Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 40-46)


23 JULY 2007

  Q40  Chairman: Forgive me for being cynical, but I will believe it when I see it. We have been round this circle too many times and I hope you are very vigilant on this because frankly I do not believe that flow chart will work. We shall see. I appreciate you are not responsible for the Leitch Green Paper but, tellingly, there was an annex setting out various actions, who is responsible for them and a timetable for delivering them. That is absent from the Department's Green Paper. Do you think it would have been useful to have? We talk a lot about rights and responsibilities but the rights and responsibilities of Government tend to get left to one side.

  Mr Sharples: The difference is that our paper is very much a Green Paper for consultation and we will obviously formulate an action plan in the light of that consultation. The skills paper is the Government's formal response to Lord Leitch's report and is therefore setting out the action.

  Q41  Chairman: But the Green Paper is your informal response to Freud.

  Mr Sharples: That is right, but it has a greener tinge to it.

  Q42  Chairman: It was said to be the Government's response to Freud, but I think that is overstating it.

  Caroline Flint: It was probably overstating it. In the Green Paper we have put some specific dates and timelines and some of the work which is going on in contracting at the moment is underway to improve that. We are also asking some particular questions about some of the proposals and the timelines we have. At the end of this process we will have a better idea of where that is happening. I am happy to look to see, if that would be helpful, whether some timelines about some things which are currently going to happen run alongside some of our proposals to give all of us a better idea about how this is going to look over the next year to 18 months.

  Q43  Chairman: I want to try a couple of questions where hopefully a yes or no answer might suffice. Is it fair to say that the Government have ruled out this concept Freud had of regional monopolies on providers?

  Caroline Flint: Certainly we were not predisposed in the Green Paper to the idea of one per region.

  Q44  Chairman: That is nearly a yes. I will accept that. Are we still pro the prime contractor model, not a monopoly but just the prime contractor model?

  Caroline Flint: Yes. I think I would say yes to that in the sense that what I am interested in here is how we can get capacity but also how we can ensure, where there is sub-contracting, that the need particularly of small organisations can be helped by the prime contractor. I met with some of our contracting people the other week and one of the questions I raised with them was that there are some small organisations which, in terms of their particular output and what they do, are very good. However, because they are small organisations they do not necessarily have the overarching IT or human resource capability to do a lot of the bureaucracy which is around contracting. One of the things I was interested in was how a prime contractor could assist those working within the area by providing services to do with that as part of the work we are trying to do across Government to recognise both the strengths of the third sector but sometimes the weaknesses when compared with bigger organisations. I still think there is a role in that, in terms of capacity and support, which a prime contractor could play. Likewise on that, I am interested in where the period of a contract might be enhanced by a longer period for the contract to run but also how you would build into that break points where, if delivery were not happening, the contract would not continue. Those are some of the discussions I am having in the Department to try to develop the capacity, but at the same time safeguard some very good services provided by small organisations and also giving time for a contract to develop whilst at the same time not allowing it to run on regardless of whether they are actually delivering. I am having a discussion around that. I hope the Green Paper reflects some of the things we are dealing with and we would welcome people's views on that.

  Q45  Chairman: As you may know, the Cabinet Office are consulting widely with the third sector—horrible phrase—and the message which always comes back is that there are warm words going out but when it comes to pen-to-paper contracting it has become very price sensitive. That sector cannot cope with excessive financial risk; it cannot cope with constantly having to devote precious staff time to bidding. I know it is something of a different project, but on the Terminal Five project, written into the contract was effectively a code of conduct for dealing with sub-contractors. I am sure, with the skills which are in the Department, something could be done around that for the prime contractor model.

  Caroline Flint: I am happy to look at that. There are some opportunities here for prime contractors to have some responsibility about where it is possible for them to relieve some of the burdens on some of the organisations which are relatively small; they produce a very good outcome in terms of their delivery, but they do not have the organisation and infrastructure to do some of the things which often come very easily to large organisations. I am happy to take that away and have a look at that.

  Mr Sharples: We do have some experience of working with the prime contractor/sub-contractor model on New Deals. We went to that model last year. Interestingly, a high proportion of both the prime contracts and the sub-contracts are held by third sector organisations. Of the 94 prime contracts 29% are held by third sector organisations and of the 527 sub-contracts 36% are held by third sector organisations. We do feel we are getting quite a good mix of not-for-profit involvement in employment service provision in the existing New Deal contracts. We would certainly want to continue that in the future contracting arrangements.

  Q46  Chairman: I understand what you are saying and I take your point. It is probably not for a public arena but some really interesting things have been happening on the contracts for the roll-out of Pathways to Work. There are potentially some serious consequences around some of that.

  Caroline Flint: I will have a look at that.

  Chairman: I am interested that you are looking at it, you are concerned and you share the Committee's concern. May I thank you very much for today? It was very good of you to do this at short notice. I realise this is an ongoing agenda and I look forward to us exchanging views again.

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