Examination of Witnesses (Questions 60-72)
RT HON
ALAN JOHNSON
MP, MS ALEXIS
CLEVELAND AND
MR ROD
CLARK
2 FEBRUARY 2005
Q60 Mrs Humble: No, sorry, Alan.
I have got some nuns, I must find out if they are Carmelite or
any other order, there is a small group of them. No, office support
services. Again, you made an announcement on 26 January that office
support services were going to be provided by external suppliers
and I just wonder how much of an efficiency saving you think that
is going to bring because going from memory I got involved in
this debate in the first term of the Government because the situation
that your predecessor inherited, Alan, was that the majority of
office services had already been contracted out but there were
some that were left in house and there was a proposal to contract
those out. On the Fylde coast, including my Blackpool my constituency,
they were still in-house and the local staff wanted to remain
in house. I remember very detailed discussions with Angela Eagle
who was then Minister. We looked at private sector comparators
and all the evidence showed that in fact the in house provision
provided value for money, which was why she as Minister accepted
that certainly on the Fylde Coast the service should remain in-house.
If that was the case about five or so years ago, why do you think
now the service should be privatised, contracted out, and why
do you think you can make savings now when clearly there were
no savings identified in the past because otherwise we would not
have won the argument? This directly affects my constituents but
also if you are anticipating savings I just wonder how realistic
is that?
Mr Clark: I think part of the
answer is to do with looking at the requirement for office services
on a national basis and looking at what we need to cover the whole
of DWP. What we are looking to do is to go for some large contracts
which cover large areas and so relatively small pockets of different
providers do not give us the opportunities for introducing new
business practices into the future. That is a large part of it.
It depends on which question you ask about how wide you cast the
net as to the comparisons you are making.
Alan Johnson: It is also probably
true that since that happened there has been a merger of the Benefits
Agency with the Employment Service so there are certain economies
of scale there that might make it possible.
Ms Cleveland: And different requirements.
Q61 Mrs Humble: Obviously it was
in the days of the Department of Social Security but nevertheless
staff who were working in the system feel that they won their
case, they won their argument, and now they are wondering what
has happened. For us as a Committee the specific issue is we are
questioning you on the strategy for the future and how you think
savings can be made in this relatively small area and how it will
then link into your overall plan.
Mr Clark: I think we can certainly
get you a note in more detail on the thinking.
Chairman: That would be useful. Thank
you.
Q62 Rob Marris: Alan, I want to go
back to the big picture on the staff because we have moved slightly
to the big picture on the future numbers of staff and so on. You
said right at the beginning that by 2007-08 you were going to
go to 100,000. I understood you to say, and do correct me if I
am wrong, but to paraphrase what you said, you said you had not
finalised which components or agencies within the DWP would have
which staffing levels. That suggests to me that the whole thing
is turned around backwards and that you have this target to reach
of 100,000 staff by March 2008, then you decide you can lever
the jobs out of which bits to meet that target rather than starting
from the other end and saying how many staff do we need in this
agency or this component and totting up all the figures and finding
what the total figure is, whether it is 100,000 or something else.
Could you comment on that because it does sound backwards?
Alan Johnson: I hope not. Do not
forget we were committed to an 18,000 reduction before the announcement
last year which would expand that to 30,000 before Gershon. The
crucial element is we can do that whilst maintaining proper public
services. We have reduced by something like 7,200 in a situation
where we were simply holding vacancies and ensuring that wastage
gave us the headroom to make changes. So given that that is the
situation, that we had no real control over where the vacancies
were emerging but we had an absolute imperative to avoid compulsory
redundancies and work with the unions to get a proper agreement,
we are only now in a position where we can start offering packages.
We expect in this financial year to be able to offer about 500/550.
Q63 Chairman: In this financial year?
Alan Johnson: In this financial
year, and that is when we can start to plan much better. That
is one aspect of this. The second aspect is that the situation
changes all the time. If the imperative is to maintain customer
service—and we have spoken about the CSA—if we had
driven ahead there and found the problems we have got we would
have had to rope back and we would have had a worse situation.
On Pension Credit where the take-up has been crucial we have put
more pressure on Alexis to work harder on this. I think what we
are saying is we were already working towards this with the 18,000
reduction and we think that we can do the 30,000 reduction whilst
maintaining a proper service. It will be challenging, it is a
big challenge. Others have suggested we can go further. One suggestion
I saw said that we can take 100,000 out of DWP. Frankly, that
is ludicrous and would affect quality of service. However, we
can do this and in a couple of weeks we hope to be able to give
to you how we plan that to spread across the different departments
in the DWP. I could give you a rough guide now but I do not think
it will be any use. I think it will be much better when we finally
agree across the board—because we have got some tough decisions
to make, I am not suggesting this is going to be easy—that
we then present it to you. It was not, Rob, a situation of doing
this backwards. It is a big department with a lot going on and
we have to be absolutely sure that we have looked at all eventualities
before we put our staff's mind at rest. That is one of the reasons
we have got high wastage rates. Once we do this we will have a
lower wastage rate because people will be more certain about their
future and that is when the packages come in to try and create
more headroom and avoid compulsory redundancy.
Q64 Rob Marris: So your staffing
levels are driven by service delivery not service delivery driven
by staffing levels?
Alan Johnson: Service delivery
is absolutely crucial to this. It is your earlier question about
Gershon which is central to this.
Q65 Andrew Dismore: Picking up from
where Joan left off, this is a question about contracting out.
Presumably if you contract out office services, you will have
fewer staff and that will count towards your Gershon headcount?
Mr Clark: Yes, that is true. There
will be a small element of that.
Q66 Andrew Dismore: Let me finish
the question so do you add back in the contracted staff who are
doing the jobs that you have just privatised?
Mr Clark: The way our arithmetic
works we have not built that in but this really is a minor element
in our plans. We are not looking to achieve a 30,000 reduction
by wholesale outsourcing. There is going to be some movement at
the margins between contractors and in-house staff but we are
talking a few 100 which in the scheme of things does not affect
the overall picture.
Q67 Andrew Dismore: What about other
departments, Alan? Are we seeing outsourcing in other departments
of a similar sort? If Job Centre Plus is looking at a few hundred—
Alan Johnson: Rob was referring
to the DWP.
Ms Cleveland: It is a corporate
service.
Q68 David Hamilton: We have received
information—and it is a point of view but I would go along
with it—that the Pension Credit is slowing right down after
an initial period, and certainly in my area there are less and
less people taking it up. Even people who might be entitled to
Pension Credit are not applying because it affects their council
tax, rent rebates and everything else and they do not want to
go through that system. Then you have a bulk of people who do
not want to go for a Pension Credit at all. Are you going to review
the Pension Credit objectives you have got and the numbers you
are going to look at because you are well below that at the present
time? The second thing is I like the point Alexis makes about
cross-referencing which is a first I think with local authorities
where council tax and rent rebates will be taken into account.
We have got to have an holistic approach to what happens. Is that
holistic approach going to be planned across departments? I refer
specifically to the CSA where you cannot get any information out
of the Inland Revenue without ten bits of paper people and months
of discussion before it gets signed off and something happens.
It is good to see that cross-fertilisation taking place with local
authorities and the DWP will be the central core to that. As you
go to expand into the CSA and indeed the Inland Revenue, which
takes it one stage further, you are going to get data protection
issues and all the rest of it, which I think is over-used.
Alan Johnson: On the first point
about take-up we are not actually off our target. The question
is whether the target could be more adventurous because my concern
here is the guaranteed element for the poorest pensioners, which
is something we ought to concentrate on. In effect, you need to
have three statistics. You need to have the one you get at the
moment, which is our overall take-up rate, and then split down
to the guaranteed credit element and the savings credit element.
I think those three figures could really help us. I would be very
worried if the guarantee element was a long way off of target.
That is the important thing. They are the people living well below
the poverty line. That is not to say the rest are living in luxury.
When you come to the savings credit you run up against the biggest
reason why people will not claim it which is, and this is wonderful
because these are people on fairly modest means who say, "I
have got enough money, thank you very much. I am comfortable,
I do not need any more." They are not making any great moral
point. They are saying, "I am fine, thank you. I have got
that and I have got that and that is fine." That is the biggest
single reason. Then you get a smaller number who are concerned
about how it will affect their housing benefit and their council
tax benefit, no matter how many times we say it. They have got
a point here. They cannot have their total money reduced but they
think there is a bit of bureacracy to go through and that is what
Alexis is determined to try and reduce. So I do think that we
need to look at the figures and break them down into the various
elements. I am not, frankly, worried to any enormous degree that
we are missing out on the poorer pensioners. I would like to think
of ways that we can attract the people who might get four or five
quid a week to apply for it. I would like to ensure that this
becomes a much more automatic process in the future, which I think
we can do. On your final point, Alexis is probably better at answering
this about how we merge all these bits together. I will let Alexis
say something on this but on the general picture for the future
we have a big thing going on in DWP which is benefit simplification.
It is huge. And when the previous chair of the Social Services
Advisory Committee stood down I met him for a valedictory meeting,
and he said from his long experience here if we were really determined
to do this, it could be done, and I think he is right. We have
got a lot of people working very hard on this and that will mean
a lot of those problems about these different elements which Alexis
is trying to do on the hoof at the moment we could have a far
more structured approach to.
Q69 Rob Marris: It did not happen
with the CSA simple formula.
Alan Johnson: Not yet but if we
can get the computer system right, it could do.
Ms Cleveland: On the data sharing
issue, we are doing a lot more work particularly on the pension
side with Inland Revenue to see what information we can bring
and to get closer, as Alan was suggesting, and to be able to predict
accurately the people who will be entitled to Pension Credit.
Q70 Chairman: Just lastly from me,
I should have asked you earlier, the recruitment freeze that you
have been working through is that still Department-wide or are
you allowing managers now, as we move into a more planned future
the flexibility to look at this because it was obviously producing
tensions within the system?
Ms Cleveland: It has only ever
been a very severe chill because certainly in pensions we have
recruited 700 people this year because of turnover in there. We
do have a very formalised mechanism in the Department to get approval
for recruitment which is done at departmental level looking at
the likely vacancies and the likely people who are becoming surplus
in a particular location. We are not planning on moving people
vast distances across the country. We are looking at very specific
cities or sites.
Q71 Chairman: So a case can be made
even now when there is a freeze and you can still get new staff
if it is considered to be essential for the business case?
Ms Cleveland: Yes.
Q72 David Hamilton: Maybe I did not
ask the question properly. The other part was about the Inland
Revenue in relation to the CSA. There is a real problem within
that system and it is about data protection and the Inland Revenue
saying they will not pass certain information on about fathers.
It is a small part in the overall picture but it is one of the
most important parts where fathers avoid paying amounts of money
and the Inland Revenue do not correspond with the CSA. They are
not very helpful and they are using the Data Protection Act for
it. Would the Minister take that up with his colleague and have
a look at that?
Ms Cleveland: We are taking that
sort of thing forward with colleagues because we have the advantage
now of Paul Gray, who understands our business very well, having
moved from this Department to be Deputy Chairman, and more recently
Nick Dyson, who was Head of our Analytical Division in this Department
but has responsibility for the relationship with Revenue, has
now moved to Revenue, so we are looking for a more sympathetic
view.
Chairman: You have got important Parliamentary
business later this morning and I think it is right that we leave
you as much time as possible to get mentally prepared for that.
It is a big announcement and we are looking forward to what you
might say to us. Can I say on behalf of the Committee many thanks
again and thanks to the staff, the professionals, who give us
such great assistance. We can assume from what you have said that
in due time as soon as you can get yourselves organised in terms
of making a sensible, detailed announcement then the Committee
will be given access to the detailed figures because it is obviously
an important part of our work in scrutinising the role of the
Deparment on behalf of Parliament and we look to you for that.
It has been a very useful session this morning. Thank you very
much. The Committee stands adjourned.
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