access to Corporate Data), which is procurement of effectively
the core of our systems, in terms of how and where we store data.
Because that is a major problem for us, all our systems of benefits
are chimneys in design and the chimneys in operation, so the data
is held in each system. I could not believe it, when I had contact
with the BA about five years ago, that on something I was asked
to complete my name and address three times, in three different
offices, and then when I went back to them three months later
I had to do the same thing. ACCORD will address that, and the
other work we are doing, consecutive with that, concurrently with
that, will start to address the benefits systems themselves. And
I think there are incremental benefits. We have a system we are
developing, called Personal Details Computer System, which is
starting to load all customer details into a single database from
all the systems, and we had a presentation yesterday, I had a
senior management meeting with all the next level of managers
and there was a presentation on that, and it sounds really simple
but for our staff it is a real breakthrough. When somebody says
who they are, they say, "What is your post code, what is
the house number?", they press a button and the whole address
appears. If you are a small business you can do that now; really
simple. The size and nature of ours, on our installed bases, we
have one of the biggest computer networks and databases in Europe,
if not the world, makes it a lot more difficult. If we had a green
field it would be a lot easier, but we have not.
157. But all the new capacity that you get
access to seems to be taken up not with quantum leap developments
and the ability of the system, it is new policy changes that that
gets diverted to, so things get just more and more complex and
you never seem to be able to make any real progress; and five
years is a long time?
(Mr Mathison) I believe we can make progressive
improvements through that period of time, ahead of ACCORD coming
in, and Steve probably needs to come in on the timing of that,
through using the Business Excellence model and the training.
We know that a proportion of the error rate on Income Support
is around the procedures and non-adherence to the procedures,
we know that a large part of that, in fact, is caused by what
Tony said about staff turnover, inexperienced staff, and about
the predominant, or a large number of, casual and FTA appointments
we have had. So I think those can improve us to a certain position,
but until we get the IT and the whole thing replaced, and that
is a long programme, we will not get down to, in error rate, the
sort of 1 per cent that I would aim for, with a monetary value
of less than that. But we are improving on our accuracy, we have
improved over the last three years, progressively, year on year
on year. Steve, do you want to comment?
(Mr Heminsley) Could I just help out with the
timetable. We are in the middle of a five-month evaluation period,
the conclusion of a couple of years' work really, with various
changes that have hit us. By the end of October, we hope, and
these timetables are always subject to some movement of a few
weeks here or there, by then we would hope to be clear about a
lead supplier to act as a strategic partner with us into the next
century, basically. We have three consortia on the short list
and we hope to be able to select a lead supplier, and, with due
consideration, have one or more of the other companies on a framework
list, to help us with other things and to help with competitiveness,
and so on. It is very much a case then of spending maybe around
six months in getting them to help us to develop a more detailed
requirement for the systems we need for the future. At the end
of that period, with this being a privately financed arrangement,
then there is a great incentive for the supplying company to deliver
what we need as soon as possible. And what we have said that we
need and what the suppliers understand and certainly agree with,
in terms of the overall architecture, is we need something that
breaks us out of the benefit chimneys that current systems lock
us into, to have a modern, 21st century, central database, to
have the benefit rules which apply to that data to be separated
off so that they are easily replaced, like starter-motors used
to be, on my first car, and you cannot do any more, you take one
out and you put another one in. And then to be linked to the detailed
business processing systems at the front end, which will support,
firstly, the sort of case management, case worker management,
and so on, that we need to administer the rules, whatever they
are, and, secondly, that will reflect the sort of benefits that
Ministers require us to deliver as we go through the welfare reform
process. So that is the plan. Our best estimate at this stage
is that once we have a supplier on board then within a period
of two to three years, because of the incentives and depending
upon how they perceive the complexity of what we are asking them
to do in the first tranche of delivery, we would expect to have
the first significant step in place, which will be a central database
which will be supporting whichever of the business functions at
the front end we have agreed with that supplier it is the most
sensible to put in place. We have views on that but we would need
to test them out.
158. I am very nervous; we have just got
a note from the Minister of State, as I say, about a number of
things. The National Insurance computer at Longbenton, Newcastle—the
buzz is that it is going to be down for a number of weeks, if
not months, later in the year. How do you get an Active Modern
Service in this Agency delivered efficiently when you have got
no access to National Insurance contribution records?
(Mr Mathison) I think, on that, the key is at
what point is it taken down for the databases to be passed across
and cleaned up; it was always known, right from the beginning,
with NIRS, and NIRS2, the replacement, that at a point in time
the records would not be available for around a three- to four-week
period of time.
159. I bet you sixpence it is double that:
are you a betting man?
(Mr Mathison) Not where computers are concerned,
no.
1 See Ev. HC 587-ii pp. 39-50 Session 1997-98. Back
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