Examination of Witnesses (Questins 60-79)
CABINET OFFICE,
DEPARTMENT OF
HEALTH & HM PRISON
SERVICE
12 DECEMBER 2007
Q60 Keith Hill: Chairman, I thought
I would ask Mr Wheatley some questions about the Prison Service,
partly because I have Brixton Prison in my constituency and partly,
I confess, because I find irresistible the concept of `customer
satisfaction' in the Prison Service! Let me ask you about tracking,
Mr Wheatley. The NAO tells us that it is difficult for the Prison
Service to substantiate its planned cuts in staff because you
are unable to track every individual affected by the programme.
Why is the tracking system apparently so poor?
Mr Wheatley: We can track the
money because the money is being removed from the operational
budgets of governors. We deliberately set out to reduce our admin
staffing in establishments. We gave governors, who were grant
budget holders for their establishments and managers of their
establishments, advance knowledge of what we were planning to
do. Governors were encouraged, and most have taken this opportunity,
when permanent staff left their admin function to replace them
with temporary staff or fixed contract staff ready for the budget
reduction that we advertised was coming their way, and indeed
it did come their way this year, and there will be a further budget
reduction next year if you take the money out where the staff
are no longer needed. We have not tracked individual members of
staff and indeed some them we planned to move to take other vacancies
in admin, so we have not moved all our admin working to the shared
service centre, for instance, the admin work around prisoner sentencing
and calculating release dates remains in establishments. We have
replaced staff who were leaving in those sorts of functions with
staff who were leaving from the admin and HR function. We have
done that in order to reduce the risk of large redundancy costs
because the Civil Service redundancy scheme is quite pricey and
we were anxious to reduce the risk of making staff redundant with
the high costs associated with that in order to make sure that
we got the real business benefit out of this.
Q61 Keith Hill: I understand why
you did it but do you acknowledge that there have been some problems
in tracking?
Mr Wheatley: To be perfectly honest,
personally I did not see the need to track each individual member
of staff. I was much more interested, having taken the money out,
to track whether we were continuing to get the proper service
in establishments. That seemed to me to be the key thing and to
build an elaborate system to track individual members of staff,
which would have itself involved expense, did not seem to make
sense. It means that I cannot answer the question perfectly but
I have probably saved money.
Q62 Keith Hill: That is pretty good.
Let me ask you about technology. Apparently, the Prison Service
initially under-estimated its technology costs and then you have
been hit by a failure of the electronic purchasing system in late
2006. Why were there these problems in the management of technology
in the Prison Service?
Mr Wheatley: We were doing something
that was new and we were doing something that was complex that
we have not done before. We were working with our IT partner,
which is EDS, who were offering us some advice on the amount of
bandwidth that we needed and the sort of technology that we needed
to implement with. We knew there were some risks around that.
Doing something novel and large-scale and doing it quickly in
order to get savings out carries some risks. We built some of
those risks into the business plan. We did not allow ourselves
to run with a business plan that was just optimistic. We ran into
difficulties with the purchase and pay system as we went up to
full strength and it began to overwhelm the available system;
it began to freeze and not do the job properly, which is when
we aborted the roll-out until we had solved that problem. We needed
more technology capacity, more bandwidth in the system and some
additional processing capacity, which we got. There were some
faults with the system because of the way it was configured—and
I am not an expert so do not ask me to explain the IT behind it—and
it was generating more messages than it needed to, so there were
messages flying up and down the system that were rather greater
than you would have needed because of the way it had been programmed,
and that program has been adjusted. We have got proper deployment
of the EDS expertise and Oracle expertise.
Q63 Keith Hill: How has it been doing
since the breakdown?
Mr Wheatley: It is performing
well. It is now performing properly. For our purchase and pay
system we have one complaint per 3,000 transactions, and we have
got up to 77% transactability, so as things come in we can transact
them promptly because everything matches and we are doing it well.
We are driving up transactability. We have an 80% target which
we are near to and we want to go beyond that because in an ideal
world one manages to do more than that, and if we get eventually
to 95%, which is the sort of target that a mature shared service
centre should be able to meet, I will be well pleased with it.
At the moment we have got improvement, it is working well and
the purchase and pay stuff is particularly good. We are not at
quite the same stage with HR because we have not rolled it out
throughout the whole of the service, and we are rolling it out
slowly and deliberately in order to make that we can spot the
problems arising and solve them rather than go for a big bang
approach which, in my experience, is very risky with large IT-enabled
schemes.
Q64 Keith Hill: I think that experience
elsewhere seems to bear that out, does it not? Let me ask you
about transaction costs then. Again, why is your performance well
below private sector benchmarks? Let me give you an example. An
accounts payable transaction costs £2.12 in the Prison Service
compared to a private sector average of £1.45?
Mr Wheatley: Because, as I think
the Report indicates, this is a relatively immature shared service
centre we are rolling out, we are just completing it and we are
driving up performance, we know that we can reduce the cost if
we go for a more technologically based solution, in other words
we make the IT do more and the people do less with fewer people
sitting there processing things and more being done simply by
the IT system. We also need to be careful because we are paying
small invoices that we have not got on over-elaborate system for
verifying them which is beyond the risks involved in paying them.
Most of the private sector systems will pay very small invoices
with very little checking. We must produce accounts that are signed
off by the NAO with all the proper high standards of government
accounting, but we can probably move to rules that allow us to
pay more invoices with less checking before payment and more checking
after the event to make sure that nobody is committing fraud on
small invoices. Those are the changes that we will make that drive
down the cost and I expect will get us to the private sector benchmark
or below, and we need to be efficient. Running on tight funding
in the Prison Service, I need to get as much to the front-line
as possible.
Q65 Keith Hill: Okay. In your answer
to an earlier question by the Chairman, you robustly pointed out
that the figures on customer satisfaction and performance were
now somewhat out-of-date but, nevertheless, it is still relatively
early days in this shared services exercise. Are you confident
that this is the right moment to begin supplying corporate functions
to the Home Office?
Mr Wheatley: Yes is the answer
to that, providing we approach the additional Home Office work
which will bring down the overall cost per transaction because
it shares the overheads. It is another way of bringing down the
cost per transaction. Provided we plan for it carefully—which
we have done—we take it on and, again, we roll into it and
we do not immediately say that we are going to do everything straight
away and we manage it carefully with a management team, who have
done well during this roll-out and are competent and now much
more practised, so I expect it to be successful if we do that
carefully, which we are doing, and reduce the cost per transaction
in getting value for public money.
Q66 Keith Hill: Your caution is admirable.
Let me take you on finally to another area where caution is desirable
and it is to pick up a question which our Chairman raised which
is the issue of the centralisation of data through these shared
services, which is obviously an especially sensitive issue in
the Prison Service. You do have a great volume of sensitive personal
data brought together in one place. How securely is that held?
Mr Wheatley: It is held securely
is the answer. This is information on staff. Not that information
on staff is not sensitive- it is sensitive—but it is not
our most secure information which is information on prisoners,
which is not held in the shared service sector. This is information
about staff mainly and accounts and bills which we have. I do
not mean we should be casual about it—we should not—but
it is not intelligence information or any of the most sensitive
stuff we hold. We are following what we believe to be all the
best practice in making sure that we have got a system that is
secure. We are conscious of the need to keep that information
secure and not to share it with anybody we should not share it
with or release it in any way to people.
Q67 Keith Hill: How do you transfer
it? Do you use TNT?
Mr Wheatley: We are not using
TNT to the best of my knowledge. We are using the appropriate
methods for passing information on. Our bills are not sensitive
issues and we do not give our bills unnecessary security.
Q68 Keith Hill: You do not have salary
and pay information on the system?
Mr Wheatley: We have information
about the staff. This is not where we pay our staff from. We are
paying our staff from a central system which is the old Home Office
system which we have been on for nearly as long as I have been
in the Service, not quite as long as that but certainly since
the late 1970s.
Keith Hill: Thank you, Chairman.
Chairman: Thank you, Mr Hill. Richard
Bacon?
Q69 Mr Bacon: Ms Cleveland, this
figure of £1.4 billion, presumably that is just derived from
your estimate of the cost of corporate services being £7
billion and then you have just taken 20%?
Ms Cleveland: Correct.
Q70 Mr Bacon: But it is clear from
paragraphs 4.11 and 4.12 that the £7 billion itself is a
fairly rough figure.
Ms Cleveland: It was the best
estimate but I could not put statistical competence limits around
it.
Q71 Mr Bacon: How long did it take
to come up with the £7 billion figure?
Ms Cleveland: I do not know how
long. I know when it was produced, I do not know how long it took.
Q72 Mr Bacon: It would be quite interesting
to know how long it took. Was it done following a fairly detailed
survey across the whole of the public sector in central government
or was it done in the Dog and Duck and written up on a beer mat?
Ms Cleveland: It was certainly
not the latter.
Q73 Mr Bacon: We had a space shuttle
on which the Government spent £45 million that was designed
on a beer mat.
Ms Cleveland: I was not aware
of that.
Q74 Mr Bacon: So that is why I am
seriously asking how much effort went into getting this £7
billion figure?
Ms Cleveland: There was a piece
of work that was undertaken which sought to gather as much information
as we could from departments and across the wider public sector.
In some departments they were able to provide the information
and others not, and so this information was then taken and grossed
up sector-by-sector to say this is what we think the prize could
be in terms of shared service.
Q75 Mr Bacon: Although I am not aware
in any way from an area of the Report or elsewhere that breaks
it down, you did have that individual line item with a number
attached to it so the department was able to supply you with that
information before you grossed it up?
Ms Cleveland: My understanding
of that was, and it will not surprise you that prior to this hearing
I spent quite a long time trying to get to the detail of that
information, and we have not been able to track down the actual
workings of that £7 billion figure.
Q76 Mr Bacon: What? My next question
was going to be can you send it to us, please. You have not got
it?
Ms Cleveland: We have not been
able to track down the details.
Q77 Mr Bacon: So for all you know
it was done on a beer mat?
Ms Cleveland: I know it was done
through a survey process—this is what has been reported
to me—and that this was then used to produce this figure.
Q78 Mr Bacon: There must be emails.
This is extraordinary, you have got no way of finding out—this
is what you are saying—how you got the £7 billion figure?
Ms Cleveland: I do not know how
we got the £7 billion figure.
Q79 Mr Bacon: What you have just
said is confirmed by paragraph 4.12 which says: "The Cabinet
Office found it impossible to obtain such a baseline figure."
What I find really interesting about this is here we are in 2007,
the Financial Management Initiative took place in 1982, Next Steps
came next. We have seen, just as we have in every area of public
life, whether it is the Health Service (which has had, notoriously,
25 reorganisations in the last 25 years) or wherever else that
there has been huge effort to improve the quality of management
and management information, and yet on two very basic corporate
functions—finance and human resources—you cannot say
for a big swathe of the public sector in the different departments
and agencies and non-departmental public bodies what it is that
they are spending on HR or the finance function?
Ms Cleveland: Not on a common
definition across all departments, no.
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