Examination of Witnesses (Questions 40-59)
RT HON
PAUL BOATENG
MP, MR GUS
O'DONNELL CB, MS
MARY KEEGAN
AND MS
SARAH MULLEN
9 FEBRUARY 2005
Q40 Mr Beard: What puzzles me in this
is, if that is the case, and you owned up to the NAO and the Audit
Commission having discussions with the department, why have the
middle-men, why did they not go straight to the department anyway?
What was the role of the scrutiny panel?
Ms Mullen: The role of the scrutiny
panel was to make sure that we understood the comments that the
NAO and the Audit Commission were making. The Treasury and the
efficiency team, who were also part of the scrutiny panel, would
have their own comments too, and we wanted to present one, consolidated,
consistent set of comments to the department.
Q41 Chairman: How then did we end up
with the situation in October whereby the Department for Education
Efficiency Technical Notes were 55 pages long and the Home Office
one was only three pages long? If we have had all this process
and this thoroughness of Gershon and the 2004 Spending Review,
how did you sign off something from the Home Office which was
just three pages long?
Ms Mullen: We did not sign off
the Efficiency Technical Notes, they are for departments.
Mr Boateng: They belong to the
departments. It is a tool for them.
Mr O'Donnell: Absolutely, it is
a Home Office document.
Q42 Chairman: When we asked the Chancellor
this, in evidence on the Pre-Budget Report, he said it was all
evolving and he was taking note, and so on. Have you given the
Home Office a rocket?
Mr O'Donnell: It is evolving and
work is underway in terms of trying to improve in all areas, I
can assure you.
Chairman: So that is a yes.
Q43 Mr Beard: Could we go back to this
question of what the role of the scrutiny panel was because, if
the National Audit Office and the Audit Commission were producing
the bones of this, can you give us an example of what the scrutiny
panel, with the Office of Government Commerce and Treasury officials,
added to the process?
Mr O'Donnell: When you have got
these panels what you are doing, basically, is trying to come
up with sensible measures of public sector outputs. This is a
specific example of a bigger, broader issue which Tony Atkinson
was looking at in his bigger report. You are coming up with ways
in which you can measure efficiency changes, so you are trying
to validate changes in inputs and outputs, which intrinsically
are difficult to look at. If you take the Atkinson one on education,
for example, the question of whether it should be numbers of pupils
or attendance numbers, a very specific point which comes out in
Atkinson. When you are doing the ETNs you have got the NAO coming
at this with their specific hat on, but you have got the Audit
Commission with their experience of local authorities giving another
view, and you have got the Treasury and the OGC, all having different
views. The point of bringing them all together is so that the
department can ensure they are not being told contradictory things
and we can sort that out and come to considered advice. Then they
can go away and it is their responsibility to publish their Technical
Note, which we hope will get better through time, the ETNs.
Q44 Mr Beard: Does not this process jeopardise
the independence of the National Audit Office and Audit Commission,
and that is what they are there for? They are there scrutinising
these things because they are independent and by putting them
into this circus you are bringing their independence into question,
surely?
Mr Boateng: That would be utterly
counterproductive because what they bring to the table, literally,
in terms of the panel meeting, is that very independence. Our
presence, as the Treasury, and the presence there of the efficiency
team with the department is to make sure that we draw on their
input, arrive collectively at a clear understanding of what it
is that they are saying, so that there is no misunderstanding
about the advice which has been given to the department and we
are all clear about the extent to which it has or has not been
taken. It goes back to the point that you made at the very outset,
Chairman.
Mr O'Donnell: It is in the very
nature of precisely what modern audit is all about. When I talk
to Sir John Bourn about the NAO's role and James Strachan about
the Audit Commission, it is very much about getting involved in
the process earlier, being able to improve things and not being
a sort of ex post analyst that gives either a tick or a
cross. It is about getting in early, helping sort out these difficult
issues and helping departments improve their performance.
Q45 Mr Beard: I understand that. My question
is not about their role, my question is about what the scrutiny
panel is doing on top of what is their role?
Mr Boateng: What it is not doing,
Mr Beard, is conducting a negotiation. It is about arriving at
an understanding. It is about clarification. It is about identifying
where the criteria need to be applied, identifying any difficulties
and being clear as to the advice which then is given to the departments
and it is then for the departments to act on them. Indeed, as
you rightly point out, looking at them subsequently, there is
a judgment to be made as to the extent to which they have or have
not been particularly satisfactory in terms of that which is produced.
Q46 Mr Beard: The Chancellor assured
us that this is an evolving process and the National Audit Office
and the Audit Commission would be asked to provide further advice.
Will you ensure, as we recommended when we looked at this last,
that this advice and each department's response to the advice
are published?
Mr Boateng: We do not have any
current plans to publish in this way, partly because of the issues
that Sarah has described. We have got some pretty difficult measurement
issues here which will need to be handled and, as I say, there
is explicit reference to those in a number of the ETNs. I do not
see myself immediately, but obviously it is something that we
can reflect on in the light of your own view, much benefit to
be gained in publishing advice on early drafts of ETNs.
Q47 Norman Lamb: Would it not provide
a fantastic incentive for departments to get their act together?
Mr Boateng: I think the problem,
Mr Lamb, is that one wants to ensure that departments are encouraged
and supported to engage.
Q48 Norman Lamb: The Home Office is not.
Mr Boateng: That they are not
frightened off by the notion of being, at that early stage, when
you have got early drafts, "named and shamed". That
is my take on it but others may have a different view.
Mr O'Donnell: I think it is better
if we give them a chance and we have an iterative process, and
when we come up with something which we think is reasonable then
is the time to move forward.
Q49 Norman Lamb: So far, you have not
been very successful with the Home Office. Do you think you might
get to a time when you do name and shame?
Mr O'Donnell: It will be a decision
for Ministers, in the end. We would hope very much that we would
get the improvement without having to go that far.
Q50 Chairman: Just finishing off on the
Efficiency Technical Notes, you told us at one point that the
reason you involve the National Audit Office and the Audit Commission
is to ensure confidence in and the credibility of the measures.
If we never know whether their advice was followed, how can we
be sure there is confidence or the measures are credible, if we
do not know that the advice was followed or not?
Mr O'Donnell: Certainly it will
be the case that when those targets are finally there and we are
trying to audit them it will be very clear, I think, whether we
have made a good job of coming up with smart efficiency measures
so that they are easily auditable.
Q51 Chairman: We might still never know
whether the advice of the National Audit Office was followed?
Mr O'Donnell: It is one of those
difficult questions, whether you are forever publishing advice
from people; you get into game playing then as to whether people
are aiming off from their advice.
Ms Mullen: There is nothing to
stop the NAO or the Audit Commission doing, as they do in a number
of areas and have been doing, for example, on PSA data systems,
an investigation or an audit or a Value for Money study.
Q52 Norman Lamb: Minister, how would
you define an efficiency saving?
Mr Boateng: I would define it
in a way that is focused on the optimum use of a given amount
of resource and the maximising of the outcome, in terms of the
benefit from the application of that resource. It is reduced inputs
for given outcomes. That is how I think I would define it.
Q53 Norman Lamb: With that in mind, one
of the OGC's efficiency proposals, according to your own Efficiency
Technical Note, is to, and I quote: "generate additional
income from services currently provided free." How does that
fit within the definition you have just given?
Mr Boateng: The way that I would
approach that is to say—
Q54 Norman Lamb: That it is not an efficiency
saving?
Mr Boateng: No. I would not say
that because if you have an enhanced quality or quantity of service
for the same level of inputs—
Q55 Norman Lamb: You are just charging
for something that you have not charged for in the past. How is
that an efficiency saving?
Mr O'Donnell: It is the whole
process that charges and prices can actually lead to a more efficient
allocation of resources.
Q56 Norman Lamb: Oh, come on.
Mr O'Donnell: Is that not the
case?
Q57 Norman Lamb: That is stretching things
a bit, is it not? It is a perfectly legitimate thing to consider,
I fully accept that, you know, "Let's see if we can get in
some extra income by charging for this service," but it is
not an efficiency saving?
Mr O'Donnell: I would disagree,
in the sense that by charging for services what you find is those
that actually get no value out of the service will not use it,
therefore you can economise there, not provide that service to
people who are not prepared to pay for it and, by charging a reasonable
price, you can generate income and ensure that service is provided
to those who most value it.
Q58 Mr Cousins: What about people who
cannot afford it?
Mr O'Donnell: That is certainly
true and there are distributional questions that we will need
to consider very carefully, whenever you move to charging, I agree.
Q59 Norman Lamb: What specific activity
is the Treasury undertaking to ensure that joint back office functions,
which was one of the ways which Gershon identified for making
efficiency savings, are delivered across government departments?
Mr Boateng: I gave one example
in response to an earlier question from the Chairman, in that
we have now a cross-departmental Shared Services Forum, which
is helping departments get best value out of human resources,
out of finance functions, departments are given practical help
in achieving that, I think the toolkits that have been made available
to them, which were examples of best practice.
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