Examination of Witnesses (Questions 300
- 319)
TUESDAY 20 NOVEMBER 2007
RT HON
ED MILIBAND
MP AND PHIL
HOPE MP
Q300 Chairman: These people
that you are talking about get fed up, do they not, with endless
politicians talking about elections.
Ed Miliband: I have to say, I
have not had anyone in my surgeries, I do not know about you,
come to me and say, "This election business".
Chairman: My constituents talk of nothing
else! Anyway, David.
Q301 Mr Burrowes: You said
that you are part of the Prime Minister's inner sanctum. Given
that, has that undermined or enhanced the role of the Cabinet
Office?
Ed Miliband: I think I am a relatively
junior member of the Cabinet who does what Cabinet Office ministers
have always done, which is to focus on the issues that I set out
at the beginning and provide more general support to the Prime
Minister and the Cabinet. My only direct experience of this is
Hilary Armstrong, my predecessor, and she spent time helping the
previous Prime Minister, as ministers of the Cabinet Office have
always done. What is interesting about the Cabinet Office now
is that you have a secretariat around domestic policy run by Jeremy
Heywood, foreign policy run by Simon McDonald and European policy
run by Jon Cunliffe, which is a strength capability. We have the
Strategy Unit and we also have a role in relation to the Delivery
Unit; so that is a wide range of issues that we cover around policy-making
in the Cabinet Office.
Q302 Mr Burrowes: Has that
changed though from your predecessor, Hilary Armstrong, in terms
of that relationship between the Cabinet Office and the Prime
Minister?
Ed Miliband: I think what is interesting
is that, in response to the Capability Review, we have got that
strength and capability partly because, as I say, the Capability
Review identified the issue of how we drive policy across government,
but I would say the relationship between the Minister for the
Cabinet Office and the Prime Minister is pretty similar now to
what it was before the transition.
Q303 Mr Burrowes: You said
you were a junior Cabinet Minister. I suppose that somehow is
a reference to the fact that you have effectively been in Parliament
for two years in a sense, but the reference from Hilary Armstrong
looked at the position of the training of ministers in the national
school, and in some ways you must have come top of the class or
you gave a nice apple to the head teacher, I do not know, but
either way you have received two major promotions. Do you think
you have had sufficient training for that job?
Ed Miliband: I think ministerial
training is very important. I read Hilary's testimony to you and
in a way I think it is quite easy for people to be contemptuous
of the notion of coaches and training and all that because it
is fashionable to be so, but I actually think that ministers probably
are under trained. When I first became a minister, Minister for
the Third Sector, I took part in some of the ministerial training.
I think there is a lot more we can do, frankly, in this area.
I had a bit of experience before being a minister, working as
a special adviser with civil servants, but there is a whole set
of issues around how you work with civil servants, how you lead
a department, and so I think we all need more training in our
daily lives and I think it is a good thing that we are doing more
of this.
Q304 Mr Burrowes: Do you give
performance appraisals to Phil Hope then?
Ed Miliband: Maybe I should let
Phil answer as to what kind of manager I am. I have regular meetings
with my ministers and talk about the priorities that I have and
that they have and how we take forward the priorities of the department.
Phil, do you want to add anything?
Phil Hope: No, we could do a mock
supervision session here in the committee, but I do not think
that would be very helpful. I think it is about working collaboratively,
and I think the three ministers in the Cabinet Office, myself,
Gillian Merron and Ed, work very closely together and meet regularly
and I feel that I certainly get the support that I need to do
the job that I do, particularly given Ed's role in the past doing
this job, but also collectively. We operate very effectively as
a team and it is a good department to be part of.
Q305 Mr Burrowes: I do not
suppose you get a performance appraisal from your boss?
Ed Miliband: No, we do not have
that formal system in government. I have thought, when I have
discussed in the past with Hilary Armstrong and others this issue
of ministerial training, about whether you could move to a more
formalised system of appraisal. Lots of people would say—they
might even say it about me—that the process of promotion
and all that is quite capricious. I think it is quite hard in
the political system that we have, where you have got different
politicians, to have that sort of formalised system of appraisal,
but I certainly think that government does not do enough in this
area. Lots of things which in the private sector we take for granted
are not done sufficiently and I think it is an area, and I have
talked to the Cabinet Secretary about this as well, where we need
to make more progress.
Chairman: Thank you for that.
Q306 Kelvin Hopkins: About
the relationship between Number 10 and the Cabinet Office. In
the previous regime there was a very strong flavour, certainly
to me, that Number 10 was somewhat separate from the Cabinet Office
and, indeed, from the Cabinet at times as well; it led its own
life. The suggestion from Gus O'Donnell last week was that Number
10 was part of the Cabinet machine, Cabinet Office. Has there
been a rapprochement in a sense since the new Prime Minister has
taken over? Is it now working more happily together?
Ed Miliband: I am not sure what
the opposite of rapprochement is. I do not recognise the description
that there was a kind of separateness before. I have only got
a year's experience of this in my previous role. I thought there
was actually quite close working. This new capability, and the
three individuals I mentioned who lead these different teams in
the Cabinet Office, is a way in which the Cabinet Office perhaps
serves better the Prime Minister, it is a cross-government function,
but I think the Cabinet Office and Number 10 work well together
now, I actually think they worked pretty well together before.
Q307 Mr Walker: Are all the
ministers in the Cabinet Office paid a ministerial salary?
Ed Miliband: Yes.
Q308 Mr Walker: Because there
are some ministers, I am right in thinking, that are not paid
a ministerial salary at the moment. Does it cause you concern
that we could be creating a two-tier ministerial structure: those
who are being paid and those who are not being paid? Do you think
that is sustainable in the longer term?
Ed Miliband: I think there are
always controversies about ministers being unpaid, but I think
there is a limit on the number of paid ministers you can have
and it is probably sensible to have that sort of limit because
this Committee might be saying, "Let us not have hundreds
and hundreds of ministers." So, it is probably understandable
that there is that limit, and that is why some people are unpaid.
You say there are people in the Government who are unpaid. I do
not know who they are. Perhaps the implication of that is that
it does not make a difference between the different statuses of
ministers in the Government.
Mr Walker: I think there are eight. I
am a trade unionist, funnily enough as a Tory MP. There are not
many of us, but I think if you are going to do a job, you should
be paid for doing the job. This is not a go at government, I just
feel uncomfortable at the idea that we have people working very
hard, because I know you do work very hard as ministers, and I
am sure they work just as hard as their paid colleagues, and that
they do not receive a salary for that.
Q309 Chairman: There we are.
Charles will make representations on their behalf. Any more Cabinet
Office questions before we move on to the commissioning area?
If not, let us move to the territory that we asked you to come
and talk about. Can I ask one question to get us going. As we
have been taking evidence in this inquiry, it has been difficult
to match the rhetoric in this area, people saying rather high-falutin
things about the role of the third sector with the reality is
it is developing, and in particular, I think, the question of
just what does the Government see is the role of the third sector
as it develops has been quite difficult to tease out. We have
been reminded that, in fact, its contribution in terms of public
spending, I think it is something like 2 % of public spending,
is really very, very small and so I think one question that presented
itself is: what would the Government like it to be? Given its
rhetoric, given all the documents that are produced, the speeches
that are made, it has targets in every other area, what is its
target for the amount of public provision that should come through
the third sector?
Ed Miliband: The way I would answer
that, Chairman, is to say I think it is right not to set a target.
Let me explain why. As you say, currently 2 % of public spending
or so goes on the third sector. We have identified in the action
plan, which I know you have seen, five areas where we think the
third sector can make more of a contribution and play more of
a role, but I suppose what I have learnt during this process of,
first of all, being Minister for the Third Sector and now as Minister
for the Cabinet Office is that the key to this is what happens
on the ground. It is local commissioners and the decisions that
they make. Do they recognise the contribution and the role that
the third sector can make, how do they shape services, either
locally or regionally and what involvement does that mean for
the third sector? So to set a top-down target for this, I do not
think would be sufficiently responsive to local circumstances.
The other thing I would say (and Phil may want to add something
on this) is that it is really important, and I have tried to do
this throughout the time I have been associated with this area,
to be realistic and credible about expectations and how quickly
this is going to be moved. I have said before, I think, that the
amount of third sector delivery will increase, but I think it
needs to be appropriate to third sector organisations being ready
to do that, wanting to do that, and, as I say, being appropriate
to local circumstance and local needs. I think to set a top-down
target from government would not be the right way to go.
Phil Hope: I want to make a general
point, which is that the third sector exists outside, as it were,
of public sector funding as well as receiving public sector funding.
I suppose there is a profound point to make about the third sector
in this country, which is that it plays an absolutely essential
role. It makes an enormous contribution to British society, whether
it is small front-line community groups, the volunteers, the local
people in their communities that we all know and see and represent
us as Members of Parliament, or large national voluntary organisations
and everybody in between. I just want to make that broad point
first. Secondly, when it come down to specifically the contribution
it makes in terms of improving public services or delivering public
services, for me it is about outcomes, not about a target in a
particular proportion of one sector or another. It is about where
the third sector at a local level can play a part in achieving
better outcomes for individuals and their families in local communities.
There are five areas that we talk about. Correctional services,
children's services, employment and skills, training, health and
social care are areas where we know—where there is a need
for personal contact, particularly where people need individualised
and personalised services—that third sector organisations
have got a proven track record. I have been seeing them as I have
been in this job in the past five months and, indeed, in my previous
career in the third sector meeting voluntary organisations, community
groups, charities, social enterprises, who make an important impact
on people's lives, and we should rightly encourage them to play
a bigger part in doing so through public funding.
Q310 Chairman: I think the
difficulty comes though when the Government says, as it does repeatedly,
that it wants the third sector to play a larger role in public
service design and delivery. I think people are entitled to say:
how much larger a role? The Government is putting in a good deal
of money to stimulate the sector and yet, as it were, we do not
seem to have a pay-off. I just wonder whether you could help us
to be more precise about the scale of what we are talking about.
Ed Miliband: Apart from having
a target (and I have tried to explain why I do not think a target
would be appropriate) and apart from suggesting some areas where
we think the third sector has a particular expertise and contribution
to make, I am not quite sure how else we can quantify this. Maybe
you would like a percentage, but I think it is quite hard to predict.
As I say, I do think it should be appropriate to local circumstances.
Q311 Mr Prentice: Can you
not just give us a sense of what you have in mind? I am not inviting
you to give percentage figures, but clearly the involvement of
the third sector is too small at the moment and helping to deliver
public services has got to be increased. Should it be vastly increased,
increased a little bit or what? Just give us a sense.
Phil Hope: Let me give you an
example. Maybe that will help. One of the first things that I
did was to visit Wandsworth Prison, where I met the St Giles Trust,
a third sector organisation, which started working in one organisation,
in one prison, where it was training long-term inmates to act
as counsellors and advisers to new inmates coming into the prison.
Thereby those inmates were gaining skills in information, advice
and guidance, they were giving it out to people who were coming
into prison who were scared and whatever, and, when they left
that prison, the St Giles Trust was employing some of those ex-offenders
as employees providing information and guidance in the prison.
I mention that as one particular example because that is now working
in 20 prisons, and it is working in 20 prisons because it has
taken a model of working which has proved to be really successful
in reducing re-offending and is winning contracts to provide that
service and would like to go further; but to go further it needs
to win contracts, it needs to demonstrate the outcomes it is achieving
and the contribution it can make through this specialised mentoring
and training system. That is not to say that we would expect,
or somehow fix the system, that a certain proportion of spend
would be by that particular organisation; they would work through
the commissioning process to win contracts to deliver the outcomes
that they are so good at delivering.
Q312 Mr Prentice: I understand
that. I do not know how many prisons we have got in the country.
It is 143. This initiative features in 20 of them, but I still
do not have a sense of whether this is something that is going
to occur in the margins or whether it is going to be absolutely
central?
Ed Miliband: What I would say
is that I think there is significant potential—we have identified
it in specific areas—but I do think it has to be shaped
by experience on the ground. If I came before you today and said
I think half the prisons or a quarter of the prisons should have
third sector providers in them, I cannot make that judgment sitting
here, and I think you would rightly criticise me if I did, because
it has got to be a judgment shaped by commissioners who genuinely
say: "Who can better provide these services?" I think
it is really important—because there are lots of people
who are working in the public sector who are doing an excellent
job—that we do not come to this with preconceptions which
say, "This will only work if we say wholesale, we are taking
it away from you and we are giving it to you." I think we
should be open to using the skills of the third sector, but I
do not think we should come to this with prejudgments about who
is better and who is worse at a general level, and that is why
I cannot give you the sort of answer you are looking for.
Q313 Mr Prentice: To what
extent is it open to you to actually grow the third sector? We
have got a briefing in front of us here from the Office of Government
Commerce on the impact of EU procurement rules, and it says here,
"Can the invitation to tender only be issued to third sector
organisations?"[1]
Answer, "No." "Can commissioners specify that they
only want to use a third sector organisation?" Answer, "No."
"Can commissioners choose only to approach one particular
provider under most circumstances?" "No." I just
wonder what instruments you have to grow the third sector where
there are these constraints?
Phil Hope: There are two halves
to that question, two halves to the answer. One is supporting
third sector organisations to gain the capacity to bid for contracts,
so we have both Capacitybuilders as a funding stream and Futurebuilders
as a stream of loans and grants specifically targeted at helping
third sector organisations develop the capacity to bid for and
succeed in a level playing field of commissioning. On the other
side, we are instituting a national programme of training for
commissioners in various parts of the public sector—local
government, the Health Service and others—where we will
be training those commissioners to understand the added value
and the contribution that third sector organisations can make
and to enable those third sector organisations to take part in,
and to enter bids for, public sector contracts. So, both on the
commissioning side those people making those decisions, training
them to recognise the added value that the third sector can contribute
when and if it can, and on the supply side building the capacity
of the third sector at regional, national and local levels to
make those bids and tender for those contracts.
Ed Miliband: You raise a really
interesting point. I think that when you are commissioning services
(and I know this concept of competitive neutrality has been discussed
by your Committee in previous evidence sessions), there does need
to be a level playing field, but I think what is interesting and
what the third sector and some third sector representatives would
say is: "Look, our contribution to public services is not
adequately taken into account by a narrow value for money efficiency
frame", and that is where the concept of social clauses comes
in. Social clauses are about saying, "We make the value for
money and efficiency tests but we can also look at wider benefits
that there might be to the community." To take an example,
if you are an organisation engaged in furniture recycling but
you are also employing local people, or employing people with
learning disabilities, a narrow contract would not take that into
account, but a contract (and this is allowed under EU procurement
rules) that took into account the wider social benefits would
take that into account. That is why, as part of our action plan,
we have been pioneering the use of social clauses. My view is
that a level playing field is needed, but, as I say, some third
sector organisations would say they do not have one at the moment,
partly because of capacity issues but also these wider benefit
issues.
Q314 Mr Prentice: Finally,
where does religion figure in all this: because in New Labour
we are all religious now. I got a letter, we would all have got
a letter, a few days ago from a colleague, Stephen Timms, who
is the Labour Party Vice Chair, appointed by Gordon Brown, "Faith".
Ten or 20 years ago I just would not have believed it was possible.
In New Labour we believe in faith, and I suppose my question is
to what extent are you prepared to contract with faith organisations?
I am not talking about mainstream Catholic, Church of England,
Rastas, Scientologists. Do you want to encourage more faith organisations
to deliver public services? I know Jim Murphy spoke about this
a few months ago, so it is in your thinking, I know that.
Ed Miliband: The way I would come
at this issue is to say it is not our job to question the reason,
the motivation that brings people to getting involved in the third
sector, but if a contract or a grant is to be used for proselytising
purposes, then in my view that is not right. Actually most mainstream
and sensible faith organisations like Faithworks take this view.
So, different people—you, Gordon, me, Phil and others—come
to the work we do for social justice for different reasons, but
those reasons should not impinge on the way a service is delivered.
If an organisation said, "You are only going to get our homeless
services as a way of us promoting our religion", I do not
personally think that would be the right way to go.
Q315 Mr Prentice: Presumably
there are guidelines then. The Salvation Army, or some other organisation,
would be told that, when you are delivering soup to homeless people,
then there is no proselytising; you just hand over the soup and
go?
Ed Miliband: The truth is it is
hard to be prescriptive about these things, but, as I say, most
people in the faith community accept that this is a fair way of
operating.
Q316 Mr Walker: Should the
third sector be favoured over business when it comes to delivering
public services?
Ed Miliband: No, in the sense
that, if you are commissioning services, I think it is fair to
have competitive neutrality, a level playing field, but, as I
say, I think these social clauses can play a role, and the capacity
building that Phil talked about can play a role, in adequately
capturing (which I think is a problem in relation to a lot of
commissioning) the contribution the third sector can make.
Phil Hope: I think the third sector,
during the consultation, which is reflected in why we have the
programmes we now have, said quite the reverse. In effect, they
feel at a competitive disadvantage to the private sector, who
can draw on sources of finance and loans and so on that they find
it difficult to draw upon, and so they feel they have not got
a level playing field, which is one of the reasons why we introduced
measures like Futurebuilders and other funding mechanisms, to
ensure that the third sector can have a building capacity to be
able to compete on that level playing field.
Q317 Mr Walker: How will you
reconcile the two? I am as guilty as the next person in thinking
that there is an inherent goodness about the third sector—nice
people who are there because they want to be there. The third
sector is not restrained by profit and all those sorts of ugly
things which are very important, but how, in empowering the third
sector to deliver major projects, can we ensure we retain the
essence of the third sector and not turn them into quasi hard-nosed
businesses always focusing on the bottom line, filling in the
forms, making sure they are ticking the boxes, getting the outcomes,
meeting the targets? How can we ensure that they remain people
focused, that they are not looking upwards towards you in Whitehall
who are providing the money? I think Turning Point gets 95 % of
its money from government, or local government, but they are still
looking towards the end user.
Phil Hope: Turning Point is a
very good example. You had Victor here before you giving evidence
and I went to visit two of their projects, one, Hartley House,
dealing with people who abuse drugs and alcohol and their sensitivity,
their passion, their belief in what they are doing, matched with,
I have to say, a very effective, highly competitive funding model
that wins them contracts and achieves real outcomes. I think outcomes
are the critical touchstone that we have to focus on here. If
that organisation is delivering outcomes and is doing so using
and marshalling the passion of its supporters, staff and volunteers
to help people to achieve changes in their lives, that is what
really matters. I also believe that in social enterprises (which
are not so much charities, they are profit-making but the profit
gets reinvested back into the community, back into environmental
projects they are working with, or back into their own organisation),
I see there (and this is what I saw on Social Enterprise Day)
the enthusiasm of people who do want to have that kind of business
ethic, if that is the right way to put it, but want to do so for
the public and community good. There were some excellent examples
of them delivering. I am thinking here of a project I visited
in Leeds called Helping Hands, where some people are delivering
support to older people with disabilities in their own homes that
would not be there otherwise and are doing so through a very robust
funding model where the resources go back into the organisation.
I think social enterprises are, in particular, a business model
for the twenty-first century that are paving the way quite excitingly
and I think many private sector organisations are beginning to
look at them and see the benefits that that brings.
Q318 Mr Walker: Do you think
these social enterprises could become a vehicle, in a very positive
sense, for businesses to project their corporate/social responsibility?
I know in my constituency of Broxbourne, instead of Barclays Bank
going on a jolly down the Thames, they get together with a local
organisation and do some good on an estate—they plant trees,
they clean the area up—and actually they find that their
employees get far more out of that, there is a far more tangible
result at the end, than just having some corporate jolly or some
boring conference. Do you see these social enterprises having
the wherewithal, with your guidance and tutorage, to actually
get in touch with business to bring more resource into that space?
Phil Hope: I think it is quite
interesting. I am a Labour Co-op MP, I have to say, and I do not
know if any members of the Committee are, but when the Co-op Bank
15 years ago declared its ethical banking policy most people thought
that was a crazy idea. Now the Co-op Bank is absolutely in the
forefront and it is seen as being the way to do business to demonstrate
ethical consumerism in terms of where people bank, that is why
people choose to bank with the Co-op. I think more people nowadays
are making choices to bank, or to buy services or goods or products,
based on the knowledge of that organisation having some sense
of corporate, social responsibility. I do want to distinguish,
though, between those that are profit-making businesses with an
importance that they attach to corporate, social responsibility,
including employee volunteering, which I think has got huge benefits
both for the community and, I have to say, back into the company
as well, and social enterprises which many want to see the benefits
of but specifically, although they are profit-making, the profit
does go back into the social good, or the community, or the environment
or back into the organisation itself. They are qualitatively different,
but I think the sort of the mood, the guise—would that be
the right thing to say, Chairman—of social enterprise, of
wanting to do something positive to the community, to the environment,
I think, is now growing and I think this is a very exciting moment
and a wave we should try to capture.
Mr Walker: The organisation I was citing
as a demonstration of social action is Groundworks. Of course
Groundworks needs funding to do all their wonderful projects,
and actually it was very clever of them to go to large corporations
and say, "Listen, we will give your staff a really good day
out, or really good week-end out. They are going to do a lot of
good work and you are also going to pay us to allow them to do
that good work", so in a sense it is a win-win. Groundworks
get additional funds to fund its other work in communities other
than mine, so I am very proud of it.
Q319 Jenny Willott: There
is a real push in the Government to get the third sector delivering
more public services, at least we have been told that is the case.
I want to unpick one particular example that was quite recent
and look at the elements in that. I am a glutton for punishment,
so as well as this select committee I am on the Work and Pensions
Select Committee, and on that committee we have done quite a lot
of work around Welfare to Work and getting people back into work,
particularly those on incapacity benefit. There has been a lot
of evidence that for quite a large number of people on incapacity
benefit, particularly those with mental health problems, the voluntary
sector does significantly better than the private sector at getting
them back into work and offering them the support they need to
stay in work. Very recently the Department for Work and Pensions
put out to tender the Pathways to Work schemes across the UK,
including the area that I represent in South Wales. Why did only
two out of the 16 contracts get awarded to the third sector?
Phil Hope: Yes, in this commissioning
process by the DWP, there were, as you say, two that were specifically
third sector organisations, and they were the Shaw Trust. I think
it was two out of 15 rather than out of 16. I think it was 17
in total that were contracted in that phase one. Interestingly,
subcontracts for those other 15 amounted to some 44 % of the providers
that will be delivering those contracts. So, although we were
concerned, I think you are right, that only two, as it were, third
sector organisations won the whole contract, in fact some 44 %,
some 164, third sector organisations were involved in delivering
as subcontractors to the main contractor who won the other 15.
ACEVO[2]
raised the concern about this, and Mavis McDonald, a former Home
Secretary in the Civil Service, was asked by ACEVO, and we have
been supporting her on the DWP, to look at that process to see
what actually happened that resulted in that outcome that I have
just described to see whether there might be lessons learned,
about how that process went forward, whether or not the third
sector were in any way disadvantaged through the design of the
market through the weighting given to various elements of the
bidding, and so on. That report is coming out, I think, in a few
days and will be very helpful to us, not just in DWP but in other
parts of government, when we are looking at the lessons to be
learnt from effective commissioning at that level. Phase two will
be published in December, and I am feeling optimistic that they
may have some better news for the third sector.
Ed Miliband: I think Phil is right
about this, but I think also we should say that there is a tension,
if you like, which we need to acknowledge here between the demands
of efficiency, which I am sure that this Committee, along with
other select committees, is keen to impress upon the Government,
and, therefore, the need for a smaller number of contracts with
the need for lots of the sort of small organisations that Charles
and perhaps you, Jenny, also have experience of to get involved.
The Mavis McDonald process is important to understand why phase
one went as it did, but I think there is a wider issue here about
the balance you have to strike between efficiency, the number
of contracts, and so on, and third sector organisations between
size and capability. The question is how many third sector organisations
have the scale to deliver in that way. For me the second part
to this, and Phil mentioned it, is the subcontracting part which
becomes incredibly important because if you have a number of large
organisations, some third sector, some private sector, delivering
these contracts, the question then is: what happens at the subcontracting
level? How much is the third sector involved? Again, it is part
of the learning process, and this partly explains why it is hard
to put a target on these things. We are learning all the time
as we embark upon this commissioning process, and this is an area
where, I think DWP would acknowledge, we need to learn lessons
as we go forward.
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