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“You know what I am getting at. I do not want to see people leaving the Ministry of Defence who have been part of the negotiation... and within 6 months 12 months or so ending up on a tripled salary.”
We know that, for an investment of £130,000, Sir John Chisholm ended up with £25 million of equity in the business. It is probably a bit less than that now, but the principle still applies. No safeguards were put in place. The permanent under-secretary, Bill Jeffrey, made it clear to us that there were no safeguards. The Treasury must revisit the whole issue of QinetiQ and make sure that in any future transactions of that kind, better safeguards are put in place. Many of our constituents are very angry about it and many parliamentary colleagues were very angry about the fact that such a transaction was allowed to occur.
I wanted briefly to mention the progress on the Rural Payments Agency, which the right hon. Member for Islwyn (Mr. Touhig) mentioned. Johnston McNeill, the chief executive of the agency, came before us and I was quite impressed by his evidence. He gave quite a good account of himself. I have read in detail the Environment, Food and Rural Affairs Committee report on the whole fiasco and he did have a lot of responsibility. But it is also clear that that should have been shared more widely.
I find it extraordinary that an agency with the title of the Rural Payments Agency had the job of making payments but was unable to tell farmers either the date when they would get their payments or how much they had already been paid. I once worked out the number of payments per employee of the agency, and I think that it was 29. The employees could have been sent out to the farms, with a day for travel there, a day on the farm and a day for travel back, and the whole thing could still have been done and dusted in three months if the payments had been made by personal visit and manually. If people phone their banks, they can find out if they have received a payment and for how much, but that so-called payments agency was unable to provide those figures, which speaks eloquently of the scale of its failure.
I hope that the Treasury studies the reports from the PAC and the Environment, Food and Rural Affairs Committee and tries to learn the lessons. I agree with the right hon. Member for Islwyn that not enough effort is always made to learn the lessons, and that must change.
There is a hopeful straw in the wind, because the Treasury has appointed Mr. Martin Read, the former boss of Logica, to try to teach it how to run IT projects and to jettison them as quickly as possible when it becomes apparent that they have gone wrong, again. There was a tremendous headline in a story in an online magazine about the appointment, although it may not be entirely parliamentary:
“Ex-Logica boss to teach UK.gov how to identify crap IT”.
The project apparently involves Mr. Read looking at how to keep
“dedicated teams on projects from start to finish”
“not being afraid to abandon a project just because it’s high profile”.
However, the article points out:
“Both those aims would run totally counter to the traditional...way of doing things. The very essence of politics and public sector work is to never finish a project and to get out while the going’s good. And because no one has a start to finish view of a particular project, no-one can really see how crippled it is, so the chances of anyone sticking their neck on the line and saying it should be pulled are next to zero.”
I hope that that is too cynical a view and that Mr. Read’s work will yield some benefits. The fact that he was forced out of Logica after a profit warning following a European buying spree in 2007—so that he presumably bought the companies involved at the top of the market—causes me some concern, but I wish him well.
My final remarks concern the national programme for IT in the health service. We do not have a report on that before us, although it is a long-term project that has been running for some six years, and is therefore now six years late. Two years ago it had been running for four years and was four years late, so little change there. There has been a development since we last had a chance to discuss it—the withdrawal of one of the major contractors, Fujitsu. Baroness Thornton described its departure in the other place as “a sign of strength”, which is an interesting way to put it. Essentially, Fujitsu was prepared to fulfil the terms of its contract, but the Government have said that they would rather keep the project money than have that happen, thus risking a £700 million lawsuit, which—according to the press—Fujitsu is now threatening. And that is a sign of strength, apparently. It reminds me of Tom Lehrer’s comment when Henry Kissinger received the Nobel peace prize that it was the end of satire. If that is a sign of strength, what would be a sign of weakness?
2.54 pm
John Howell (Henley) (Con): I shall begin by offering my thanks to my hon. Friend the Member for Gainsborough (Mr. Leigh) and members of his Committee for the work that they do. I shall pick up on two reports, the first of which relates to shared services. That is an area in which I have some practical responsibility, in that I had political responsibility for delivering a shared services centre in a large local authority. As I am a committed decentraliser, the centralisation inherent within shared services was something of a bitter pill to swallow, but the potential from shared services is so enormous that it is difficult to ignore.
I would like some reassurance on the models for shared services centres. They have become much more sophisticated, so they are no longer about the centralisation of everything in one place but about a number of different shared services that can work in parallel, supporting each other in partnerships or through federated solutions that deliver more of the benefits without creating the centralised monster that these things can become.
My experience has been positive and has delivered a high degree of success, with considerable savings. Let us be clear about those savings, however. They come from removing people from the pay roll where there is considerable duplication in areas such as finance and human resources. If shared services come with considerable savings, they also come with considerable cost. Success
can be measured in a number of ways, not just in cost savings. This is a chance to avoid and remove duplication and to simplify processes, but, most of all, the implementation of shared services, if delivered in the right way, can be a fundamental tool in achieving culture change within an organisation and sweeping away a wasteful and bureaucratic culture.
I would be interested to hear comments on a few lessons that I took on board from my experience. First, the key to success is to have not only a strong business case but a superb level of detail up front in the implementation plan. It is not just about the practicalities of buildings and technology. Any organisation will find that multi-tasking means that bits of jobs are here and there. It is not unusual for somebody in finance, for example, to spend 40 per cent. of their time on finance and 60 per cent. of their time on something else. That is quite difficult to accommodate within the concept and model of a shared services centre, but unless that is done, the opportunity is missed not only to centralise the 40 per cent. that is devoted to the finance function but to challenge the viability of the remaining 60 per cent.
Secondly, it is absolutely essential to have a clear timeline, detailed financial information and an idea of exactly where the savings will come from. My experience is that that will change as the project advances, but unless one knows where one is at the start—or at least where one wants to be—it all ends up in an awful mess. I understand that a number of attempts at setting up shared service centres have already fallen foul of that. It is right to insist on detailed project plans and to measure progress frequently.
Thirdly, it is important not to be too ambitious. Most Government Departments could do with setting up a shared service centre just for that Department first, before the Government try to take an interdepartmental approach. If they try to extend too quickly, that will lead to problems because of the differences in culture—even fairly small ones—between different Departments. In the case of the shared services centre that I set up for my county council, for example, we refused from the beginning to follow the Government’s advice to try to do it in one go by bringing in district councils, the police authority and whatever else. The differences in culture would have meant that that would have been too difficult and would have upset the financial business case. I would have been happy to consider doing that in the future, and I hope that those still involved in the project would be happy to do so, but it has to be done incrementally, so that people can be absolutely sure of the costs and the savings that arise.
Fourthly, the project cannot be divorced from a hearts-and-minds initiative. As I mentioned earlier, this is about major cultural change. In my experience, one of the biggest bits of cultural change was driving home the idea of the internal customer and of the needs of that customer. There are huge penalties and risks of failure if that point is not taken on board, and the IT requirements got right, from day one.
My fifth point is that is essential to have a separate governance structure that includes customers and simple service agreements. Such a structure ensures that customers have a stake in the shared services centre, and it also helps to secure efficiencies.
Finally, it is very important that someone from the commercial sector outside Whitehall is hired to run any shared services centre that is being set up. If a centre is not run on proper commercial lines, the risk is that it will fall back into the bureaucracy from which it came.
The second report to which I want to allude, somewhat more briefly, is entitled “Ministry of Defence: Leaving the Services”. The reputation of RAF Benson in my constituency is that it is extremely good at looking after the human resources needs of its personnel, but I am concerned about the effect that leaving the services can have on a range of health and family issues, as well as employment. That is why, in 2009—I hope in association with the Soldiers, Sailors and Airmen Families Association and the Royal British Legion—I shall be running surgeries on the base to fill in some of the gaps.
I took a look at the interview form that is completed for early service leavers, and it is not the most personal form that I have ever come across. As far as I could see, there is only one small box for additional personal information, with most of the rest of the form being concerned with handing people on as quickly as possible to other organisations, and to the jobcentre in particular.
I am aware that the National Audit Office found in 2007 that services for early service leavers were inconsistent, and I hope that the Minister can reassure me that there is some measurement of whether that consistency is being put into the system. It is important that early service leavers in my constituency and elsewhere have access to consistent services.
In addition, I should like the services to be joined up more with the services offered by local government, especially in relation to homelessness. Early service leavers are referred to a list of places, but the interview form does not seem to include any element that relates to passing them on to local government. Therefore, I was not surprised that many people responded to surveys asking for an evaluation of the resettlement packages by saying that they were not useful to their needs. I urge the Government to come forward with firmer proposals in that respect.
3.3 pm
Mr. Austin Mitchell (Great Grimsby) (Lab):
I should like to begin by saying how much sheer pleasure I get from being a member of the PAC. I am very enthusiastic about it, and consider it the most interesting Committee appointment that I have ever had. The work that we do is an enormous source of satisfaction, covering as it does a wide spread of interest and subjects, and I compliment the hon. Member for Gainsborough (Mr. Leigh) on his skilled chairmanship, despite the many divergent views among members. Moreover, our Chairman always makes a very pointed and effective introduction to our sittings. The fact that he steals most of the questions that I would want to ask in my interrogations is purely incidental, because I suppose that that is his job. It has also been a pleasure to work with members of the Committee. The hon. Member for South Norfolk (Mr. Bacon), who is modestly exiting the Chamber before I can pay him any compliments, is one of the most effective questioners and financial analysts with whom I have ever worked. My right hon. Friend
the Member for Islwyn (Mr. Touhig) brings to Committee a whole sheet of detailed questions, written on yellow paper in red ink. My correspondence is normally in green ink, as he will appreciate. His effective questioning of officials and Departments has been an inspiration. It is a pleasure to work on the Committee with those people. It is marvellous training or preparation for a ministerial job that I shall never have. It has been wasted on me; it came at the wrong stage in my career.
Mr. Bacon: A fine wine takes the longest.
Mr. Mitchell: Well, revolutions might happen, and we are all socialists now, so I have not altogether given up hope. I am very well trained, thanks to the Committee and to the hon. Member for Gainsborough. I want to make that clear, because it is such an effective Committee.
I now want to express one or two reservations about problems. In some—or most—senses, our reports do not make the impact that they should. It is a confusing situation; a National Audit Office report comes out, and usually hits the headlines, and some months later, the Committee produces a report saying much the same thing. People are not sure who is saying what. The impact is dulled because the reports come out in two stages. We do not follow up on our reports effectively enough; that is a failure on our part. On the Table we can see a pile of our reports. We are a very hard-worked Committee.
The Committee Clerks ring us up individually and ask us whether we want to do a radio or television interview about this, that or the other. I remember dealing with an unnecessary, expensive detention centre that had been built in the countryside around Oxford somewhere. I unearthed the fact that there were no security arrangements, as it had been built in that place because there was no bus service. Anyone escaping could not get a bus to the station to make their getaway. That was an extraordinary fact. Having revealed it in the course of the Committee’s inquiries, I was asked to make a statement, but there was not time, and I could not do it adequately. We need a press office attached to the Committee to make sure that our reports have the impact that they deserve.
The fact that our reports do not have the impact that they deserve is indicated by the attendance at today’s debate. There is dynamite in many of those reports. It is red meat that the Opposition should be devouring; they should be mobilising to use it against the Government. The left in the Labour party should be using it to further their views about the efficiency of Government spending, yet it goes unnoticed. The reports sit there on the Table, we briefly mention them, and then they are forgotten. The lack of interest in our reports and the lack of effort that we make to put their content over to the public are disappointing.
That is in total contrast with our American counterpart committees. I have watched them on C-SPAN, the Cable-Satellite Public Affairs Network. They are very effective; they are all on television, and they all have powerful, effective questioning. They haul the mightiest in the land before them and get headlines in the newspapers—and it is always a pleasure for a politician to get headlines in the newspapers. The lack of interest in our proceedings is depressing. It is partly our fault, because we do not have time to put over the arguments and give them political impact.
It is unsatisfactory that we are always dealing with issues posthumously. We interview a body’s current accounting officer, but the people and officials responsible for the decisions that we are questioning and criticising have retired, been moved on or moved out, or been made governor of some remote colonial possession that still lingers in the Government’s purview. We never deal with the people who made the mistakes.
Mr. Bacon: Does the hon. Gentleman agree that the most interesting thing about the NAO’s regular reports on the Olympics—I think that there have been three or four—is not simply that they are about the Olympics but that they are not “posthumous”, as he described it? They look forward to an event that has not yet taken place, and are getting in on the act much earlier in the cycle. Does he agree that that could represent a model that the NAO and, in turn, our Committee could apply to other areas of Government spending?
Mr. Mitchell: Absolutely. We need to keep a running analysis as the situation develops, as it puts us in a more powerful position. However, in most subjects, we are not in that powerful position. The best instance is the Ministry of Defence information system, with which we dealt yesterday. The contract is behind schedule and over cost, as several such big contracts are. It was decided to introduce it in 2000, but—I speak from memory of yesterday’s discussions—it was finally introduced in April 2005. The accounting officer with whom we dealt was amiable and effective in giving us the official view, but he was appointed in November 2005, so he had no responsibility for the system that he had to explain and defend.
The one instance in which the official responsible appeared before the Committee was in the case of rural payments, and they were revealing about the procedures involved. I wish that we could have that experience more often. There is a problem with all the big IT projects that the Government are keen on. The intention is absolutely fantastic: details about this patient or that case or issue are open to access in any part of the country, depending on which train the laptop was left by the civil servant responsible. It is marvellous to have such access. There is too much enthusiasm for big projects, which are often too big. Every single one is inadequate; they are usually behind schedule—NHS Connecting for Health is one such project—well over budget and face many problems that are glossed over. There should be a centralised Government system to allow the civil service to vet and authorise those big projects before they go ahead, because I am not sure who is responsible for them.
The Exchequer Secretary to the Treasury (Angela Eagle): In fact, the Office of Government Commerce is in the middle of developing a system that does just that. It is called the major projects review group, and it aims to get a handle on strategically important projects, whether they are large or small, and do precisely what my hon. Friend said, from beginning to end. It is a new way of doing things and I, for one, hope that it will remove some of the blood sport that my right hon. Friend the Member for Islwyn (Mr. Touhig) discussed in his speech.
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