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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 96-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE SCIENCE AND TECHNOLOGY COMMITTEE
Wednesday 15 December 2004 MR STEPHEN RIMMER, MR TIM WILSON and MR MIKE SILVERMAN DR DAVE WERRETT and MR BILL GRIFFITHS Evidence heard in Public Questions 1 - 143
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Science and Technology Committee on Wednesday 15 December 2004 Members present Dr Ian Gibson, in the Chair Dr Evan Harris Dr Brian Iddon Mr Robert Key Mr Tony McWalter Bob Spink Dr Desmond Turner ________________
Examination of Witnesses
Witnesses: Mr Stephen Rimmer, Director of Policing Policy, Mr Tim Wilson, Head of Science Policy Unit, and Mr Mike Silverman, Forensic Pathology, Science Policy Unit, the Home Office, examined. Q1 Chairman: Thank you very much for waiting. I am sorry, it is the end of the year and there are lots of arguments going on about various other inquiries that we are involved in. It is another day and another inquiry and you are the first, and thank you very much. It is nice to see lots of suits but no white lab coats, but I am sure some of the people here get bedecked in them now and again and are very interested in this forensic science inquiry of ours. I will let you, Tim, introduce your team first, but thank you very much for coming and my penetrating Committee will be asking you some questions which I am sure you will enjoy. Mr Rimmer: I am Stephen Rimmer. I am director of policing policy in the Home Office. I have got responsibility for all police issues within the Home Office, including its relationships with key partners such as the Forensic Science Service. Mr Wilson: I am Tim Wilson, the head of the Science Policy Unit, responsible for work on the transition of the FSS but also for the DNA expansion programme and forensic science and forensic pathology in general. Mr Silverman: I am Mike Silverman. I work with Tim in the Science Policy Unit. I have in the past been an operational forensic scientist for some twelve years for the Metropolitan Police and have been a purchaser of forensic science as a scientific support manager with Kent and I have worked for a while with the Forensic Science Service in their national accounts department. Q2 Chairman: Great. Is one of you going to answer? If you want to have three of you answering something just indicate, but we have a lot of questions and since you are first up to bat the bowling gets fast. Mr Rimmer: I will normally kick off but my colleagues may then add to that, if that is okay. Q3 Chairman: Okay, Stephen. Thank you. Your memorandum refers to systemic weaknesses. Are there? Is it in a bad state? Is it in a mess? Is it a shambles, or what? Give us the picture, please. Mr Rimmer: The picture as ministers see it is that the Forensic Science Service has been a very successful trading fund. Q4 Chairman: Who says so? Mr Rimmer: Ministers. Q5 Chairman: How many? Mr Rimmer: Well, the current Home Secretary is firmly of that view. Q6 Chairman: That is David Blunkett, who thinks you are a success. Okay. Mr Rimmer: He thinks the Forensic Science Service is a success, yes, and that it has delivered high quality services to the Criminal Justice system over a number of years as a trading fund. However, they also are very clear that the FSS has reached its limits in terms of capability while operating as a trading fund and that there is a number of significant factors which are now starting to militate against optimum performance for the organisation. We have set those out in the evidence, but just briefly to summarise those, if I may, first of all increasingly the forensic science market is a highly competitive one and the competition is increasing year by year its market share. Secondly, as this Committee will be well aware, the technological changes are fast and evolving around issues such as DNA miniaturisation and the need to respond rapidly to those changes is not one that ministers believe the trading fund status will deliver. Thirdly, the procurement environment for the principal customer at the moment of Forensic Science Service (i.e. the police service and indeed the Criminal Justice system more generally) is becoming increasingly driven by requirements around best value and efficiency, notably after the Gershon Review, which has highlighted procurement as one of the key areas of requirements around efficiency in the public sector and that is entailing a huge culture change within the police service about how it views, how it deals with and contracts with major services such as forensics. Fourthly, the FSS itself, so far as ministers are concerned, badly needs a level of investment in private sector capital and expertise that trading fund status simply cannot provide and under our accounting rules will not in the foreseeable future be able to provide to liberate the Forensic Science Service to compete in that rapidly changing commercial environment, which is essential so far as ministers are concerned. Fifthly, it would be fair to say in some areas of performance while ministers are very clear that the FSS is a success, not a failure, there are concerns around issues, notably timeliness, which is something that (as this Committee knows) has been picked up by both the NAO and the PAC and the general requirement on the system as a whole to improve the numbers of offences brought to justice reinforces in ministers' minds the need to fully equip the Forensic Science Service to deliver the best possible performance. Being a success story as an organisation clearly is not incompatible with changing over time to meet new factors and new environments. Q7 Chairman: Are you happy with the management structure within your forensics because some people, even yourselves, have indicated and you have said so too that really there are some weaknesses there that need addressing. You are a slow, tepid bunch of people who do not get a move on with things and operate in the 21st Century, allegedly. Mr Rimmer: That is absolutely not the Home Office's position. Q8 Chairman: Of course you would say that, but some people think that. How are you going to allay that fear? Mr Rimmer: Well, there is no doubt that part of the challenge about moving to a Government Owned Company in the next few months is to determine the capabilities of the current management. That is clearly part of the process and that will be done rigorously. Q9 Chairman: Tell me more about that. I mean, everybody says that but nothing happens. That is our experience. What are you doing? Are you appointing new people, are you sacking people? Mr Rimmer: Okay. I will ask Tim in a moment to add to this. The most important thing we have done in the last few months - and I am conscious of him sitting there so I will try not to embarrass him - is that the ministers have selected a new non-executive chairman of the FSS about six months ago, something like that, Bill Griffiths, with a strong track record both in private and public sector operations and he has huge confidence from ministers to lead the organisation through major change. Now, it clearly is not only a judgment for him and his non-executives but we will be one of the elements of that process. I will ask Tim to broaden it out, but one of the key elements of that process that you focused on from our perspective is the judgments of the non-executives in how far and how significant the changes are that need to be made within the executive team. That is clearly a key role for the non-executives and for the chairman in particular, but there are other dimensions that Tim might want to add to. Mr Wilson: We are working with the shareholder executive, which is taking a role in respect of Government owned entities across many departments, looking at the corporate governing structure of the FSS, moving from an accounting officer led body to a body which functions under the leadership of a corporate board and works in a more commercially focused way in terms of its strategic and business planning and the professionalisation of its functions. Q10 Chairman: Have you got business people on that board? Mr Wilson: The FSS already has a main board member who is not a forensic scientist and this is one of the issues for the coming months working with Bill Griffiths and the shareholder executive to look at the competences of main board members against the new structure. Q11 Mr Key: So that is a no? Let us be clear, that is no, he does not have industrial experience? Mr Wilson: There is no one with industrial experience on the main board, no, amongst the executive directors. Dr Turner: I am the proud owner of several tee shirts which say, "I told you so." One of them relates to air traffic control and you may remember the saga of the air traffic control partial privatisation (or PPP as Government likes to call it). Mr Key: You mean "Our air is not for sale"? Q12 Dr Turner: "Our air is not for sale," yes, that is the one, except that you guys would have sold it completely! But I do seem to remember that it immediately ran into trouble and had to be bailed out by the Government because the private investment just did not materialise. Now, how confident are you that any partial privatisation of the FSS would not run into similar difficulties? Mr Rimmer: There is a number of dimensions to that. First of all - Q13 Chairman: You can start by saying yes or no! Just say no and then try and defend it. Mr Rimmer: How confident are we? We are confident. I mean, I have to make it clear the Government does not use the term "partial privatisation", they deliberately use the term public private partnership because the Government will continue to have a significant stake in the future of the FSS and I hope that is clear in the evidence and it is important to emphasise that. As far as the investment profile is looking at the moment - and Tim may wish to add to this - our business advisers and ourselves have been already in significant discussions through the shareholder executive and other sources with a wide range of investors and there is no doubt that there is very significant interest in a wide range of the business community about the capabilities and the opportunities facing this organisation. Generally it seems to us out there that there is a general belief amongst potential investors in the intellectual capital on which the FSS is built, the fact that it has a very significant share of a growing market. Q14 Chairman: Is that the City of London or is it the Hull City Council, or what? Mr Rimmer: No, it includes significant investment bodies. We cannot go into details because this is all commercially confidential discussion at the moment. Q15 Chairman: Well, that did not take long. The first five minutes and we are into commercial secrets. Right. Okay. Mr Rimmer: Well, that is the position we are in. The level of interest in the FSS is significant. As I say, the recognition about their role in an expanding market is significant and of course there are going to be risks in moving towards a public private partnership but I would say at this stage the level of interest is, if anything, greater than we had anticipated, but Tim may wish to add to that. Q16 Dr Turner: Are you then saying that commercial investors can see a good return on this, i.e. a profit? Mr Rimmer: Well, of course that is one of their criteria. Q17 Dr Turner: So how do you think this is going to reflect on the prices that police forces are going to have to pay for their investigations? Mr Rimmer: One of the critical issues about the Government remaining a significant player in the future of the FSS - and bear in mind, as I am sure you know, we are not going straight into a public private partnership, we are going to be testing out how, as a Government Owned Company the FSS operates when that milestone is reached sometime next year. But in terms of the Government's role one of its absolutely critical responsibilities is to sort out an effective contractual framework to enable police forces, who at the moment basically do not operate on a contractual basis with the FSS, which leads to all sorts of issues and inefficiencies - that that framework is appropriate for all the interested parties, which includes the Government and ultimately the criminal justice system. Mr Wilson: If I could also pick up one of the previous questions as well, please, NATS raised issues, and I hope that Government has learned from the lessons of NATS, particularly the risks involved and the kind of processes that we have put in place now to assess the risk before we proceed to a stage to take into account the criticisms of transactions like that made particularly by the PAC. In the case of interest in the FSS, there will be no move to the market unless we are sure there is a substantial interest in the market. Also, in taking forward this project we are looking at value for money in two senses; value for money from the potential proceeds from selling a stake in the FSS but also the overriding value for money in terms of the purchase of forensic science services by the police. Now, that market and the services the police need will need investment. It requires equity to support that investment. That costs money and it is a question of getting the right balance so that we obtain value for money with the police getting modern technology which enables detections to increase and to use police manpower more efficiently. Q18 Mr McWalter: Your outline business case says that the FSS as it is currently structured is vulnerable to a loss of business for a number of reasons and a crucial element of that is it is a labour-intensive business and it has got as a result very high fixed costs. That is a very negative way of putting what you have just put positively as the FSS has got a substantial intellectual capital. I mean, the outline business case actually is pretty clear. That is an encumbrance and they want to get rid of it and smash the thing to pieces because it is too expensive compared with these lean commercial organisations which do not have this incubus. Mr Rimmer: No, that is not a fair reflection at all of the outline business case. The outline business case is there absolutely to assess a whole range of strengths and weaknesses of the organisation and it highlights a significant number of strengths as well. Ministers are absolutely clear - and they have said this publicly on a number of occasions - that they do not see this process at all as leading to the dismembering, as it were, of the FSS. Q19 Mr McWalter: In that case why is the outline business case not saying that that is something that is a real problem and you want to get rid of it? Why does it say instead that that is something which it is absolutely vital that it be retained because of the expertise and knowledge that that incorporates? That, by the way, would destroy, as far as I can see, the key argument really in the outline business case. Mr Wilson: May I come back on that point, please. In some respects the FSS is two businesses. There is a high volume of commoditised analytic business that has been driven very much by the expansion in the use of DNA in recent years and the FSS and its competitors have very successfully commoditised much of that work while maintaining high standards. There is a huge intellectual capital, though, in the business on its professional case work, which is added value case work which requires people capable of taking a very holistic view of the issues that arise in a police investigation. That kind of experience is something which needs to be cherished because we have some of the most capable professional forensic scientists in the world. Most of them are in the FSS; some of them are in another organisation also providing services to the police. Q20 Mr McWalter: Well, you are either going to sack people or you are not and if you are going to sack people to make this organisation leaner and more competitive then you should come clean and say so with the consequences that that would involve; or you are going to leave the people in place, in which case the case for this radical change, I think, seems to be very poorly made. Mr Rimmer: I am sorry, that seems to me to be based on a false premise that the FSS is locked in some sort of time warp where people are not going to have to - Q21 Mr McWalter: No, not at all. Mr Rimmer: Well, it is because the FSS has already had to make major restructuring, major reductions as a result of the competitive pressures they are already under and the whole purpose - and this is why ministers are pushing forward on this, it is not on any sort of basis of ideology - is to enable the FSS to compete more effectively in the future so that people working within it can have a fulfilling and rewarding career rather than get slowly over time dismantled because the commercial environment within which police forces are operating is going to look for business elsewhere. Mr McWalter: In an environment where police budgets are constantly under pressure the FSS has suffered enormously from the 1990 changes. That is the reality, is it not? Q22 Mr Key: Mr Rimmer, you told us in your written evidence that the Forensic Science Service is seeing highly trained staff now leaving the FSS to join competitors. Why are they leaving? Mr Rimmer: Well, I do not know the exact numbers and I think you may wish to speak to the FSS itself. We are not here to micro manage the FSS. There are relatively small numbers in recent months who have left the FSS and there is always a turnover of staff. It is an issue which within the Home Office we are going to keep a very close eye on because it could obviously indicate a degree of organisational resilience or lack of it depending on what that level of turnover is, but I would not want to say that at the moment there is any strong evidence that there is a great drift of people leaving the FSS. Q23 Mr Key: I am sorry, but the strong evidence is in the evidence from the FSS. Surely if you are managing this project in the Home Office you cannot say, "Well, it's nothing to do with me, Guv, it's only the FSS who are saying this," because surely they are the very people who have told us, "Highly trained staff are now leaving the FSS to join competitors," and the Home Office argument is therefore, "We've got to join the competitors." Is the answer not just to make conditions better for your existing highly trained staff? Mr Rimmer: No. The issues around turnover are always going to be there in a competitive environment. I am not sure whether it is in the evidence, but I know that the FSS also are able to get people coming back from the commercial environment as well as losing them out. I do not see why that at the moment is an issue of major concern about the transformation process. I am not saying it is nothing to do with us. What I am saying is we need to keep an eye on that in general terms but we are not going to be panicked into individual cases of people moving on which may or may not have something to do with terms and conditions around the FSS or competitors. Q24 Mr Key: We are told, too, that the Home Office's new headquarters under construction will not be able to accommodate all the staff as originally planned. What will happen to the FSS staff? Will they manage to be fitted in to the new headquarters or will there not be room for them? Mr Wilson: It has never been intended that the FSS staff should be located in the Home Office. Their premises are entirely separate from 2 Marsham Street. Could I just comment on the previous question. There is an issue about the rigidity of pay and conditions of service as a trading fund because it is inherently part of Civil Service terms and conditions, which reduces the flexibility in a competitive market for seriously required professional staff and I am sure that Dr Werrett and his colleagues will say something about that. They have conducted exiting views by staff leaving. I do not think that pay and conditions is the sole issue from what I understand, but they will no doubt correct me if I am wrong. Some of the uncertainty about the future direction of the organisation is another issue and clearly with expanding markets people may see opportunities by changing organisations that they see as a challenge which they want to rise to. Q25 Mr Key: What would be the net cost of developing the PPP? In other words, any organisation which is being developed to take account of the new technology is going to cost more even if it were to stay within the Home Office under the existing arrangements? Mr Wilson: Yes. Q26 Mr Key: But what is the difference between that cost and the projected cost of the new PPP? Mr Wilson: The new PPP in terms of transaction costs is currently estimated to be about 3 or £4 million. That partly depends on how the transaction is managed, the number of stages in the transaction, the timetable for the transaction and market conditions at the time of any change. Q27 Chairman: Where are these figures available, this perspective? Mr Wilson: This is a kind of figure that I mentioned when I toured the seven FSS lab laboratory sites and was asked the same question by members of staff. Q28 Dr Turner: So that is the amount of money that you expect to receive for the transaction? Mr Wilson: No, that is a transaction cost. Q29 Dr Turner: Can we be clear what the 3 or £4 million means. Mr Wilson: The transaction cost of employing advisers specifically for - Q30 Dr Turner: Just the consultancy services? Mr Wilson: The consultancy services, yes, and our own internal management costs of that process. Q31 Mr Key: Please could you explain a little more about the nature of this market that is developing and which you are having to compete with. Who are the competitors? Mr Wilson: There are two organisations that have a significant share in the market, Forensic Alliance, who undertake professional case work and with an associate company undertake DNA analysis and other analytical services. They have about eight per cent of market share compared with about 83 per cent of the contested market held by the FSS. There is also LGC Limited. That was previously the laboratory of the Government chemist. They have extensive experience in analytical work and are prominent in DNA analysis. I think Mr Silverman would add something more from direct experience of people active in the market. Mr Silverman: I would also include the police themselves, I think, because they have the greater proportion of the forensic market at the moment. They do most of their own fingerprinting, they do screening within forces and I would suspect that if the market was appropriate and better value could be obtained they would see that they would do more forensic science. Q32 Mr Key: Is the competition all Government owned, in the public sector, or are they PPPs or purely private companies? Mr Wilson: They are two private companies which are backed by venture capitalists. Q33 Dr Iddon: Could I just intervene, Chairman? I have worked with the Greater Manchester Police for thirty days on the police parliamentary scheme and I have visited Bradford Park, which is an amazing establishment, quite frankly. If you go ahead with this PPP and the police are forced to buy from the PPP at a higher price, as Des Turner pointed out, would you not drive more and more of the work in the direction of the police because it would be in their best interests to do it cheaply in-house? Mr Wilson: Best value legislation requires that the police have to critically examine whether to make or buy a function and I do not think anyone would underestimate, following the Gershon Report, the drive within the police on this to achieve economies. The Home Office is supporting the police service in the creation of a centre for procurement excellence as part of an agenda which requires them to achieve three per cent savings over the next three years, 1.5 per cent of which are cashable. So that combined with the best value legislation creates a tremendous pressure on the police to ensure that they are achieving best value. As far as forensic services undertaken in-house and what they buy from external providers, the police need to look collectively at the most sensible way forward in terms of how they sources their services in order to get the most competitive prices while maintaining integrity on which evidential standards rely and quality assurance so that the forensic intelligence that they are making use of for the purpose of detection is actually up to the mark. Mr Rimmer: As well as those pressures on the police, the Government is clearly anticipating that the commercial environment will become increasingly competitive. Those proportions that Tim has outlined are very fast-growing. The FSS has lost about ten per cent of the market share in the last three years. As long as there are parameters around how that competitive environment operates (which is why I go back to the contractual framework of the FSS because that is one of the key leaders to ensure that happens) then the Government welcomes that, not least because it will dovetail with the police's own requirements to manage price in a cost-efficient way. So those two elements, the pressures on the police to deliver best value and the growing commercial competitive environment from the Government's perspective, should dovetail. Q34 Bob Spink: Given that this is the only country in the world that is going this route of PPP for its forensic science service, there are two little areas I want to explore. First of all, how do you maintain public confidence, particularly the confidence of juries, given that forensic science is taking a massively increasing importance in the criminal justice system? Mr Rimmer: Tim will add to this. That is an absolutely central objective for ministers to maintain and build on that public confidence and of course already juries are looking at evidence which has had the involvement of those commercial providers. What matters is obviously the quality threshold of what is being provided through the criminal justice system and how that impacts on the evidence that is presented to juries and courts. There is nothing in the process of me being the FSS to PPP that from a Government perspective is incompatible with maintaining that focus on the delivery of quality services to juries and courts. Tim may want to elaborate on how we are going to do that. Mr Wilson: May I please split the question in two. I think that maintaining the integrity of forensic science is critical irrespective of whether the organisation doing the forensic science is, as it were, owned by Government or in private hands. This is a central issue for the police. Whichever way the market develops the police - and they may well be giving evidence themselves later - firmly expect to see adequate arrangements in place to regulate quality and that is part of the new procurement structure that we will be putting in place. For its part the Government is supporting independent quality within forensic science through its support for the Council for the Registration of Forensic Practitioners. Many FSS staff are so registered. Similarly, we have engaged in a major programme of reform and modernisation with forensic pathology where there have been similar issues arising, although many forensic pathologists are from the NHS and universities. So I think this cuts across where they come from. In terms of international comparisons, I am not a forensic scientist but I think that our standards of integrity and quality assurance bear comparison with anywhere in the world and we should be rightly proud of that. I do not think that that will be lost sight of. Where forensic science is expanding most rapidly in terms of government funding, the United States, they are very much following a mixed economy approach and this is something we have seen in this country because in the tremendous growth of the forensics (in which I am not directly involved) that would not have happened without the capability of working with private ITC companies in order to interrogate computers and the like, particularly in cases of child abuse. So the US is very much going forward on a mixed economy. I discovered the other month that this is also the pattern for Wilander(?) in Germany, where there is a process in some of the federal states there of putting their DNA analytical work out to tender to either privately or publicly, or academically managed laboratories. The practice varies apparently from area to area. Sometimes it is only the state laboratories who are working at capacity. But as forensic science changes, particularly as e-forensics become more significant and as demand for forensic science grows as we can see the impact forensic science can have on detections, it seems inconceivable that we can go forward without some kind of mixed economy. I think the issue is for the police as customers and users of forensic science to remain very firmly in control, to operate in a very unified manner and to ensure that they are getting the standards that they require. Q35 Bob Spink: Tim has just said that it is essential that we move forward with some kind of mixed economy, so I come to my second part of this question. Given the growing importance of forensics and given that we are the only country to adopt this model, do you have a plan B if this model does not work? Mr Rimmer: Can we be clear about this. The Government has set out a direction of travel where the presumption is that we will move to a public private partnership. Q36 Chairman: It has not got through Parliament yet. Will it need changes? You are saying it is irrevocable. I do not believe that. Convince me it is. Mr Wilson: The technical change is an order to wind up the trading fund. Mr Rimmer: Of course there will be parliamentary scrutiny throughout this process. Part of that process, though, is to test out very rigorously what will happen in terms of a transition to a Government Owned Company and the Home Secretary has, I think, already made it clear to MPs that he wants to test that model, as it were, out very rigorously. The analysis that we have had to date, both from the independent McFarland Review and the subsequent work done through the business place suggests strongly that there are greater advantages to have in maximising the flexibilities that PPP would offer. But the Home Secretary is very clear that he will only reach that point when the Government Owned Company model (for want of a better term) has been fully tested and that is the sort of step by step, if you like, evidence based approach he is taking. He is not saying, "I'm doing this whatever else happens," and in a sense therefore there is not any plan B because each step of the process will be based on an assessment about what is in the best interests both of the FSS as an organisation but obviously the wider criminal justice system. In particular, there will be some very rigorous tests, terms and conditions precedent, around which any move to PPP ultimately will not be agreed by Government because that is the basis on which there will be transparency about moving it forward. Q37 Dr Turner: I want to ask about the interim stage that is hypothesised, the publicly owned company or GovCo. How long do you anticipate that that particular stage would take? How long would it have to operate as a Government Owned Company, a publicly owned company, before you consider that it was time to move on to PPP? What would happen, for instance, if the FSS as a publicly owned company was operating very happily, competing very nicely, thank you, and there was actually no particular reason to involve the private sector? Mr Rimmer: Well, Tim will wish to answer this. The Home Secretary is shortly going to be writing to MPs following a very useful meeting he had last month to set out his expectations at this time and there will be alongside that a parliamentary statement to set out his expectations about timescales moving into a Government Owned Company and to respond precisely to your point about his expectations around the minimum length of time it will be likely to operate before final decisions around a PPP are taken. I genuinely cannot give you the precise time yet because he is still looking at the paperwork literally as we speak, although he is still keen to get something out before the recess on that. But he is very clear that the GovCo status needs to work through in sufficient time to demonstrate whether at this stage the analysis around the flexibilities that GovCo does not appear to provide, around things such as procurement - he wants the time to be sufficient to test out whether (a) that analysis is correct (i.e. that those flexibilities really are not there under GovCo status), and (b) if they are not there whether that materially affects the performance of the FSS. Q38 Dr Turner: This seems to be starting from the assumption that a GovCo will not provide everything that is needed. Mr Rimmer: Yes. Q39 Dr Turner: So that is setting up the GovCo to fail, is it not? Mr Rimmer: No, it is absolutely not setting out to fail. He is quite clear that he wants it tested out in its own terms but he is responding to the independent report from Robert McFarland which, as far as he is concerned, no one has yet given conclusive evidence why this would not be the case, that the flexibilities that will enable the FSS to optimise its performance in a commercial environment would be much more workable through a PPP model than a GovCo, or indeed any other model. Q40 Dr Turner: But surely the only things that matter are its management and its capacity to invest? Mr Rimmer: Yes, and - Q41 Dr Turner: Is there a reason why a GovCo cannot do that just as well as a PPP? Mr Rimmer: Yes. There are significant issues around investment. Q42 Dr Turner: Well, I think you will have to justify it. I think that is the point. Mr Rimmer: Yes. Tim may want to add to that. Mr Wilson: It is not the case that the GovCo would be established to fail because the Government would not envisage putting a failed organisation out to the market as a PPP. The policy is very much based on recognition that trading fund status, as the FSS is now, is inadequate in order to face the changing competition that it faces. There are going to be very clear objectives for GovCo which will result in a transformation in the management and strategic direction of the business. There remains an issue beyond the changes that one can achieve in GovCo about access to investment because as a Government Owned Company it will still be subject to investment via the Home Office within the Home Office departmental expenditure limits and competing with resources from that set pool rather than being able to access money commercially. If there are potential alternatives to that which emerge in the meantime that is something that the Government may want to - Chairman: We are really running out of time so we are going to have to be really short and sharp with our questions and our answers. Bob, are you finished, because I want to get Evan and Brian in? They have got questions on some other aspects. We want to try and get as much evidence from you as we can in this session. Q43 Dr Harris: Do you see the need for a regulator to oversee the development of the forensic services market and what form might such a regulator take and what powers would it have? I know that is a big question but if you could, as the Chairman says, be as succinct as you can. Mr Wilson: Yes, and we have a model in the custodian of the DNA database, which is explained in our memorandum, but we can give you supplementary evidence if you wish. Chairman: Please do, yes. Q44 Dr Harris: That is a model within the service, but are you saying that that would be able to guarantee adherence to technical standards in the private sector across the whole range of forensic services? Mr Wilson: Yes, and using the leverage of the police as customers and CPS and people like Customs & Excise as customers for setting the quality standards that providers need to work to, and other issues such as sharing forensic intelligence that individual providers acquire which needs to be shared across police forces' boundaries. Q45 Dr Harris: That would include laboratory accreditation? Mr Wilson: Yes. Q46 Dr Harris: So are you saying that is an alternative and therefore there is no role for an expanded Council for the Registration of Forensic Practitioners who are already doing the regulation, as you know, of individual practitioners. Do you see them as having any expanded role in this structure? Mr Wilson: I see advantage in the Council sticking to its existing remit, which is independently validating the professional competency of individuals, irrespective of for whom they work, whereas that may be an issue which could be taken into account in the procurement framework, which may require providers to have a certain percentage of people, for example, who are registered or going through the process of applying for registration. There needs to be a raft about quality of accreditation, about the processes followed in the laboratories and the integrity with which the laboratories are managed. Q47 Dr Harris: You could set that percentage, whatever it was at the moment, on average. So what you are saying is you are not moving towards a system where it would be a requirement that all those people doing the sort of work we are talking about would either have or be moving under supervision towards that accreditation? Mr Wilson: That is a long-term ambition, I think, of the Council and the Government to see registration. The issue has been how we can encourage accreditation of individuals without severely paralysing the criminal justice system, because I think at the moment about a third of potential individuals are qualified for accreditation (I will check my facts and come back if there is wrong) and there is pressure on the Council to accredit people in quite different fields, in civil law, domestic law as well as criminal justice. Q48 Dr Harris: In respect of regulation of prices, would you just leave prices to the open market or would you consider putting a cap on prices for core services, given the pressures the police say they are under and are under? Mr Wilson: I think this will be more a process of the police acting as an intelligent customer, pooling information about market conditions and seeking to ensure - particularly through more consolidated purchasing, increasingly perhaps on a regional rather than a force by force basis - better control over the market and better management of the market. Q49 Dr Harris: What about this question of the Forensic Science Service being a provider of last resource and forcing it to do that? How do you envisage that playing in the market and how would you compensate them? Has the thinking been done? Mr Wilson: We are beginning to develop our thinking on that. A new group has been established which is tripartite, led by ACPO, APA and the Home Office, which will be grasping that issue. It is very important that the FSS is not disadvantaged economically by the cost of free riders, by people relying on the FSS as a provider of last resort. That has to be properly remunerated in a way which corresponds to value for money. Q50 Dr Harris: There is a couple of key questions that we have not covered on public confidence because I think this is essential. Firstly, do you envisage international companies being able to compete in the UK market, or indeed - I do not know if you covered this earlier - would you partner in the PPP with a foreign-owned, foreign-run company? Mr Wilson: Forensic science is already international. Much of the IPR is owned by US companies and there is US investment in the UK forensic science market already. Q51 Dr Harris: So that is a "No", you do not see a problem? Mr Wilson: As long as we are regulating entry into the market in terms of quality assurance and integrity standards through ACPO indicating very clearly the conditions for trade, I think that is something which can be managed in a way which does not conflict with international procurement law. The obverse of that coin is the opportunity for the UK, which has a competitive advantage in forensic science, to actually take its services elsewhere. Q52 Dr Harris: But there are some security issues, are there not, around security clearance? Mr Wilson: Yes. Q53 Dr Harris: Do you envisage there being security clearance rolled out into the private sector and do you think that will maintain public confidence, because it only takes one mole to be unveiled and that might be a problem for your political masters? Mr Wilson: Well, this is an issue which has to be faced in quite a lot of engagement with private sector providers in areas such as e-forensics already and a whole range of Government services where private contractors are undertaking managing sensitive information. Q54 Dr Harris: Yes. That is why we do not contract out the Anti-Terrorism Squad. There might be a reason not to do it. Mr Wilson: But the management of the criminal records - Mr Rimmer: I think there is a general point here about the fact that this Government has no intention whatsoever of sort of cutting an umbilical cord between itself and either the FSS as an organisation or in terms of the general impact of forensics on public confidence. Of course ministers are well aware that ultimately those questions will be for them. We cannot plan for every particular eventuality in that context but we need to ensure we have got a framework that enables ministers not only to take account of public confidence issues but clearly to be able to intervene where necessary. Now, I do not think they envisage needing to intervene in any particular circumstance around the examples you have given because they have confidence that the contractual basis and the security vetting processes will sort that out. But if on that or any other front they thought there were genuine public confidence issues then they are clearly going to regard themselves as having a direct role in resolving any concerns. Q55 Dr Harris: In an earlier question you claimed that the Government is taking an evidence-based approach, but then you described what was not an evidence-based approach based on research, you described a step by step approach, saying, "We'll take it one step at a time and check." I think those are different things and I would like to ask what research you have done into the development of the FSS as a PPP and as to how that will affect public confidence. Mr Rimmer: There have been two key processes at work. Firstly, the independent McFarland Review, which I do not know if you have had a chance to look at but it has looked very carefully at the status of the work of the FSS, the roles of other competitors, the market and a whole range of potential models. Q56 Dr Harris: We have only had access to the executive summary, so that is not published research as I would understand it. It is not research and it is not published. Mr Rimmer: Well, the summary gives you at least, I hope, a flavour of how rigorous that process was. Since then, of course, with the outline business case in particular we have been looking to extract all the relevant information in a way which is genuinely objective and evidence-based and I do think the step by step approach - of course it can mean different things in respect of research, but it acknowledges the fact that we have got to keep an eye on what is happening to a rapidly evolving commercial environment. Q57 Dr Harris: My last question. My colleague asked earlier whether you had learned anything from previous PPP experiences and an equivalent essential service might be NATS. Your answer was, and I wrote it down, "Well, we'll learn lessons from NATS." Is the lesson ever, "Don't do it"? Mr Rimmer: Yes, absolutely, and what the outline business case covers very rigorously, in my view, is a set of issues which are surfaced when you look at cases of successful and unsuccessful or aborted PPPs. We have, I think, something like fifteen or sixteen criteria, as it were, for assessing whether PPP is the right model to deliver high quality forensic services in this context and the conditions precedent, which I referred to earlier, will reflect - and I hope in a very transparent way because we think in the New Year we will be able to get a summary of the conditions precedent out in the public domain even before we go into GovCo - we will be setting out clearly what are the criteria against which we will be testing whether PPP is the right model or not. Q58 Dr Iddon: Assuming that the FSS has some IPR, who will benefit from exploitation of that in the PPP? Mr Wilson: This is an issue that we are looking at jointly with ACPO and APA in order that the police do not find themselves in the position of paying twice. Some IPR will be held by the FSS but IPR which could have a monopolistic impact, particularly things such as national data reference collection such as the National Database, will be very firmly held within the public sector. That was announced by Hazel Blears back in January. Q59 Dr Iddon: I am worried about blue sky research which is long-term. What will be the impact of a PPP on that kind of long-term research? Mr Wilson: I hope that it means we will be able to do more research of that kind in the UK and the IPR will remain in the UK. The other week I saw some face recognition research being undertaken by the University of Sheffield, funded by the American Government, the IPR rights of which will go to America. There is no one in the UK able to fund that research. Q60 Dr Iddon: In order to stimulate research would the Government be willing to put more money into R&D? Mr Rimmer: Can I answer that not least by flagging our overall science and technology strategy up. We have limited resources on R&D and obviously the climate for expansion in resource terms is difficult at the moment, but I know ministers will look very seriously at issues around central support on R&D, not least because this strategy, which I hope Members have had a chance to read, is very much an attempt to try and encapsulate futures thinking around research and development needs right across the piece, and that includes the FSS as part of that strategic overview but so too is the general market in forensics. This provides, we hope with increasing impact, a sense of priorities given the limited resources that we will want to put into it in R&D terms. Q61 Dr Iddon: How will the Government prevent a single company exploiting something coming out of the PPP? Obviously competition is a way of keeping prices down, but if we have a monopoly supplier then that is going in the opposite direction. Mr Wilson: I think we have found ourselves in that position already in terms of some of the things the police use. What we need to do - and this is something we are discussing with the police - is move increasingly to output specifications based on clear universal scientific and QA standards which then a range of competitors can provide rather than developing a single solution and then find that police business processes get locked into a single source. Q62 Dr Iddon: I have one last question. Forensic science is rapidly taking over from pure science in universities. Chemistry departments are closing; forensic science departments are opening. I am not sure that is a good thing but we can debate that with other witnesses. Would you be willing to stimulate (as the EPSRC has) research in the forensic science area in the universities? Mr Wilson: We are already working with the Council in terms of identifying projects of interest to the Government and we feed into their decisions, hopefully in a positive way. Q63 Chairman: Thank you very much. It is a bit rushed, I know, but very valuable as a start. Could I ask you, Steve, as a last question when we can expect a statement in this arena now, forensic science? Mr Rimmer: Hopefully before the recess. Q64 Chairman: You have got two days. Mr Rimmer: Early next week, we hope. Q65 Chairman: So we should be here on Monday to hear it, should we? Mr Rimmer: It will be a written statement, not an oral statement. Q66 Chairman: It will not be a leak to the Guardian, will it? Mr Rimmer: I have absolutely no comment on that. Chairman: Thank you very much indeed and all the best for the holiday season. Thank you for coming. Examination of Witnesses
Witnesses: Dr Dave Werrett, Chief Executive, and Mr Bill Griffiths, Non-Executive Chairman, Forensic Science Service, examined. Q67 Chairman: Dr Werrett and Bill Griffiths, thank you very much for coming. I do not know if you heard what was going on in the last session. Dr Werrett: I was listening intently, Chairman. Q68 Chairman: I will bet you were. You did not fall asleep. Good. Thank you very much for coming and helping us. You are second up and the questions will be orientated around different things but some of them will be similar. Let me start with the first one about the Sleepy Hollow effect in the FSS. What have you got to say about that, that you are not commercially orientated enough, and so on. You have heard all that stuff. What are you doing to address it? How is the management structure? How do you feel? Dr Werrett: If I could start and then I will hand it back to my chairman. I would of course dispute it completely and we are not a Sleepy Hollow. I think I can confidently say in terms of forensic science that we lead the world in this country and the Forensic Science Service has been instrumental in leading the world. I could give you a history of things that I have done over the thirty years within the Forensic Science Service that I have been there, and that has been through rigorous investment, business cases and very good programme control of projects and delivery. Q69 Chairman: Why is all this coming up now, Dr Werrett? Why is this suddenly a big issue? Is it just because of the PPP? Dr Werrett: I do not think it is suddenly a big issue. If you look at the history of this, in 1990/91 the Forensic Science Service started to charge for its services. The basic problem was that more service was required by police forces than the Forensic Science Service could possibly supply and so we decided to let the market decide how big the Forensic Science Service should be. In 1991 we had a turnover of about 20 million; we now have a turnover of 147 million. If I could return to the first part of your question - Q70 Bob Spink: Just before Dr Werrett does that, he said that we lead the world now. Can he be confident that we will be leading the world in ten years after this change? Dr Werrett: I think the development of the marketplace is such that to continue to lead the world we need more commercial freedoms in which to operate. The latest innovation and project that we are carrying out is a multi-national project. It is a huge project involving ten to twelve companies and it would have been greatly facilitated if we could have acted in a commercial way. The problem with Government procurement rules is that you have to not only run competitive tenders as a compulsory basis but you have to declare to the world what you are about to do through OJEC and companies which are on the verge of breakthroughs and who want to liaise and trade with you do not particularly want you advertising what you want to do next. Bob Spink: Okay. Thank you. Q71 Chairman: Carry on. You wanted to briefly finish off. Dr Werrett: Yes. Before I hand over to Bill, I would just like to say that for the last several years now we have run virtually as a commercial company with accrual accounts. We charge for everything we do. Our government structure is similar to - well, it is modelled by Higgs. We consulted with the Institute of Directors only yesterday and our government structure is as it is with Higgs. We have a main board with a majority of non-executives on it, we have a development and remuneration committee, we have audit committees, and so on. We run effectively like a commercial company, but I will leave it to my chairman to make that judgment. Mr Griffiths: I joined the FSS about eighteen months ago, first as a non-executive director before becoming chairman. Q72 Chairman: Where did you come from? Mr Griffiths: My background is mostly Unilever, in different parts of the world, and a little bit in ICI and I have got some experience of working in science-based businesses. I have done some work through the University of Manchester and I have got some experience of other Government departments through non-executive positions there. So with that sort of knowledge base and experience base I was remarkably struck, on joining the FSS, as to the quality of the business and that is the quality of the science and innovation but also the quality of the management team and the fact that, as has been said, it is a business which is used to dealing with customers. It is customer-focused, it is used to invoicing, it is used to collecting money in and all the normal commercial business - Q73 Chairman: Do people pay their invoices, though? Mr Griffiths: That is also part of the experience of being commercial and obviously dealing with that, and indeed the management structures, the government structures, are pretty progressive. So that is good. I do not think that is, therefore, the issue about a snap judgment about whether the FSS is good or bad. I think it is very good. The issue is to what extent it needs to change and what is the transformation agenda for the business to keep it healthy, to keep it leading, and to respond to the inevitable forces out there - market forces, competitive forces, but frankly also what are the demands of the customers. That is the key question. Q74 Chairman: What do you think of the criticisms that are made of it, from your experience from Unilever, for example? Mr Griffiths: Well, I think one can always pick an entity which is in the public sector and level criticisms that it might not be as commercial, as agile, as flexible as a best in class private sector business. I think it is a question of degree. Q75 Chairman: What did you find when you first got there? Mr Griffiths: I found that on a scale of relative competitiveness and flexibility the FSS scores high. I was very pleasantly surprised at how many things were in place. That is not to say we cannot improve and that is not to say that it is adequate for an increasingly competitive environment, but this is a business which is already thinking commercially. It is highly innovative and that will be a key attribute of any requirement for a healthy business. It has got dedicated staff, who have got clearly a good grasp of the business's vision and what it is there to do. So a lot of the building blocks are in place and that scores very highly from my point of view. I do not think we are talking about a business that is in the doldrums, struggling, and it is a mammoth task to make it - Chairman: You have made that very clear. Thank you. Q76 Mr Key: You have obviously got substantial experience in the private sector as well as the private sector. Am I right that the United Kingdom is the only country in the world which is seeking to put its Forensic Science Service into the private sector? Mr Griffiths: As far as I know it is, but let me just kind of disaggregate this issue. From our point of view, what we want is not a particular status or not per se. What we want is the capacity to make the business healthy and healthy includes, where necessary, being cost-effective and where necessary providing innovative unique services for customers. So I think where I come from is a position in which there is a transformation agenda to do that, of which statism, and particularly the construction of the company, if you like, the business, the company, is one element. But it has got to be business-led. It is not a status for status sake, privatised or Government Owned Company, or whatever, it is what is fit for the business to flourish and to deliver its plan (a plan which we are formulating for the future years) and which has ultimately got to deliver to the criminal justice system and to the customers. Q77 Mr Key: I find some difficulty with this concept of having a private sector Forensic Science Service at all. Are you not concerned about the loss of the public sector ethos here? Mr Griffiths: Well, I think we can have a public service ethos and a customer respect in a business which still has, for the sake of argument, private sector shareholders. The question is how to do it and to what extent that is easily done, but there is no doubt about it, for the health of the business we need to harness the public service ethos (which is there in the staff, the quality of work, and so on) and we have to marry that with a total respect for what the customer requires. Q78 Mr Key: But will anyone else do business with you? I mean, the Americans will not. Europol will not, will they, if they think you are a private company? Mr Griffiths: No, I think it is a question of what kind of company we are, what kind of employees and what kind of service we deliver. I do not think the status necessarily should get in the way of the reputation, if you like, in the marketplace and the reputation for science that the business has. Dr Werrett: Could I just add, within the United States it is very much a mixed economy and in fact the injection of many millions of dollars into forensic science. Some of it has been done on the basis that the state laboratories actually used that money to procure services from private sector laboratories and the idea of that was to boost the capacity of forensic science within the United States. Q79 Dr Turner: Could we come back to the parallel with NATS. When NATS was going to go for a PPP that again, to the best of our knowledge at the time, was the only instance of an air traffic control service going out of public ownership and of course I do not have to remind you of the troubles that that has got into. What gives you the confidence that an FSS PPP will not run into not necessarily exactly the same kind of difficulties but other difficulties which will trip it up in just the same way and, as my colleague has suggested, lose the confidence that comes with the public ethos? Mr Griffiths: Well, I think the foundation for any change of status, particularly going to a PPP, is that there is a well-articulated business plan and a clearly defined set of requirements placed upon the business to deliver that plan and the PPP should not be constructed in such a way, in my view, that it would contradict those requirements. So we have got to work forward now in deciding, as we change status and as we move into a more competitive marketplace, which is our plan, what are our intentions for the business to develop it, to make it stronger, to what extent are the demands on the business in terms of performance measures going to change as we embrace the competitive market, and then and only then should a construction be developed for a PPP if that is necessary. I think that sequence will unfold over the next year or two. It will be a business-led, management-led proposition for the business and it needs the full endorsement of the shareholders, whether they are the current shareholders/stakeholders in the business or future ones. Q80 Dr Turner: But you are still presuming PPP rather than stopping at a GovCo if a GovCo can deliver everything that is needed? Mr Griffiths: What I would say is that we are presuming we will put forward the FSS's view as to what it needs to do to stay healthy in terms of a business and out of that will come requirements for funding, structures, and all sorts of things, not the other way round; in other words business-led. Q81 Mr McWalter: You have just talked about the American model, but in America when they make those commitments to investment they make damn sure that the jobs that come from that stay in America and they would be absolutely delighted to have market opportunities here for their companies which they would never vouchsafe to our companies because of the American very strict rules about security clearance. So really are you not in fact just opening the door for some cheapo loss-leading American companies to move into the market here and in doing so actually undermining the very expertise that you have inherited? Mr Griffiths: I think there is a distinction between a potential competitor from America or anywhere else moving into the UK market. That is clearly possible at the moment and our primary concern is to stay in the forefront, both competitively where necessary and in terms of innovation. Whether a route through an investment would be a threat to us I think very much depends on choices about what structuring the PPP had, what people were allowed to invest and on what conditions they wanted to take a share. Again, I go back to the point that we are trying to formulate a plan which keeps the FSS as a business healthy and the issue of structure and shareholding should be addressed as a function of that rather than us prejudging, if you like, the attitude. We are going to be faced with competition come what may and who knows where the competition will come from. I think our job in the management team is to keep the business as robust and healthy and prepared for that as possible. Q82 Mr McWalter: But if I am a hard-pressed chief constable I am going to go to somebody who will provide this service cheaply and all of the benefits of the FSS, the innovation, the investment, the sort of long-term strategy, the tradition of very, very rigorous examination, and so on, which is an integral part of that public service ethos that we have talked about, that is all very nice but, quite frankly, if that fancy service is too expensive for me I am going to go to somebody who does not do a lot of that stuff but gives me the service cheaply and works 90 per cent of the time as effectively. I will just cut corners, will I not, and that is the FSS down the plughole? Mr Griffiths: To some extent the FSS has a business which it clearly has to benchmark against competitive pricing and its aim is to be as competitive as possible, the so-called commoditised end of the market, and in other areas the FSS is clearly promoting value added services and products and it is our job to convince the customers that those are truly value added and value for money and an enlightened customer can recognise the difference between buying on price and buying on a combination of price, plus service, plus value in use, and I think that is our job. Q83 Dr Harris: Everything you have just said in answer to the question about why you are going down this path with regard to the public sector could have been said if you were running the police, that you would like to keep the public service ethos, that it is good to have a mixed market, the Americans are doing it. If the Americans invaded Canada that is not a reason why we should do it. Can you see any reason why there are reasons for this step which you would not apply to a PPP for the police or bringing in a mixed economy into the police service itself? Mr Griffiths: I go back to the answer, which is that we are trying to move the FSS on to deliver services in a more competitive market. What structure we need, whether it is a GovCo which is entirely Government owned but which would just operate in a different way or more likely that we need more flexibility, I think is where we are starting. There are other considerations which have to be judged as to what the appropriate structure might be, which people might be allowed to invest, and so on, but from our point of view we are starting from a business-led proposition not a dogmatic structural end-game which we are trying to get to. Q84 Dr Harris: Do you think that nationalisation, moving the other way, is still on the agenda and always has been, or would you say there is an element of ideology in where we are moving? Mr Griffiths: I think the mindset is to give the FSS a chance to be a stronger, more competitive business. That is where we start and I think that is what inspires this project. Dr Harris: The Home Office said it had no restrictions on who the partner might be. It said that it could be anyone, international companies. Do you have any qualms at all about having your partner being, I do not know, a newspaper magnet or a Russian oil baron, or them selling their share on to something even more dubious than those two noble professions? Is that not an issue? Q85 Mr McWalter: There could be some forensic inquiries, could there not, which might be a bit compromised by those forms of power? Mr Griffiths: There is an issue about the difference between a shareholder and somebody who is intrusive and knows about the business. Perhaps newspapers are not a good example in that respect. There is a difference between a shareholder who is a shareholder and one who would know about very sensitive or other commercially valuable things in the organisation. Chairman: Des, you have got a penetrating question. Q86 Dr Turner: Well, I hope so. You have mentioned several times the mixed economy of forensic services in the United States. Can you tell us something about the effect this has on standards? For instance, I am told that the turn-around time for burglary investigations in St Louis is one and a half years and a murder DNA sample in California three months. Not very impressive. Dr Werrett: I think it is singularly unimpressive. There are other examples. New York State, for example, has invested a lot of money and forensic science is providing a very good service, but I think that is precisely why some of the money was tagged to go to the private sector because there was a realisation that the state laboratories could not handle the volume of work that was coming in. So particularly where it was convenient to do so, and that is in the areas of DNA testing, the money was tagged to actually purchase services from the private sector and in that way boost the capacity rather quickly. I think they are going through a period of realisation that we went through probably around 1996/97/98 when we began to realise what a fantastic tool DNA in particular was but forensic science in general and if you look at our history there where we had to expand four or five-fold, our turn-around times were pretty awful at that time. Our turn-around times are an awful lot better now. Q87 Dr Turner: Can you satisfy us as to how a PPP is going to guarantee the rapid turn-around times that crime solution urgently and desperately needs and that you are not going to fall into excessive delays? Dr Werrett: I think I would return to the answer my chairman gave, in that rather than look at it as a PPP doing it, I think it is about some of the innovations that we have got currently being developed being turned into excellent service and it is how, as a business, we can do that with the instruments that we have currently got. Trying to do it in a Government situation, with Government procurement, with no investment (because the Home Office under the current arrangements is our bank and there is very little possibility of us borrowing money to invest from the Home Office), under those situations looking to take what is a relatively expensive innovative programme into a service which I think could revolutionise the speed with which forensic science is delivered without investment would be very difficult and quite slow. Q88 Dr Turner: No one questions the need for investment but it is perfectly possible for this to be delivered through GovCo. Dr Werrett: If it could be delivered through GovCo, as my chairman said, I think it is a question of will the business acquire the freedoms to act in a way which will allow it to continue its path of excellent innovation and be business-led. Q89 Bob Spink: I just want to continue this line on standards but particularly move to quality rather than timing. In this sort of mixed market I was just envisaging that there might be some small group, a small company or a small number of people, who specialise in a particular niche market who have standardised or commoditised a particular service which they can give in an area of forensics and can deliver that because they are small with very, very low fixed costs and therefore offer a very attractive service financially and in terms of speed for the police, and I can see these people giving this service. I want to draw a parallel here with that scenario in the mixed market with what happened in, say, expert evidence where somebody developed a particular niche market. It was in cot deaths and he gave his service and we saw some massive travesties of justice in that area which took perhaps ten years to discover and are still unfolding now. So how are we going to protect from this? Does this give you concerns? How are we going to regulate this? Dr Werrett: Anyone in the current climate can call themselves a forensic scientist and stand in the witness box as we are now. So that is an issue which is with us today and it is up to the judge to decide whether he accepts that expert witness or not. So that is a concern. It is a concern I have had throughout my professional life and I have welcomed the introduction of the Council for Registration of Forensic Practitioners, which seeks to actually formalise the competence and demonstrate the competence of forensic scientists, and I welcome that approach. We as an organisation also subscribe to international quality standards and we are externally accredited. So I think that is the kind of hallmark that we would continue to aim for, but yes, it is an issue and it is an issue which faces us today. So if the approach is to have a regulator then that is one way of doing it. Q90 Dr Harris: Would you be attempted to cherry-pick the most profitable parts of the service if you became a PPP? Dr Werrett: I think one of our greatest strengths and indeed commercial advantages is that we tend to offer a one-stop-shop service. Q91 Dr Harris: So I am a shareholder and I want you to give me a return. I do not want you to do this one-stop-shop. Give me a return. Let us do the high throughput, high profit, high value service. Let us concentrate on that. Dr Werrett: But the strength of the organisation and its commercial success I would hope to be able to justify to you as a shareholder is based on the fact that it does operate the comprehensive service. There was at one time a sort of feeling going around that there were bits of the service that were not profitable and bits of the service that were loss-making. That is simply not true. Under the Treasury's fees and guidelines, as we currently operate, all parts of our service have to provide a contribution to the organisation. Q92 Dr Harris: So how do you think the Government is going to ensure that it actually maintains the broad range? Is it going to require you, because it cannot require the market by definition, to provide everything that you are currently providing and in the future will need to provide? Dr Werrett: I cannot really answer for them. Q93 Dr Harris: But you say that you think you are going to be expected to be a provider of last resort. In your evidence you recognise that, both in the interim and, I would argue, in the developed market as well. Dr Werrett: Yes. I think the provider of last resort, if I may say so, is a slightly different question to the shareholder question. By "provider of last resort" I presume the current thinking is that there may come a time when a police force which generally tends to use the competition for its services will come to us and say, "We need you for this." It is either too big a job, they cannot do it, they are snowed under with work, or whatever, and the question is should the Forensic Science Service maintain capacity to provide that service as a last resort. I think we can do that, but I think we will do it on a business-led commercial basis. At the moment we publish a universal price list across all the forces. I would expect, as the market develops, for contracts to develop between ourselves and the forces which use us on a regular basis and our price list will be adjusted for those who want to use us on a one-off basis and the price would reflect that. Q94 Dr Harris: So what you are saying is that it will just be the market that does it? As a member of the public, I want confidence that there is not going to be a part of the service that is no longer there because it is unaffordable in the market and will you not need compensation? These police forces that need to do these rare one-offs are going to have to find the money at very high prices for you to maintain that flexibility. I would not have confidence that that is going to encourage the police to do those sorts of tests. Dr Werrett: I am not quite sure - Mr McWalter: It is about, is it not, a competitive disadvantage? That is what Evan is asking. You say you are competitively disadvantaged by your brief and the shareholders are going to be unhappy about it and members of the public are going to be unhappy about the prospects that that recognises. Q95 Dr Harris: I think what you are saying is that for some services which are at price X because it is inefficient for you to provide them that price will rise significantly within the market even as other prices are falling? Dr Werrett: No. I am sorry if I have made you think that. That is not what I am saying at all. What I am saying is that as the market contractualises, which it currently is doing - and I think it will continue to contractualise whether or not we become a GovCo - currently the number of contracts between ourselves and police forces are very few. We have operated on basically a customer practice, but increasingly police forces (and I think Tim Wilson mentioned Gershon) are looking to procure services in a competitive way and move to formal contracts between ourselves and themselves. So as the market continues to do that there will be police forces with whom we have agreements, with whom we have regularised pricing structures, and so forth. There may be other forces who choose to use us on a one-off basis for which as a business we will need to make judgments about how much capacity that is likely to use. That will probably be a more expensive way for us of providing a service. Q96 Dr Harris: But you will provide it? You will absolutely provide it? Dr Werrett: Yes, we provide it, and on the basis of providing it in that way it is likely to be more expensive. Q97 Dr Harris: There will be ebb and flow in demand for some of the services and you welcome being able to be flexible, but you have a high fixed cost with your salaries and you have people in careers in the FSS. How are you going to create the flexibility? Just stick everyone on short-term contracts? Dr Werrett: No. Q98 Dr Harris: Is that a guarantee you will not? Dr Werrett: Well, under TUPE the terms and conditions of moving from the public sector to the private sector have to be comparable. Dr Harris: I am sorry, you will recruit people on to short-term contracts, that is what I meant. Q99 Dr Turner: TUPE does not last very long, so any change in commercial circumstances can wipe out TUPE. Dr Werrett: Well, not any change, but -- Q100 Dr Harris: I am sorry, I did not mean you would move individuals on, I just meant you will start recruiting people who used to have a career on to short-term contracts. Dr Werrett: Could I just say we actually do that now. We take in agency staff to boost capacity where we need to in emergencies and we let them go again. Q101 Dr Harris: So it is not your plan to increase the proportion? Dr Werrett: No, in fact generally our plan is more about securing what the demand is likely to be and then move to a greater proportion of permanent staff because agency staff are more expensive. Q102 Dr Harris: So we can expect that as a performance indicator, as one of these things that is going to be a measure of how you are doing, what proportion of your staff or salary is in - Dr Werrett: It is not for me to set my performance measures. Q103 Dr Harris: But would you have happy if that was a performance measure? Dr Werrett: I think it would be rather an unusual performance measure. Q104 Dr Harris: But you just advocated it. You said you hoped to do it. Surely you hope to be measured on things you hope to do? I do. Dr Werrett: I am advocating it on good business practice, but I think our measures may be slightly different for that. Q105 Chairman: Prospect and the PCS trade union, said there is currently no regulation of the forensic marketplace in respect of training or the use of new and novel scientific processes. What do you say to that? Dr Werrett: There is no regulation in that there is statutory regulation. There is regulation in that all of the providers subscribe to certain elements of forensic science that is provided now and subscribe to that regulation, and I think Tim Wilson mentioned the custodian of the National DNA Database. To provide results to the National DNA Database you have to go through a rigorous proficiency testing regime which continues after you have passed your initial tests during the period that you are supplying results to the National DNA Database, and that is subscribed to by all suppliers. You are not allowed in unless you do that. Q106 Chairman: Does that mean you disagree with this statement? Dr Werrett: It means that there is no formal, as we might say, statutory requirement. Q107 Chairman: Do you think we need it or might need it? Dr Werrett: This is a very big subject because forensic science itself is a very big subject and that has always been the difficulty. Courts use forensic evidence from all sorts, from lots of different ologies, if I can put it that way, and I think it is quite different to regulate it in that way. Q108 Chairman: Do you not think the public are advantaged by having a regulator, given some of the high profile cases that forensic scientists and surgeons and others have been involved in in court where they have been ridiculed by the press and therefore the public pick it up? Would a regulator help in that arena? Dr Werrett: I think if a regulator could help those situations then it would be a worthwhile thing. Q109 Dr Iddon: I would like to know how much you invest in R&D as a percentage of your revenue income. Dr Werrett: Currently about 12 per cent. Mr Griffiths: 12 per cent is quoted, yes. Q110 Dr Iddon: Is that going up or down, or has it been stable? Dr Werrett: It has actually gone up by about one per cent for last year to this year. It is one of our agency targets to not only encourage that investment but also increase the level of investment we get from outside, not from just our customers. So if, for example, we had grants from the FBI and so forth, unlike the grants that were referred to earlier we keep the IPR for that work that we are doing there. Q111 Dr Iddon: Do you see much change in a PPP or a GovCo? Do you think there will be pressure to reduce that? Dr Werrett: We are an organisation whose prosperity is characterised by great innovation and I think it will be a huge commercial mistake not to continue with that innovation. Q112 Dr Iddon: There is a lot of new developments coming in forensics, of course. What about hand-held devices for the police to do DNA or fingerprints at the roadside and of course drug testing at the roadside? Are you investing heavily in that area or leaving it to the competition? Dr Werrett: We are investing heavily in that area, although I have a wry smile on this one because six years ago after visiting California and seeing several biotech companies there I came back and confidently predicted that in five years' time we would have a hand-held device. There is no sign of it yet, but what we have done is taken a halfway step. We have certainly miniaturised some of the DNA equipment and I think you will see in the next few months that we are taking another step forward in that area. Q113 Dr Iddon: Okay, that is one step forward. Where are the new avenues of opportunity in forensics, do you think? Dr Werrett: For us, I think we need to expand our capability in electronic forensic science. The use of mobile phones and computers is an obvious area where we need to excel. Q114 Dr Turner: Have you found that your R&D efforts have been unduly constrained by the availability of investment? Have you been able to spend as much as you actually need on R&D or do you find that you cannot do work which you feel is potentially extremely important because you cannot fund it? Dr Werrett: I think there is one step before that. Actually doing the R&D is quite difficult because of the Government procurement rules. A lot of the R&D that we are doing currently is R&D that involves other companies. Forensic science traditionally has combed the academic world and to some extent the industrial world for advances that we can forensicate and DNA was a prime example of that. Q115 Chairman: What was that, forensicate? Dr Werrett: Yes, a new word. Q116 Chairman: Is that in the Oxford English Dictionary? Dr Werrett: I have been to America too often. I am sorry. Q117 Chairman: No wonder you are blushing. Dr Werrett: I think the problem we have is actually being nimble in placing contracts or striking up those partnerships and then spend the money, but I think even when we did the National DNA Database and we had to invest heavily we did then borrow the money from the Home Office. I foresee times coming where we may want to borrow money again fairly soon. Q118 Dr Turner: So I think the answer is you have not yet been constrained but you think you might be in the future? Dr Werrett: We are constrained by the rules with which you can conduct research within Government and that is about procurement. Q119 Dr Turner: A GovCo would make that easier, would it not? Dr Werrett: If some of that procurement constraint was lifted. Q120 Dr Iddon: So why does Government not change the procurement rules if they are inhibiting you? Dr Werrett: I would welcome a political move to change those procurement rules. They are European procurement rules. Q121 Dr Iddon: European? Dr Werrett: Yes. Q122 Dr Iddon: Okay. You mentioned mobile phones and communication technology in general, but of course the Internet and the Web, e-forensics in general, is that something you are investing in? Dr Werrett: Certainly we have a contract with the National Crime Squad, which we are particularly proud of, where we provide them with a service from scenes of crime to courtroom and a lot of their work is to do with computers, so the answer is yes. Q123 Dr Iddon: So you are into that. Do you think the Government needs to stimulate investment in R&D in private sector forensics? Dr Werrett: I cannot really answer that one. Q124 Mr Key: Perhaps you could answer mine then. The Forensic Science Service is much admired for its training and I think you delivered about four hundred and fifty training courses last year to over fifty police forces and at the moment that training is cost-neutral. I am not saying it does not cost anything but it is cost-neutral. When you become a PPP you are going to have to start charging police forces and others for that service, are you not, with a profit element, not just cost-neutral? Dr Werrett: Not necessarily. It depends how we approach it. I think you are probably seeing some of our competitors and perhaps you might like to ask some of our competitors about their approach to training because I think they probably use it in a neutral way at the moment as it is a very good way of educating policemen in the services that you provide. Q125 Mr Key: The FSS has perhaps unfairly got a reputation for being the best place to train and move on. Are you anticipating that when you are a PPP you will still be able to recruit, to attract sufficient graduates to train as forensic science practitioners? Will it make a difference? Dr Werrett: I am absolutely convinced that we would be able to attract enough graduates. I am actually concerned at the number of forensic science courses that you see in universities these days because I am not quite sure where all these people are going to work, but what we need to work on are incentives and remuneration packages that retain those people once we have trained them and those are somewhat limited sometimes within the public sector. Q126 Mr Key: Have you identified any particular specialisms where there are shortages of forensic practitioners and therefore identified niche markets which you might seek to address when you are a PPP? Dr Werrett: There are some areas which we see as niche markets, yes. Q127 Mr Key: Such as? Dr Werrett: I am aware that my biggest competitor is actually in the room at the moment, so I wonder if I could refrain from answering that publicly. Q128 Chairman: Are you frightened of your competitor? Do you want me to throw him out? Dr Werrett: It is a her actually! Chairman: She has every right to be here, yes. Q129 Mr Key: Well, it is pretty disappointing. Can you give us a general flavour of the sorts of areas which are going to be particularly important over the next few years? Dr Werrett: Some of the areas we have already referred to within electronic forensic science, so there are some areas there. Chairman: Dr Werrett, you can write to us secretly. Mr Key: And we will publish it later! Q130 Dr Harris: The Chairman will sell it on ebay! I would like to ask you about the views of your staff. Why is there such a divergence of views between staff and management based on the evidence we have seen and what we have read on whether the PPP of the FSS is a good thing, and what steps are you taking to bring them on board, or have you given up? Dr Werrett: I have certainly not given up, in fact I am right smack bang in the middle of a tour around all the laboratories at the moment. I talk to all staff probably once every four to five months. I do it in sessions where I try to keep them relatively small, thirty to forty is preferable but in the London laboratory it is much bigger, it tends to swell to one hundred and fifty. It makes it quite an arduous tour but it gives me a very good feel. I explain to them it is Chatham House rules and it gives me a very good feel of the feelings that are out there, and yes, the majority of staff are against PPP. The latest survey has just come in. I have not had time to compile the data yet but from the last survey 75 per cent of staff were against PPP. Q131 Chairman: Why do you think they are against it? Dr Werrett: The major issues are uncertainty over pensions, uncertainty over what it actually means because it would be nice for people like me to stand up in front of my staff and say, "A GovCo is dah, de dah, de dah, de dah, and a PPP is" - Q132 Chairman: What about principle objections about the whole thing? Dr Werrett: There are objections such as, "I joined a public service and I want to maintain a public service and that's what I want to do, good things with my science." I do not actually see myself that that is incompatible with a commercial company. Q133 Chairman: What would Government have to do to attain that, keep it as a public service? Dr Werrett: I think it is a question of us maintaining our ethos and our values as we move through to getting the freedoms that we need, and I think I would return to the point that Bill made, that it is about the freedoms that we need to act in a more commercial way. Q134 Chairman: Do you feel you are swimming against the tide? Dr Werrett: No, I do not feel I am swimming against the tide. I would not say either it was an easy period. Q135 Dr Harris: But you say in your evidence that staff are leaving and when we finally got evidence in your name and not under the auspices of the Home Office you make the point specifically that staff are leaving, "Highly trained staff are now leaving the FSS to join competitors," and reading between the lines, and indeed in the lines, if you are going to go down this path you want to go quicker rather than slower? Dr Werrett: Absolutely. I think one of the other daunting things for people is the lack of speed of the decision process. I think if you are going to make decisions, obviously you have got to analyse them and be careful about them but you need to make them fairly speedily. Q136 Dr Harris: But this could be quite damaging, the hostility of staff and the fact that you are being stretched out on a rack during the process. So this could actually undermine the FSS given you have this loss of staff? Dr Werrett: Yes. I think the loss of staff, as I think Steve has said, is not huge at the moment but the indications are there. We recently lost - Q137 Dr Harris: This is Steve - Dr Werrett: Stephen Rimmer. Q138 Dr Harris: From the Home Office? Dr Werrett: Yes. We have recently lost seven to eight staff to a laboratory that is being set up in Tamworth. We did exit interviews with people and people left for different reasons, but if there is going to be a competitive marketplace, which is clearly developing now, then we will have to come to terms with the fact that people move from one establishment to another and there will be a market for forensic scientists. Q139 Dr Turner: Obviously it is essential for the successful investigation that you can have data sharing between different providers where necessary. Is a PPP likely to get in the way of data sharing between a privatised FSS and its other competitors? Dr Werrett: I would hope not. The databases that Tim referred to, there is a keenness to maintain those in the public arena so that data sharing continues. Dr Turner: Good. Finally from me, if you do become a PPP can you, as the FSS, guarantee that it will stay in one piece and that perhaps less profitable parts of it might not be hived off, or whatever? Dr Harris: Privatised. Chairman: Forensicated twice! Q140 Dr Turner: Would it remain as a comprehensive service? Dr Werrett: I do not think I can offer a guarantee in that direction. I mean, that is asking me to predict the future. Q141 Chairman: Forensic science is a big thing, as you say, in education. All these young people are being seduced by it at the moment and you are wondering about whether there are going to be jobs, and so on, because of t.v. and all that kind of stuff. Have you been involved in the courses which have been developed in our universities? Dr Werrett: I have not been involved with many. There is an awful lot. In fact some of the forensic scientists who chose to take early retirement when we reduced in size have gone to lecture to some of those courses. Some courses I have been involved with and some have been established for years and years and years and are good courses, but it does worry me that because of the trendiness at the moment for forensic science so many people may be pinning some hopes on it. Q142 Chairman: When you look down the line at forensic science what do you think it is going to be like? Forget the PPP stuff. What is it going to be like? Is it going to be full of scientists doing more technologies or is it going to stay just waiting for things to happen? Are you going to provoke things to happen? Are you going to mix with people like Kinetic and companies like that and find out what they are doing, or is it just that you have got too much to do? What is your attitude? What is the feeling working in this? Dr Werrett: My attitude is the latter and I think it is a very exciting world, and I think we are just about to go through another era of great excitement. Q143 Mr McWalter: I am just staggered by how naïve really in a way you seem to be about the markets. It feels to me like you are a racehorse, you have got a lot of virtues and you are great of your type, and you are entering into a stock car race where a load of cheapo stuff is going to be - I mean, the reality is that you are going to be subject to intense pressures in the cherry-picked parts of the market and you do not have the capacity to do that back, so you are going to get shafted! I mean, there is a very good reason for your staff feeling unnerved. It does not matter whether it happens quickly or slowly. In the end they are going to be very badly positioned in terms of their continuing employment. Dr Werrett: I would like to rigorously defend that one because in the commoditisation of the marketplace, particularly in DNA analysis, we have actually led, completely led the automation of DNA analysis and worldwide we have lots of visitors from overseas who have come to see what we have done for DNA analysis, automating it, not only from the mechanical point of view - where we used to have three or four hundred people we now have forty or fifty people churning out probably four or five times as many tests - but also from an expert system point of view where most of the analysis is now done by expert systems. So we have led that commoditisation. We have realised and anticipated that that is going to be cheap and that these people are going to come in. So no, I do not think we are naïve. We have got the business into a position where we understand where to put the added value and where to have the commercial pressures to make things cheaper. But at the same time I would add that cheap does not necessarily mean value and there are areas where we emphasise to our customers that value requires a little more expenditure but gives you much greater outcomes. Where we have worked alongside police forces, particularly in the partnership projects, to address the whole supply chain where they are doing some of the work and we are doing some of the work, the outcomes are so much greater and that is really good value. Chairman: Okay. Well, Dr Werrett and Bill Griffiths, thank you very much for coming here and helping to set the scene for us in an inquiry which will extend into the New Year. We wish you well in the holiday season and thank you very much for taking time out to bring your expertise and obvious enthusiasm, and doubts, to this meeting. Thank you very much indeed. |