Examination of Witnesses (Questions 40-59)
JOBCENTRE PLUS
30 April 2008
Q40 Mr Bacon: Mr Groombridge, were
you?
Mr Groombridge: No.
Q41 Mr Bacon: Mrs Strathie, were
you?
Mrs Strathie: No.
Q42 Mr Bacon: I did not think you
were. It says that you started as a clerical officer.
Mrs Strathie: Yes.
Q43 Mr Bacon: Is it possible that
this project has gone so well because between you you have about
120 years' experience in the department, you started at the bottom,
worked your way up and know the problems that your staff encounter
on the ground because you have been there yourselves? I agree
with the Chairman that from all accounts it appears to have gone
remarkably well. Do you think that is the basic reason?
Mrs Strathie: Yes, one of many.
I think we applied all of that knowledge and experience. I had
three jobs during the time from when Jobcentre Plus was first
formed through to the one I have now, so I have been able to see
this from a different perspective. But the real success is that
we consulted with our people on the ground and our stakeholders
and everybody locally on the service delivery plan. The whole
of the service delivery plan was developed from the bottom up
with all the support of the programme.
Q44 Mr Bacon: It is awful but necessary
to say this. To say you consulted with the people on the ground
and built it from the bottom up, finding out what people wanted,
is startling and not what we expect to hear. It is wonderful and
very good news. I should like to ask you about the budget to start
with. How was the £2.2 billion arrived at? If I wanted to
come in under budget I would just make sure my numbers were significantly
higher than I needed and by the time I pared it back I would be
showing significant savings. Are you sure that is not what happened
here?
Mrs Strathie: And you must wonder
why everybody does not do that and why so many go over budget.
Mr Groombridge: The £2.2
billion was really based on the best available estimate that we
and Treasury colleagues could make of the likely cost of rolling
out a service that involved a lot of construction and IT work,
process change and learning and development. Those were the ingredients
that went into the £2.2 billion. The onus was on us immediately
to drive down the likely costs of the whole exercise as far as
we could. That is why during the first year, arguably perhaps
not as quickly as we should have done, we engaged external sources
in particular an effective works programme manager to help and
equip us to do precisely that.
Q45 Mr Bacon: It says in paragraph
2.10 on page 12: "After the first year of the programme it
was projected that to complete the roll out would require an additional
£100 million. In response the Department and Jobcentre Plus
adopted a series of measures to more tightly control"—I'll
ignore the split infinitive—"the costs of the programme."
Do you think that if you had tighter financial management from
the beginning you would have delivered even bigger savings? Is
that one of the basic lessons from this?
Mrs Strathie: Yes, that is absolutely
fair. We estimate that at around £17.4 million.
Q46 Mr Bacon: It is not a lot of
money in global public expenditure terms but it would fund an
awful lot of primary schools in my constituency or extra officers
in Jobcentres, would it not?
Mrs Strathie: That is one of the
lessons learned, but that has to be balanced against how long
it would have taken us to do it. We certainly would not have delivered
on our ministerial commitments, but that is our best assessment
of what could have been achieved.
Q47 Mr Bacon: Mr Davies, when you
talk to other agencies and departments about the things that went
well and did not go well is one of the matters that there should
be very tight financial management from day one?
Mr Davies: Absolutely; there should
be central control. I understand why we did it the way we did
at the beginning and part of it was because we were a new organisation
and there was a sense of wanting to bring about inclusion to create
wellbeing in the new organisation. After the first year it was
realised that that was perhaps not the way to do things and we
changed rapidly.
Q48 Mr Bacon: How necessary is it
to have flash new buildings in order to get the results? It is
nice to have them. I remember visiting labour exchanges, as they
were. They had concrete floors and there were cigarette butts
everywhere. You took a ticket and queued for two hours. Over the
past couple of decades there has been an absolute transformation.
At the same time, in Africa many students who get through GCEs,
which we still export from this country although we do not do
it ourselves, do so by the use of one book while sitting under
a tree. Did you need to do all this refurbishment in order to
increase the number of work-focused interviews?
Mr Davies: I believe we did. This
was a new focus on things with which you will be familiar: work
for those who can and support for those who cannot. The business
processes to deliver those work-focused interviews required a
different way of doing things in offices and we designed the offices
around the business process, and vice versa. Therefore, the integration
of the process with the environment and the sense of what the
environment was trying to produce were essential ingredients of
success. Had we tried to refurbish the offices in a simple way
I do not believe it would have had the same impact.
Q49 Mr Bacon: In paragraph 8 it says
that 2.2 million additional work-focused interviews per annum
was the aim. How many have you achieved?
Mrs Strathie: I do not have the
answer to that question because it is not a steady state. We can
write to you. [1]If
you are asking how many we are doing in each year over the period
we have that.
Q50 Mr Bacon: Paragraph 1.8 says: "The
business case stated that", and bullet point 1 is, "the
new organisation would provide an additional 2.2 million work-focused
interviews per annum." I am really asking: did you? I am
slightly surprised that no one seems to know.
Mrs Strathie: I do not think I
can give an accurate answer or number. That was the aspiration
when we started. Obviously, it was for specific customer groups
where there was no regulation for them to attend work-focused
interviews.
Q51 Mr Bacon: You mean lone parents
and so on?
Mrs Strathie: Lone parents and
other groups of customers brought in incrementally. Therefore,
the advance of the additional work-focused interviews was in line
with policy development over a period of time. If we have the
absolute figure before we finish this hearing we will add it,
but I do not believe we have them here.
Q52 Mr Bacon: Perhaps you would write
us a note and set out the different groups to which you refer,
that is, lone parents and the others, whoever they are. To what
use have the savings of £300 million or so been put? [2]
Mrs Strathie: The savings were
used for a number of different things including the benefit processing
centralisation project and were handed back to the department.
I think it is important to understand that Jobcentre Plus is an
agency of the Department for Work and Pensions, so our money is
allocated via that department. We have a breakdown and fact sheet.
Do you want me to read out the table?
Q53 Mr Bacon: Perhaps you would send
it to us. I have a question about the overall level of quantified
benefits and the degree to which they are sensitive to changes
in the UK economy. In 1.7 it says: "The three projects combined
are expected to deliver savings eventually reaching £1 billion
a year." Plainly, some of this depends upon getting people
back into work. Have you made a sensitivity analysis, and is there
something you can let us have? [3]To
what extent do the quantified benefits depend on or are sensitive
to changes in the UK economy? If we had a 7% or 8% growth rate
in the next few years presumably you would achieve rather larger
savings. You are saying that if we went into a deep recession
this might not be achieved at all. Presumably, the truth lies
somewhere in between.
Mrs Strathie: That is probably
a fair assessment in answering the question. The net present value
of the savings on which we are working is predicated on the overall
benefits, many of which do not derive from the business case because
this takes place over a long period of time. We constantly review
what we can derive from it. If growth in the economy has an impact
on our business volumes we have to remember that this is based
on work for those who can and security and support for those who
cannot. At the moment the relative on-flows of new customers and
off-flows are pretty even. We work to make sure that our customers
move from an unemployed to an employed state as quickly as possible.
Therefore, the impact on growth or not will inevitably have an
impact on customers calling on our services, but I think we are
in very much better shape to respond to that.
Q54 Mr Mitchell: Since we have had
such a paean of praise from the Committee it may be time to be
a little cynical. The project has been delivered efficiently and
without excessive costs, but surely a lot of that improvement
was due to fortuitous developments after the contract was signed
and the work had begun. For instance, what was the saving from
the simpler and more austere standard design that the architectural
consultant imposed on the system after the changes had begun?
Mr Davies: The design consultant
imposed from the beginning a design standard which never changed
throughout the life of the project.
Q55 Mr Mitchell: There was a lot
of local preference and influence until the standard design and
consultant were brought in?
Mr Davies: To be clear, the standard
design was there from the very beginning. In the first year of
the programme there was a local interpretation of how that design
standard could be applied. I decided to review the efficiency
of that approach. When I saw that it was leading to an over use
of space which was happening in part with the backing of the programme
steering committee I decided to say that from then on we would
introduce a more rigid approach which was that the design consultant
with the building construction teams and project would determine
how the office was made.
Q56 Mr Mitchell: How much did that
save you?
Mr Davies: I think you have the
figure. In the first year it cost an extra £17.4 million,
and throughout the life cycle of the programme it is part of the
element of the £314 million that was saved for the duration
of the programme thereafter.
Q57 Mr Mitchell: Does that standard
design have any connection with the fact that, as I see in paragraph
4.11, people do not believe there is enough privacy in the interview.
It seems to me that in this situation privacy is a right and yet
36% consider that it is poor. We understand that 74% of customers
thought that privacy was very important but only 26% thought it
was very good. What is the connection between that and the standard
design?
Mr Davies: There is some correlation
between that and the standard design and it will affect mostly
those offices which are smaller in floor space. In the main it
is not a huge issue. To counter that, which is a very important
thing to do, our advisers are sensitive to the privacy factor.
If a client wants to have a private interview that facility is
afforded. Equally, because of the improvement in our channel strategies
we can now offer most of our customers an interface over the telephone.
Therefore, there are issues.
Q58 Mr Mitchell: I am glad to hear
that. The other fortuitous development was that staff numbers
were cut by efficiency savings. If you fire 15,000 people and
have an office building programme you are bound to be able to
make economies. One thousand offices were cut down to 860, so
there is a big saving there; 22% less space was being used. What
contribution did that make to the savings that you claim for the
programme?
Mr Davies: I am not sure there
is a direct correlation because the reduced figure started to
emerge towards the beginning of the programme. Because of the
experience of the first year we reviewed rigorously the service
delivery plans. That review told us that we could make better
use of space and at that point it had nothing to do with staff
reductions. I think you see the impact of the staff reductions
in the closures that occurred after the roll out because the impact
suggested that we did not need all the space we had, so there
we see a correlation between staff reductions and those offices
closed after make-over.
Q59 Mr Mitchell: You cannot quantify
the saving?
Mr Davies: I cannot.
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