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I know from when I was a councillor that citizens advice bureaux get considerable resources through service level agreements with local authorities. They do a tremendous amount of work.
We should take note when Citizens Advice tells us of the problems that it has. In 2003-04, citizens advice bureaux dealt with 1.3 million cases relating to benefits and tax credits. Citizens Advice acknowledges that some progress has been made, but says that it is still seeing too many people who are missing out on the money to which they are entitled.
Similarly, the Child Poverty Action Group acknowledges the inherent complexity in targeting benefits, but points out that it is made worse by poor delivery, which the Department can do something about. In our report we highlight the importance of highly skilled, trained staff, and at our hearing I asked the permanent secretary why a human being could not review the computer-generated letters that went out and, if necessary, write an explanation on the bottom in plain English. If a letter lists all the benefits to which one could be entitled, but it actually means that one is not going to get any money, it would be a lot easier to understand if that were written on the bottom.
Of course, the use of IT, telephone and other communication technologies will aid simplification. We must be aware, however, that some people will always need face-to-face advice, and we must make sure that our staff have adequate training to do that.
Greg Clark: Given the importance of preserving that human face, does the hon. Lady share my concern that the savings proposed from front-line staff at the Benefits Agency should not go too far too quickly? We should not throw people on the mercy of a complex computer system without a sufficient number of staff to guide them through that complexity.
Sarah McCarthy-Fry: It is important that we make sure that the IT systems are in place first, but I would be the last to say that we should not make savings and process benefits more efficiently. We must, however, put the user at the forefront. Efficiency savings and simplification must be delivered for the benefit of the user, and not necessarily for the benefit of the Department. The user must come first. Claimants and applicants must get the benefits of the simplification.
The most important outcome of the inquiry into the complexity of benefits is the setting up of the simplification team, which will develop the simplification strategy and then be able to challenge all new policy proposals on the grounds of complexity. At our hearing, I was encouraged when the permanent secretary said that he hoped to come back in one year and show a demonstrable difference in the level of complexity. I was dubious, however, about how that would be possible, when a clear set of performance indicators had not yet been devised. I was not quite sure how that improvement would be demonstrated. Sadly that was borne out in the Treasury response:
Because of the difficulties with developing such a measure, the Department cannot commit at this stage to producing one by 2007.
Measurement of progress brings me back to our visit to the USA. For me, one of the highlights of the trip was our visit to Harvard Business School and our opportunity to debate with four of its professors. It was
a huge privilege to listen to them. I was especially interested in the concept of the value chain in delivering public services and how, all too often, we are focused just on inputs, activities and outputs, and we forget the next two items in the value chainoutcomes and impacts. I have no problem with targets. I come from an industry background where total quality management was the norm, and one of the first lessons in any quality system, whether Six Sigma, TQM or whatever is fashionable at the time, is that one must be able to measure.
One must have a mechanism to show whether one is meeting ones defined standards. Delivering public services, however, is not the same as manufacturing widgets, and our standard must be more than just the measuring of inputs, activities and outputs. We must also have a means of assessing outcomes and impacts. The difficulty arises because those are often long-term outcomes and impacts, and the Government are under pressure to find ways in which to demonstrate progress quickly.
Yesterday, I visited my out-of-hours GP service, which had failed on a measurement criterion to get overnight reports to the relevant GP by 8 am the next day. One might say that that was fair enough, but the fact that it had extended its service until 8 am and could not get reports to GPs by 8 am because patients were still being treated at that time had not been taken into account. Yes, it had failed on the raw output target, but it was delivering a better outcome.
The most common form of human stupidity is forgetting what we are trying to accomplish.
As members of the PAC, we should keep in mind what we are trying to accomplish. I hope that we will consider outcomes and impacts as well as inputs, activities and outputs when we scrutinise the cost-effectiveness of Government policy.
Mr. Richard Bacon (South Norfolk) (Con): It is a great pleasure to take part in the debate and to follow the hon. Member for Portsmouth, North (Sarah McCarthy-Fry). I, too, greatly enjoyed the visit to Harvard Business School and would commend it to anyone. I hope that before long the Government also go there and listen to the professors.
My hon. Friend the Member for Gainsborough (Mr. Leigh) referred to my role in the exposure of the foreign national prisoners scandal. I do not propose to say anything about that in this debate, but merely to make one comment about the former Home Secretary, the right hon. Member for Norwich, South (Mr. Clarke). I consciously and deliberately did not call for his resignation over that matter, and I was sorry to see him go. Some may say that his departure became inevitable, but I continue to have a high regard for him and I think that what has happened in the Home Office since then demonstrates that the problems go much deeper than the issue of one Cabinet Minister. I pay tribute to the right hon. Gentleman for the work that he did during his time at the Home Office. Oops,
sorry, I did not mean to destroy your Cabinet career, is not necessarily the most welcome thing to hear from a parliamentary opponent, and that was not my intention. I can only repeat that I have a high regard for the right hon. Gentleman, and I hope that he will continue to make a contribution in this place.
Nevertheless, as was pointed out by my hon. Friend the Member for Gainsborough, there is a serious problem with the Home Office that goes well beyond one issue connected with the immigration and nationality directorate. My hon. Friend said that the Home Office had been unable to present a set of audited accounts to Parliament. There have been the most serious problems possible with the Home Office accounts. They were flagged up in a memorandum from the National Audit Office to the audit committee of the Home Office, entitled Home Office Resource Accounts 2004-05 Audit Update from the National Audit Office.
I pay tribute to Mr. Darren Box, financial audit director at the National Audit Office, whose persistence caused the seriousness of the problems to come to light. His memorandum to the audit committee states
At this stage we are contemplating a disclaimer opinion on the accounts on the grounds that fundamental control failures mean that we are unable to form an opinion on whether the accounts are true and fair and whether expenditure recorded in them is regular.
The accounts display a very limited understanding of how different figures within financial statements relate to one another indicating skills and experience deficits within Accounts Branch.
The accounts showed little evidence of meaningful management review at any level.
With the notable exception of IND, there is no evidence of the accounts production process being subject to any proper project management disciplines.
Issues raised in our previous management letters have not been actioned and appear not to have been disseminated to relevant staff.
In addition to late and poor quality financial statements, serious control weaknesses have also been identified during the audit. The weaknesses include:
IT Controls: There is a lack of security within key IT applications through the absence of unique identification for system administrators, no audit trails, weaknesses in control over standing data
Bank reconciliations are the most fundamental of all accounting controls as they enable payment, receipts and cash balances to be validated to an external source and provide assurance about debtor and creditor balances. Due to difficulties in implementing the Adelphi accounting system, the Home Office has been unable to reconcile its cash at bank position.
Bank reconciliations are fundamental. They are an essential control over cash to ensure that income and payments recorded in any organisations bank account match its accounting records. Matching also provides assurance about debtor and creditor balancesin other words, amounts owed to and by a Departmentand can help to prevent and detect fraud and error.
What was worse was that the Home Office had not even realised that failure to reconcile cash fully could ultimately undermine its ability to provide Parliament with fully audited accounts.
A further cause for concern has arisen from our review of Adelphi transaction data. It took six months for the Home Office to supply us with transaction data that we were able to reconcile successfully to the Adelphi general ledger. However, when the gross transaction value of debits and credits within this data was totalled, they each amounted to some £26,527,108,436,994, almost 2,000 times higher than the Home Offices gross expenditure for 2004-05 and approximately one and a half times higher than the estimated GDP of the entire planet. This suggests that something has gone seriously awry...We have yet to receive an explanation for what has happened... Collectively, these control weaknesses expose the Home Office to a high risk of fraud, irregularity, poor value for money and waste in its financial operations.
David Taylor: Given that the Home Office is feeling its way through this incoherent and inaccurate maze of figures that underpin its performance and direction, can the hon. Gentleman suggest why it is so certain that savings that are available under contestability and outsourcing are sufficient to apply those two techniques on a grand scale to the National Offender Management Service?
Mr. Bacon: I do not think that I can. Many of the so-called savings to be found under various aspects of Government efficiency programmeshad we been in office, they would probably have been found under the James committee savingsare very questionable. A different example, with which the Financial Secretary will be only too familiar, is that Her Majestys Revenue and Customs is busy sacking fraud staff, who were bringing in many hundreds of times their own salary in some cases, in order to meet rather spurious targets. However, I will not dwell on that.
The result of all that activity was that the Comptroller and Auditor General, Sir John Bourn, was unable to reach an opinion on the truth and fairness of the Home Office accounts for 2004-05, so he disclaimed an audit opinion. It is worth explaining what disclaiming means. A disclaimer is not the same as a qualified opinion. We are familiar with the idea of qualified opinionsfor example, because of concerns about fraud and error, there has been a qualified opinion on the Department for Work and Pensions accounts since 1988, which specifies the particular aspects, such as housing benefit fraud, income support fraud or whatever, that are the subject of concern. The same happens with the European Court of Auditors in respect of EU accounts. However, that is not what I am talking about. This is Sir John Bourn, an Officer of the House, telling Parliament that he has no information at all with which to form a view. The accounts were presented to Parliament unaudited.
Irrespective of whether we are talking about a public or a private sector organisation, that is an almost unbelievable state of affairs. It is hard to imagine any private sector organisationwhether it be a golf club or a multinational corporationfor which that would fail to lead to enormous consequences. The Home Office cannot say with any certainty how much it spent during the year, what debts it was owed and what it
owed to others or what assets it owns. There is no assurance that all expenditure incurred during the year was in line with what Parliament authorised and financial information provided by the Home Office is unreliable. Those are the most basic failures of financial stewardship and control by the accounting officer who is legally responsible to Parliament to account for how moneys are spent.
In that case, the accounting officer failed in his duty to Parliament and one might have thought that the person responsible would have been hauled over the coals, exposed and brought to the Bar of the House to explain himself. What actually happened, however, was that he was promoted to become Deputy Governor of the Bank of England in charge of financial stability in the banking system, which, if nothing else, at least shows that the people who run the country still have a sense of humour.
late qualified accounts are extremely damaging to the Home Offices reputation, particularly with the Treasury who are likely to exercise closer scrutiny over the unaudited resource budget outturn submitted to them each summer.
What assurances can the Financial Secretary give us about the Home Offices use of public money? Is the Treasury now keeping a close eye on what happens? What supervision regime is now in place? Is there now a Treasury hit squad inside the Home Office helping to sort things out? How often does the Home Office have to report in and tell the Treasury what it is doing? It has been a disgraceful episode and I hope that it is soon sorted out.
I come to the national programme for information technology in the health service. I do so with some trepidation because I see that the hon. Member for Glasgow, South-West (Mr. Davidson) is in his place. The last time I made a speech on this subjectit was some years ago, I can reassure himhe said that he was glad that there were anoraks in this place who were prepared to devote so much attention to such areas and that he was very glad that he was not one of them. I have to say that the problems have not gone away; if anything, they have become worse. The scale of the national programme is simply huge. As the NAO described it:
The scope, vision, scale and complexity of the Programme is wider and more extensive than any ongoing or planned healthcare IT development programme in the world.
It started with the beguiling idea that information technology offered enormous potential benefits for the NHS. Above all, patient records could follow the patient smoothly and quickly around the system, bookings could be made online, and doctors could consult records easily in their surgeries and during their rounds. Managers and clinicians could track and report on the work of hospitals and trusts, on the prevalence of clinical conditions and on the success of the health service in treating them. IT in the NHS seemed to offer nothing short of a revolution. However, the problem was that the revolution appeared to be outside the Governments control. System standards were being set at the centre, as they should be, but system procurement was happening at a local and trust level.
Kitty Ussher (Burnley) (Lab): The hon. Gentleman mentioned procurement. Will he join me in congratulating the Department of Health on having secured the cheapest ever deal with Microsoft across the whole world?
Mr. Bacon: The hon. Lady may recall that Sir Peter Gershon, when he was at the Office of Government Commerce, negotiated a deal with Microsoft that saved the taxpayer £120 million. As the hon. Member for Livingston (Mr. Devine) said earlier, there have been serious problems with the public sector failing to exercise the procurement power that it has, and I welcome any steps towards improving procurement and using the purchasing power that is available.
In relation to the national programmein which Microsoft is not involved, by the waythe system standards have been set at the centre, but procurement has happened locally. The whole process must have seemed terribly slow to those who wanted to make things happen more quickly. That was why, some years ago, the Prime Minister called to a seminar the heads of some of the worlds largest IT companies. They told him that there was no problem and that they could design, deliver and install national systems across the entire NHS that would do everything that the most optimistic advocate of health IT could want. Of course, they said it would not be cheap and they quoted a figure of £2.3 billion, but, as the Prime Minister said, up to 600 million pieces of paper would be saved a year.
Thus the national programme for IT in the health service was born and with it a new bureaucracy, Connecting for Health. Promises were made, headlines garnered and giant regional contracts were duly let. However, five years on, where are we? For one thing, the cost of the whole programme has inflated enormously. By 2003-04, £6.2 billion worth of contracts had been placed and, in evidence to the PAC, the director general of IT in the health service, Mr. Richard Granger, told us that the figure is now £12.4 billion. The Minister of State for Health has said that the figure is closer to £20 billion, although there is some dispute about what he is including in that. In any event, those are huge numbers.
David Taylor: Even taking the mean of those projected figures, it suggests an overspend of £12.5 billion, which would fund in total the trust deficits that the NHS is experiencing for more than 20 years, which would take us moderately close to the next Conservative Government.
Mr. Bacon: The hon. Gentleman ends on a very optimistic note, and I join him in that. The fact is that the numbers, as well as being very large, have been very varied. We have heard £2.3 billion; £6.2 billion; £6.8 billion; £1.9 billion of central costs, making a total of £8.7 billion; £3.4 billion of central costs making £12.4 billion; £20 billion; and three to five times central contract costs, which could push the figure to more than £30 billion. The fact that the figures are so vague and varied is part of the problem. The potential opportunity cost is also enormous, as the hon. Gentleman points out.
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