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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 907-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CONSTITUTIONAL AFFAIRS COMMITTEE
DEPARTMENT FOR CONSTITUTIONAL AFFAIRS DEPARTMENTAL REPORT 2003/04
Tuesday 13 July 2004 SIR HAYDEN PHILLIPS GCB Evidence heard in Public Questions 1 - 99
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Constitutional Affairs Committee on Tuesday 13 July 2004 Members present Mr Alan Beith, in the Chair Peter Bottomley Mr James Clappison Ross Cranston Mrs Ann Cryer Keith Vaz Dr Alan Whitehead ________________ Witness: Sir Hayden Phillips GCB, Permanent Secretary, Department for Constitutional Affairs, examined. Q1 Chairman: Good morning, Sir Hayden, and welcome. We are going to miss you, so we shall make the most of our last opportunity to question you. With the Chancellor's Spending Review ringing in our ears and still confusing our minds, because it takes some getting one's head round, I thought we would start by looking at the Department's strategic objectives and how well they have been absorbed. They have now been changed, of course, as of yesterday. Presumably you knew about this in advance. This did not come as a surprise to you. Was it negotiated? Sir Hayden Phillips: Absolutely, Chairman. Q2 Chairman: Last week your website was still referring to your 2002/03 objectives, which suggests the Department had not even fully absorbed its 2003/04 objectives. Sir Hayden Phillips: The results of the Spending Review 2002 will go on through this year. We switch to the new targets from the beginning of 2005 but we will be looking at both during that period. The overlap between each year is, I know, confusing. I must say that I imagine the Committee think when they look at our explanations for what the relationships are, and certainly I do, that they are very complicated. The key is that we have now agreed a reduction in the number of key targets, which must make sense. That is sensible. Q3 Chairman: The Treasury Green Book says that alternative options should be examined when assessing a proposal. Did the Department follow that process of considering alternative ways of meeting its objectives? Sir Hayden Phillips: Do you have a particular subject in mind? Q4 Chairman: No. This is just as a general principle of how the Department operates/ Sir Hayden Phillips: What we have tried to do in each area is to look at a range of ways of achieving the same outcome. We have tried to make a judgment between those based partly on policy, partly on effective impact and partly on cost and value for money, and come to a judgment about those. We try to do that systematically wherever we can. If we take as an example the creation of the new unified courts administration as an objective of policy, the way we went about that, the timing, the phasing, the degree to which efficiency savings could be secured in the process, choices about the way in which we absorbed 10,000 staff from the magistrates' courts over time, did we try and do it in a big bang to harmonised terms and conditions on day one or did we let it roll out over time? That is an example of where we have done some quite detailed working through of the choices that there are. Q5 Chairman: Yet that is not reflected in the Annual Report. It would make the Annual Report rather more interesting if it actually said, "We considered doing it in this way but, having considered it carefully, we followed an alternative route". The report does not go into that sort of thing. Sir Hayden Phillips: No, it is straightforward reporting of, as it were, what happened, what the outcomes were and other things. It does not go into the choices that were discussed and debated with Ministers. I think for the future what the Committee might find useful, and I am very careful when I talk about what I might commit myself to today because I have to consider my successor's position, if there are areas in which you are interested, is that you see, as it were, the background papers that do the analyses of various options and choices. While I recognise that obviously what we would not do is to publish in a report the advice we have given to Ministers under the normal conventions about that, there is something that could be achieved in that area in discussion with the Committee and the Department. Q6 Chairman: Given that it is an explicit objective laid upon you by the Treasury to have looked at alternative options, it seems both unfair to the Department and uninformative to the public to let the old rules about advice to Ministers preclude setting out why you reached particular decisions when there is a logical case for having done so. Sir Hayden Phillips: I would accept that. Another programme that you know we are planning and introducing is the creation of a unified tribunal service. There are choices there about timing, the rate of absorption, how it is set up, and that might be a good example of an area where the Committee would find an explanation as to how we reached the decisions we did and what the choices were more interesting than some of the flat prose that is here in the report. Q7 Chairman: You share some PSAs with other departments, particularly the Home Office, do you not? How does that work in practice? Sir Hayden Phillips: I think it works much better now than it did two or three years ago. I think in relation to the two key points, to criminal justice and asylum, we have begun to demonstrate that with regard to criminal justice three departments - the Home Office, ourselves and the Crown Prosecution Service - really can work well together. I think in relation to asylum, the joined-up work we have done with the Home Office has borne fruit in terms of the results in relation both to the reduction in the number of cases, primarily a Home Office issue, the speeding up of Home Office decision-making, and then our own relative success in putting cases through the appellate authorities much faster than was the case before so that we have exceeded the target of 60% throughput in six months - it is now 63% - and we are getting through 73%, if I remember rightly, of cases before adjudicators in a much shorter time than was previously planned. I think the joint working between the departments is beginning to demonstrate that it can be done. Those breakthroughs have been made in the last two or three years. Q8 Peter Bottomley: May I start with an observation? I think during Sir Hayden's time as Permanent Secretary there has been an appearance of serenity which has been riding above a great deal of activity, both in changes of responsibility in the Department and all kinds of other things. I think he should be congratulated on that. Where the targets are not met, do you give any idea either to explain that they were wrong in the first place or should have been slightly different, or do you give an explanation as to why they have not been met? Sir Hayden Phillips: I think that is right. I agree with that. One of the subsidiary and important targets, if I take an example in the family justice area, which we have not succeeded in achieving is for care cases and public law cases. I think this is worrying. The target has been set at a level which, given the number of people and organisations involved in making the decisions and given the limited influence the Department can have, is unrealistic. We have now set, and this is in agreement with the Treasury and it is linked to yesterday's announcement, a target which says that we must make sure we increase over the next four years the number of cases now dealt with within the 40-week limit by 10% as opposed to trying to hit a target of 70% in 40 weeks, which is really quite unrealistic and was plucked from the air. There are other examples. A historic example now is that we had a target about increasing the amount of international, legal business that was brought to this country, and very laudable for UK plc, but in fact that is not something which is either easy to count or measure and it is uncertain as to what extent the Government itself can claim to have large direct responsibility for achieving the target. I think what you are saying is, taking those examples, a clear and frank explanation of where failure occurred and why it had occurred and why it was being changed would be helpful to the Committee in the future. Q9 Peter Bottomley: There is that possibility for the Department and those who serve in it as well. To take the example of care case disposal and reducing by 10% the number of cases not concluded within 40 weeks, would it be possible for someone to come along to the Department and say, "Look, even this target could not only be met but could be exceeded if, for example, the consequences of the chaos and incompetence of the CAFCASS establishment were changed"? I know you cannot reverse things but it would be a leap forward. Is there a way of someone maybe like you but 30 years younger saying, "There is a way of carving through an awful lot of what is blocking things and can I have some of the responsibility for making dramatic change", or is it all in the machinery of government and set for three or four years? Sir Hayden Phillips: No, I do not think so. To take that particular example, what the departments now do with the Department of Education, which now has responsibility for CAFCASS, is to make sure that we are looking clearly at practical ways of speeding up those cases. We have to play a part in that with the judiciary by having a protocol for handling these cases from the courts. We must lock CAFCASS into that. I think the point you are making is that the way that is best achieved is by saying to a couple of relatively senior people, one in my department and one in the DfES, "You have personal responsibility for going around and thinking of ways of a practical sort in which you can make these changes", rather than just leaving it to a bureaucratic process. Q10 Peter Bottomley: Can I turn for a moment to the Annual Report? I am not going to refer to a particular part of it. Looking at that report, it gives a very good history and acknowledges what has happened during the year. It seems to be accurate and it is useful. We understand that the Treasury says that the departmental annual reports, among other things, should be prepared to be self-critical. No one could accurately accuse your Department's report as being particularly self-critical; it may be on factual things. Do you think it would be helpful if departmental reports such as your department's report were more obviously self-critical? Sir Hayden Phillips: I think there is a tendency obviously to talk more about what you think your achievements have been than to talk about where your failings have been. I hope it does not take a very discerning reader to find parts of this report where the position is not satisfactory. We have just been discussing one of those in relation to care cases in the family courts. Speaking in personal terms, I wish I had got round to making a lot of the changes in the structure and organisation of the Department rather earlier than we did, beginning in 2003, indeed on the creation of the select committee, and things came together then. That degree of stepping back and saying, "Look, we think we have done reasonably well but we wish we had done this rather differently in the past and also we think for the future we ought to set the following challenges and targets" would be a perfectly reasonable style to try to adopt. That is the message I would take back to my colleagues. Q11 Peter Bottomley: If I can put a symmetrical question to you, what do you think have been the greatest successes in the last year or two and what have been the greatest gaps or failures? Sir Hayden Phillips: There are two sorts of successes, departmental ones, as it were the official achievement as opposed to the political achievement. There we have genuinely created a new organisation, which is better fit for purpose. We have demonstrated that we can, after many years of not doing so, live within our means. We have demonstrated, if you take for example fine enforcement, that we are capable of going out into the real world and making a real change. We have an organisation now which I think is much more coherent and corporate than the Lord Chancellor's Department ever was. Mr Vaz will remember what it was like in earlier periods when in fact I felt always that there were just too many individual silos not coming together in a sensible way and too many problems landing on my desk and the Lord Chancellor's desk without having been thought through beforehand. I think these are real changes that have occurred during the lifetime of the select committee's existence. You have observed, I hope, some of those in action. At the more political level, I think the programme of work we have got through in terms of policy changes and legislation, which is not only the biggest legislative programme in the Department's history by many miles but also one of the very biggest in Whitehall - we are up there in the Home Office league this year, which is quite a threatening achievement - and doing that reasonably well in my view, while keeping the whole of the system of day-to-day delivery through the courts running more efficiently than before, has been quite a significant success. As I say, the things we have not done as well as I would have liked are as we have mentioned: I think we have turned a little too late to the family justice issue but we recognise that now; I certainly wish, from the point of view of departmental management, that the iron had entered my soul about financial discipline and the need for improvement rather earlier than it did; I certainly wish we had acted in relation to fine enforcement earlier than we did. There are a number of other areas where it is not so much that I am saying we have failed to do those well but we have not got on to it quite quickly enough and gripped it fast enough. Q12 Peter Bottomley: Shall we then leave the curtains drawn as to the role of the holder of your office in the proposed changes in the Lord Chancellor's position overnight? Sir Hayden Phillips: I think we can leave the curtains drawn or, if you want to ask me a specific question, I might peek round them and see what you have in mind. Q13 Peter Bottomley: Was it you or was it Mr Jurgens of Belgium who put to the Prime Minister the idea that the Lord Chancellor's role could not be continued and that the changes were proposed without consulting the former or the present Lord Chancellor? Sir Hayden Phillips: I do not think Mr Jurgens should carry off the prize, nor do I wish to do so. My Secretary of State and I have discussed this with the select committee before. It is interesting that the ideas that the announcement contained were of course very familiar matters of debate over a very long period of time. Because they were announced, as the Prime Minister acknowledged when he talked to the Liaison Committee, in the way they were, they appeared to be, as it were, a revolution rather than a natural evolutionary step, which some of us had seen happening for some time. If a department grows from 12,000 staff to what is going to be 26,000 next year, then onwards up to 30,000 staff when the tribunals are in, we are changing the nature of the organisation quite fundamentally. If you have a position in which it is clear that the Lord Chancellor no longer sits as a judge and therefore cannot in that sense be head of the judiciary, if you are clear that you have got to make some radical changes, as indeed Lord Irvine was, in relation to judicial appointments, you are beginning to move the fundamental basis on which the old department was constructed. I would not claim any particular credit for this dawning recognition. I think there was a lot of dawning recognition but it was rather suddenly announced. Q14 Chairman: You get some quite fierce criticisms from the Commission for Judicial Appointments on the Department's operation of the present system from the diversity standpoint over the last couple of years. Were you surprised by the intensity of the criticism, which was based of course on a specific review of how appointments have been carried out? Sir Hayden Phillips: In one sense, yes, I am a little surprised by the intensity of the criticism, and in another sense I am not. We had made a number of changes in the process - much more discipline in looking at the criteria, much more discipline in analysing the comments that are made about individual candidates - but we had obviously come to the conclusion that we could not hold the present position and that we should create a Judicial Appointments Commission, and that is planned. I suppose what I have been slightly surprised about is not the criticisms of the process, which I understand and they will be taken into account and the Judicial Appointments Commission will absorb those lessons, but the fact that there has been no criticism, as far as I can see, at any point of the quality of candidates for judicial office who have emerged from the process which they think should be substantially improved. It is very important for the way in which everyone perceives the process that that recognition of the quality of the candidates that do emerge is clear. The recent report on the High Court Bench, which they produced, made it absolutely clear, but it was rather buried under the criticism, and there was not a hint of criticism there that of the people being appointed were not of the highest quality. I am slightly surprised that it has not quite got that balance but not surprised by the fact that they think the process should be changed at some point in the future, as we intend to do. Q15 Chairman: In commenting, the Department said it was going to have a look at the report very carefully and decide what action to take. Does it not follow that refinements to the process would have to take place before the new judicial appointments machinery is in place to deal with some of the failings that were described? Sir Hayden Phillips: This is something that the Secretary of State has to think about over the summer months, I think, and discuss with the Lord Chief Justice. Clearly, we are going to have to have new lists of candidates for the High Court between now and 2006 when the Judicial Appointments Commission comes on stream. The judgment comes in how far you go and how radical you make the changes in the meantime in order to deal with the criticisms that have been made. The point I really stand to, Chairman, is the fact that I do not think there is a single suggestion put forward that we have not been appointing people of the highest quality on the basis of merit. Q16 Dr Whitehead: I would imagine that you are aware of the outcome of the Spending Review yesterday. Has there been a full settlement with the Treasury in terms of negotiations that proceed before that or are there still matters outstanding? Sir Hayden Phillips: No, I think we have pretty well finished this stage of the decision-making. Obviously, there will be discussions with the Treasury over the coming months and the coming year about some of the details and how some of the procedural things we have agreed to do will work out. Basically, the position is pretty settled. Q17 Dr Whitehead: I noticed, in terms of the efficiency targets, that the DCA is required over the period of time from 2005 to 2008 to realise annual efficiencies of ₤290 million, of which at least half will be cashable. Does that cause problems in terms of how you roll out your plans as set out in your Annual Report? Sir Hayden Phillips: Of course, a much smaller number would be more easily managed but I do not think that over the four-year period we will find that too difficult to achieve. We have to have a fundamental look at legal aid, where it goes, and why it costs what it does. In the criminal justice area, that means looking at the process by which cases are taken through the courts. I think we can get safely through that. Secondly, we will, through some of the IT investment we have made, the sheer fact of unification of the courts' administration, be able to make significant efficiency gains there. We shall also do so through our procurement process and other things. I am reasonably confident that we have managed, over the last year, to make really good efficiency gains. If I have the figure wrong, I will correct it later. I think we have managed to take out about ₤136 million in a single year, which has been a considerable success in terms of our own financial management and our ability to look through the projects we have on stream and ask if they are really necessary and do they have to be done to that sort of timetable. Both the Treasury and I recognise this, and we have a track record now of making those efficiency gains, which I think we will see through. Q18 Dr Whitehead: In essence, you are suggesting that ₤290 million is, as it were, an intensification of a general trajectory of those efficiency gains rather than actually targeting particular areas in the Department and taking the costs out of those? Would that be a fair exposition? Sir Hayden Phillips: Yes. Obviously in order to achieve it, we will have to decide in particular areas which are the right ones to pursue in detail, but I do not think I feel confident in mortgaging my successor to agree to the ones I might have in mind now. I think the areas where we want to concentrate are: procurement; the rationalisation of the administration of the courts, the opportunity for which comes through unification; much of the IT investment; more careful targeting of legal aid; and looking at the process through which criminal cases go in order to try to speed it up and make it more efficient, which would then reduce the legal aid burden. We can only do that in close conjunction with the Crown Prosecution Service and the whole charging process. I am confident because of what we have achieved that we now know how to go about it in a more targeted and informed way than the Department would have been capable of two or three years ago. Q19 Dr Whitehead: You are also required to cut 1,100 posts under the efficiency agreements. Does that count towards the ₤290 million or will the proceeds from the cutting of 1,100 posts be, as it were, simply cutting the budget and reutilising the money? Sir Hayden Phillips: No, that is part of the overall efficiency gains. Q20 Dr Whitehead: Are you clear from where you are going to cut those posts? Sir Hayden Phillips: We are reasonably clear at the moment. Round about 800 of that 1,100 will come out of the creation of the unified courts administration over time and about 300 will come out of the headquarters area. We had already committed ourselves to try to move from a ratio of headquarters staff to those at the front line, which is now about 1:5 or 1:6, to somewhere between 1:12 and 1:20. It is important that over the time that we demonstrate that we are capable of doing that. We will be helped as the number of major projects we are running at the centre of the Department gradually comes to an end. It is important to know the turnover rate of staff, which is about 9% at the moment, which means that 2,500 staff a year leave, and the rate of turnover in the magistrates' courts of about 14%, because that means that I hope and believe we can do this, and, if we can, it is what we intend, without compulsory redundancies if we manage that process carefully, over the three or four year period we have to achieve it. Q21 Dr Whitehead: You are also relocating 200 posts? Sir Hayden Phillips: Yes. Part of the Judicial Appointments Commission in due course will be outside London, and that is about 150 posts, and we plan for the headquarters of the new tribunal service, which is very small at 15 or so people, will also be outside London. The majority of our staff, 90%, are already, as it were, in front-line jobs, including those in the south-east; they are not, as it were, "relocatable" because they are delivering services locally to particular communities. Q22 Dr Whitehead: You have what one might describe as a flat, forward administration budget, 2005/06 to 2007/08. Is that something that is going to cause you difficulties in terms not only of administering the Department but administering these changes? That is, your administration budget is set at ₤477 million flat for three years? Sir Hayden Phillips: No, we accept that challenge. It is the other side of the story I was telling you about, the fact that we do need to bring the size of the headquarters down. We had committed ourselves to do that. We are going through a bit of a hump at the moment with the extent of all the constitutional changes and other activities that are going on now. I think that will ease back and that should give us room to live within our means. It is a very good cash discipline. I was in the Treasury and when I was there we used to impose the same cash disciplines on departmental administration wherever we had the opportunity to do so. Q23 Dr Whitehead: What new priorities did you agree in terms of the PSA targets, for example as a result of the Comprehensive Spending Review negotiations? Sir Hayden Phillips: The priorities constantly are part, above all, of the target of increasing the number of offenders brought to justice. In that area, our primary contribution as the Department is through reducing the number of ineffective trials, which we have done extremely well in the Crown Courts to well within the target. We have done quite substantially better than our target. We have only just missed the target in the magistrates' courts, but we have to act there now. That is a major contribution we must make. Secondly, our priority is to continue, as it were, to make the asylum process more efficient. I can give you numbers of those but I think you are more concerned about where the priority areas are. Thirdly, our priority is to try to deal now with the family care cases in a more efficient and expeditious way, and then to try to make more progress than I think we have done in the difficult area of trying to see whether mediation or other forms of alternative dispute resolution can better deal with disputes than the court process. That is always a challenge. We have made some progress but rather bitty in various areas, but I think that is an important priority, too. Inside the criminal justice area, there is one important development of which we do need to make a success as a priority, and that is the creation of the Community Justice Centre in Liverpool. If we can do that well and we can make sure that the port is really at the centre of what the community wants to see done about low level crime in particular and we associate all the criminal justice players with that court, not just the judge and the staff but probation staff, youth offending teams, police, Crown Prosecution Services and other services around, we will have set a new pattern for the way in which criminal justice is delivered locally. I think that is something the Department is anxious to get right and I think the Committee will want to watch the development of that with great care. I hope that is helpful in replying. Q24 Dr Whitehead: Thank you, yes. In the last Spending Review you agreed for your PSA5 target "by 2004 that 65% of substantive asylum applications are decided within two months". Then at the time it was also agreed that "for 2003/04 a proportion (to be determined) including final appeal, are decided within six months". Has that figure now been determined or updated as a result of the agreements on the 2004 Spending Review? Sir Hayden Phillips: The target previously was 60% for the six-month clearance. We have achieved 63%. Q25 Dr Whitehead: Do you now have a definitive new target agreed as a result of that progress? Sir Hayden Phillips: I need to check that. No, I think we are staying on those same targets for the moment, against which we are doing quite well. If the detail of those has changed since the results were published yesterday and I have not grasped those, I will obviously let you know. Q26 Chairman: What was the target? I do not think we are entirely clear on what the target was in the end. Sir Hayden Phillips: In our case it was to clear 60% of cases end-to-end through the whole system in six months for asylum cases. We have got to the stage where 63% are being cleared in six months. For us, the target was to clear 65% of cases through the adjudicator tier of the appellate system. We have so far been clearing about 73% of target cases within 12 weeks. I think I am right to say that with the creation of a single tier in the appellate system, what we aim to do is to get all cases through that single tier in 19 weeks. That is a big challenge because some cases can take up to a year and drag the performance down quite substantially. That is what we are going to try to do in the single tier. If I have those figures at all wrong, I will correct the record. Q27 Dr Whitehead: That is clearly good news in terms of your exceeding targets, but an area, as you have already mentioned, where the Department very substantially did not achieve its targets was the target for public law heard within 40 weeks. You have mentioned that that was too ambitious a target. I presume you have agreed to a more realistic target. Firstly, what is that target? Second, why do you think the target was so badly wrong in 2002? Sir Hayden Phillips: The target now is to increase the proportion of care cases being completed in the courts within 40 weeks by 10%; i.e. from where we are now to what the report states at 39%. We are looking at an increase from 39% to 49%, 40% to 50% roughly, and getting them through in 40 weeks. Why do I think the previous target was unrealistic? Q28 Peter Bottomley: May I interrupt there? In the Department's response to our questions on page 10, it gives us some detail. Some of that we can take as read. I think you also make the useful point that occasionally the court asks for a delay in the interests of the child, so in fact in that case the delay is of advantage rather than disadvantage. Sir Hayden Phillips: It is laid out in great detail, and thank you very much, Mr Bottomley, for reminding me. On the sort of generic level, there are two points. The first is to try to make sure that cases are not unnecessarily transferred around between different courts and different judge; i.e. to get the specialist follow-through of these cases. That is what the protocol we have agreed with the President of the Family Division is trying to do. The second is to try to make sure that the courts are not unnecessarily asking for further and further reports. The trick there is to get a really good connection between the courts and CAFCASS, but then, as Mr Bottomley points out, in some of these cases it will be very important that time is taken, which is probably also why to try to speed up the whole thing massively is not in the interests necessarily of the child in these cases. Although some of these cases do take a long time, protection orders can be put in place and are put in place very quickly to make sure that, during the length of the process, there is not any greater risk to a child in these cases. As I said earlier to Mr Bottomley's questions, I think this is an area where we do have to put in a new sense of effort and priority more than we have done in the past. Q29 Chairman: Let us be clear that the interests of the child not only depend on protection orders in cases where the child might be in some kind of danger but on the resolution of matters which may prevent the child from maintaining contact with members of the family, which can be extremely damaging. Sir Hayden Phillips: I agree. Q30 Ross Cranston: Those within the family justice system itself think that they are doing better than some of these figures demonstrate because sometimes the cases are effectively closed. There might be an amendment some years on of the order but the case is treated as still being ongoing. Your result where you are not achieving target is actually an artefact of the way accounting is done. Sometimes I am a bit sceptical about some of these figures. You may well be doing things in this area better than you are demonstrated to be doing on the figures. Sir Hayden Phillips: I understand that. I think it is right that we should have some sort of elementary, simple headline target which we are striving to achieve. The trick in this area, as the Chairman points out, is that when you dig down underneath that story, the complexity of the arrangements, and indeed the complexity of the different stages of outcome, do need to be taken into account and maybe we could try better to explain than perhaps we have so far the wide variety of cases we are dealing with in this area. Glancing at the answers we gave you is some attempt to do that in our supplementary sheets where we dig down a bit to talk about the length of the oldest and most difficult cases and other factors that influence the figures. I think that explanation does need to be thought through perhaps more clearly than we have up to now. Q31 Dr Whitehead: May I clarify the new target? You mentioned the figure of 10% on where you are at the moment, and that is at 39%. Is that a year-on-year target? Sir Hayden Phillips: No, this is over the four-year period. Q32 Dr Whitehead: By the end of the four-year period, the figure is 49%? Sir Hayden Phillips: That is my interpretation of the words in the White Paper on it. That might sound to some a bit modest but I think it does reflect the points that the Chairman, Mr Cranston and Mr Bottomley have made about the complexity of these cases and the need to deal with them really quite sensitively. Q33 Chairman: You describe to us how an officer from your Department and one from the Department for Education and Skills were tasked with working together to achieve improvements in this and related areas, indeed the precise areas where the responsibilities have been split up following the departmental changes. I suppose you could see it as a means of minimising the damage caused by splitting up the responsibilities in this way. Is this something that is quite formalised? Clearly it is very important, from the standpoint of the Committee in its very great concern about what had gone wrong with CAFCASS, that if there is not somebody ensuring that the two departments work together very closely, both to see that CAFCASS is doing its job properly and to find other ways of improving the process, then very serious problems will continue for families and children. Sir Hayden Phillips: I think the answer to that question is that I believe what I have said is absolutely right. Perhaps I could give you a note setting out what the relationship is now between us and the Department for Education, what the plan must be in my view, that we should have the same relationship with them in dealing with the spectrum of children's cases before and into and through the court as we have had with the Home Office in successfully dealing with the asylum process end-to-end. That is done on the basis of very clear responsibilities on both sides with individuals in the Home Office sitting on our teams and our people sitting on Home Office teams. I want to see the same happen between us and the DfES, and I will confirm my understanding that that is correct. Q34 Chairman: We did have a note, of course, explaining where the responsibilities had been split. That took some time to produce because it took some time to decide on this division of responsibilities. I am particularly interested in what you said earlier about officials charged with joint working to try to improve the system. Could you deal with that when you write to us? Sir Hayden Phillips: We have given you a note about how we had been divided. I think what I am offering to give you is a note about how we have been put back together. The Committee will want to make sure that that putting back together is sensible and effective. Chairman: All the king's horses and all the king's men could not achieve it. I hope you manage to do so. Q35 Ross Cranston: Could I take you to some aspects of the budget and policy developments? I do not want to sound like an apologist for the Department because I think my colleagues share a view that often we see policy developments, say in the Home Office, that then have repercussions for your Department and you then, in a way, have to pick up the cost of new legislation in terms of legal aid, for example. The question is about the mechanisms that you might have to deal with those sorts of implications that are being pushed on to your Department by other departments. Sir Hayden Phillips: I think it was absolutely fair to say that a few years ago decisions would be taken in one part of the system and they were not worked through, and suddenly the Department was hit, particularly in relation to legal aid, by demands not being properly planned through. I will not say the position is perfect now but it is certainly much better and that rarely now occurs. Mr Cranston is aware, as others on the Committee are, that something like 90% of the legal aid budget is really on non-discretionary cases, whether we are talking about crime or public law children cases, mental welfare or domestic violence. We are obliged to spend money there, and so it is crucially important that the planning mechanism with the Home Office and the CPS, to take the largest volume on crime, is really worked through extremely carefully. Q36 Ross Cranston: How is that done specifically? Could you just give us an understanding of that? Sir Hayden Phillips: Together with the Home Office, we will make estimates, and they are inevitably fairly generalised, of the impact of changing processes, changing policy numbers, and what impact that might have in terms of crime. These have to be what I might call informed assumptions rather than scientific rules. Q37 Ross Cranston: Do you think it is being done early enough? Are other departments doing this early enough, letting you know what the implications for your Department and the court service and the legal aid budget are going to be? Sir Hayden Phillips: I do not think it does necessarily take place early enough. Some of the increase we have seen in criminal legal aid some would say has been unforeseeable, particularly in the magistrates' courts. A large number of factors led to that. When you actually look at the factors, with hindsight you can see that if you had had a planning mechanism that was tighter earlier, you would have identified if not all of them at least some of them. I do believe we are better at that now. We do have discussions with the Home Office and the CPS in a co-ordinated way in the context of the Criminal Justice Reform Programme. We are now able to see what the implications might be, for example of the CPS taking over charging, which in the pilot areas has been very successful both in increasing the number of guilty pleas and in reducing the number of cases pulled out of the system. These have clear implications on the funding for legal aid. I will not say it is perfect but we are beginning to get this mechanism to work much better. Q38 Ross Cranston: Specifically, do you have any thoughts about how it might be done better in terms of the mechanics of it? Sir Hayden Phillips: What we have to do better progressively is to try to draw out different scenarios of what might occur, making certain assumptions about detection rates, certain assumptions about successes of charging, certain assumptions about the length of cases going through the courts. I am concentrating on crime here because that is where the big money is. That is so that when it comes, for example, to decisions on a spending round that were announced yesterday, and you are looking at the global figures, the underlying work has been sufficiently well done for us to be able relatively quickly to translate those into what the numbers therefore might mean for legal aid. A lot of that work was done before this last spending round. Not only do you get therefore the Home Office budget, DCA budget and the CPS budget, but there is a Criminal Justice budget as well, which has, for the first time, joined together these different parts, we hope with a set of intelligent assumptions about the downstream consequences of other people's actions. I think we are still on a serious learning curve. I do not think we have got it right yet. Q39 Ross Cranston: Could I take you to a target that you share with the Home Office, which is about bringing people to justice? The target is to improve the delivery of those brought to justice to 1.2 million by 2005/06. In the Annual Report you set this out. It has been put to us that the outturn that you have there of 1.074 million in March 2003 and 1.096 million to the year ending November 2003 - it is page 16 - is not an impressive outturn, but I put that point to you. Your diagram down at the bottom demonstrates that the trend line is favourable in terms of 2005/06 but how confident are you that the trend is going to continue, that you are actually going to achieve that? Sir Hayden Phillips: The trend is quite solid, although the movement upwards is marginal. I think that gives us a greater sense of confidence. For 2005/06, I think we would be looking for a movement up to about 1.15 million. The new target announced today is for a total of offenders being brought to justice of 1.25 million by 2007/08. It will be good if we can, in 2005/06, get from 1.15 million and in the year following to 1.2 million. The trajectory is right to achieve the target. The changes that are being put in place in relation to charging by the CPS, the increases in the number of community constables which the Home Secretary has in the budget, the work we are doing on more effective trial management, are all directed at trying to support that trajectory. Unless there is an unforeseeable shock going on in the system, I would have thought that we were now much more confident than we would have been back in 2001 that we were beginning to get our act together in this area. Q40 Ross Cranston: One of the puzzles we had was the move to absolute numbers as opposed to percentages. Again in your note to us at page 9 you explain that. I think you say, quite rightly, that the proportions can vary in terms of the amount of recorded crime. One can see why you could have an argument for absolute numbers. I guess our puzzle was: why do you not have the two because you need both the absolute numbers and a proportion in terms of a target? Sir Hayden Phillips: The reason is probably - it is speculation and I cannot remember now how we came to this decision - that, as it says in this note, the point about the absolute number is that you would get less variation and therefore, if you were also to have a proportion target, the task of explaining generally - and I think this is meant really for public consumption - how well the process was doing would become much more complicated. One of the problems, and this is much more Home Office business than mine, from my experience in the Home Office, was that having to explain movements in criminal statistics is always very difficult. It is a fact that crime has come down overall by 25% since 1997, but, within that, the pattern of different sorts of crime has changed. What people respond to, as it were, is the more immediate experiences rather than the general trends. If you are setting an absolute number, it just feels like common sense and not over-sophistication. Ross Cranston: As you say, this is primarily Home Office, but I guess we reasoned that, say crime went up enormously, the fact that you are now bringing 1.2 million to justice does not really assuage the community feeling that you do not have a grip on the problem. I guess in our simpleminded way we thought, "Why not let's do?" Could I take you on to the fact that the department has been put on special measures. Q41 Mr Clappison: Could I just ask one question on the crime report. We have heard from you and from ministers about the apparent dramatic reduction in crime over the last few years and we know that one of the Chancellor's targets or agreed targets is to reduce crime by 15%. How is that reconcilable with the ambition set for your department to get 1.2 million cases a year brought to court? Does that mean that lower offences are going to be brought to court than are at the moment or is there some disconnection that I have not spotted between the number of crimes and the number of criminal cases brought to court. Sir Hayden Phillips: First of all, I am happy to say that the 1.2 million/1.25 million longer-term target is indeed a shared one and not placed on us. There are critical contributions from the police in terms of the detection rate and from the CPS in terms of the charging policy. That is a process point. I agree with you, there must come a stage logically, and we are not there yet - and I do not think we necessarily will be there over this period, as announced yesterday, of four or five years of looking for this reduction, and at improvements in crime prevention measures, as much as anything else - in which, if crime were dramatically falling, as it were, the numbers you would be bringing to justice, depending on the nature of the crime you investigated, might themselves be expected to fall. That would be "a good thing." Logically. But I do not think on those trends we are there yet, nor would I necessarily expect us to be there in the foreseeable three or four years. Q42 Peter Bottomley: To be explicit, central government has not told you to expect a smaller number of crimes to be taken through the courts during the next four years. Sir Hayden Phillips: No. Q43 Ross Cranston: Could I take you to this point about special measures. In your helpful note, again at page 16, you tell us something about that. Why was the department put on special notice? Sir Hayden Phillips: Perhaps I could try to explain how I feel about this personally. There is a bit of history here. I observed during my first few years in the Lord Chancellor's Department that year-on-year at around Christmas time I was told we were going to overspend on our budget, particularly in relation to legal aid, and each year we put in a reserve claim at the end of the year to cover it. Quite often, that reserve claim turned out not to be necessary. In 2002 - and I am trying to do this by anecdote because it brings out the problem - I was told we needed a reserve claim of £40-odd million and I used up some considerable personal capital in the chief secretary of the day to persuade him that that was all right. He agreed. Then, as a result of a bureaucratic disaster, the supplementary estimate was not laid and therefore we did not get the money, so I spent the next two months sweating quite considerably. But I should have relied on our historic inability to forecast accurately: we came out and we did not need the reserve claim. Q44 Chairman: Because you under-spent in other areas? Sir Hayden Phillips: We under-spent, I forget the amount, and I was told rather cheerfully that it was all right. I thought that this was not a cause for celebration; this was a cause for real concern. That was the point, Mr Cranston, at which I decided that we had to fundamentally reform our finance function and I went into the market place and hired a professional from the private sector who had a proven track record as a finance director in major companies. That we began to put right, but that activity did not take place until the beginning of 2003 on the creation of the Committee. In that year we had a very large reserve claim again, at the point at which I wanted to make some serious changes in the way the department did business and the Treasury wanted to see some serious changes in the way the department did business, so the so-called special measures came together with what I recognised was a real need for the department to change. They amounted to our working extremely closely with the Treasury - on a quarterly basis; regular meetings. We have had for the first time over the last 18 months a set of management accounts that you can absolutely trust and there is one financial story told to everybody, including the Treasury, rather than a series of different figures - which has always been the argument before. I think that has been extremely helpful and the result is that we have been told by the Treasury and by the Chief Secretary that we have genuinely made a major transformation in financial management. Although "special measure" sounds like a terrible imposition on the recalcitrant, it is a part of a fundamental change in the way the department does its professional business in the finance area, and I claim - I would, wouldn't I? - that we now live within our means and we have a good story to tell. I hope that relationship with the Treasury will continue. If you ask me if I want to stay in special measures and whether I like this sort of treatment, I think it is very healthy and very good, and that we should be very open with our banker and we should share the books. That is good for the department and good for the Government. Q45 Chairman: You have answered a number of questions there: you have the Finance Director, Simon Ball; a whole new approach; and one set of figures. Is there anything else in terms of the way the department is run? Sir Hayden Phillips: Yes. We have a process in which the rest of the department and its senior management are locked into making sure that the finance figures are real, that they reflect reality. In government departments in the past, the senior responsibility for money was combined with that of personnel. There was not a professional focus on finance and everybody said, "We leave that to the finance division." The result? Things go wrong. That is no longer the case. Every month my Executive Committee colleagues and I look through the whole of the management accounts to see how things are moving and make adjustments in-year. That is how we were able to manage down our expenditure by £136 million last year, to come in under budget, and for the first time in a decade not to make a reserve claim to the Treasury. Q46 Chairman: You are celebrating not coming off special measures. You like them. Sir Hayden Phillips: I love them, yes. I like this form of bondage! Q47 Ross Cranston: When are you going to come off? Sir Hayden Phillips: I do not have a problem about this. I think quarterly meetings between the Secretary of State and the Chief Secretary, and regular meetings between my Finance Director and Treasury officials in which we go through the figures and see how we are doing, is good for us and it is good for the Treasury's knowledge of us. To take an example, if the legal aid forecasts are genuinely looking as though we will overspend, we are sharing that with the Treasury at an early enough stage for them to ask questions about the underlying reality of the projection, and, therefore, if we did need help from them in the future, for them to be more ready to help because they have been engaged on the ground floor. Q48 Chairman: Is this process only important to the two departments currently on it or is it to be the general practice? Sir Hayden Phillips: I do not know what happens in relation to other departments. Q49 Chairman: Most of them are not on special measures. Sir Hayden Phillips: I find the phrase "special measures" extremely bizarre in a way. I think there must well be other departments where, in terms of looking at the way expenditure is going, the relationship is as close, even if it is not described in this way. Our history of putting in reserve claims when they were not necessary, was one, when I was in the Treasury, I would have thought it was not satisfied with. Ross Cranston: Constructive engagement, the term you used, might be the more appropriate description. Q50 Peter Bottomley: It is much better than that, is it not? Sir Hayden Phillips: It is much better than constructive engagement. It is triumphant success. Q51 Peter Bottomley: Could I pick up on a point on judicial pensions, which appears on page 22 of the supplementary document. There is an explanation that the resource budget plan was expected to have a reduction of £10 million, but, in fact, on reflection, it turned out not to be a reduction of £10 million but an increase of £1 million. That is an £11 million difference, which may not be very significant. Were the £10 million of judicial salaries being paid out of an account that no-one had spotted? Would there at some stage be the possibility of a little note explaining how either the number of judges or what they were paid or where they were paid from was not always known? Sir Hayden Phillips: I have to confess I cannot answer that off the top of my head. Q52 Chairman: You admitted to us that you over-estimated contributions to the judicial pension fund by £10 million but you have not told us how on earth that could happen. Sir Hayden Phillips: I will tell you. I cannot tell you now but I will give you a note that sets that out clearly. Q53 Ross Cranston: If I may move on to efficiency and other savings, page 11, point 6, of your written document. You tell us about an action plan there. The Corporate Board undertook a rigorous examination of its cost and income base and agreed an action plan. What does that action plan consist of? Is that what you were talking about earlier: trying to get down the number of ineffective criminal trials; dealing with asylum legal aid? Sir Hayden Phillips: Yes. I see the information we have given you on page 11 in point 6 relates to specific actions we have taken over this last year and this coming year to come on stream by 2005. Q54 Ross Cranston: This is what is down at the bottom here, "... action in hand to meet the overall deficit." Sir Hayden Phillips: Yes, up to the end of 2005/6. In response to Dr Whitehead's questions earlier I was talking about our plans to make further efficiency savings over the period from 2005/6 to the end of the SR/04 spending round. At this stage, they are probably not as specific in terms of plans as the ones we describe here which are in action at the moment. But we would certainly go on looking to achieve savings in the areas of where it is relevant and it is sensible additional civil fee income, although I cannot give you figures for what they might be for the future. We would go on, as it is described here, purging unnecessary projects, as it were, that did not fit our priorities. We would certainly go on with trying to make better use of the combined estate of the magistrates' courts, the crown court and the county courts in order to produce savings without reducing services to the public. This mentions innovative facilities management, and one of the things I mentioned earlier in relation to Dr Whitehead's question was that we must look to achieve a smarter procurement of all our goods and services. They are the sorts of areas we would look at, but I am afraid I am not in a position today to give you precise figures for each of those categories for the longer term. Q55 Ross Cranston: You touched on the implications of the Gershon review earlier and I see the figure at table .42 mentions a reduction of 1,100 and also relocation by 2010 of 200. I do not know whether you want to say any more about the implications of Gershon. I would like to ask you specifically about the implications of the Lyons review in terms of relocation as well. Sir Hayden Phillips: The label "Gershon" means the £292 million efficiency savings ---- Q56 Ross Cranston: I suspect you have covered most of it. Sir Hayden Phillips: I think we have covered most of it. I think I have mostly mentioned the areas we will be looking at, including the fundamental review of legal aid - which will make a contribution to that but is not focused on it. On relocation, the numbers we have agreed we will aim to relocate are relatively small: out of the total staff of 26,000 - and I am looking forward to next year - only 200 posts. I think the best thing is to repeat a point I made earlier, that the staff who serve the public directly in individual localities are out of scope, and that is about 90% of our 26,000. Half of the DCA staff, about 7,500, are in London and the South-East but 80% of those are in front-line roles. You are left with a pool of about 1,600 posts in the centre of the department. When we looked at what could sensibly be done, it seemed to us that in our case the realistic thing was to look to the creation of the future organisations and JAC and the tribunals' system as the likely candidates, which brings us to a relatively low figure. You also have to look at the business case for this. The full cost is relocations by £50,000 a head, and it takes quite a long time for that to pay back. For understandable reasons, I think, in terms of the way in which we deliver our services, we are at the low end of the numbers ------ Ross Cranston: I just noticed that Lyons estimated that some 1,200 to 1,600 might be relocated - and you will always remember Dudley in your relocation plans! Q57 Chairman: And Berwick-upon-Tweed as well! Sir Hayden Phillips: If I could have a list of the constituencies. The trouble is, Chairman, my influence may no longer be quite as powerful as it has been! Q58 Keith Vaz: Are you disappointed that over six years you have failed to implement a diversity agenda in your department? The department is still, in a sense, exactly the same as it was six years ago. Sir Hayden Phillips: I think that is a little unfair. A diversity agenda we do have. Quite a bit of action has been taken in terms of the way we work to enable that to happen. We have some very powerful networks in the department, both in relation to ethnic minorities and to other groups. We have managed to win an award for work/life balance; we have a record on dealing with general issues and the encouragement of women returning to work which is really very good. I am not trying to be complacent. This is an area in which, as you know, I have been engaged ever since the 1970s. Q59 Keith Vaz: You have been, and that is what disappoints me. Sir Hayden Phillips: In terms of practical advance, of all the areas of administration it is one of the most intractable I have found over many years. Q60 Keith Vaz: But you have had the support of the Corporate Board. I gather one of the things the Corporate Board has done is to give you strategic guidance on diversity - you have discussed it at these board meetings - but, if you give us the statistics, they will show that there are very few black and Asian people at the highest levels of your department and very few women. In fact, if you look at the board itself, you only have Clare Dodgson, who is there because she is Chief Executive of the Legal Services Commission, and Barbara Thomas, who seems to come from a private company. You do not seem to be able to promote and retain black and Asian people and women in the highest levels of your department. Sir Hayden Phillips: I think if you just look at the top slice ---- Q61 Keith Vaz: What are the figures? Sir Hayden Phillips: I will ask for the figures to be found. I think we have a good number of women in senior civil service in the department and I have no reason to think the best of those will not come through and go to the top level. I will give you the figures now. Of the staff in the senior civil service, 32% are women, and our target for next year is 34%. We are below target on ethnic minorities: 3%, as opposed to a target in 2005 of 4.7%; and on disabled we are at 3% with a target of 4.5%. I know recently, certainly in relation to senior civil service, we have just recruited two very good members of staff from ethnic minorities, which is a small breakthrough which has occurred in the last year. I am in no sense complacent. You know that. As I say, this has been an intractable problem for many years. The tricky issue always is taking effective action. I think we are now going to have to settle down to more vigorously try to make sure that the general opportunities available are good, and, secondly, that we do not just concentrate on what I might call the recruitment process - which is, in a sense, the most straightforward way in which you increase the diversity of your workforce - but try to deal better with the stock of people now in the department, as it were, and provide them with the opportunities that they may not so far have had. But, in various jobs, I have found this one of the most disappointing aspects of development: you can make a great personal effort, then you go away and leave the scene and the thing drifts back again and it is no better than it was before we started. Q62 Keith Vaz: Remind me, did you create the Executive Board and the Corporate Board during your time as ---- Sir Hayden Phillips: Yes. Q63 Keith Vaz: Have they been useful additions to the way in which the department has been run? Sir Hayden Phillips: Yes. First of all, the important step we took at the beginning of 2003 was to reduce the size of the top management team that met regularly together from eight or nine, or ten sometimes, to five. That produced a way of corporate working which was invaluable from my point of view. My experience is that things would drift up from all over the department and end up on my desk or the Lord Chancellor's desk or someone else's desk without real coordination having taken place. That made a real difference. I also tried to make sure that the jobs at the top overlapped, so that it was not possible for serious big decisions to be taken without there being coordination among those key five people - myself and the four directors general; sadly, none of them women. From that base - which is a strong base - we have been able to increase the size of the board now to include the new Chief Executive of the Unified Course Administration, Sir Ron de Witt, and Clare Dodgson. It is very important that the Legal Services Commission, which spends £2 million of our £3 billion - although it is an NDPP and we respect their independence in terms of individual decisions - were a real part of the strategic decision-making process. The trick then - which is now the current practice - was to get some non-executive directors who would meet us as the Corporate Board, not as the Executive Committee - as it were, so we dealt with big issues when they were there - and they are there to challenge us and to bring their professional expertise to bear and we have set out in our note their names and their backgrounds. The one comment I might make was that it is something of a breakthrough, as you would realise, to have the Deputy Chief Justice of England and Wales as a non-executive director of the departmental board. Q64 Keith Vaz: This is Lord Justice Judge. Sir Hayden Phillips: Igor Judge. Q65 Keith Vaz: When he criticises, for example, the civil legal aid provisions and what is happening on the criminal defence bill, do you take that more seriously because he is a member of your board? Sir Hayden Phillips: I hope we will take very seriously the fact that we will have debated his reservations in the board discussions before it suddenly emerges, if that is what he wanted, into the public prints. More seriously, one of the things I would flag up that we have achieved over the last six years - and I have played a small part in that - is a better partnership with the judiciary in managing the system than had existed before. I think you would get the same evidence fro the Lord Chief Justice and from Igor. Q66 Keith Vaz: Going back to the question that Mr Bottomley put to you earlier on, for the last six years the department has faced a number of crises, and serenely the department seems to have survived. I think he was making the point that the reason for this was because you were there and you were able to steer the department through the problems that have occurred. Are you sound free? Sir Hayden Phillips: I have stepped past Mr Bottomley's dangerous compliment and I think I will step past yours. Q67 Keith Vaz: You have been in the civil service for 30 years. Sir Hayden Phillips: Thirty-seven. Q68 Keith Vaz: It has changed a lot, has it not, in that period? Sir Hayden Phillips: Yes. Q69 Keith Vaz: Have civil servants in your department become more politicised? Sir Hayden Phillips: No. Q70 Keith Vaz: How have you made sure this has not happened? Sir Hayden Phillips: Because the cultural traditions of independence, objectivity, non party-political behaviour remain exactly as they were. I see no difference at all ----- Q71 Chairman: That is not true everywhere, is it? Sir Hayden Phillips: -- between the attitudes of my younger staff and their values from the ones I held when I joined. One of the things I try to do, Chairman, is to talk as often as possible to Civil Service College, to groups of young, new, fast-stream entrants. I do not give them a speech, I answer their questions. I am always encouraged by that but they always ask me the question: Has there been politicisation? I give them my honest answer, that in party-political terms there has not. I believe that remains absolutely the case. Q72 Keith Vaz: But you are the most senior of the Permanent Secretaries. Sir Hayden Phillips: Yes. Q73 Keith Vaz: And all correspondence for the Cabinet Secretary goes to you first before it is copied to all your Wednesday morning colleagues. The Chairman has tried to bring in this point: This has not happened in other departments has it? The civil service has become more politicised. Your department's whole identity has changed. It has gone from being this 18th century quill-pen department into a major department of state and therefore when you drop the façade of the Lord Chancellor's Office and the department being what it was, you become open to criticism in a much more robust way. Should that not meant that you need to be more political? Sir Hayden Phillips: No. I follow the points but I do not believe the logic is correct. Indeed, I am, as I said earlier, encouraged by the fact that young entrants, whether from my department or more generally, have very similar values to those that make people want to become civil servants in the first place, and they are concerned to ask me whether what they read in the newspapers about politicisation is true and I give them the straightforward answer I have tried to give you. Q74 Keith Vaz: As the department's identity has changed over the last six years, do you think there has been a failure to communicate your message and your ethos more effectively to the public because of that change? The Chairman mentioned the website. That is just one example of perhaps the technical problem you were having in putting across your message. Has there been a lack of communication with the public as this change has gone ahead? Would you have liked to have done more? Can more be done by your successor? Sir Hayden Phillips: I would have liked to have seen more done. I think I particularly felt that before the changes to 12 June. I thought the Lord Chancellor's Department had itself changed substantially. I think the creation of your Select Committee, Chairman, was a recognition of the fact that it was no longer, as it were, shall we say a 19th century rather than an 18th century quill-pen thing, that it was not just simply looking after the judges or repeating what the judges said, that it was actually trying to relate more specifically to the public more generally. When, for example, it also gained a whole ramp of constitutional issues from the Home Office, the Cabinet Office and the former DTLR, that changed the nature of the core of the department and gave it many more politically sensitive issues to handle than it had had before, but I do not think any of that blew back on any politicisation. I do believe, however, there is a task which I have not completed and got right, of communicating what we are about to a wider public - but you then have to make a careful distinction between that and what looks like just the ordinary propaganda you get from organisations saying how wonderful they are. Q75 Keith Vaz: Sure. Sir Hayden Phillips: That is not what you are on about; it is about trying to get hold of the changed nature of the way we are and what we are trying to do. Q76 Keith Vaz: Indeed. Let us be crystal clear about 12 June. You were not consulted or told about these changes until after they had been agreed, is that correct? Sir Hayden Phillips: No, I believe I have always made it clear to the Committee that I was aware in advance of what was planned. But I have always been very careful to say the confidences I have around that I will keep. Q77 Keith Vaz: Was the then Lord Chancellor aware? Sir Hayden Phillips: He was aware about the time I was aware. Q78 Keith Vaz: Now that we have begun the process of those changes and we have the department becoming basically a very big, political Whitehall Department - and you have mentioned the challenges that you think your successor faces - is it now the case that this department does not have to be headed by a lawyer? There is no requirement that the Secretary of State for Constitutional Affairs should be a lawyer, as there is no requirement that the Permanent Secretary for the department should be a lawyer. Sir Hayden Phillips: This is a current and highly topical debate, which is taking place I believe in the House of Lords this very day. The Government's position has been clear: the Government does not believe that the office of Secretary of State for Constitutional Affairs should automatically be held by someone who is a senior lawyer, but it does not believe it should automatically be held by someone who is a Member of the Upper House. There are a number of Members of the House of Lords and possibly others who take a different view but that is the Government's position. Q79 Keith Vaz: What is your position? As you come to the end of your 37 years, having had to control all these lawyers over the last six years and not being one yourself? Sir Hayden Phillips: I think I can still, for the next 14 working days, take refuge properly in the fact that I am here to explain what the Government's position is. But I make one side comment: If I look back over my 37 years, I have worked with ministers in other departments from the one I am now in who were not lawyers but who were as sensitive to issues about the rule of law and the independence of the judiciary as any Lord Chancellor could have been, and that is about temperament, style, intellect and understanding and not about your professional qualifications. That is my only historical observation. Chairman: I think we need to move on, because there are three substantive areas we must try to deal with and a matter Mr Clappison wishes to deal with, otherwise we will run out of our permitted time. Q80 Mr Clappison: I am intrigued by the answer you gave to Mr Vaz when you said that you became aware of the changes which were proposed to the position of the Lord Chancellor at the same time as the Lord Chancellor. Could I ask you - and I hope this will not involve you giving away any confidences - when that was? Sir Hayden Phillips: Chairman, I think I am going to ask for protection from the Chair now. I think I have gone as far as I reasonably can to help the Committee in this area. I owe a duty of confidence about these things to the Prime Minister and to the former Lord Chancellor and I do not intend to break it. Q81 Chairman: They are questions we can perfectly well put to the Lord Chancellor and may well do so again. May I turn to the department's estate. You are about to move into the Home Office building. Have you learned any lessons from the operation of putting that together? Sir Hayden Phillips: As far as I know - and I checked on this recently - the work is being done solidly and well. It is a big enterprise. It is of considerable value to the Government as a whole that the Home Office does not have to surrender the lease and then start again, so there is a substantial saving to the taxpayer of about £130 million as a result of our going into what is the Home Office building. There is a considerable advantage to the department, which is across a number of scattered sites, to be able to bring these various groups in different buildings together. I hope that will reinforce and reinvigorate some of what I would describe as the greater corporate sense of the Department for Constitutional Affairs, if they are altogether in the same building. But the Home Office I think do not leave the building until next year, 2005 early 2006, and I think my department is not scheduled to go in there until 2007. We are still quite a long way away and the planning stages have a long way to go. I am not sure I have much more detail to offer the Committee on that. Q82 Chairman: Your department and the court service are the custodians of an extraordinary wealth of historic buildings, some of them valued as much for their interior layout as for their exterior. Over 800 courthouses have closed since the Second World War and a recent report by SAVE Britain's Heritage drew attention to the very significant loss of historic buildings involved. Does the Minstrel Street development in Manchester provide evidence that the department really has changed its attitude, in that not only has it responded to the public desire to keep the courthouses in use but also it sees the value of using and, where necessary, incorporating in larger facilities the treasury of historic buildings that it has? Sir Hayden Phillips: We have a rich heritage in the courts. I personally would not want to see that diluted. A lot of these historic court centres are at the centre of towns and are therefore of civic importance, and actually in terms of environmental development making use of excellent heritage buildings is of value. We have worked quite closely with SAVE over the three years while they were incubating their report. I think they started off thinking we were probably a bunch of philistines and came to the conclusion in the end that that view was grossly unfair, and that we had, as you have described, changed attitudes. I think there is partly a change of attitude. We have appointed an architectural advisor and we get conservations specialist consultants to help us on our buildings. There is only one building now that is on the at-risk register and that is not a major courthouse on our estate. I hope that we can continue to do that. If, for example, we can add sensitively to a historic building, to make it a more efficient place, that is better than rejecting the historic building and creating something new somewhere else. I hope that policy will be continued by the department when I have gone. Q83 Chairman: Is that a recognised policy within the department now? Sir Hayden Phillips: Yes. Absolutely. We have tried to do that closely with the Commission for the Built Environment. We have tried to make sure in relation to both the conservation and the preservation of historic courthouses that we do that, and, wherever possible when designing new buildings, we have tried to make sure they are of architectural significance. Courthouses are a significant civic statement and we have managed to win an award for that. These things are worth cherishing. Of course there are problems with some of these historic buildings in terms of the Disability Discrimination Act but we have managed in most of them to do the sorts of conversions for those physically incapacitated to handle that. Where we have not, we have a policy of trying to make sure the cases are listed in an alternative court which has the facilities so that people are put to less trouble. The combination of trying to preserve the historic environment of courts and to celebrate, if you like, the value of these buildings architecturally, while making them fit for purpose for everybody who needs to use them, is the policy of the department. Q84 Chairman: In the course of your consideration of the Supreme Court's location, have you had discussions with English Heritage about what might or not be done to Middlesex Guildhall if that were chosen? Sir Hayden Phillips: Yes. We are in the process of those discussions now. We had some earlier discussions about the differing degrees of adaptation that might be required. We now have to go through those thoroughly with a view to meeting the commitment we have made for an announcement of the result in the autumn - precisely when, I do not know. We shall need to through that with English Heritage very thoroughly, both for Middlesex Guildhall and, indeed, Somerset House, and we are engaged with them now. Q85 Chairman: Both of those are still actively under consideration. Sir Hayden Phillips: Yes. The work will take place during August and September. Q86 Chairman: The Commercial, Technology and Construction Courts at St Dunstan's House are not satisfactorily housed. They are courts which are very significant export earners for this country. Lord Woolf has referred to them as "flagship courts which attract business to this country from abroad". When are you going to solve this problem? Sir Hayden Phillips: I cannot give you a precise timetable, but the plan is that we should get rid of St Dunstan's House and create, on the Royal Courts of Justice site, a commercial court. At the moment I think that means doing things to what is called the Queen's Building there. I am not absolutely up to speed, Chairman, on that. Would you like me to give you a note about where we have got to on the commercial court project? I think that would be the easiest way to inform the Committee. Chairman: We would certainly like to see a note indicating the progress, with a conclusion in sight. This is a very important issue. Q87 Mr Clappison: Could I turn to court fees and access to justice. I have two questions. Are you concerned that people with legal claims will be discouraged from bringing cases to court as a consequence of the department's policy on moving towards full cost recovery. Secondly, do you have any estimate of the number of litigants who will no longer seek recourse to the courts as a result of those initiatives? Sir Hayden Phillips: I cannot answer the second question. I need notice of that, but if there is an estimate that we have made I will give it to you. Q88 Mr Clappison: Thank you. Sir Hayden Phillips: As far as the first question is concerned, this is a question of moving towards full cost recovery; it is not just saying that everything has to be paid for from tomorrow, and we do have a range of areas in which I expect subsidy will properly continue: family proceedings, domestic violence, child contact, adoption and things of that sort, and all those who are on means-tested benefits. We have to try to balance the value of properly charging where it is reasonable to do so at reasonable levels, which helps us to the extent that we can then secure the funds for the courts, as it were, without having to engage in the debate about other priorities, because we can then make sure those fees are locked in, and without doing it to the extent that would be damaging in the longer-term. I think we would be expecting to move overall to around 80 % recovery over the next year or so. Q89 Mr Clappison: As you have acknowledged, there are some important types of litigant who have to be protected, such as in family cases, and other people have to be protected because of very low incomes. There is also a balance to be struck in the public subsidy of the courts. But you will bear in mind the interests of the ordinary man in the street as a litigant in this when you set the costs. Sir Hayden Phillips: Absolutely. Q90 Mr Clappison: You have very helpfully given us a table on page 36 of your answers, setting out the fees income against expenditure for each of the types of courts. Setting aside the family courts, where there is a very important interest at stake, as we have acknowledged, and turning to the county courts and the high courts, the county courts, it would appear, are generating more fee income than the cost and providing you with a subsidy, whilst the high courts are being very heavily subsidised because the fees income is falling well short of the cost. Bearing in mind that the man in the street, if he has a legal claim, is very likely to be going to the county court - the small businessman, the person with a grievance arising out of contract and so forth - why is it that they are bearing so much more of the costs than the probably much bigger concerns, the companies, the international litigants, you are trying to attract who go to the high court? Sir Hayden Phillips: It is partly the sheer volume of business and the level at which you can reasonably set fees in the county court. If you look at the probate area, that has been cross-subsidising the rest for a number of years now. We are proposing there - and we are consulting at the moment on this - a reduction, so that income is kept in line with expenditure, so that we no longer, as it were, cross-subsidise in that way. I think we probably need to look under the breakdown of the sorts of cases that are going there to explain that fully and I cannot do that straight away. I am sure I can give you an explanation in more detail, if you would like it, as to that variation. Q91 Mr Clappison: But you will bear in mind that the man in the street, with the type of case they going to have as a consumer or a small businessman or a small landlord, is going to be using the county court. The man in the street will be using the county court rather than the high court. Sir Hayden Phillips: Absolutely. Q92 Ross Cranston: The trend for the county court is actually favourable. For 2003/4 there is only a very small amount of cost recovery of 104%, whereas earlier, in 2001/2, it was 116%. Sir Hayden Phillips: That progressive rebalancing year-on-year is what we are trying to achieve, but obviously we do not want to change the fees sharply and we try to do it, where we need to, very gently if we can. Q93 Mr Clappison: Will you be seeking a full cost recovery or a cash target for the proposed Supreme Court? Sir Hayden Phillips: Yes. I think we have already announced that as far as civil cases are concerned we would follow the same policy. I forget the precise figure, but that will be loaded not onto the individual cases that come into the court, which produce massively high fees, but on to general civil litigation across England and Wales. I think the sums of money that would be involved there in terms of the increase are very, very small indeed to pay for the Supreme Court. Types of cases other than civil litigation will be funded from public expenditure in the normal way. Q94 Chairman: You are aware obviously that members of the judiciary often express extreme unhappiness with a full costs' recovery policy and its implications for access to justice and the fairness of the proceedings that they are conducting. Sir Hayden Phillips: They do. I have had discussion over my time, Chairman, with them about that. I think we have reached a point where we have agreed to join up somewhere in the middle in this debate, in the sense that we do make it clear that there are certain categories and types of cases for which we do believe subsidy is right. A test, as Mr Clappison was implying, is access to justice. If there was real evidence that that was genuinely being threatened in individual cases - and I think it is individual cases that matter; we have to look at the detail here - then I think that would be very worrying. But, as far as I know at the moment, our discussions with the judiciary, particularly on the current round of fees' increases and a progressive move towards full cost recovery, are at the moment supported by the Master of the Rolls who has often been the most outspoken in this area. Q95 Chairman: You do accept that there is a public interest in the law being defined which goes beyond the interests of the participants in some of the cases involved, and there is also a public responsibility, if we in Parliament, for example, have not made the law sufficiently clear or the regulations have not made the law sufficiently clear, for the costs which arise from having to clarify it through the courts. Sir Hayden Phillips: I accept that. You will also know, however, that I am dealing with two important principles here: one is the one you have enunciated and the other is the one that the Treasury have enunciated, and my job is to try to make sure this marriage of convenience works. Q96 Mrs Cryer: Could I touch briefly on yesterday's Spending Review. Apparently the new PSA objective 2, target 5, is "to achieve earlier and more proportionate resolution of legal problems and disputes and by: increasing advice on disputes to help people resolve their disputes earlier and more effectively; increasing the opportunities for people to settle out of court; and reducing delays in resolving disputes that must be decided by the courts. Because we are running out of time, could I just push on and ask about the middle item there, alternative dispute resolution. What is the department doing to encourage mediation and other forms of dispute resolution? Sir Hayden Phillips: To be very specific, we have an automatic referral scheme for mediation with which we are experimenting at the Central London Civil Justice Centre. We have a mediation advisor now in the Manchester County Court, actually there, so we can see how that works, and in 28 other courts we have new information, leaflets and other things, which we will give to people so they can consider whether they might benefit from mediation. We have a national helpline on this and we are doing a national awareness campaign with the mediation sector - which is a great variety of different types of people. Mr Cranston knows about this. We are discussing this in general but you really have to look at the individual type of case you are dealing with to see whether mediation can work better than it does now. Of course, Lord Irving announced, I think in 2001, that the Government had committed itself to look at mediation in all its civil contract cases with the agreement of the other party. I do not have the figures with me now but I think we did something like 40 mediated cases in the first year and that is now very, very substantially greater. If I may, I will send that information to the Committee because it is very important that the Government itself sets an example in this area, if that is our policy. I am sorry to go on at some length, but that is where we are now. I will obviously send you more information if you would like some more later on. Q97 Mrs Cryer: Thank you. Clearly we are moving in a pretty big way in that direction. What assessment has been made of the likely savings to the court service eventually, having implemented mediation? Sir Hayden Phillips: I think it is too early to say in general terms what sort of savings this might lead to. As I say, the issue is not: mediation across the board, taking cases out of court, what will that imply for court costs? We are looking at a whole series of individual examples of where it might be effective. When we evaluate those pilot schemes is the point at which we will make an assessment of where there might be savings. Some of these schemes are, as it were, integrated into the court itself. I think it will be interesting there to see how that changes the cost balance, but at the moment I could not give you a safe figure for how much we would save. Q98 Mrs Cryer: Could you very briefly touch on reducing delays in resolving disputes that must go to court? What is to be done to reduce those delays? I have a lot of experience of this through constituents. Sir Hayden Phillips: The main things being done are a stronger role for the judge in managing the cases and the parties. Certainly, following the Civil Justice Reforms that Lord Woolf proposed, we have made quite a bit of progress over the last few years in reducing some of the timescales involved in civil litigation. Secondly, we are trying to drive down the time taken for the more difficult family care cases, in the way I described earlier. In the criminal courts we are very dependent on trying to make sure that the relationship between the police, the prosecutor, the court staff and the defendant is managed by the judge. This is a new style of judicial management of cases. It will come, it will develop, and that, it seems to me, is the best guarantee of having a grip on the case, rather than just leaving it to the parties to decide when they are ready. Really proactive management of cases is the way we are best trying to achieve these reductions in time. Mrs Cryer: Thank you very much. Q99 Chairman: We have taken full advantage of the opportunity to question you for the last time, taking you right up to the maximum time. We would like to thank you for the courtesy and cooperation you have given to the Committee during our period of co-existence. I am sure the Members of the Committee would want to wish you all the very best in retirement. Sir Hayden Phillips: Thank you very much, Chairman. Could I just say two things. First, it would be wrong for me not to say today how much we and the department regret, and I know the Committee will too, the recent death of two senior judicial figures, Lord Justice Kay, very suddenly, who helped us enormously on criminal justice and the Recorder of London Michael Hyam. For the record, I thought it was right I should say that has been quite a blow. They played two key parts with us in the justice system. Secondly, Chairman, thank you very much for your good wishes. I have actually enjoyed appearing before you. I hope you have found me reasonably open and I hope that tradition will continue. I am delighted to say the Committee arrived on the scene at the moment when my extra 18 months kicked in, so whatever we have wrought together has been done in that time. Chairman: You will be a hard act to follow, but we look forward to seeing you successor. |