We were asked for the 1,023 figure broken down
by month of release date. The table below shows the available
information on the release date of the month of the 1,023 foreign
national prisoners not considered for deportation.
The information by the Home Office is different from the information
previously provided to the PAC in the letter from the former Home
Secretary of 25 April 2006 (Ev 21-23). This is because the immediate
priority was to provide an update on the available information.
Later work investigating the situation uses data from a wider
number of sources, reflecting a far more intensive investigation
of each case. This has resulted in improved data which has caused,
and will continue to cause, changes to the information originally
provided.
We said that we would clarify what communication had taken place
with prison governors and the Immigration Service. The Prison
Service Order (PSO) 4630, which sets out the procedures and actions
relating to immigration matters was issued on 20 September 2004
and has not since been revised.
In addition, a protocol signed in December 2004, sought to improve
the process of consideration for removal from prison custody to
the immigration detention estate those foreign nationals held
under immigration legislation.
A further message to Governors and Directors of contracted prisons
reminding them of requirements to notify IND was carried out in
April 2005 in one of a series of bulletins on foreign national
prisoners.
Following the PAC hearing of 26 April 2006, we also reissued PSO
4630, which included revised contact details on 27 April 2006.
From October 2004 there were also regular montly meetings at official
level between the Immigration and Nationality Directorate (IND)
and HM Prison Service (HMPS) on issues involving foreign national
prisoners. At ministerial level, the increase pressure on the
prison population in Autun 2005 led to closer examination of the
"segments" making up that population. The growing proportion
of foreign nationals was highlighted and, in addition to the meetings
at official level, the Home Secretary met with ministers and officials
from both immigration and prisons to discuss measures to be taken.
The first of these took place on 17 October 2005 on the need for
closer working between IND and HMPS on a range of issues involving
foreign national prisoners.
The performance target for removal of Foreign National Prisoners
is 85% within 28 days of the end of the individual's criminal
sentence.
The Home Office accepts that performance is low compared to our
targets and, as described at the hearing, we have increased, and
are further increasing, resources devoted to this area.
The Home Office is not at this stage able to provide the
Committee with information on the prisons from which the 1,023
foreign nationals were released, the length of sentence for the
1,023 foreign nationals, or how long they have served. This information
is contained in individual case files but was not entered electronically
in every case in a central system. This means that it would be
a very big manual job to produce this information and it would
be of doubtful reliability.
There was no IND system to capture information on foreign
nationals released from prison pre-1999 when a system of records
was established. Comprehensive statistical information on prison
discharges is not collated centrally. However, the number of those
entering prison establishments under sentence each year can provide
some indication of the number of sentenced prisoners discharged
in a year. Information on foreign nationals entering prison establishments
under sentence is available from 1993 onwards and this figure
was 21,102 in England and Wales (1993-98 inclusive). The breakdown
of each year is as follows:
The table below shows the number of deportations broken down into
year. However, it must be noted that prior to October 2000, these
figures will also include people we now deal with as administrative
removal, including those removed for overstaying or working in
breach of conditions. The figures below include thoese categories
as well as the deportation of Foreign National Prisoners and those
with a family connection.
The prison population projections produced by the Research,
Development and Statistic branch of the National Offender Management
Service (RDS NOMS) have not provided separate estimates for foreign
nationals and there are currently no forecasts of flows of foreign
national prisoners through the system. The growth in the foreign
national prisoner population has been accompanied by changes in
the profiles of nationalities, reflecting to some extent changes
in the nature of make up of the general UK population, for example,
the influx of visitors and migrant from EU Accession countries
since May 2004.
There are currently no long term forecasted intake figures for
foreign national prisoners, although work on this is being taken
forward as a priority. Until that work is completed we are working
on the basis of 600 new cases per month (based on April 2006 intake).
Work is underway to assess the resources needed, based on this
workload.
The Committee also requested the 1,023 figure broken down by the
prison from which they were released. However, whilst this information
is contained in individuals' case files, it was not entered electronically
in every case into a central system. The fact that a prison is
not recorded on the central system does not affect whether an
individual will have been considered for deportion.
1. This note sets out the background to the cash management
problems and the progress that has now been achieved in reconciling
the cash. In summary:
— The Paymaster General (PGO) account is reconciled
for 2004-05 and 2005-06. Reconciliations will be carried out on
a monthly basis for 2006-07.
— In April 2006 the NAO confirmed that they were satisfied
with the bank reconciliation of the PGO account for 2004-05.
— In May 2006 the Natwest Bank accounts for 2004-05
have been reconciled and the reconciliations are being reviewed
by the NAO. Reconciliations for 2005-06 have been completed up
to 28 February 2006 (the reconciliation as at 31 March 2006 will
be completed shortly).
— The reconciliation of the PGO and Natwest Bank accounts
have not disclosed any evidence of fraud.
2. The initial technical problem—Paymaster General
Account (May 2004)
2.1 Shortly after the new accounting system went live the
Home Office encountered a failure in its BACS payment facilities
which prevented it from being able to make BACS payments from
the Paymaster General account. Normally the Home Office would
make daily payment runs but during the first three weeks of operation
was only able to complete four payment runs. This had a severe
impact on the payment processes of the Home Office and created
difficulties with suppliers who were demanding immediate payment.
This created a number of problems for the Home Office as BACS
payments, which had been started in the accounting system but
not completed, had to be cancelled (voided) on the system and
alternative manual payments made. Payments totalling some £380
million were successfully voided using this process. However,
for some £67 million of payments the voiding process did
not work properly. The transactions were effectively only partly
cancelled and this resulted in an error report of 300 pages and
approximately 12,000 transactions. The problem was logged with
Fujitsu Services in the early part of June 2004. At this time
the problem was thought to relate only to the accounts payable
module. The implications for the cash management module were not
qualified or understood at this stage.
3. Resolution of the technical problem by Fujitsu Services—June
2004 to May 2005
3.1 Fujitsu Services referred this issue to Oracle during
June 2004 for resolution. As a result of escalation of the problem
by Fujitsu Services, Oracle delivered a technical solution in
January 2005. The solution was applied to a test environment by
Fujitsu Services and thoroughly tested before being finally applied
to the live Adelphi environment in May 2005. The overall effect
of this solution was to create an accounting entry which adjusted
the bank account and creditor balances by £67 million (This
is the background to the £67 million referred to in Table
1, lines 5 and 9 in paragraph 17).
4. Cash management reconciliation difficulties—Paymaster
General Account May 2004 to December 2004
4.1 Cash management went live during May 2004 and early efforts
to reconcile the cash management system were hampered by the business
and consequent accounting issues generated by the BACS problems.
It also became clear that the team operating the cash management
module, who had been involved in the design, build and implementation
of the module, did not fully implement the daily, weekly and month
end processes. Because errors were made and processes not followed
the bank reconciliation did not successfully reconcile bank balances
in the general ledger to the bank statement balance.
4.2 Early reconciliations produced for June and July 2004
highlighted that there were differences that were not resolved.
It was at this time that the cash management team recognised that
the accounts payable problem, which had been logged with Sirius,
was a contributing factor. The presumption of the team was that,
once Oracle had delivered a solution, the bank reconciliation
would then balance. Cash management staff did not flag up to senior
management that they were experiencing problems and there was
no evidence of bank reconciliations being reviewed by management
chain outside of the cash management team.
5. Review by Internal Audit—December 2004 to February
2005
5.1 Between December 2004 and early February 2005, the Home
Office Audit and Assurance Unit (AAU) undertook a review of the
financial accounting controls. On the 14 February 2005, they told
the Head of the Accounting and Financial Unit and the Director
of Performance and Finance Directorate that there were serious
issues on the bank reconciliation. AAU confirmed that there was
no effective scrutiny of the bank reconciliation and that the
first time the reconciliation was reviewed by senior management
was in February 2005. An independent Oracle experienced consultant
was immediately brought in to help with the reconciliation and
an action plan was put in place. A follow up review by AAU was
undertaken during April 2005. The progress reported to the April
Audit Committee was that the bank reconciliation position had
improved but had not been fully reconciled, as a software solution
was required.
6. Action undertaken by the Home Office to reconcile cash
management—February 2005 to December 2005
6.1 With assistance from the Oracle experienced contractor,
the team were able to make progress on the cash management reconciliation.
By June 2005 they knew that the solution provided by Fujitsu explained
£67 million of the reconciliation difference but they were
unable to resolve a remaining unreconciled difference of £3.035
million. Attempts to investigate this were hampered by the fact
that reports available from the system at the time could not be
run retrospectively. One million transactions had been processed
through the account hence a manual reconciliation approach was
not possible.
6.2 Faced with this problem, the judgement of the cash management
team was that there were compensating differences in debtor and
various other creditor accounts. Writing off these compensating
unreconciled balances in these accounts to the Operating Cost
Statement would make the closing balances as at 31 March 2005
correct. These entries were reflected in the accounts presented
to the NAO on 9 September for audit.
6.3 Following on from their audit work, the NAO escalated
their view that the accounts were inadequate to the Director of
Performance and Finance during October 2005. They indicated that
they were concerned that the unreconiled difference of £3.035
million could mask substantial errors and potential losses. The
Home Office discussed with Fujitsu Services whether a systems
based reconciliation was possible and following a scoping exercise,
work commenced in the first week of November. By the 14 December
the bank account was reconciled to within £3,500 and working
papers were provided to the NAO for them to review.
7. Conclusion from reconciliation work on Paymaster General
Account
7.1 Our work on reconciling the Paymaster General Bank Account
has confirmed the following points:
— there was no evidence of fraud or loss; and
— there were no substantial errors in the resource accounts
which needed correction as a result of completing the reconciliation—this
work did not contribute to the changes in account balances between
the accounts submitted on 9 September 2005 and those laid before
Parliament on 31 January 2006.
7.2 Following further work by the NAO since the end of January
2006 they have confirmed that they are content with the reconciliation
for 31 March 2005. They also confirmed through their review that
the £3,500 difference did not mask larger offsetting differences.
7.3 Although the NAO refer to £946 million of gross adjustments
in paragraph 17, this produced a net adjustment between bank and
creditors of £67 million. This was reflected in the accounts
submitted in September 2005. A number of adjustments actually
had no overall effect on the accounts (eg £760 million reflected
entries to eliminate from the cash accounts matching payments
and receipts resulting from the £380 million failed BACs
transactions in May 2004). Similarly the gross value of corrections
needed to reflect the accounting entries associated with the application
of the solution provided by Fujitsu totalled £180 million
to produce the net adjustment between bank and creditors of £67
million.
Background information: Home Office banking arrangements
There are two main types of bank accounts used to finance Home
Office operations. These are an account with the Paymaster General
and a facility with the National Westminster Bank.
Paymaster General Bank Account
The Home Office has an account with the Paymaster General through
which:
— all exchequer funding is channelled;
— all major payments are made; and
— any receipts generated by the Home Office are processed
(both Appropriations in Aid and Consolidated Fund Extra Receipts).
Paragraphs 16 to 18 and Tables 1 and 2 refer to this account.
The Paymaster General Bank Account was reconciled by the Home
Office and audited by the NAO as at 31 March 2004. No problems
were noted by the NAO and issued an unqualified Audit Opinion
on the resource accounts for 2003-04.
National Westminster Bank Accounts
The Home Office has a facility with National Westminster Bank
to provide a local banking facility to Home Office functions which
need to bank receipts (eg receipts associated with asylum processes
such as Leave to Remain fees) or provide a local petty cash facility
to remote offices. There are two umbrella accounts which during
the course of 2004-05 had up to 47 sub accounts which operate
overnight sweeping arrangements and an automatic transfer to combined
balances over £40,000 into the main Home Office Paymaster
General Account. The NAO report refers to this in paragraph 19.
In 2004-05 there was no process or review process in place to
ensure that reconciliation of the Natwest accounts were completed
on a monthly basis.
Home Office sponsored agencies and NDPBs have their own bank accounts
which are outside of these arrangements and were not affected
by the Home Office problems.
Adelphi
In May 2004 the Home Office went live with its Oracle financial
system (Adelphi), which comprised of a General Ledger (which records
transaction information and is used to report financial performance
in the Home Office), and the following modules:
— accounts payable;
— accounts receivable; and
— cash management (the module which reconciles cash
transactions in the Home Office books to bank statements produced
by Paymaster General).
The cash management team, who had participated in the design,
build and implementation of the cash management module, were trained
in its day to day operation and were responsible for the operation
and were responsible for the operation and reconciliation of the
module from May 2004. During 2004-05 the bank account in the General
Ledge would have processed around one million transactions.
Question 172 (Mr Edward Leigh): Use of Adelphi to keep track
of programmes and project implementation
Adelphi
This note describes the Home Office Adelphi system, including
the accounting facilities it provides, and describes how this
can contribute to better programme and project management, as
requested by Public Accounts Committee on 26 April 2006 (Question
172).
The Adelphi system is a major step forward in supporting the management
of finance, human resources (HR) and procurement in the Home Office.
There have been some transitional problems in introducing the
new system, but overall Adelphi provides a sound business solution
that is already delivering real benefit. Project and programme
management are not the primary purpose of the system, but Adelphi
can nevertheless make a useful contribution to these areas, as
described in this note.
Business rationale
The Adelphi system provides an integrated business solution for
administration of finance, HR and procurement in the non-Agency
Home Office, including central policy directorates and the Immigration
and Nationality Directorate.
The business rationale for Adelphi arose from the need to replace
outdated legacy systems for finance and human resources (HR);
and to introduce a central system to support procurement. The
most effective way to do this was considered to be a class of
business solution known as an Enterprise Resource Planning (ERP)
system. The Oracle eBusiness suite was selected as best meeting
Home Office business requirements.
The projected benefits of the proposed solution include productivity
improvements through automation, sharing (rather than replicating)
data and better management information and control over the resources
used by the Home Office.
Total costs are estimated as £79 million and total benefits
are estimated as £118 million. Of the total benefits, 76%
(£91 million) are considered to be cashable.
Development and rollout
The Adelphi system was developed for the Home Office by the Sirius
consortium including Fujitsu Services (lead contractor) and IBM
Consulting (business advice services), under the IT 2000 PFI contract
which also includes general provision of Home Office IT and telecoms.
The proposal was subject to robust commercial negotiation, including
a benchmarking study by the Gartner Group. The resulting programme
was subject to an OGC Gateway 3 review (investment decision) before
agreement was signed in May 2003, envisaging that the solution
would be delivered to the Home Office ready for use from 1 April
2004.
An OGC Gateway 4 (readiness for service) review was held in February
2004, towards the end of the design, build and test phase of the
project. The rollout of the system was phased, avoiding a `big
bang' implementation, in accordance with best practice and OGC
recommendations. Core finance modules except for fixed assets
(see below) were fully implemented in May 2004; core HR modules
were fully rolled out by the end of September 2004; and a rolling
programme to implement procurement was completed in March 2005.
An automated interface from Adelphi HR to the Home Office payroll
system (ePayfact) entered full operational service in April 2006.
All the original intended functionality has now been rolled out
except for HR self service; an interface from payroll to Adelphi
General Ledger reporting monthly pay spend; and fixed assets (see
section on finance modules, below). Work is continuing on each
of these items.
The Oracle system requires a very disciplined approach to data
quality and adherence to specified business processes. It also
requires an integrated approach between finance, HR and procurement.
Taken together all of this represented a substantial challenge
for the Home Office, as it does for many or most organisations
introducing an ERP solution. However the potential benefits of
a fully integrated resource management system, and modern industry
standard processes and IT, more than justified the business change
required.
Agreement was reached at an early stage of the project that in
keeping with best practice, the Oracle solution would be used
without major technical customisation (a so called "vanilla"
implementation). In other words, where the design revealed any
conflict between the two, Home Office business processes would
be adapted to fit the Oracle solution rather than vice versa.
This reduces technical risk and has considerable lifetime benefits
in reducing the cost and complexity of implementing future upgrades
to the core Oracle eBusiness suite—although it may increase
the extent of business change required by the organisation.
Finance modules
Four finance modules (accounts payable, accounts receivable, general
ledger and cash management) have been live since May 2004. The
Adelphi fixed asset module is not yet live (and has not been paid
for) because it could not calculate the modified historic cost
accounting adjustments required for resource accounts. Oracle
has recently provided a proposed solution for this problem which
is being tested. A decision has yet to be taken on when this will
be rolled out. Fixed asset calculations were therefore undertaken
outside of the Adelphi System in 2004-05 and 2005-06.
Adelphi has already delivered a substantial advance on previous
financial reporting and now provides budget managers with a single
source for standard budget reporting, early in each month, providing
transparency at each level. Budget managers therefore have significantly
better information presented to them to enable timely action to
take place in response to trends and exceptions.
Procurement
The Adelphi procurement system provides substantially improved
controls to ensure that expenditure on the purchase of goods and
services from third party suppliers is properly authorised and
that an invoice is properly linked to an authorised purchase order
(and to receipt, where 3-way matching is required). It also provides
Home Office-wide reporting on procurement activity and will increasingly
allow better management of the Department's commercial activities
with suppliers. Suppliers are now provided with a single point
of contact with the Home Office in relation to payment of invoices,
and have been advised that invoices will not be accepted without
a reference to a matching purchase order ("No Order, No Payment").
This enforces the disciplined, industry-standard approach.
Widespread introduction of the Government Procurement Card (GPC)
has at the same time enabled small payments to be handled efficiently,
but still to be brought into the Home Office accounting system
and integrated into management information reporting.
Adelphi delivers better management controls eg over access to
data and transactions; authorisation; and accountability. In the
light of internal audit and NAO observations, steps have been
taken to improve and to establish further audit controls and transaction
history, and to monitor access by Sirius technical support.
Within the overall Home Office performance on prompt payment,
the record of the central Home Office has been unsatisfactory.
The changes made by the Adelphi programme to centralised invoice
processing, the GPC and standard purchase orders will improve
the situation. This improvement began in 2005-06 and has continued
following the introduction of "No Order, No Payment".
In April 2006, 86% of invoices in the central Home Office were
paid on time.
Benefit realisation
The Adelphi Programme has developed a detailed approach to benefits
management which has been maintained throughout the delivery and
operation of the system. An OGC Gateway 5 (benefit evaluation)
review was held in early 2006 and confirmed that Adelphi had delivered
overall benefits largely in line with the expectations set in
the Business Case. There is no doubt however that the early stages
of implementation of Adelphi created considerable strains in the
business which contributed to the serious problems on the Home
Office accounts.
Adelphi will also be an important enabler as a working platform
for the Single Transactional Shared Service (STSS) programme under
way in the Home Office.
Lessons learned
Several approaches adopted by the programme reflect good practice.
These include: "hands on" conference room pilots to
support the design and work on an early prototype of the intended
solution, engaging business practitioners closely in that activity;
integration between finance, HR and procurement; the "vanilla"
approach to deploying the Oracle solution, avoiding customisation
of the product; and significant investment in training, change
management and business process design, recognising that this
was a holistic business change programme, not just a technical
system design.
A number of lessons have been learned about aspects of the
programme which could have been handled better. Probably the most
important lesson is that the scale of business change in implementing
such a major new business system was still underestimated by the
organisation as a whole, leading to slow take up of the full potential—and
to some mistakes. In particular the problems in producing the
2004-05 accounts included not fully understanding how to reconcile
the balances taken on from the BASS legacy system; not fully appreciating
the implications of losing a key member of staff; and not fully
undertaking the off-system controls of reconciling bank and suspense
accounts.
As all of this has become better understood it has enabled improvements
in processes and data quality to be made with a view to achieving
the full potential of the system.
Programme and project management
The Home Office undertakes a variety of major programmes and projects
to deliver a range of improvements and essential changes. Adelphi
itself is of course one example.
The Home Office is giving a strong focus to improving programme
and project management generally, for example through:
— adoption of strong programme and project management,
and financial management, disciplines, including guidance;
— linking this to development of individual skills and
competencies eg through the Professional Skills for Government
initiative;
The Adelphi system has not been developed specifically to
manage projects and programmes, but can assist nevertheless, for
example:
