Examination of witnesses (Questions 1
- 19)
TUESDAY 25 JULY 2000
SIR HAYDEN
PHILLIPS, KCB, and MISS
JENNY ROWE
Chairman
1. Good morning.
(Sir Hayden Phillips) Good morning, Chairman.
2. I am sorry we are a little late but you will
both know that this time of year is particularly frenetic and
it is always the case on this Committee! Thank you very much for
coming to see us. I think it is your third time here, Sir Hayden?
(Sir Hayden Phillips) I think it is, now, yes.
3. An old and valued visitor. Can we start,
please, with the outcome of the funding settlement in the Comprehensive
Spending Review last week. What has this done for the Lord Chancellor's
Department proper; that is, including the Court Service and the
Public Trust Office but excluding the Public Record Office and
the Northern Ireland Courts Service? Has it been good for you?
(Sir Hayden Phillips) Yes, I think so. In the report,
Chairman, in Chapter 2, we said we wanted to make substantial
progress in three areas: market legal services (and that is, basically,
a lot of the work involved in delivering the Criminal Defence
Service), modernising the courts and firming up rights, especially
for children and vulnerable adults. In all these areas we now
have the resources, I think, to be able to concentrate on achieving
priorities in those areas. If you are content, I would ask Jenny
to prepare and give you a breakdown in more detail, so that you
can get a sense of the numbers in each of the crucial areas.
4. Yes, thank you. That would be very helpful.
(Miss Rowe) These are figures covering the three years.
So on Legal Aid we are looking at around £320 million; on
asylum £195 million; on CAFCASS £16 million; on Libra,
which is the computer system for magistrates' courts, £30
million, and on modernising of the Crown and County Courts we
are looking at about a total of £100 million over three years.
Mr Linton
5. I am sorry, what is CAFCASS?
(Sir Hayden Phillips) That is the Children and Family
Court Advisory and Support Service.
(Miss Rowe) On maintenance for the Court estate we
are looking at around £80 million over three years and on
headquarters, administrative, support services, our management
information system and the like, around £60 million. We also
do have access to unallocated provision within the Criminal Justice
System which the Home Secretary announced last week; ourselves,
the Home Office and the CPS can bid against that fund over the
three years, and to the Children's Fund, which the Chancellor
announced. We also have access to that.
(Sir Hayden Phillips) The figure for the unallocated
Criminal Justice System is £525 million over three years,
which is quite a significant improvement, and for the Children's
Fund—
(Miss Rowe) £450 million over three years.
(Sir Hayden Phillips) Obviously, the objective here
is to make sure that the Departments and Ministers involved are
joined up in deciding what to do with those resources. Can I just
say one other thing, Chairman? The money for the Criminal Defence
Service is ring-fenced. We need to spend that on Legal Aid. Equally,
quite a bit of money there is for electronic service delivery
of IT. That is ring-fenced, too, to the extent that we have to
go through the process of getting our plans approved before we
are allowed to draw down money, but the rest is up to the Lord
Chancellor to decide how to allocate it. Perhaps I could just
say, for the record, that the figures we have given, therefore,
are indicative; he will need to consider between now and September
precisely how to allocate the amount of money we have been given.
I think that helps the Committee to be able to be in the same
ball-park as we are, at the moment.
Chairman
6. Thank you for that. I should have thanked
you as well for your memorandum, which was very helpful. What
increase is that in percentage terms on 2001/02, please?
(Miss Rowe) Percentage on top of our bids or on top
of our baselines?
7. Yes.
(Miss Rowe) On top of our baselines, overall we have
got an increase of 8 per cent in the first year, 11 per cent in
the second and 12 per cent in the third.
8. Thank you. You have indicated the priority
areas of that spend to improve those services, as you set them
out. Are they the main priorities for the Department?
(Sir Hayden Phillips) Yes, I think they are the main
priorities for spending over the period. I think the important
thing to note, and you may want to come on to this, about Legal
Aid now is that, for the first time ever, the overall spend went
down last year. The objective here is to use the additional money
we have got not just to meet the pressures that we foresee but,
also, to try and target it even more carefully at areas of priority
need. I think that is a very important programme we have to pursue
over the next two to three years. The second area we really can
now begin to tackle is a substantially out-of-date information
technology base. Our under-investment compared to other departments
is reasonably substantial, and you will want to come on to that
and we can give you some figures. At the same time, not having
invested in very big projects up to now means we have avoided
some of the mistakes and difficulties that other big projects
have got into. So I hope we are in a position where we have learnt
some lessons. We now have the resources and we can move forward
in a number of main areas to achieve that. Finally, we mentioned
the priority which the Lord Chancellor wants now to try to give
to our work with children who come into contact with the courts
through the creation of the new service—the long name of
which I mentioned—and in other ways. I think, there, with
the money we have been given and the money which we are, hopefully,
going to be able to get from the Children's Fund, we should be
able to push that further. Chairman, if it is all right to say
one more thing, in the context of the settlement, you asked and
we tried to answer in the memorandum questions about what we meant
by transforming the Department pro-actively. I just want to say
a couple of words about that, if you wish.
9. I was just exactly coming on to that. The
last departmental review painted this picture—a very challenging
one—of the need for the Department to transform itself.
Perhaps it would be helpful if you could just pick out some areas
where you think the greatest amount of work needs to be done to
achieve this transformation.
(Sir Hayden Phillips) I looked at our memorandum and
I think it explains it there but it was very wordy. I thought
I would try and pinpoint some actual examples and illustrations.
There are two things I would say—and I come to this, in
a sense, as a newcomer and I have talked to people in the Department
about what I was going to say to you. First of all, I think there
is the range of activity we are now engaged in and, secondly,
the way we are doing it. The range of activity change, I am told,
is greater than at any time in the history of the Lord Chancellor's
Department. That is the view of those who have been working there
for much longer than I have. Can I give you some examples? The
civil justice reforms which we have done and which are now being
implemented—essentially on case management—are fundamentally
changed. We now have Lord Justice Auld looking at the criminal
courts from end to end, for the first time ever, reporting at
the end of the year. We have Sir Andrew Leggatt now overhauling
administrative justice throughout the country. That is all tribunals,
over 100 of them, for the first time ever, since the Franks Royal
Commission of 1957 when there were only 30 tribunals. We have
changed the basis of the delivery of Legal Aid through contracts
through the new Legal Services Commission. You know about, and
we have given evidence to you about, the reforms to the Public
Trust Office. We are creating this important, new organisation,
CAFCASS, from three quite separate but linked types of organisation
across the country. The judicial appointments system, if you like,
the traditional heartland of the Department, is being fundamentally
overhauled following Len Peach's report. Finally, we have a new
responsibility which the Cabinet has agreed we should have for
promoting and developing international legal services abroad in
the United Kingdom interest. That is a selection of the range
of work that this Department is now doing, moving it away from,
if you like, the concentration simply on running courts and appointing
judges. Secondly, how are we doing it differently? I think some
of these sound like slogans but I will try to make it simple:
really reaching out into communities. This has not been the Department's
traditional area of activity, and if you take, for example, the
development of Community Legal Service Partnerships, that is a
quite new way for my Department to do business. "Joined-up
working", to some extent, is a slogan, but it is becoming
more and more real in the Criminal Justice System—the unallocated
provision, which we mentioned, of £525 million will drive
that even further—in our work with children, and the Community
Legal Service. We are trying to develop a more intelligent sponsorship
role from a legal service market—provision of advice to
people. That does not involve vast sums of money but it means
that we must have the capacity within the Department to understand
the way the legal services market is going. Finally, electronic
delivery. We are now, in the Department, on the threshold, over
the next two to three years, of really being able to change the
way we do the work. So the range of the work and the way we are
doing it is, for my Department, in my view, a real transformation,
and we have been, I hope—and I think we have been—well
supported in that in the expenditure results that Jenny has explained.
I am sorry to go on so long.
10. That is helpful. Can you just tell us, in
this great fundamental change in a whole lot of areas, how do
you intend to engage the staff in this and explain to them what
is going on and get them on-side? In an inquiry we are doing,
one of the comments we have had from people on the ground is that
there are all sorts of things happening, flying around, and they
feel on the outside of it. Yet they are the ones who are supposed
to be operating all these new systems. How do you deal with that
in the LCD?
(Sir Hayden Phillips) I think this is one of the most
difficult jobs I have to oversee. I will give a personal view
about that, but I am quite interested in what Jenny has to say.
I believe the most critical thing here is that those, if you like,
at the senior/middle levels of the organisation—the people
who are in charge of the sections and divisions—are genuinely
talking to their teams of people about what is going on. Not just
in their area but about the impact of other things going on around
the Department. To use what may sound like another slogan, this
is what I call "leadership from the middle of the organisation".
If you do not have it you will not get through. However much I
send out messages and walk around the floors—
11. Be careful with memos, Sir Hayden!
(Sir Hayden Phillips) No memos. I have gone off memos.
It does seem to me, particularly, if I may say so, in an e-mail
age, that it is actually more important that those in charge,
the managers in charge, are talking to their staff about what
is going on. That means that I have a responsibility and Jenny
has a responsibility to make sure that all those people are (a)
given the information they need to have about what is going on
and (b) they themselves feel part of the management of the organisation
and not, somehow, the victims of this change. That, I think, at
the end of the day, is the essential way to do it. There are lots
of technical things to do—conferences and newsletters and
all this sort of stuff—but, at the end of the day, you depend
on the people you have got and explaining what is going on face-to-face
with their teams and listening to what the staff say. We had a
first-ever staff attitude survey last year. The initial response
rate was 62 per cent, and it presented a mixed picture—it
was not all roses—but we will replicate that year-on-year.
It gives us a chance to know where we stand and that will inform
management as to how well they are doing in the eyes of the staff
in explaining the amount of change that is around. I am sorry
that is a long answer.
12. No, no, it is interesting, because when
we had some exchanges about the reform of the Public Trust Office
one of the things which came out of that was staff bewildered;
it was almost like all the chairs flying around. It is extremely
important to get people on-side and signed up to change—and
difficult as well. That brings us nicely on to the Public Trust
Office. Can you tell us which consultants are being retained to
assess the risk associated with implementing the programme of
change which you spelt out to us?
(Sir Hayden Phillips) I cannot immediately, off-hand,
I am afraid, remember who they are, but we will find that out.
13. You have appointed someone?
(Sir Hayden Phillips) We have, as we said we would
do so. That work is still going on, but we will give you the names.[1]
14. Fine. Is it your intention that their report
will be published?
(Sir Hayden Phillips) I think the present plan is
that when we have got that work done and following the consultation
we are now still doing, we would look towards a detailed statement
in October/November when the House comes back. Now, we have not
decided yet with the Lord Chancellor what he wants to publish
at that time, apart from the statement about what he thinks is
the right way ahead, but we will also publish as much of the analytical
material about the results of the work as is possible.
Mr Winnick
15. When, Chair, on 18 April, Sir Hayden, you
gave evidence together with the Minister, a number of reservations
were expressed and I remember quoting from one or two letters
that had been sent to Members of this Committee. Has any of that
been taken duly on board?
(Sir Hayden Phillips) Yes. I think there were two
particular areas which I remember. First of all was the concern
you brought to my attention about the need for continuity during
this period of change on case work. We have been holding a series
of, as it were, open days with clients and we have written to
every single client. One of the things that has come back to us
is to confirm what you said about the importance of that and,
secondly, I think, to indicate that it was not so much that the
prospect of change might make things necessarily worse but that
it was not necessarily good now, and there was too much change.
What I said is that I think what we must do for the future—because
there are bound to be changes of personnel over time—is
to try to make sure we have a policy that says if the immediate
client manager changes, the supervisor does not. So that at any
time there is always somebody at one level or another who knows
about a case and who has had contact with that person. That has
borne fruit, if you like, in terms of informing us as to how we
should run the new way. The second area of concern which you and
others expressed was our suggestion that we should engage the
Benefits Agency with us in visiting clients. I think, at this
stage, I need say no more than that this has proved deeply unpopular
with everybody in the consultation process, and we will obviously
take account of that. I think they were two examples of the particular
concerns the Committee put to us. If we get more information about
it in the course of consultation we will take those points seriously.
16. If I remember, again, I gave a letter to
the Minister from someone who was rather concerned about the proposed
change. I would not mind, Sir Hayden, if it is possible, for us
to receive a note from you on what is being done—an outline
briefly (and it has to be briefly). I think some of the reservations
were sufficiently serious for us to have doubts in our minds about
all aspects of the proposed change and, therefore, I would not
mind having a note from you about what has been decided arising
from the oral hearing on 18 April in relation to the reservations
which were expressed. Is that possible?
(Sir Hayden Phillips) Absolutely, if we can give you
a progress report on those points, which is a staging post between
now and the decisions the Lord Chancellor will settle in September.[2]
Can I mention one other thing? We have secured, in the spending
round, the public expenditure support we need to subsidise a fee
structure that will be simpler, which will not have cross-subsidy
and will ensure that we can enable those who cannot afford to
pay not to have to pay. It is not large sums of money, I think
it is 1, 3 and 2 million in each of the three years with my finding
this money from September of this year. I think that is good news
and it means that we can have a fee structure which is not only
defensive for PAC but much more easy to explain to the clients
and more affordable for those who do not have much money.
Mr Cawsey
17. When you had your dry run at resource accounting
in 1998/99, the National Audit Office said that they would have
issued a qualified audit opinion for four reasons: first of all,
difficulties with payments of grants; insufficient documentation
on criminal Legal Aid expenditure, non-recognition of liability
for on-going criminal Legal Aid cases and that your Department's
non-operational antiques had not been valued. That sounds like
a description of the House of Lords to me. Bearing in mind it
probably is not that, I wonder if you might want to tell us something
about non-operational antiques and, also, why they were not valued.
Presumably now they have been valued, what sort of value are we
talking about?
(Sir Hayden Phillips) When I saw this I thought to
myself "This is a subject for humour—this is what the
Department thought of the Permanent Secretary and what are my
values?" Perhaps I should ask Jenny to say a word a bit further
about that. Obviously, in an estate like ours, which is full of
heritage courts, Grade I listed courts and so on, there are all
sorts of paintings and sculptures which have been there for years
and, as with other departments, we have to value these and put
them into the accounts. Perhaps I could say, in relation to grants,
we have had some problems there, as other departments have. I
think we are well on the way to solving those. What we will not
be able to solve, it seems to me, until—which is very near—the
abolition of criminal Legal Aid means test, is this chronic problem
we have had year-on-year of accounts being qualified because of
the number of errors that are made in the magistrates' courts.
That criminal Legal Aid means test will disappear in the magistrates'
courts for charged and youth cases this summer and then for all
cases, I think, from 1 April next year. So we will not be subject
to that difficulty again, but we can come on to that. Jenny, I
do not know whether you want to add anything on non-operational
antiques.
18. It might be quite interesting to know what
the value of them is.
(Miss Rowe) The valuation is under way at present,
but we do not have the final figures, I am afraid. However, it
is, as Sir Hayden said, things like paintings which have been
in court buildings for some years. We had not aggregated them
into the accounts before because they do not contribute to the
achievement of our objectives—they are just there. As I
say, the valuation is currently under way and it will be reflected
in the accounts for the current year, 2000/01, but I do not think
it will be ready in time for the 1999/2000 accounts. If we can
do it we will, but I am not sure we can.
19. The Department, I understand now, has entered
into a Private Finance Initiative contract with CSL for the provision
of accounting services and they will invent systems for the delivery
of resource accounts. Why did you take that decision? You have
done your dry run, you have prepared for it and, at this stage,
you switched to PFI. What was the driver behind that?
(Miss Rowe) We switched to PFI before then because
we knew that our existing systems were too old and not capable
of delivering resource accounts. They were designed for cash accounts
and we had to have a new, updated system. So we looked to PFI
to deliver that and contracts have actually been in place for,
it must be, a couple of years.
1 See Annex. Back
2 See Annex. Back
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