Select Committee on Liaison Minutes of Evidence


Examination of Witnesses (Quesitons 1-19)

RT HON GORDON BROWN MP

13 DECEMBER 2007

  Chairman: May I welcome you very sincerely to your first appearance at the Liaison Committee; I hope it will be the first of many. This hearing will have four themes: first, the future of public services; second, constitutional reform; third, migration and community cohesion; and, finally, foreign policy priorities and delivery. As usual, the Prime Minister has been notified of the themes a couple of weeks ago, but he was not notified of the questions, nor has he asked to be notified of the questions. As we have four themes and we are tight on time, we will go straight into the first theme, public services.

Q1 Mr Sheerman: Prime Minister, good morning. The Labour Government for 10 years has been known for its belief in public investment, with a lot of money going into the public sector, but also with the mantra that that must be accompanied by public sector reform with the private sector playing quite a role in that. Is there going to be anything different under your stewardship?

  Mr Brown: First of all, it is a great pleasure to be before the Committee and I think you can see the priority I attach to attending this Committee! Let us go straight to the issue that you raise of public sector reform. I think you will see it intensify and I think you will see it wider and deeper in future years than it has been in the last few years. Why do I say that? Our first job after 1997 was to create higher minimum standards and that is why of course there were many targets to make sure that either the Health Service or the schools or any of the welfare agencies performed well. In the last few years, we have concentrated on a diversity of supply, so we have been opening up supply by competition, by contestability and delivering to people more choice as a result of that, and that will intensify. If I give you an example, in the Health Service, primary care will be opened up over the next few years in the way that, through independent treatment centres and independent diagnostic facilities, we have opened up the acute sector. Equally, in the health sector and the social care sector, we will be opening up personal social budgets for people in a way that will probably help 1.5 million people over a period of time. In education, there is a wider diversity of providers, more academies, and I think you will find that the target for academies that was set a few years ago of 200 will be surpassed, 230, we will go beyond 400 in the timescale that we have set, and of course we have got far tougher procedures in the last few months for dealing with failing schools as well as failing hospitals. The next stage is to combine the diversity of supply with a greater attention to the diversity of demand, in other words, services that meet the personal needs of the individual citizen, so you will be talking not just about public services, but about personal services, not just about a universal service that seems to be uniform, but a service that is tailored to people's needs. That is why, when you look around at education, you will see, for example, that we will have one-to-one tuition developed for all those who need it, gifted pupils at one end of the spectrum, people falling behind at the other. That is why I mentioned social care budgets in order for the elderly and for people who are disabled to be able to direct their own care, with finance provided through the social services, but with the choice in their hands about how it is spent. Increasingly, you will see all the different services, welfare services, housing services, social services, health and education services, tailored to people's needs in such a way that people are not only seeing the service organised around their needs, but they are able to dictate how that service develops in the future, so to some extent they will see themselves as co-owners of the service themselves.

  Q2 Mr Sheerman: So, Prime Minister, it is the same ship, it is the same course, a different captain. Is there anything more unique about the Brown vision?

  Mr Brown: I think you will find over the next few years that, where we personalise services, we will be focusing also on the one-to-one relationship between a tutor, a coach, a mentor, a teacher, a nurse, a practitioner and the relationship that they have with the individual. If you take all the big social problems that we face, long-term unemployed not being able to get back to work, people leaving care and lacking the direction that is sometimes necessary for them to succeed after they leave as children in care, people who have tried to break from drug dependency, elderly people who feel isolated and on their own, what usually makes the biggest difference to their lives is a one-to-one relationship with someone who can help them. Sometimes, when you talk about bureaucratic, uniform services, it does not capture what the individual who is trying to escape from poverty, from unemployment, from a drug dependency or from crime needs. They need one-to-one help, they need someone who is there to be of assistance to them and it is more than a public service can normally provide and that is why we want to support the voluntary sector in being able to do this. That is why we set up what is called the Council for Social Action which met this week and its first investigation is into how we can expand one-to-one support for people. That is why I think volunteering is going to become more important in this country because people who are willing to give of their time with an expertise that they can develop to support an individual, that is more likely to make a difference to whether that individual can get a job or get a skill or break from a dependency than perhaps anything else. You will see public services develop as personal services, you will see them organised around people's needs, you will see individuals increasingly able to direct these services and spend the money themselves and make the choices that they want, but you will also see, I think, the development of far more one-to-one support for people who need it and that will be an increasing ability to draw on the great strengths of the voluntary sector in Britain, whose role, I think, has often been undervalued in the past, so that, by volunteering but also by the professionalism of some of the voluntary organisations, we can help people who have got particular needs that sometimes in the last 10 years the system has not been as good at picking up as it should be and will be in the future.

  Mr Sheerman: Thank you, Prime Minister. We would now like to drill down on the course and the vision.

  Q3  Mr Barron: Good morning, Prime Minister. Could I develop a bit further this issue of diversity and choice in healthcare, and you say you are looking at extending the independent sector in primary care. What do you say to some of the charges which have been made by the independent sector about the recent decision-making in secondary care and ISTCs[1], that is, the cutback in the second wave of ISTCs? Perhaps I can just quote from the Managing Director of Carillion Health, which saw one of its schemes pulled, who warned that "this might undermine the confidence of the private sector". If the private sector think that actually they are always diminishing in secondary care, how is that going to give us confidence to see it expanded elsewhere in healthcare systems?

  Mr Brown: The role of the private sector in the areas that you are suggesting is expanding, will continue to expand and will be a lot bigger in the next few years than it is now. If you take independent treatment centres, I think we will move to the first million patients who have had their operations or their diagnoses done through independent treatment or independent diagnostic centres by April next year, so we move very quickly to give a million people the chance to use these independent centres. If you look ahead, in terms of elective operations, it has been 1% a few years ago and it will be about 5% by the end of next year, so it is moving up very quickly. The issue about independent treatment centres for the future of course has been how much local control there should be as opposed to national control. The original independent treatment centres were decided nationally. Should local organisations in the Health Service be able to make their own decisions about that, and that is where the basis of the argument lies? Perhaps I can just say that we have set up a new forum to encourage more private sector operators to come into the healthcare centre. Ara Darzi, the Minister, is holding a meeting in the next few days with people to discuss this. We have been asking in people from the private sector to review what we can do to give them a better chance to compete for contracts which we want them to do. We are carrying out, as John Hutton announced over the last few days, a review into the total role that the private sector plays in the Health Service. We believe from the recent evidence available that it is about £22 billion of expenditure that goes through the private sector. Now, that is a very considerable amount of expenditure and, if you think pharmaceuticals is a £9 billion industry in Britain, the private sector's involvement in the Health Service is £22 billion, so that is a huge amount of money, so the private sector plays an increasing role and will play a bigger role. The question really is: how much of it is by local decision-making, which I think most people would want to see, rather than by national decision-making? Perhaps I could just emphasise that the extension of it to the GP sector and to the social care sector is going to be particularly important in the years to come, so the independent sector increases its role, will continue to increase its role and, in a wider and broader range of areas, will have a bigger role in the years to come.

  Q4  Mr Barron: Could I just ask you about that because Alan Johnson told the Health Committee a couple of weeks ago that the third wave of ISTCs would be procured locally. I have to say, my experience is that, if the first wave had had to be procured locally and had not been driven from the Department of Health, it would not have happened. I think most of us around here would say that the National Health Service was hostile to the introduction of the independent treatment centres or certainly those in my area that spoke to me, as an MP. Do you think that the culture has changed inside the National Health Service and that they will be able to happily engage with the independent sector if there is no direction from the centre?

  Mr Brown: I think the financial disciplines that local organisations have now got to meet mean that they will be seeking value for money at all times. Now, of course in any organisation you are dealing with all the vested interests and part of the reason that the independent treatment centres were started at a national level was to break down the old vested interests, but now that local organisations can see the benefit in value for money from building up their capacity through the private and independent sectors, then I believe that they will take up these opportunities. The test at the end of the day is not private versus public, it is value for money, and it is not dogmatic to support one against the other. It is value for money you are trying to achieve all the time and where a project, such as the one in the Midlands, was only 5% used, then that was a waste of taxpayers' money. Where, however, in another area of the country it is more than 100% used based on previous projections, that is achieving, as I understand it, far greater value for money than was expected, so value for money will be the test. I think increasingly locally the financial disciplines will lead people in that direction and, let us remember, at a local level you can see lots of providers coming in to offer GP care, you will see lots of additional providers coming in to offer also social care more generally, so the independent treatment centres will go side by side with it. I think Neil Dixon of the King's Fund said a few weeks ago that the issue for independent treatment centres, which you have raised, is now that the capacity in the Health Service is being built up, then the independent sector will have to continue to prove that it is genuinely value for money, but that is a good thing because that is competition effectively working on behalf of the patient.

  Mr Sheerman: Prime Minister, we now move on to efficiency savings and Michael Jack.

  Q5  Mr Jack: Prime Minister, since you took over your office, what have you done from your standpoint in Number 10 to ensure that departments are actually delivering the real value of their Gershon savings?

  Mr Brown: Well, the whole Public Spending Round, which concluded in October with the announcements by the Chancellor, was effectively about greater efficiency and greater value for money, so you have a situation where departments are being asked to make 3% efficiency savings, where their budgets are costed on the basis that they do make these savings and, side by side with that, we are having regular reviews, including the work of the Delivery Unit on each of the individual departments, and I have these exercises almost every week looking at what individual departments are doing to achieve the efficiencies that are both promised and necessary if we are to get proper value for money.

  Q6  Mr Jack: By how much are departments actually out from achieving the targets that have already been set? How bad is the situation in terms of their not doing what they said they would do to Gershon?

  Mr Brown: I think the Gershon Report and his recommendations have been more or less achieved.

  Q7  Mr Jack: Well, that is not what the National Audit Office say. In their report to the Public Accounts Committee, they indicate that £3.1 billion worth of supposed savings are substantially incorrect and, with a further £6.7 billion worth of savings, they indicate that there are measurement issues and uncertainties. That is nearly £10 billion of a saving programme that you cannot account for.

  Mr Brown: Hold on! The £6.7 billion, what they are actually talking about is how these savings are measured because some of them are savings in working time, some of them are the better use productively of time, so, when you say £6.7 billion, you cannot write off these savings. What they are saying is that there is a debate about what has actually in practice been achieved and £6.3 billion or £6.5 billion—

  Q8  Mr Jack: There might be a debate, but how is that going to be resolved because, if you cannot account for the savings and they are an integral part of the budgets of departments, you are going to find that you actually have not in real terms got the money. If you question £6.7 billion, £3.1 billion, the NAO say very clearly, are substantially incorrect. That is an awful lot of money not to be able to account for.

  Mr Brown: Yes, but I think what you are actually talking about is the Gershon set of proposals that I think involved, was it, £20 or £30 billion over a period of time. You are talking about a procedure by which these are achievable. Look at the Health Service, look at what has been achieved in terms of waiting times and look at what has been achieved in terms of the waiting lists, look at the increased number of operations that have been done, look at the introduction of some of the new technology and how more patients are being treated; there are millions more patients benefiting from what has happened. Equally, in schools, in colleges and in universities, there are more students now than there were in 1997.

  Q9  Mr Jack: But the NAO has quite definitely, Prime Minister, agreed with you that there have been some improvements, but there is still an awful lot of money unaccounted for, so, in conclusion, if you cannot make these improvements and you are, for example, £3 billion short, what are you going to do?

  Mr Brown: Well, I do not accept these figures.

  Q10  Mr Jack: So you disagree with the NAO? You put a lot of store by it when you were Chancellor.

  Mr Brown: What I am saying is, if you look at what the NAO and other bodies are saying, you then set your Spending Round for the next few years on the basis of the information that you have, and each department has been asked to get, in most cases, 3% annual efficiency savings. Now, that is a big target for a department, that they have got to get 3%, and of course, if they do not get these savings, then it will become very clear in what is happening to the service. Now, I just tell you to look at the services themselves, and the merit of what has happened over the last few years is that the value for money achieved in the Health Service is hugely greater and the value for money achieved in education is greater, but we are never complacent and that is why the Spending Round set very strenuous targets both in terms of cutting back central bureaucracies, cutting back the number of civil servants overall, so overall, I think it is, 80,000 civil servants have had to go as a result of the changes that we have made, and I think you will see over the next few years the benefit in increased efficiency savings, but also in a better service.

  Mr Sheerman: Prime Minister, you are rattling through, and now I would like to call on Andrew Miller to talk about problems with IT programmes.

  Q11  Andrew Miller: Prime Minister, in the Modernising Government White Paper, there was a commitment to publish an IT strategy for government that would focus on the needs of citizens and business. Do you think that has been a success and, if not, what are you going to do to improve it?

  Mr Brown: We have got a long way to go. I think all private and public organisations are coming to terms with both the security issues relating to the use of IT and the proper organisation of data, and I know you personally are an expert on IT issues, I think every organisation knows that it has got a long way to go. We are only now aware of the explosive power of information if properly co-ordinated to make a difference, but we have got to get the better systems in place.

  Q12  Andrew Miller: But seven out of ten projects, according to the Chief Information Officer at the Department for Work and Pensions in May, have failed. The well-known "Contractor", the IT contractor's Portal, raises very serious questions about the roll-out of ID cards because of contract management and even today we have had a statement on the BBC that victim surcharges are not going to be collected because of the failure of Libra. This is a fundamental weakness in the system. Is it that the Government has failed to abide by its own advice in the McCartney Review?

  Mr Brown: I think the first thing that we are recognising, as the events of recent months have shown, is that care and security in the use of information is incredibly important, and I know you are not specifically asking about that, you are asking about how we organise our systems, but let us remember, when the Chancellor reports next week on the Pointer Review, that we are dealing with issues about the care and security of data and information, and these are very important issues. Secondly, I think every organisation, and I am talking about every country in the world, is recognising that so much more has to be done to make for the efficient use particularly of computerisation and IT in the future, so I do not think we are alone in having to learn the lessons from present experience about how things can be done better in the future.

  Mr Sheerman: We will move straight on to look at another aspect of the public sector.

  Q13  Mr Leigh: Good morning, Prime Minister, and thank you for thinking that the affairs of this Select Committee are more important than the mass ranks of EU Heads of Government; we are very grateful.

  Mr Brown: I have got the advantage of being able to do both! You, I gather, will not wish to join me there!

  Q14  Mr Leigh: Obviously this proclaims your view of the importance of Parliament. I wonder if you could help me because on Monday we have got a PAC hearing into the HMRC loss and we have got the acting Chairman coming along. We know about the email of 13 March that was sent from HMRC to the National Audit Office and that was the email which said that it was too expensive to strip out all the data, so they put all the names and addresses, bank details and all the rest of it into the post. Now, we know that was copied to an assistant secretary and I understand, and this is new information, that that was actually written by a senior executive officer. I am not asking for the clerk who put the stuff in an envelope, but so far the acting Chairman has refused to bring these people. Will you instruct him to bring these people on Monday so that we can have a proper hearing and actually find out what happened?

  Mr Brown: I will obviously look at what you say on this, but I think the position is this: that, as far as this data is concerned and the relationships between the National Audit Office and HMRC, that is precisely what the Pointer Review is looking at. Because I was expecting that you may ask these questions about these emails to which you attach, and have attached over the last few weeks, such importance, having got these emails here, I think it is important to recognise that there is a lot of information in them. The Pointer Review is looking at it and the Pointer Review will report and then we can make a judgment on these issues.

  Q15  Mr Leigh: Precisely. I am not going to ask you about the actual substance of this because the Pointer Review, we hope, will be published maybe tomorrow or Monday morning. I was just asking you, and you said you would look at, I am grateful, about the principle of instructing the acting Chairman to bring these officials. This is very important because my dream, if you like, is that these select committees should have as powerful a role as congressional select committees in an advise and consent role. Previously in scandals, the Civil Service has hidden behind the Osmotherly Rules and they have said they can bring who they like and then we have found in the Hutton Inquiry that all sorts of information which is available to High Court judges is not available to select committees. Now, you have said that you want to have a new start, you want select committees to be more important, so can you at least look at this so that we can have proper select committee inquiries and get to grips with all the information and all the players in any particular event?

  Mr Brown: Can I just say about March, however, that the issue that arose on child benefit data was essentially an issue about what happened in October. In March, there was a transfer of data and there was no data lost at that stage or mislaid or which went missing in the post and, as I understand it, the data was then returned to HMRC.

  Q16  Mr Leigh: Well, you are now getting into the detail. I can debate this with you, but you said you do not want to discuss these details before the Pointer Report. The fact is that that request was made in that way in March and, because HMRC refused to change their minds because of their contract with EDS, they did not want to waste money and all the rest of it, this whole process carried on until October, but we do not want to get into the detail. Perhaps I can just ask you one general question. I have had several emails from HMR staff, for instance, saying, "I am shortly to retire from 35 years with the Inland Revenue. I am glad this horrendous error has occurred because something may at last be done about this disaster area known as HMRC: the disregard for providing a service for taxpayers; the inability to contact HMRC easily by telephone; the tax credits fiasco ... " Now, what this is saying to me, and what the acting Head admitted in his evidence to the Treasury Sub-Committee, is that there appear to be systemic failures. Do you believe that this is a useful event to try and clean up HMRC and make it the best department in Whitehall, which it was before the reforms that frankly you brought in?

  Mr Brown: Well, the reforms were recommended after a long investigation by Gus O'Donnell who is now the Cabinet Secretary. One of the reasons for the reforms was, if I may say so, that business complained that it had to deal with the Customs & Excise authority on the one hand and then, with the same type of information it had to provide, it had to deal with the Inland Revenue. The idea was in this particular instance that there would be one service for business through HMRC and not two agencies that people had to deal with. If I may say so, this reform was supported by business, small and large, because it was a major breakthrough in preventing them having to deal with two agencies. As far as the individual instance of child benefit was concerned, the specifics of the transfer of Customs & Excise and Inland Revenue did not affect the Child Benefit Office that is concerned in the particular issue of the investigation at the moment, so I think one needs to separate, if you like, the individual instance of rules not being followed and whether of course there is a case for better procedures. The general amalgamation of HMRC from Customs & Excise and the Inland Revenue, I think, has very considerable benefits, particularly for business, because it becomes, therefore, a one-stop shop for them dealing with—

  Q17  Mr Leigh: I am not asking about the overall thing, it is just that we want to use this event to improve. There have been seven security breaches since April 2005, so this is a useful occasion to try and improve this for everybody, is it not?

  Mr Brown: I think you are putting some words into the mouth of the acting Head of HMRC. He said that the Pointer Review would have to decide these issues and undoubtedly we should wait until the Pointer Review comes out. My whole point of mentioning March is that the incident which is the issue was something that happened in October and that has been the cause of the difficulties that have been revealed and hopefully, because there does not seem to have been any criminal activity as a result of it, nobody has lost any money and people's bank account details appear to be protected.

  Mr Sheerman: The Chairman has been very generous with the time, but Edward is on Lisbon time already! Sir George?

  Q18  Sir George Young: Prime Minister, can we wind back to the answer you gave to Barry Sheerman at the beginning of this session and try and tease out the role of consumer choice and the delivery of public services. One of your ministers has described consumer choice as a `fetish', another one, Ed Miliband, has called for an end to the obsession with choice, and I read your speech at the University of Woolwich about education, a long speech, where there was no mention of parental choice at all. Was this just an oversight?

  Mr Brown: I think if you read that speech closely, what I was actually saying was that we looked at educational opportunity as being absolutely crucial for the future of every child, but we had not sufficiently taken on board the need for high aspiration on the part of the child and parental involvement in education. I think you will find in that speech that I was talking about the important role of both parents and the aspirations of the children. Now, on this general question of choice, Sir George, I would just mention the social care budgets—

  Q19  Sir George Young: I want to come on to that, but can I just pin you down a bit on education. Your predecessor wrote a foreword to the Education White Paper and he praised the school choice programme of Sweden and Florida where parents can use the money earmarked for their children's education in independent schools. Would you endorse that approach?

  Mr Brown: The issue about the independent sector, I have not supported the state-assisted places scheme and actually Tony Blair was the Prime Minister who abolished it, so, if you are suggesting we are going to bring back the state-assisted places scheme, we are not, but far more people are benefiting from the academy programme than ever benefited from the state-assisted places scheme. There are more children, as a result, getting an education through the development of academies and the freedoms that they have in poorer areas than was possible under the other schemes. If you look at what we are actually doing, and this is why I think we should turn our attention to the specifics of academies, specialist schools and trusts, what we are trying to root out is failing schools. What parents hate most of all is where there is a school that they do not want to send their child to, but they have got no choice, but to have to send their child there, so let us root out failing schools. In that speech that you mentioned, I set the objective in the next five years of rooting out all the failing schools in our country. Now, that is an ambitious objective which I hope you support, but that is a means by which we give parents more control over the quality of the education—



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