Examination of Witnesses (Questions 40-59)
ALEX ALLAN,
BARBARA MOORHOUSE
AND ROD
CLARK
17 JULY 2007
Q40 Chairman: It is very significant
that because the small claims limit is much lower in Scotland,
banks are settling in Scotland, or they are pitching their settling
level different in Scotland from England, demonstrating that they
are making a financial calculation based on whether the claimant
is likely to take it to the court, and Scotland, because of the
lower level, is less likely to do so.
Alex Allan: I did not know that.
Q41 Robert Neill: Perhaps you could
provide us with an update on that. That would be helpful. We have
got that part of the over-recovery, the profit may not necessarily
be great, but at the same time we have got expenditure in the
civil courts going up by 10% in 2006-07. That is quite a significant
increase when you think about it. If you set that against government
efficiency targets in other departments, it seems to be going
in the wrong direction. Do the normal government efficiency targets
not apply to this report?
Alex Allan: They certainly do,
but clearly there are areas where you both have, in some cases,
expanding volumes and they are looking for efficiencies. Another
example is, quite clearly, the Prison Service as we look ahead
beyond the CA to the Ministry of Justice, where there are efficiency
targets for the Prison Service but, equally, at the same time,
the volume is going up and so you have to combine the two.
Q42 Robert Neill: So is there an
objective and a set of time frames to get the civil courts into
line with the efficiency targets?
Alex Allan: Our efficiency targets
apply across the department or, in some cases, the Court Service
as a whole rather than to individual elements of business, and
clearly if there are significant changes in the distribution of
business, then the relative spending would change.
Q43 Robert Neill: Does the pattern
for 2007-08 give you any indication as to whether the expenditure
is going to continue to rise in the civil courts?
Barbara Moorhouse: One thing that
is very important in the civil courts, and I am not sure we have
the detailed information with which to answer precisely, but one
of the things that I think is very true is that the civil courts
are clearly very, very manpower dependent. There has been relatively
little IT investment in the civil courts, which I think is well-known,
and we certainly do have some programmes that we are anticipating
being able to press ahead with during the CSR years that would
help us to improve the efficiency of things like paper handling
systems and procedures in the civil courts, and that is obviously
exactly the kind of way in which we can get proper service for
meeting the efficiency target, living within our budget, which
we have already talked about, in the context of that three or
four year financial settlement under the CSR.
Q44 Robert Neill: I think we heard
from what Mr Clark said earlier that there may be some areas where
there may be reductions in court fees?
Rod Clark: Yes, and we have proposed
some.
Q45 Robert Neill: And there will
be increases in other areas.
Rod Clark: Yes, that is right.
It is the consultation document that was issued in April this
year on which consultation is closed, and we should be coming
out with the Government's response shortly on that.
Q46 Chairman: Business consultants:
you have been using rather a lot of them, we have noticed. Do
they really give you value for money in areas like business change
managements? What about the resources you have got within the
department?
Alex Allan: We clearly look for
the combination of what resources we have got and, where we do
not feel we have the resources necessary either to bring it in
from another bit of the department or, in some cases, if it is
a specific, short-term need, it may be actually better in the
long run to buy in a service for a short period. But, as you will
have seen, we have reduced our consultancy expenditure in 2006-07
relative to 2005-06, which partly reflects the factors that some
of the change programmes that we were investing in, in 2005-06,
and used consultancy to bolster those resources, came to an end
and so we wound down the need to spend in those areas.
Q47 Chairman: You spent over a million
on four projects covering business change management consultancy
and yet at the same time the Government was able to decide to
change the whole character of your department and a whole lot
of other responsibilities to it presumably without such expenditure.
There is some sort of mismatch here, is there not? You can make
a really big decision about what is going to happen to the department
without any business consultants, but it costs you a million to
work out more generally how business change management has to
be altered.
Barbara Moorhouse: Yes, there
are a number of issues that I think would be helpful to bring
to your attention on consultancy. The first thing is that we have
within DCA (the old DCA) reduced expenditure from 16 to 11 million.
Within the NOMS area that is now part of Ministry of Justice,
spending over the two years has been relatively static at around
17 million. The last time we appeared before the Committee there
was a significant series of questions around what action we were
taking to improve our control of consultancy expenditure and we
agree that as part of our overall efficiency programme that is
a perfectly proper thing to ask us to do. There have been five
areas where we have significantly tightened up, having had success,
of course, in recovering from our Oracle systems failure, which
meant that it was very difficult to control any form of procurement
while we were going through that form of crisis; but once we had
established Steady State we have now got much more information.
Centrifuge is giving us the tools to control and improve on the
use of consultants, we have enforced approvals arrangements much
more strictly, we are now providing much greater challenge, which
I think goes to the Chairman's point, to the business's requests
for the use of consultants, we are carrying out a much more strategic
review of the way in which our supplier relationships work in
order to make our relationships more cost-effective and productive,
particularly around areas likes skills transfer, and, finally,
we are working with a range of other government departments, OGC
and indeed the NAO, introducing best practice across the department,
not only within the old DCA, where this programme has been prevalent
to date, but also across the Ministry of Justice as a whole, embracing
the NOMS activities as well. We think it is, as I say, entirely
proper that we should be challenged to use consultants effectively,
though I think I would like to pick up on what I think might be
a slightly misleading comparison. We use consultants quite extensively
in areas like IT and business change. I talked earlier about the
fact that we had received as part of our CSR settlement some 135
million of modernisation funding. It is clearly critical to the
success of the department, both in terms of cost-management and
indeed service improvement, that where we embark on modernisation
programmes they are delivered successfully, and it is particularly
in those areas, and particularly in IT, that we tend to use consultancy
extensively. If we discuss the changes that were made for the
Ministry of Justice, they were to some degree the bringing together
of two headquarters facilities with all of the ancillary changes.
We have not yet, although no doubt activity in this area will
be needed, embarked on trying to change the way in which our 76,000
employees across the entirety of the Ministry of Justice work
together to deliver the benefits of the bringing together of the
new department, and it is in those areas of business change that
outside expertise can be critical and valuable to success.
Q48 Chairman: You are on to your
third title for the department you head, Mr Allan. Did you read
about it in the Sunday Telegraph for the first time?
Alex Allan: I think, as the Lord
Chancellor said before your Committee, and I was with him and
informed, I think shortly after he was informed a few days before,
of the planned line that was taken on that Sunday. Yes, as it
happens, I was actually not here for the first of those changes.
I arrived at DCA when I arrived, but certainly, as you say, it
is the third change within four years.
Q49 Chairman: So you did not have
any planning time really to speak of, did you?
Alex Allan: We did have some planning
time, because the announcement, or first of all there was a gap
between January, February, or whenever it was that the article
you are referring to came out, then actually the formal announcement
in March and then the actual creation of the Ministry of Justice
in May. We had about six weeks between the formal announcement
and the actual start up and we did do quite a lot of planning
in that six weeks. We settled down and worked out what was achievable
within six weeks, recognising that there was then a whole lot
more to do after that. So, we did deal with some of the key—
Q50 Chairman: You ordered a new sign.
Alex Allan: We did.
Q51 Chairman: What else were you
able to do?
Alex Allan: We managed to put
in a lot of plans for moving staff, in some cases physically moving
staff between buildings, in order to make sure that we were equipped
to deal with the new challenges. Clearly the most immediate issue
was some of the corporate functions, like supporting ministers
through the private offices, like the press and communications
functions. We did quite a lot of work on IT to try and make sure
that across the department it was reasonably easy to communicate
using IT. I would not say we got there completely. We produced
the general strategy for the department, the booklet that was
published pretty much on 9 May. We did set out in some detail
what we thought we could do over the six weeks and then we set
up a project group and a steering group to make sure that we did
achieve that, and that included a lot of work with our staff so
they understood what we were planning and what we were going to
do. Clearly, since then more has gone on and it will continue
over quite a long period as we look at how we can really integrate
the department and create a coherent whole out of separate parts
of organisations.
Q52 Keith Vaz: It is said that when
the Lord Chancellor, Lord Falconer, left the building you led
200 staff onto the pavement to clap him out of Selbourne House.
Is that right?
Alex Allan: I went down in the
lift with him, and there were a lot of staff assembled to say
goodbye to him, yes.
Q53 Keith Vaz: Did you do the same
thing when Jack Straw arrived?
Alex Allan: I was down there and
greeted Jack Straw when he arrived. There were not large numbers
of staff, simply because it was less predictable when he was going
to arrive, but I was there to greet him.
Q54 Keith Vaz: In between your two
bosses, have you been able to develop your strategic objectives
or to finalise the budget transfers from the Home Office to your
department and from the Privy Council to the new Ministry of Justice?
Alex Allan: We are very close
to finalising those. There were negotiations before the announcement
of the Ministry on some of the top level numbers in terms of what
the budgets were going ahead, but that inevitably left a lot of
detail on which Barbara Moorhouse has been leading negotiations
with the Home Office, over particularly the corporate resources,
which is always the most complicated bit. We are pretty close
to agreement on most of that. There are some issues where it makes
sense to keep going. We are looking, for example, at how we best
do shared services for some of our transactional human resources
and finance functions where it may make sense for us actually
to maintain very close links with the Home Office going ahead.
There will be issues that will be left for further negotiation,
but on most of the corporate services we are pretty close to agreement,
but Barbara may want to spell that out in more detail.
Barbara Moorhouse: Very quickly,
the big numbers are obviously the resource budget and the capital
budget that were transferred from NOMS, and they are agreed between
ourselves and the Home Office and with the full involvement of
the Treasury, and that represents around a five billion resource
budget for NOMS and around 500 million of capital expenditure,
roughly. We have also agreed transfers relating to the Office
of Criminal Justice Reform and the Criminal Injuries Compensation
Authority, which are also part of the NOMS package, if I can put
it that way.
Q55 Keith Vaz: Miss Moorhouse's appointment
you have heralded in your press release of 8 February as a key
appointment for the new department in ensuring that it has appropriate
financial control?
Alex Allan: What was that?
Q56 Keith Vaz: You issued a press
release on 8 February, of which I have a copy, heralding the arrival
of Miss Moorhouse as a top-drawer appointment.
Alex Allan: This was 8 February
two years ago, I think.
Q57 Keith Vaz: Does it worry you
that, since then, we have now had a report into the CSA, of which
I think you were a non-executive director, a highly critical report
by another committee of members in terms of the way in which they
were financially managed and their strategic direction?
Barbara Moorhouse: Do you want
me to comment on that? Yes, I was a non-executive director of
the Child Support Agency at the time when I was a full-time finance
director within the commercial sector; so it was my first exposure
to government, and I suppose it was that which brought me into
the public sector wisely or otherwise. I was a non-executive director
for three years and the other non-executive directors took a number
of steps in making clear to the departmental management, for which
we effectively worked at that time, our concerns about a number
of issues in the Child Support Agency, and they were put in writing
and we expressed a number of reservations about the way in which
the business planning activity was conducted, the objectives and
the deliverability of the overall CSA plans, which were our role
at that time.
Q58 Keith Vaz: But you are confident
that whatever happened at the CSA in terms of strategic management
will not be repeated.
Mr Allan: I am confident that
for over more than two years when Barbara Moorhouse has been our
Director General of Finance we have, as we were explaining earlier,
done a lot to improve our financial management get better transparency.
I am entirely confident, and I stand by the comments—which
I think may be quotes from me—in that press release.
Keith Vaz: They are all quotes from you.
Q59 Chairman: Confidence for the
future, underlined by the fact that Ms Moorhouse is already on
the Department for Transport's website, since she is about to
move there if she has not already done so.
Mr Allan: She is due to move shortly.
We have advertised and are recruiting a successor.
| 
