Examination of witnesses (Questions 248 - 259)
WEDNESDAY 29 JULY 1998
DAME ANN
BOWTELL, DCB
and MR STUART
LORD
Chairman
248. Good morning. Can I open the public
session of evidence. We are absolutely delighted that Dame Ann
and Mr Stuart Lord could come along this morning. It is a session
that we have been looking forward to for some time. Can I say
straightaway that we are simple seekers after the truth. You have
an enormous responsibility—we understand that—and
you are not a politician, so we recognise all of these limitations,
if I can put it that way. You must feel free to seek advice from
whichever quarter it comes or indeed resort to notes because,
at the end of the day, what we are trying to do is inform the
work of the Committee and I am sure that you will be able to help
us best if you feel just relaxed and have recourse to any of these
ways of answering questions, if that is more comfortable for you.
We are aware that there are some difficult circumstances facing
us all in terms of the new interface between government and the
private sector. There are lots of advantages in all of that. We
recognise those too, but I think, if you have no objections, we
would prefer—although we do this reluctantly because select
committees really rely on being able to do all of their valuable
work in public—in the peculiar circumstances of some of
the PFI details that we are facing, to leave questions of that
kind to the end. I stress we do this reluctantly, but in these
special circumstances that we are facing we will get more out
of the exchange if we proceed in that fashion. Members of the
public who are in attendance this morning can expect the public
session to end at around 12.15 and a short, private session to
succeed that. I think that would be helpful. I should, however,
remind people that there will be a public record, although some
of the elements of it may be deleted, duly printed afterwards,
even of the private session. It is not entirely in camera. My
own judgment is that, in the peculiar circumstances that we are
in, it is the best way to proceed and I hope that meets with your
approval.
(Dame Ann Bowtell) Fine, thank you, Chairman.
That will be helpful.
249. We were interested to get the government's
reaction to our Benefit Integrity Project report on Disability
Living Allowance. I think we were satisfied that the two big issues
that were addressed in the report—firstly, the way that
the project was implemented in the hiatus between dissolution
and the re-establishment of the new Parliament left some things
to be desired, and I think that we were reasonably content that
the government and the department had recognised that. Secondly,
there are further and better particulars to be looked into in
terms of the way that Disability Living Allowance and the Benefit
Integrity Project proceed. I wonder if you could just start by
helping us with some of the lessons that you think have been learned.
Are you now reassured yourself, from your high, elevated perch
in the department, that this problem will not arise in future?
(Dame Ann Bowtell) As you know, I wrote to the
Committee and accepted that we should not have gone ahead with
this project during the election period. I would just like to
say how very much I regret that that happened. It certainly should
not have happened in the department. As the Committee also know,
I have had some work done to try to establish exactly what happened
and why so that we can learn lessons. That work has shown that
the guidance we put out in the department was quite specific about
the need not to start new projects. The officials handling BIP
did know about that guidance. They did consult the election team.
I had an election team set up in the department to handle these
sorts of inquiries. They did consult the team both about the meeting
of disability organisations and about whether or not the project
itself should go ahead. The misjudgment occurred I think in the
discussion between the election team and the officials handling
the project over whether or not this was a new initiative. I think
this was something which officials mentioned when they last gave
evidence. Because this project used visits and reviews—reviews
were already done in DLA; visits had been done in other areas—it
was not perceived as being something that was so amazingly new.
The election team clearly did not have a full appreciation of
what it was really all about. All there is on the papers is a
brief telephone record. From that misunderstanding about whether
this was a new thing or not flowed also the treatment of it with
the new government coming in, because if it was not new the need
to rush instantly in with a submission about it, when there was
a huge press of new business, was much less. It seemed to me that
the next time round we must be more detailed and specific in our
guidance to officials about the need to look at projects and,
if you are in doubt whether this thing really is new or not, you
do not go ahead with it. We have not been properly detailed enough
about that. The other thing that there was not was a very clear
signal in the project plan about the point at which you really
needed to get a ministerial agreement to go ahead. These develop
over time and there is discussion with ministers as you go along,
but there was not in the project plan something which said, "Do
not pass this point without a ministerial agreement". There
should have been and I will see that that goes in the plans in
the future. Also, in connection with the way we manage projects,
this project involved quite a lot of different bits of the department.
There were people in the project itself who had worked very hard
and very well to get this project off the ground in the time they
had. There were people in the policy division; there were people
who were responsible for the security and integrity projects and
there were people in finance. They all worked together very well
to get this thing forward in the time available. There was not
a single, senior person who felt accountable for the whole project.
If there had been, we would have identified what had happened
and it would have been stopped. We have already, over the past
couple of years, taken steps to improve our project management
in the department. I now have a head of project management who
is responsibility for putting out guidance as to how you run projects.
One of the things that we are now doing is always appointing for
these big and difficult projects a senior, accountable official.
There was not one in BIP and there should have been one at the
time. If there had been one, I do not think this would have happened.
250. It seemed to us in the report that
the provenance of the project changed. It started off very clearly
buried in the antifraud drive and then that all seemed to change
and now we have a new perception: that the money being saved is
not coming from any detected fraud; it is coming from other sources.
We are now looking at new kinds of exemptions in a way that the
department is still thinking about. Some of these may be policy
issues which are in front of ministers but have you any thoughts
about how the Benefit Integrity Project will proceed in future,
with particular reference to an extension of categories of exemption?
(Dame Ann Bowtell) The project was always about
wrongly paid benefit. It was part of the spend to save initiative
so it was quite clear that that was where it was placed. We were
given additional money in order to go through the DLA cases in
order to see that benefit was no longer going to be wrongly paid.
There were savings attached to that. That was the position and
that is still the position. The project still has money allocated
to it and it produces savings at the other end. There was not
a target in the sense of you had to make this thing. It was an
estimate of what would happen if we actually did some work on
DLA. It was not really about fraud or not fraud; it was about
wrongly paid benefit which is actually the issue in terms of your
expenditure and so on. I do not think the positioning changes
that much. Probably what was unfortunate in the way it started
off was that a lot of the other projects, for which we have been
given spend to save money, are really, absolutely and directly
fraud projects, and are very clearly about fraud and the detection
of fraud. This was about wrongly paid benefit.
Ms Stuart
251. May I take you back to what you said
earlier about project management and accountability? If you have
a project manager in industry, the role appears to me to be slightly
different to the way I perceive project managers to be in the
department. For example, I was very surprised by some of our previous
evidence that someone who was described as being in charge of
the project had never been on a home visit, which was part of
the criticism. Similarly, if you have a project manager who looks
at how you have incorrectly paid benefits, as we had in BIP, I
would have expected them to pick up some simple, strategic issues
like claimants are not given a record of how they assess themselves.
I would like you to say just a few words on how you perceive the
role of a project manager within the department and whether you
feel that possibly the way industry uses project managers may
be something you could learn from.
(Dame Ann Bowtell) This particular project was
to set up the arrangements under which cases were going to be
reviewed and visited. It was set up on an incredibly fast timetable.
In the four months while they were planning, they had a huge amount
to do and it got done a little bit late but more or less in the
time that ministers had asked. They were planning against very
tight timetables. I do not know to what extent they considered
the particular things which you described, but given the timetable
they had and the brief that they had I do not think it is altogether
surprising that they might not have done some of those things.
I am not sure that that makes the role that they would have in
industry different. They would have though a very clear brief
to deliver against a specific time and what they were able to
do in that time would be dictated by the time that they had.
252. Are your instructions changing as a
result of hastily implemented policy?
(Dame Ann Bowtell) There is always a problem about
the time you get to implement policy. Officials always want longer;
ministers always want shorter, because naturally ministers want
us to get on with things. We will always be tending to say, "It
will take this and this time" and there is a bit of a squeeze
each way. I do not think we shall ever get away from those pressures.
We just have in each case to argue the case for how long it will
take and try to come to a sensible and satisfactory solution,
but there is always a tension there.
Mr Leigh
253. I am still worried about the way that
ministers were informed or not informed about the project when
they took over Parliament after 1 May last year. I think it is
an important constitutional point. We have been told that the
responsible minister was only informed on 29 May. I know there
is a parliamentary question and answer down from Simon Burns,
the opposition spokesman, which sets out the exact chronology.
It seems there was some sort of information given to ministers
of an incomplete nature around 9 May. I seem to remember from
my days in the DTI that when new ministers come they are given
a pretty fat folder which explains everything that is going on
in the department. I just wonder whether you can tell us a bit
more about this and reassure us that in future incoming ministers
will be properly informed? I think this is important for us because
when we take over the department after we win the next general
election we want to know that there are no buried bodies there
and we want to make sure that this never happens again. I make
no criticism of ministers, although it would be in my political
interests to do so. I really do think that they were not treated
entirely fairly on this occasion.
(Dame Ann Bowtell) It is hugely difficult, particularly
when a new government comes in, to actually give ministers information
in a form which they can manage and which also enables them to
identify what the key things are. We had taken an enormous amount
of time and trouble to try to manage the process of them getting
information and focusing early on the right things. Had any of
us known that the BIP had gone ahead in the election period, I
am in no doubt that there would have been a submission on ministers'
desks in detail about that very quickly. The trouble was that
we did not actually know that and therefore it looked like something
that they should be informed about within the first few weeks
but not as though it was something which was a day one issue,
because it was not apparent that something had just happened.
The processes to achieve the right solution are all there. In
this case they did not work because the project had gone ahead
without actually anybody senior realising that that had happened.
It was very unfortunate that it was not picked up, but the whole
process is there and I think the process works. You should be
reassured.
Chairman
254. Can we turn to the question of aims
and objectives? I am interested in your view about how useful
you find targets and objectives being set for the department.
Maybe this is me being unduly conspiratorial but I noticed there
seemed to be a slightly different nuance between the aims and
objectives in the departmental annual report and those that were
recently published in the Comprehensive Spending Review. I do
not know if that is significant or if I am reading too much into
that. Perhaps you could just say a word about how these aims and
objectives are worked out and how useful they are for the department
in the succeeding months that they are supposed to obtain.
(Dame Ann Bowtell) Aims and objectives are very
important because they focus the department on where it is supposed
to be going. The departmental report was really focused on the
eight principles which the government have laid down for the development
of social security. Those principles have been very useful to
us in trying to see where the work we are doing fits in. I think
they are on page 26 if you have the departmental report. It is
to those eight principles that we have really been working. All
departments have looked at their objectives again in the light
of the resource accounting requirements. The CSR objectives are
really connected to the benefit spend in the department. They
are things which are focused on and which explain the areas of
benefit spend. If you look at them, you can read them across to
the principles. The first one about gateways and encouraging people
to meet their responsibilities focuses in on those of working
age. There is one about pensioners which reads across to the objective
about pensioners. I do not think we would see a conflict there.
Some of the principles do not result in bits of spend. The one
about fraud and openness and the one about service and delivery
run all the way through. We have two sets of things with slightly
different purposes which we need to explain different things,
but both of them will be useful because, particularly in a department
as big as ours and with as much work going on, you do need a focus
which enables people to clearly fix on where they are going.
Mr Wicks
255. Can I ask about fraud in social security?
What is your own estimate of the cost of fraud in social security?
(Dame Ann Bowtell) The most recent estimates in
the Green Paper give a range of costs of fraud. The Green Paper
quotes a range of two to seven billion pounds because it is uncertain.
The sorts of reviews we have done have very wide ranges of certainty.
256. When we cross-examined the former Minister
of State, Mr Frank Field, about fraud and why the attack on it
had not been given a priority in the past, he was very loyal to
officials and rather implied it was because they had not been
given a political steer in the past. As the Permanent Secretary
of the department, which I guess has seen a growing amount of
fraud in recent years, which could be two per cent of your total
budget; it could be seven per cent, why has it all slipped? Why
has this occurred?
(Dame Ann Bowtell) The work that the current government
is doing I think takes forward the work that the last government
began in about 1995 when we first began spend to save packages.
The history of the renewed attack on fraud does go back a few
years beyond this government, although it has now been given new
impetus. This kind of crept up on us, in a way. During the eighties,
there were a lot of changes made in order to improve the efficiency
of the social security system. Some of those things involved doing
less, like visiting and reviewing cases, which we have now discovered
are actually some of the most effective ways of deterring fraud.
257. Surprise, surprise!
(Dame Ann Bowtell) I do not think it was as apparent
then as it is now because the purpose of them had originally been
much more simply to take claims and to make sure that people got
their full entitlement and so on. I do not think they had been
seen at that time in quite the same way as things which deterred
fraud. I honestly think there has probably been a change of behaviour.
There has also been a big rise in the benefits which tend to be
more fraud prone. We have had a big rise in lone parents on income
support which is an area where there tends to be a lot of fraud.
There has been a change in the structure of the benefit population
which I think has made a great difference and I think there has
been a change in people's behaviour.
258. I suppose my concern is it should not
really take politicians and ministers, should it, to say to officials,
"Look, there is this thing called fraud. We think you should
tackle it"? Presumably, any company or any organisation prone
to fraud—and it is obvious social security could be—would
be on guard against this both in terms of making new policies
fraud proof and in terms of having a bit of common sense about
the importance of home visits. As earlier indicated, we found
out your senior officials never accompany staff on home visits,
so perhaps it is not surprising that senior policy makers were
not aware of the antifraud nature of those visits. If any other
company's chief executive had seen five or seven per cent of the
money go in fraud, the shareholders would be cross, would they
not?
(Dame Ann Bowtell) We did not know it was five
to seven per cent.
259. Why did you not know?
(Mr Lord) I think that is an important point,
which I was seeking to come in on. It is the fact that we now
have started doing benefit reviews which has given a broad indication
of the scale of the problem and confirms the importance of tackling
it. There was a stage when there was considerable scepticism as
to whether or not it was possible to establish the scale of the
fraud.
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