Examination of Witnesses (Questions 93
- 99)
THURSDAY 1 MARCH 2001
MISS MELANIE
JOHNSON, DR
PAUL MILLS,
MR PETER
SCHOFIELD AND
MR MICHAEL
SWAN
Chairman
93. Good morning.
(Miss Johnson) Good morning.
94. Can I start by asking you how important
you think it is that the Government should have its own Actuary's
Department as opposed to contracting out for actuarial work?
(Miss Johnson) The aim of GAD is to provide actuarial
advice to Government departments and to other clients, as you
know, in respect of employer-sponsored pension arrangements, the
social security and the demographic analyses that are done and
their work underpins ministerial decision-making as well. We need
access as Government to that professional, impartial and, indeed,
rather cost-effective actuarial advice on a range of issues, including
the demographic projections and pension matters. I think it makes
good sense that this is provided by a separate professional body
and Government Actuary's Department also has a range of statutory
responsibilities under existing legislation.
95. But, Minister, our understanding from the
evidence we have taken is that the Actuarial Department does not
give policy advice, for instance, on pensions which you have mentioned.
(Miss Johnson) Well, it gives actuarial advice which
obviously, in effect, informs a policy advice which ministers
are receiving.
96. But that could be done by anybody. It is
not intimately involved with the policy-making process in any
way at all?
(Miss Johnson) You could say that of many specialists
in government I believe. Obviously there are many specialists
who are, in effect, providing the underlying advice of a technical
kind which informs the policy advice which is then coming on to
ministers and the government.
97. But if it is specialist advice which is
being given as it were independently, by actuaries, then surely
the cost effective way to do it would be to tender out for it?
(Miss Johnson) That would be the case if private sector
rates were not so high but Government Actuary's Department is
a very cost effective supplier of actuarial advice and its rates
are normally considerably under the costs that we would be charged
in the private sector.
98. So if it is a cost factor...
(Miss Johnson) Well, it is an independence factor
as well, as I have mentioned, but it is a series of factors.
99. Yes. You seem to feel that it is independent
advice it is giving but, on the cost factor, are you sure that
there are no hidden subsidies involved in the lower costs, if
they exist?
(Miss Johnson) They fully charge out their time and
they recoup their costs on all the work that they do outside,
and all the work they do across government departments.
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