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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