Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 120-134)

Wednesday 10 December 2003

Mr David Anderson, Professor Mansel Aylward CB, Mr John Sumner, and Mr Simon Chipperfield, examined.

  Q120  Chairman: Why do you not know whether you can answer it? Are you refusing to answer or do you not know the answer, or what?

  Mr Chipperfield: It is not that I am refusing to answer. It is that I am not clear on the extent to which I am permitted under the nature of the contract to reveal the commercial arrangements of the contract. I need to take advice from the Department on these questions, if you do not mind.

  Mr Anderson: I was going to suggest that we came back to you in the form of a note. One of the issues is that presently we are in the process of early re-tendering for this contract and there are several bidders involved in that process and therefore publicising some detailed numbers at this point might prejudice that process.

  Q121  Mr Bacon: Perhaps you could give us a confidential note.[8]

  Mr Chipperfield: I am not refusing; it is merely that I am looking for guidance from my customer as to what I am able to say.

  Q122  Mr Bacon: I understand. Mr Chipperfield, would you say that overall the contract is profitable?

  Mr Chipperfield: It is just about profitable.

  Q123  Mr Bacon: Is it correct that the only way you can make any profit is to avoid ordering Incapacity Benefit assessments?

  Mr Chipperfield: That would be totally incorrect.

  Q124  Mr Bacon: That would be totally incorrect. Do you have an informal target, where you expect that roughly 50% of the applicants would be deemed unfit for work at the medical scrutiny stage so that they do not end up having an assessment which costs you money?

  Mr Chipperfield: No.

  Q125  Mr Bacon: You have no informal target, no covert target.

  Mr Chipperfield: No, we work to scrutiny guidelines. The calling rate, to which you are referring, which is the rate at which the doctor makes the decision whether someone qualifies at the scrutiny stage or whether it is necessary to call for exam, fluctuates all of the time. Currently it fluctuates between the early 50%s and into the early 60%s. It varies from centre to centre. It is not a rate that we manage in any way, shape or form. It is totally the decision of the doctor using the scrutiny guidelines as laid down by the Chief Medical Advisor.

  Q126  Mr Bacon: Mr Anderson, you are spending £18 billion of taxpayers' money. 1% of that would be £180 million. You are only giving Mr Chipperfield £80 million. Do you honestly think that you are spending enough money on checking whether the people who are getting this £18,000 million of taxpayers' money all deserve it?

  Mr Anderson: Yes, I believe that the processes we have in place for making the decisions are fit for purpose.

  Q127  Mr Bacon: A national charity will boast if its administration costs are 2% to 4% and that 95% gets through to the good cause. You are spending less than half of 1% on making sure that this £18,000 million ends up in the right place.

  Mr Anderson: I do not believe that is correct.

  Q128  Mr Bacon: It says £18,000 million. Mr Chipperfield gets £80 million and, doing the maths in my head, 10% is £1.8 billion, 1% is £180 million, divide that by two gives you £90 million which would be 0.5%, so half of 1% would be £90 million and you are giving him £80 million, you are giving him less than half of 1%.

  Mr Anderson: Mr Chipperfield's company does not fulfil the whole of the process in administering the £18 billion of benefit. Quite clearly there is a terrific amount of activity which takes place inside DWP to administer that benefit which is not included in that £80 million.

  Q129  Mr Bacon: Could you give us a note on how much the value of that activity is?

  Mr Anderson: I do not believe that information is currently available. Since the merger of the Benefits Agency and the old Employment Service, we have not yet implemented a new unit costing system.

  Q130  Mr Bacon: So you cannot say how much money you are spending on checking this £18 billion.

  Mr Anderson: No. That information ought to become available as that system is developed during the course of next year.

  Q131  Chairman: Reference was made there to the next contract. How do you think it will deliver more innovation and service quality improvements?

  Mr Anderson: Obviously we have learned during the course of this contract and we would like to put that experience into the tendering process. A number of firms have asked to be included in the process and they have been asked to make their own suggestions as to how the service delivery could be improved as part of the tendering process. We have five years' worth of experience of operating the contract that we did not have last time we let it and we would hope that we could improve it as a result. It is fair to say that since the extension to the contract, significant new targets were included for Schlumberger which have produced some of the improvements which are shown in this Report.

  Chairman: That is a complete non answer to the question I asked you. When you have had a chance to look at the transcript, you may be able to give us more information in a note.[9]

  Q132  Jon Cruddas: One brief question. Can you quantify the number of appeals proportionately where your doctors, DWP doctors, sit on compared with Appeals Service doctors?

  Professor Aylward: How many appeals doctors who work for SchlumbergerSema sit on appeals?

  Q133  Jon Cruddas: Yes.

  Professor Aylward: I cannot give you that figure, but I can provide it.[10]

  Q134  Jon Cruddas: Could you provide it? A lot of questions have revolved around the difference between the different doctors, so that would be useful.

  Mr Chipperfield: If I may answer, I do not know the exact figure, but I believe it is quite small, no more than 10 to 20.

  Jon Cruddas: It is only because I received a letter from a disability information advice line and their main source of criticism was the number of doctors sitting on appeals who had sat on initial cases; not necessarily the same cases but as part of the same pool. Therefore they were questioning the actual relative independence of the appeals systems themselves. It would be useful to know what the proportions are.

  Mr Bacon: May I just say that I think it is a matter of severe concern that the Department cannot say how much money is spent scrutinising this process? I very much hope that our report will reflect that.

  Chairman: Thank you very much, Mr Bacon. Thank you, gentlemen, for coming to see us this afternoon. Clearly progress has been made since our last report and no doubt we shall be looking in our report as to how further progress can be made and another £50 million saved with a bit of luck. Thank you very much.





8   Commercial in confidence-not printed. Back

9   Ev 17-18. Back

10   Ev 18. Back


 
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