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29 Jan 2003 : Column 929—continued

3.34 pm

Mr. Nick Gibb (Bognor Regis and Littlehampton): I apologise to the House and my hon. Friend the Member for Gainsborough (Mr. Leigh) for missing the first few minutes of this debate. I had to attend a meeting that was arranged some time ago, and it was difficult to rearrange it. However, I heard most of his excellent speech, which was an enjoyable and important contribution to our debate. I agreed with the three themes that he set out in weaving the year's events into his speech, and I should like to pursue some of them.

It is a pleasure to follow the hon. Member for Tamworth (Mr. Jenkins), as I often seem to do in our twice-weekly hearings. He is right that serving on the PAC gives one a unique spotlight, to use his phrase, on the operation of the civil service. I find particularly interesting the notion of a split between the running of an organisation and policy development. It is echoed in the question of whether a Minister should be held accountable when things go wrong because of poor policy implementation or when the policy itself causes things to go wrong in his Department. Permanent secretaries who appear before our Committee often draw that distinction.

A recent case that starkly illustrates the point is the London Heart hospital, to which my hon. Friend the Chairman of the Committee referred to early in his speech. Mr. Andy McKeon, the director of policy and planning at the Department of Health, appeared before the Committee, and I asked him what experience he had had of running an organisation of 800,000 employees. I would have been happy if he had told me that he had experience of running an organisation of 100,000 employees. He told me that he had no such experience, and added that he was not running an organisation of 870,000 employees. His role was to set a framework for the NHS within which 600 organisations can develop and implement their own plans. In other words, he saw himself merely as the civil service adviser to Ministers on the overall direction of policy in the Department, not as an executive or director of the NHS as a whole. No doubt that is also the view of Sir Nigel Crisp, the chief executive of the NHS. There is therefore no one in charge of the NHS. There are 600 separate organisations, and the Department of Health fulfils its role by sending memos, guidance notes and teams of inspectors to those organisations, cajoling, harassing, targeting, measuring and judging them. But it does not actually run the national health service.

By contrast, in the private sector, there is always one person in charge at the top—a chief executive in the true sense. He runs the operation, and his survival depends on how well he does so and how profitable the company is. That, in turn, is determined by the successful delivery of the company's service. There is no distinction between policy and operation—every failed operation is a failure of the chief executive's management. The most revealing distinction between the operation of the

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private sector and Whitehall is that the person who runs the organisation also sets its policy. In Whitehall, the people who run the organisation are different from the people who set policy. Because of that, the skills required of a permanent secretary in Whitehall are different from those required to run a large organisation, be it the NHS or the education system.

A running theme of the PAC's deliberations—there were many echoes of it in the Chairman's opening speech—is the fact that the successful project manager rarely makes it to the top job of permanent secretary. He may be able to run a successful operation but cannot necessarily craft beautifully written policy recommendations and memos to Ministers.

One of the best witnesses to appear before the Committee in the past year was Mr. Paul Jenkins, to whom my hon. Friend the Member for Gainsborough referred. Mr. Jenkins is the national project manager for NHS Direct. The National Audit Office report was very complimentary about how NHS Direct was established and run, and Mr. Jenkins was widely praised for his achievements by members of the Committee. Even more striking, however, was the way in which he answered questions. He was clearly on top of every aspect of the project, and did not need to turn to the people behind him for extra briefing or notes. I suspect that he had not even been briefed the previous week in the usual intensive way undertaken by civil servants coming before the Committee. I think that he knew everything anyway.

The contrast between Mr. Jenkins's answers and the answers that we normally receive from permanent secretaries was striking. The difference is that Mr. Jenkins is a project manager who has been in charge of NHS Direct for the past five years. The tragedy is that it is unlikely—although I hope that it is not impossible—that he will become permanent secretary at the Department of Health. PAC members with experience longer than mine have noticed that success at project manager level tends not to lead to promotion to the top positions in the civil service. That is a mistake that may contribute to the problems that Britain has faced over many years. Those problems—which did not begin in 1997, but go back 20 or 30 years—have surfaced in our health and education systems, not to mention in the immigration service, the passport office, and elsewhere.

I want to draw to the House's attention three other PAC reports that I believe are of concern. To an extent, they demonstrate the broader themes that I have just set out. A number of hon. Members mentioned the report entitled, "Improving Student Achievement and Widening Participation in Higher Education in England." The problems in that area were in part attributed, in the report and by witnesses, to poor prior attainment at secondary school level. I focused my questions to David Normington, permanent secretary to the Department for Education and Skills, on that poor attainment.

I was struck by the equivocation in the answers that we received. There seemed to be no clear departmental view about the reasons for the poor performance of many secondary schools. Despite constant questioning, I was unable to extract a departmental view about the ethos that makes a state school successful, and how that would contrast with the ethos that makes a school

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unsuccessful. I felt that there was an alarming complacency about British education, and that it contrasted alarmingly with parents' deep concerns.

The permanent secretary cited the Pisa report from the Organisation for Economic Co-operation and Development. That is an international survey of all 32 OECD countries, and Mr. Normington said that it provided evidence that Britain's education system was fourth in science, seventh in English and eighth in maths. By now, he will be aware that the survey has been widely discredited, because the questions that it used measured aptitude and life skills rather than the education curriculum. The survey is more a test of IQ than knowledge, and French officials have dismissed it as biased in favour of creative skills over knowledge. I had hoped that Mr. Normington would refer to the more authoritative Timms survey, which has been carried out for many years and shows that, in terms of the standard of state education provision, Britain comes 20th among OECD countries.

I am worried about complacency and the lack of understanding of our education system. Above all, I am concerned about the lack of rigour in policy development—a problem to which my hon. Friend the Member for Gainsborough alluded. There appears to be no real understanding of the figures cited to the Committee.

I was concerned when we interviewed the then permanent secretary at the Department for Work and Pensions, Rachel Lomax, who gave one of the worst performances of the year before our Committee. The accounts of what was the Department of Social Security, and is now the Department for Work and Pensions, had been qualified by the National Audit Office for the past 13 years because of the huge and unacceptably high levels of fraud and error, which, as our Chairman said, are estimated to amount to at least £3 billion a year. Personally, I suspect that that is an underestimate.

Our report considers fraud and error in just one benefit—income support. For that one benefit, some £573 million a year is lost through fraud, £154 million through customer error, and a staggering £173 million through official error. The £573 million fraud figure is made up of a staggering 216,000 cases of fraud, in each of which an average of £2,600 a year is fraudulently claimed. Of those 216,000 cases, the Department prosecutes only 11,000 a year—just 5 per cent. of the estimated number.

Leaving aside the difficulties that we had in extracting those figures from the permanent secretary during the hearing—I believe that that demonstrates that tackling fraud was not at the top of her list of priorities—I must emphasise that such a low prosecution rate in itself reveals problems. At first I thought that the low rate was a policy decision, based on the fact that the costs involved in pursuing a prosecution involving only £2,600 fraudulently claimed would be likely to exceed the amount recovered. That, of course does not take account of the argument that prosecuting and obtaining convictions constitutes a deterrent to people attempting fraud, whereas merely repaying fraudulently claimed benefit, even 13 weeks' worth of it, does not.

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The bulk of the £573 million of fraud does not derive from organised crime, which accounts for only £100 million, but from small-scale fraud. The only way to tackle the massive fraud at the Department for Work and Pensions is to have a policy to deal with small-scale fraud rather than concentrating on organised crime alone.

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