Conclusions and recommendations
The Department and its Agencies
Shared Services
1. Over
the next four years the Department estimates that the Shared Services
project will cost in excess of £44 million. The exact cost
however remains unclear. It is important that lessons are learned
from this complex project. We expect that any problems which may
be encountered by the first Agencies to join will be addressed
for later Agencies. It is critical that Shared Services is implemented
'on budget' and 'on time'. The financial and organisational ramifications
of failure are certain to be significant. We expect the Department
to keep us fully informed of progress against the project plan.
Any delays and the implication of these on additional costs should
be made clear. (Paragraph 14)
Driver and Vehicle Operator (DVO) Group
Structure and governance
2. The
Committee is concerned that Mr Hickey was unable to provide, when
challenged, concrete examples of how the Driver and Vehicle Operator
Group structure has improved the working of the Agencies or the
service they deliver to customers. The credibility of the new
administration arrangements will depend on producing such evidence
quickly. (Paragraph 17)
3. It is too early
for the Government to consider transferring the Group to direct
Departmental control or for outright outsourcing, as some have
argued. But the time to take stock is approaching rapidly. It
is clear that the case made thus far for the Group's existence
is more one of hope than reality. In line with the Department's
commitment to evidence-based policy, we expect there to be a thorough
review of the Group structure before its fifth birthday in 2008.
There must be clear evidence then that the new structure has delivered
real, practical benefits in terms of integrated working, value
for money and service standards. In the absence of such evidence,
the Department will have failed and it must then look seriously
at creating a more effective structure of accountability for the
Group Agencies. (Paragraph 19)
DVO Board
4. The
DVO Board must prove its worth by enhancing the overall corporate
and financial governance of the Agencies. It must create identifiable
benefits, and a strategic approach to services, that the separate
bodies cannot achieve in isolation. We have seen no evidence yet
that the Board has added value in this way. It needs to begin
to demonstrate this now. (Paragraph 22)
Value for money
5. The
Director General of the Driver and Vehicle Operator Group does
not know whether or not the Group structure provides a 'direct
financial benefit'. He certainly should be in a position to know,
and we are astonished that he does not. It is critical that a
value for money assessment of the Driver and Vehicle Operator
Group be conducted as soon as is practicable to ensure that benefits
are being realised in the most efficient way. We want to see the
results of this in the Government's response to this report. Without
such an assessment it is difficult for the Department to justify
the Group structure. (Paragraph 23)
Trading funds
6. Given
the functions of the Driver and Vehicle Licensing Agency, the
Driving Standards Agency and the Vehicle and Operator Services
Agency, Trading Fund status is appropriate. It is very important
however that the financial requirements of this status should
not compromise service standards. Such compromise undermines the
rationale of these Agencies. It is difficult to gauge if this
is happening when targets are changed frequently, are not co-ordinated
across Agencies, and often do not reflect service levels at the
front-end. It is vital that the impact on service levels of the
shift to Trading Fund status can be measured effectively over
the long term. (Paragraph 25)
Position of the Vehicle Certification Agency
7. It
is not clear to us what justification there is for the Vehicle
Certification Agency's inclusion in the Driver and Vehicle Operator
Group. The justification offered by the Chief Executive for its
inclusion in the Group was cursory. We would like the Group to
offer a more detailed rationale for its inclusion when the Government
responds to this report. (Paragraph 27)
8. The Agency's plans
for growth in the short term are ambitious and depend on meeting
vigorous growth targets. The Committee will be questioning the
Secretary of State on the Agency's progress when we look at the
2006 Departmental Annual Report. (Paragraph 28)
9. The Agency is a
small organisation and is currently in deficit due to a drop in
demand from some major customers. The decision not to move to
Trading Fund status therefore seems reasonable. Should the Agency
expand its business in the future however, its status should be
reconsidered. (Paragraph 29)
Administration and staffing
Changes in working practices and staff morale
10. it
is vital that the Department recognises the legitimate and enduring
concerns of staff groups about the continuing inconsistencies
in working conditions and challenges of new ways of working and
has a programme in place to ameliorate them. (Paragraph 30)
11. The Committee
is pleased that the Driver and Vehicle Operator Group has accepted
that all of its Agencies should be on a single 'information technology
platform', and that office systems should be common across the
whole Department and its Agencies. But it has taken far too long
to arrive at this common sense conclusion. This issue must not
be 'parked'. The replacement and integration of systems should
be completed without delay. The Department must tell us what its
timetable is for this work. (Paragraph 33)
Role segregation
12. The
Committee has not seen any clear evidence that either administration
or enforcement divisions are compromised by being operated by
the same Agency. We would advise Agencies to keep a sharp eye
on this matter however. Customer confidence must not be compromised
by the Agencies' failure to keep a proper check on their dual
roles. (Paragraph 36)
Injuries of Driving Standards Agency staff
13. In
2005 there were 858 accidents during driving tests; 90 non-test
accidents; 386 near-misses on tests; 33 physical assaults; and
348 verbal assaults. This high number of accidents and assaults
suffered by driving examiners is alarming. The Driving Standards
Agency must address this as a matter of urgency. We wish to be
updated by the Agency on its progress in one year's time. (Paragraph
39)
Efficiency
14. There
is some evidence of attempts by the Driver and Vehicle Operator
Group to make savings where possible. Further scope for savings
are sure to follow where all bodies within the Group regularly
benchmark costs against each other. We seek the Department's reassurance
that such benchmarking is taking place as a matter of course.
(Paragraph 41)
15. The Committee
is encouraged by the 20 per cent efficiency savings made by the
Driver and Vehicle Licensing Agency in 2004/05 and further 20
per cent planned savings. We expect to see the other Driver and
Vehicle Operator Group Agencies set similarly ambitious efficiency
targets. (Paragraph 43)
16. The Driver and
Vehicle Licensing Agency appears to be on the way to meeting its
Gershon Review headcount reduction target on time. The Agency
is aware that this must not compromise service standards. It remains
to be seen whether this will be the case. We shall keep a close
eye on any evidence of slipping standards. (Paragraph 44)
Corporate documents
17. The
Vehicle and Operator Services Agency's costs for producing corporate
documents are too high. They must be reduced. (Paragraph 45)
Prepayment to the Post Office
18. It
is generally accepted best practice in Government that services
should not be paid for in advance unless there is a sound value
for money argument in favour of doing so. We were not given any
such justification in this case. The Driver and Vehicle Licensing
Agency should have conducted a value for money assessment for
the prepayments it makes to the Post Office. If it has not done
so, it must do so now, and must also provide a copy of this assessment
to the Committee. If no such assessment has been made, the Department
needs to explain why in its response to this report. (Paragraph
46)
Targets and performance
Consistency and toughness of targets
19. The
overall picture of efficiency in the Driver and Vehicle Operator
Group is one of declining achievements. Mr Hickey and his team
need to get a grip on the problem and reverse it. We expect to
see a plan for achieving this set out in the Government's response.
(Paragraph 48)
20. The Driver and
Vehicle Licensing Agency gave the Committee three sets of figures
for its customer service targets (two in writing, one in oral
evidence). This is unacceptable. The Agency must clarify its figures
and publish one full set in the public domain. The Committee does
not expect to see further examples of this problem. (Paragraph
49)
The retreat from 'customer service'
21. The
Driver and Vehicle Operator Group has moved away from tough, precise
public service to woolly, internal milestones. This is a retrograde
step which makes measuring the Group's success much more difficult
and which will sap public confidence. The Department needs to
think again about this approach. (Paragraph 53)
22. It is also unacceptable
that there are so many different 'measures' of success for the
Agencies. There must be one, clear, consistent measure of customer
service standards and customer satisfaction, subscribed to by
all Agencies and by the Group as a whole. The target must be sufficiently
challenging and performance against it should be measured and
published annually by the Department. (Paragraph 54)
Under-performance
23. It
is not clear to the Committee, despite the evidence we have received,
whether the process of managing under-performance is actually
effective, or just window-dressing. In particular, we have concerns
that it is the Group Director General and the relevant Agency
Chief Executive themselves who decide what constitutes a 'significant'
matter for 'escalation' to Ministers. This is very poor administrative
practice. We expect the Department to advance evidence of much
more robust arrangements for identifying under-performance and
for tackling it. (Paragraph 56)
Information Technology
Level of take-up
24. We
are concerned that the Driver and Vehicle Operator Group and its
constituent Agencies seem to be highly focused on the cost savings
available through the introduction of information technology-based
solutions at the expense of customer service. The Agencies gave
us no evidence that their Internet-based operations have the potential
to grow beyond current levels. They were not able to demonstrate
that there is any real demand for this costly expansion from customers.
(Paragraph 62)
25. We do recognise
that in the modern world the Internet is a vital tool for speeding
up and simplifying transactions. We are not arguing for a return
to a system of customer service that avoids information technology
solutions. We do however expect the Agencies to make a solid demand
case for future information technology projects; and to recognise
the vital importance of driving up the effectiveness of human
responses to customers. These projects are uniformly costly and
complex undertakings and should not be begun without determining
what will bring the most benefit to the greatest number of people.
(Paragraph 63)
Automatic test booking system and MOT computerisation
26. Both
automatic test booking and MOT computerisation were affected by
delays and implementation problems. It is unacceptable that initial
confusion resulted in uncertainties over billing which lasted
three weeks. The Vehicle and Operator Services Agency Chief Executive,
Mr Tetlow, reassured the Committee that these problems were dealt
with and that restoring a full customer service as soon as practicable
was the priority. Information technology projects are too often
beset by difficulties of this kind. It is critical that the lessons
learned by the Agency from the introduction of these projects
are shared by the whole Driver and Vehicle Operator Group so that
there is no repetition of this qualified failure. (Paragraph 69)
Protection of data on the driver registration
27. We
recognise the importance of the data held on the Driver and Vehicle
Licensing Agency's driver and vehicle registers. It is therefore
vital that it should be safe from disclosure to unscrupulous third
parties. (Paragraph 70)
28. The Committee
welcomes the Department's review of the data release policy for
the Driver and Vehicle Licensing Agency databases. It is vital
that this data is not released to companies or individuals who
might misuse it. Public confidence in the disclosure policy has
been lost; it must be restored. We recommend that 'reasonable
cause', the presently undefined standard for disclosing drivers'
names and addresses to third parties, be legally defined, and
we invite the Government to set out a preferred definition when
it replies to this report. (Paragraph 73)
Vehicle and Operator Services Agency
Test centre locations
29. The
test centres of the Vehicle and Operator Services Agency are not
ideally located. This is acknowledged by the Agency. It is critical
that the Agency's review of test centre locations goes ahead promptly
and that the locations chosen for new sites have a good fit with
twenty-first century road patterns. We are alarmed by the lack
of precise information about the timing and scope of the review.
Nor was it clear that there will be an open consultation so that
those affected have a chance to make their views known. The Vehicle
and Operator Services Agency must rectify this immediately by
setting out a clear timetable, the parameters of the review, and
by making a commitment to consult the industry. (Paragraph 77)
Roadside checks
30. The
Agency is right to target roadside checks at areas where there
are suspected high levels of offenders. We had evidence however
that an individual port may have been singled out for a greater
number of checks than other ports of equal or greater size. This
seems inequitable. We want the Agency to explain in detail its
rationale for checks, and to be assured that operations are targeted
proportionately with the number of vehicles transitting them.
(Paragraph 80)
Points system for Vehicle Examiners
31. Mr
Tetlow made little effort to defend the points system for vehicle
examiners. He also failed to convince the Committee that the complaints
procedure for operators against vehicle examiners is sufficiently
independent or free from implicit intimidation by examiners. One
of the Agency's most important functions is ensuring that vehicles
are safe when on the road. The way in which vehicle examiners
are rewarded for how they perform should be open and transparent.
The Agency should look again at how the vital function of vehicle
inspection is linked to the system of reward for vehicle examiners.
We expect the Agency to explain how it will do this when the Government
replies to this report. (Paragraph 83)
Younger drivers
32. Despite
the recommendation of our predecessor Committee seven years ago,
the Government has not since taken the opportunity to improve
after-test monitoring for younger drivers. This is unacceptable.
(Paragraph 84)
33. The accident rates
for younger drivers are appallingly high, and rose by 12 per cent
in 2004. It is important that the studies that the Driving Standards
Agency is undertaking to look at the efficacy of programmes such
as Arrive Alive and Pass Plus that help educate younger, newly
qualified drivers are properly considered by the Department. If
these studies demonstrate material benefit from such programmes,
the Department must act quickly to make them mandatory for all
young people preparing to learn how to drive. (Paragraph 87)
34. In the meantime,
the Committee does not see why a strengthening of the existing
probationary period for young, newly qualified drivers should
not be implemented. We do not agree that such a strengthening
would be 'draconian', as described by Dr Stephen Ladyman MP, Minister
of State for Transport, during the Committee stage of the Road
Safety Bill. We recommend that the Government seek powers in the
Bill to vary the measures for the probationary period. It should
then consult fully on changes to those measures and introduce
them by Statutory Instrument later this year. (Paragraph 88)
Highways Agency
35. Since
our predecessor Committee last looked at the Highways Agency in
October 2003, it continues to experience problems. One organisation
told us in evidence that the Agency is 'an elitist organisation
which is … lumbering and risk averse'. To that, the Committee
would add its concerns that the Agency has no grip on the costs
of its major road projects; is managing a property portfolio it
should not possess from expensive offices it should not be using;
has only a limited idea what some of its staff are actually doing;
and has failed to build a constructive dialogue with local communities
over road planning. These problems are set out below. (Paragraph
89)
Finance function
Finance Director
36. We
welcome the first steps being made to improve the Highways Agency's
financial management by the appointment of the Director of Finance
and a general overhaul of the finance function. Now we expect
to see real results. The Chief Executive places confidence in
the Finance Director's ability to keep a firm hand on the Agency's
historically wayward finances. We hope this confidence is not
misplaced. The Committee expects to see improvements over the
coming year. We shall be examining the Agency on a regular basis
to keep ourselves fully informed of developments. (Paragraph 93)
37. In its response
to this report the Government must set out definitively the estimated
implementation costs of migrating the Highways Agency's Oracle
finance system to SAP. (Paragraph 95)
38. We strongly support
the Agency moving to a common 'platform' for its financial management
system with the rest of the Departmental Group as part of the
'Shared Services' programme. The costs of this process are in
doubt however. The Agency told us £10 to £15 million.
We note a Freedom of Information request which states £1.27
million. We are concerned therefore that the potential costs of
this transfer might not be under full control. The Department
must keep the Committee informed of detailed costing information
for the new Shared Services system as it becomes available. (Paragraph
97)
39. We understand
that the rapid changes in technology will necessitate some ongoing
use of external consultants. It is important that the Agency does
not rely so heavily on external consultants that it loses control
over its own systems, or becomes tied into overly costly contracts
from which it cannot extricate itself. The Agency itself needs
to assure us that this is in fact the case. (Paragraph 98)
Cost overruns on major road projects
Pre-April 2003 schemes
40. The
Highways Agency has lost budgetary control of the Targeted Programme
of Improvements (TPI). If overruns continue at the current rate,
the cost of yet-to-be-completed TPI road projects would be 50
per cent higher than originally estimated. Such an increase would
be an irresponsible and unacceptable waste of public money. This
is a very serious matter, and Mr Robertson, as Agency Chief Executive,
must take personal responsibility for ensuring that an increase
of this magnitude does not occur. We wish to know how that will
be achieved. (Paragraph 104)
41. The Department
must keep a keen eye on the costs of TPI projects. Although the
Highways Agency operates at arms length from the Department, it
is clear that on this issue it needs close supervision and support
to ensure that costs do not continue to spiral. The Department
must make it clear to the Agency that it must cover the costs
of its own project increases by imposing price caps where necessary.
(Paragraph 105)
Post-April 2003 schemes
42. It
is too early to draw final conclusions from those schemes which
entered the TPI programme after April 2003. We hope that the Agency
has made more accurate estimates of these costs than it did for
the older schemes. If it did not, then cost overruns would be
about £1 billion. This would be utterly intolerable. We expect
the Agency to manage the costs for the post-April 2003 schemes
tightly, and to show very significant improvement in management
over the pre-April 2003 schemes. (Paragraph 108)
Ways of managing costs
43. The
Committee welcomes the Agency's attempt to reduce overall costs
through early contractor involvement. We wish to see an estimate
of the level of savings this will deliver. The Agency must continue
to develop new ways of working aimed at reducing the costs of
road schemes. (Paragraph 111)
Staffing
Administration staff
44. The
Agency does not appear to have a clear picture of the administrative
work it carries out at the moment. This is absurd. It must develop
a system to allow it to do so. In the absence of this, it cannot
ensure its administration is fully cost-effective. The Committee
wants a clear picture of how many of the Agency's staff perform
purely administrative duties and what percentage of other staff
time is spent on administrative work. (Paragraph 114)
Traffic Officers
45. In
2003 great claims were made for the financial benefits - £98
million a year - of introducing Traffic Officers onto the highway
network. We wish to know the Agency's latest estimate. (Paragraph
116)
46. The Committee
takes this opportunity to reiterate the concerns of its predecessor
Committees that the introduction of Traffic Officers onto the
highway network could compromise the effective investigation and
prosecution of road accidents and offences. We wish to see the
relevant Agency data and to be assured that investigations by
the police are taking place when required. (Paragraph 118)
47. We were shocked
at the reports we received that Traffic Officers have access to
few information technology resources, and that they are being
asked to work in generally poor conditions. If true, this represents
a bad deal for Traffic Officers, the Agency and the public. Sound
morale is based on good staff management. Where this is evident
instances of staff 'churn' will be low. Mr Robertson's statement
that he does 'not recognise' the Union's concerns was particularly
alarming. If these problems are real, and the Chief Executive
was not aware of them then he is badly at fault; if he refutes
them then he should have done so clearly, and with evidence, when
he came before us. He did not. The Committee expects Mr Robertson
to meet Union representatives to discuss these concerns. We expect
to be updated on the outcome of these discussions. (Paragraph
120)
48. Of further concern
are the diversity statistics for the Traffic Officer scheme. The
Agency must work very hard to improve the position. These reveal
that only 15 per cent of officers are female and 4 per cent are
from ethnic minority groups. Ethnic minorities represent eight
per cent of the UK population and the Agency needs a recruitment
target which reflects that. A big effort needs to be made to recruit
more women and minorities as Traffic Officers. (Paragraph 121)
Industrial action
49. When
the Committee took evidence from Mr Robertson, work-to-rule industrial
action was still taking place. It was not then possible to gauge
whether it would have a material impact on the Agency's ability
to meet its performance indicators. Nevertheless, Mr Robertson
appeared confident that the action would not have an impact on
the Agency's ability to meet key targets. The Committee would
like to know whether that has been the case. In its response to
this report, the Government must tell us whether the Agency is
still on target to meet its Key Performance Indicators. If it
is not, the Government must tell us if this was an effect of the
industrial action early in 2006. Mr Robertson should tell us what
action he has taken to prevent a repeat of this problem for the
2006 pay round. (Paragraph 124)
Property matters
Management of the property portfolio
50. The
Highways Agency has 29 full time staff managing property contracts.
This is 29 too many. The Committee has not seen any justification
however why the Highways Agency, which is in the roads business,
should have a property portfolio at all. (Paragraph 125)
51. The Agency has
failed to develop an effective approach to managing its property
portfolio. It employs managing agents; but retains a significant
number of in-house staff. The current situation appears to be
a 'half-way house' where property management is neither fully
outsourced, nor conducted in-house. The Agency should tell us
why it has full service property agents when it insists on keeping
a hand in managing the property portfolio. The Agency needs to
demonstrate a commitment to reduce the size of its property portfolio.
It must tell us how it will do that, what milestones it has, and
when it will relinquish its properties. (Paragraph 130)
Cost of the Agency's offices
52. The
confusion between the Agency Chief Executive and the Finance Director
over the staffing and costs of the London office is disgraceful.
It is clear that they have no grip on this issue. It is clear
to us that taxpayers' money is being wasted by the Agency maintaining
a London office. It should seek to negotiate an early release
from its lease. If this is not possible, then the Department should
ensure that any future spare capacity is utilised by the Agency,
or by other public bodies. In any case, we expect the Agency to
conduct a value for money assessment of the London office in the
light of falling staff numbers and explain to the Committee how
it intends to utilise the spare capacity over the remaining years
of the lease. (Paragraph 135)
'Article 14' directions
53. There
is a fundamental disagreement between the Department and the Agency
on the one hand, and regional bodies and local authorities on
the other, about why 'Article 14 directions' are used and whether
they are effective. (Paragraph 141)
54. This is a matter
which impacts on vital regeneration projects where transport links,
development and the associated employment and inclusion benefits
are required. The Agency cannot sit complacently back and do nothing
about what are obviously real concerns for these communities.
We would like to see the Agency making an effort to engage with
local authorities and other groups and undertake to explain clearly
why individual directions are issued and how they can be brought
swiftly to an end. (Paragraph 142)
Water-preferred policy
55. The
'water preferred' policy does not appear to be encouraging more
freight onto the inland waterways as intended. Since the Highways
Agency assumed responsibility for the policy in 2003 they have
not published a single significant piece of research or guidance
on it. Little real effort has been made to divert freight off
the roads and onto the water, particularly 'abnormal indivisible
loads'. Indeed, we have received evidence that the Agency's own
policies are working in the other direction. (Paragraph 146)
56. While moving such
heavy loads by road might be the most commercially convenient
form of transportation, this Committee believes that it is neither
sustainable nor necessary. At the very least, and given that the
Agency has responsibility for this policy, it should insist that
its own contractors use water where possible. We want to see much
more effort by the Agency to make the currently failing water
preferred policy bite. (Paragraph 147)
Response to the Committee
57. The
Agency's inability to furnish the Committee with relevant information
within the prescribed deadlines is sadly indicative of the incompetence
and disorganisation which, in too many areas, still characterises
this Agency. Next time the Agency appears before this Committee
we expect it to be able to provide information on time. (Paragraph
151)
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