The Department for Business, Innovation and Skills: Helping over-indebted consumers - Public Accounts Committee Contents


Examination of Witnesses (Questions 1-68)

DEPARTMENT FOR BUSINESS, INNOVATION AND SKILLS AND HM TREASURY

15 MARCH 2010

  Q1 Chair: Good afternoon. Welcome to the Committee of Public Accounts where today we are considering the Comptroller and Auditor General's Report Helping over-indebted consumers. We welcome back to our Committee Simon Fraser, Permanent Secretary of the Department for Business, Innovation and Skills, and we welcome also Sue Lewis, who is Director of Savings and Investments at the Treasury. Mr Fraser, you have another colleague?

  Mr Fraser: Yes, Mr Ben Coates, who is the Deputy Director responsible for these issues in my Department.

  Q2  Chair: Thank you. Obviously, Mr Fraser, this is a very important subject for many people, particularly in times of recession. Who is in charge?

  Mr Fraser: In charge of the face-to-face—

  Q3  Chair: The public strategy. In Whitehall, who is in charge of all this?

  Mr Fraser: In charge of the strategy, a number of departments are involved in the strategy and have delivered programmes, I believe successfully in most cases. It is true that the Report identifies some shortcomings in co-ordination which I would accept and agree should be addressed.

  Q4  Chair: If we look at the Report at the summary on page seven, paragraph 13: "There is no clear accountability for achieving the overall objectives of the strategy and no programme management function to co-ordinate its delivery. The strategy is made up of 51 different projects and a number of funding streams, so effective oversight and co-ordination is essential ..." That rather begs the question, Mr Fraser, why is there not one person like you in charge? Why is there no single department, like your own, who we can hold to account?

  Mr Fraser: Chair, the strategy which was put together in 2004 is not a single programme, it pulls together a number of programmes within different departments, also local authorities and devolved administrations, to give an overview of the policies that are in place to address the issues relating to over-indebtedness. Some of those are, indeed, policies involving advice to people who are over-indebted. Mechanisms were put in place at the start to ensure co-ordination between departments. On a strategy of this complexity and breadth, I do not think it is possible to have one person conducting it as a single programme management project. I fully accept that the mechanisms which were put in place, as I have said, have not been adequately pursued over time and I think the Report does make some recommendations which certainly we are ready to consider. Whether a single programme management approach is an effective and feasible approach is something which I think we need to consider.

  Q5  Chair: Ms Lewis, I would have thought the first step if you are trying to co-ordinate things is to at least get together and meet, is it not? Would you like to look, please, at paragraph 3.25 on page 31 of the Report where we read: "The Ministers group did not meet ...", presumably that means did not meet at all, "... and the Officials group last met in March 2006 ...", and here we are in March 2010, "... although officials from the relevant Departments did attend the Advisory group, which last met in April 2008. No single department took responsibility for the programme ..." What is going on here? Ministers are not meeting at all, officials last meet in March 2006, is anybody trying to get a grip on this?

  Ms Lewis: Chair, yes, the Treasury takes overall lead for the financial inclusion fund and for the financial inclusion programme which funds parts of the over-indebtedness strategy and in particular the face-to-face project which the NAO looked at. The Treasury is accountable for that fund and for joining up policy on financial inclusion across Whitehall. We have a ministerial group chaired by the Exchequer Secretary to the Treasury containing other ministers from other departments with an interest, but that looks specifically at financial inclusion and not at over-indebtedness.

  Q6  Chair: Is there anybody else who can help me? Mr Fraser, can you help me as to why paragraph 3.24 says: "... there was no allocation of responsibility for achieving the aims of the strategy ... The Ministers group did not meet, and the Officials group last met in March 2006". Apparently the Treasury appears to be washing their hands of this, but what about you?

  Mr Fraser: Chair, I have already acknowledged that the co-ordination left something to be desired. That said, the Ministers group did actually meet once in correspondence, the Officials group did meet thereafter and, as you say, attended the Advisory group, but since 2008 that has not met.

  Q7  Chair: I am sorry, Mr Fraser, that leaves something to be desired. What does that mean? If they last met in 2005, what would that mean? I do not know what you are talking about. I would have thought it leaves a hell of a lot to be desired if you have a strategy and the ministers did not meet at all, except in correspondence, and the officials last met in 2006, and here we are in 2010. That is not leaving something to be desired, it is just plain wrong.

  Mr Fraser: Officials last met through the Advisory group in 2008. Officials are constantly in contact with each other. If I could just complete the answer. A number of other things have been done since the recession to focus co-ordination in this area. For example, the Consumer Finance Forum has been established, the Department for Communities and Local Government have conducted a number of cross-departmental meetings on the mortgage related aspects of the schemes, and through the National Economic Council there have been meetings of officials to address these issues. Whilst the mechanisms that were put in place in 2004 have—I readily acknowledge—not been properly implemented, other things have been done. The Citizens Advice Bureau, for example, in their comment I note say: "Despite the weakness that the NAO identifies in programme, leadership and governance, the Government has provided energetic, timely and joined-up responses to the recession in the past two years". I think there are things which have been done which have helped to address the weakness that has been identified.

  Q8  Chair: Let us try and evaluate the success of this, shall we? You are obviously responsible for evaluating the effectiveness of the strategy. You are implying or even saying that it has been successful. Why do we read in paragraph 3.34 on page 35 of the Report: "BIS reported back in 2005 stating that it would not be possible to evaluate the strategy as a whole ..." Is that right, can we not evaluate it? It says here: "... it would not be possible to evaluate the strategy as a whole because of the number of policy interventions, the influence of external variables and the complexity of the drivers of over-indebtedness ..." That is quite a good phrase which could really apply to the whole of government at any one time, I would have thought, but still, it is an interesting phrase, I am not sure it takes us much further though.

  Mr Fraser: Chair, I am responsible for the delivery of the BIS programmes within this strategy, including the face-to-face advice to over-indebted people. I am pleased that the NAO recognises the success and value for money of that programme which constitutes the majority of the coverage of this Report. As concerns co-ordination of the cross-government strategy, BIS is one of the three departments which undertook the secretariat function to co-ordinate that strategy. We have recognised already the weaknesses in co-ordination that have come about. As I said at the beginning, it is not possible for one department to evaluate a strategy across not only government but a number of other authorities and administrations with 51 constituent parts. Certainly in future, when we consider the future of our policy post-2011, which will be a new funding period, we should look at how we can focus policies in this area more effectively and ensure that they are properly monitored. I have already written to my permanent secretary colleagues most directly concerned to make that proposal and to propose to them that we should accept the criticisms that are made in the Report of the co-ordination so far.

  Q9  Chair: Mr Fraser, why has no annual report been produced on the strategy since 2007?

  Mr Fraser: The annual report was not produced in 2008, Chair. I will ask Mr Coates to comment on the specific reason for that. I will just add that since 2007 we have not had a single request for a report or complaint that the report was not produced. Perhaps Mr Coates could give the specific reason.

  Q10  Chair: I am sorry, I rather thought in government one does annual reports. Maybe I am being naive about this. I thought one met regularly with officials, if not ministers, one did annual reports, one evaluated strategies, but obviously this is not going on here.

  Mr Fraser: I acknowledge, Chair, that it would have been appropriate to—

  Q11  Chair: I agree it is only public money so why worry too much.

  Mr Fraser: Can I ask Mr Coates to come in here.

  Mr Coates: If I could just explain. The annual report in—

  Q12  Chair: Even my local cricket club has an annual report with a budget of £520 or something, but you do not think it is necessary do you, Mr Coates?

  Mr Coates: We did get quite a way down the line in producing an annual report, but at that point just as we were close to being ready to produce one we undertook a large number of developments in this area which led to the publication in July last year of the Consumer White Paper. The Consumer White Paper last year included two chapters which are very much an update, effectively, on the over-indebtedness strategy and the supporting economic narrative.

  Q13  Chair: Are you going to do one now? Are you going to do an annual report from now on?

  Mr Coates: We would certainly look to strengthen, as Mr Fraser has mentioned, the co-ordination of whatever strategy there is going forward. The problem with us there was it was such a moving feast that any annual report would have been out-of-date almost the moment we published it.

  Q14  Chair: Any witness can answer this: why do we read in paragraph 2.22 that the different service providers are spending massively different amounts per person helped? "In terms of total spend to date divided by number of clients seen, the costs of projects ranged from £201 to £377 per person". Why is that, as a matter of interest?

  Mr Fraser: Chair, this is on the BIS programme for face-to-face advice delivered through third sector providers. The first point to make is that the provision of this programme is proceeding effectively. It is above target on reach and below target on cost across the programme. Within the delivery of the programme, the NAO have identified different costs for different providers. There are a number of reasons for that, partly the location in which they are operating but also each provider was given an initial contract and some of them are operating in different circumstances from others and providing services which are more expensive to provide to certain parts of the community. There are a number of reasons why there are differential costs in the provision of the advice, which is certainly not to say that we should not seek to learn the lessons and share best practice which is something we are, indeed, trying to do.

  Q15  Chair: Ms Lewis, paragraph 3.12 is "Selecting channels for delivering advice". As I understand it, you ring-fence some money for face-to-face meetings but you do not let the Department use funds to give out telephone and internet-based advice. Obviously this is cheaper than face-to-face and people need to have a choice. Should you not be gearing your funding streams to departments to ensure that people get whatever is most appropriate, either internet-based advice, face-to-face, telephone or whatever?

  Ms Lewis: Yes, Chair. When the Treasury first gave money for the face-to-face project we had strong evidence that was where the real gap was and the most vulnerable people needed face-to-face advice. That was in 2004 when we gave £45 million from the fund to fund the project. I think it is still true to say that the most vulnerable will still require face-to-face advice, but I do also agree that we should look to be more flexible in the funding streams.

  Q16  Chair: Thank you. My last question to you, Ms Lewis, is the current funding for debt runs out in 2011. Are you going to go on funding this type of advice after 2011 or will we have to rely on the private sector to do it?

  Ms Lewis: I think that is going to depend on the next spending review, Chair. Certainly we will look at the evidence as part of the next spending review and make a decision as part of that review.

  Q17  Chair: Of course, Mr Fraser, that begs the question if we are going to rely on the private sector how are you going to ensure that it is of a decent standard? We do not want people to be delivered into the hands of loan sharks, do we?

  Mr Fraser: We should certainly examine the future of this programme and from my perspective it appears there is an ongoing requirement for the provision of free face-to-face and other advice to over-indebted people. I think that is an appropriate public policy initiative going forward, but clearly it will be subject to negotiation in the next round. I do also think that as the Report indicates we need to look at ways in which we can engage other providers in the future. We also do need to bear in mind that the motivation of many private sector providers is different, they are actually for profit operations and are probably addressing a different part of the market. Those people who are providing the advice on our behalf are targeting very often those who are in the most difficult circumstances with multiple financial difficulties and I do not think it would be appropriate for us to leave that function entirely to the private sector.

  Q18  Mr Bacon: Mr Fraser, in paragraph 1.9 on page 12 it says that the strategy has these 51 different initiatives and the NAO in analysing spending on the strategy's various different projects, sponsoring bodies and main funding stream, including those introduced more recently, found they totalled some £600 million for the period 2004 to 2011. The face-to-face that is listed above there in figure three on that page and the National Debtline are really your responsibility, together with the money that you get ring-fenced from the Treasury, the £143 million, or £146 million if you include the Ministry of Justice, but that is less than one-quarter of the expenditure in this area. It is less than one-quarter of the £600 million. Am I to understand that the 51 initiatives listed at the back in appendix two on page 38, and they are very neatly listed there one through 51, which are the responsibilities of various different sponsoring bodies and departments, each have a sum of money attached to them and if you added them all up you would get to £600 million or thereabouts?

  Mr Fraser: The figure, as I understand it, is a totalling up of the programmes run by the different departments. For example, there are programmes run by Communities and Local Government relating to mortgage rescue schemes, the Department for Work and Pensions has a growth fund which is active in this area and the Ministry of Justice has programmes as well. The total adds up to this figure of 600. Each of those programmes is run and monitored within the department concerned just in the way that we monitor the programmes and supervise the programmes in BIS.

  Q19  Mr Bacon: But they are all part of the strategy referred to in 1.8, "... the government's strategy for Tackling Over-indebtedness, which was published in 2004 jointly by BIS and DWP". That is right, is it not?

  Mr Fraser: They are, indeed, brigaded into what is called the strategy that was published in 2004 which is, in fact, the pulling together of the activities of different departments, administrations and authorities in this area.

  Q20  Mr Bacon: "Brigaded" is a term of art that I do not usually find outside the Army. I have heard it once or twice and it was always from permanent secretaries. While we are on the subject of jargon, the Ministers group "met in correspondence". Is that really something you say internally or just something you say for Committees like this? What is a meeting in correspondence? It sounds like a contradiction in terms to me.

  Mr Fraser: What it means, Mr Bacon, is I am informed that because of diary clashes it was not possible to get ministers to meet in a room—

  Q21  Mr Bacon: So they email each other?

  Mr Fraser: —so there was an exchange of letters from the different departments.

  Q22  Mr Bacon: Why do you call it a meeting? Why do you say afterwards they met? Why do you use the verb "met"?

  Mr Fraser: I apologise if I used an inappropriate verb.

  Q23  Mr Bacon: Presumably it is a term of art, is it not?

  Mr Fraser: This group of ministers were in contact to discuss this issue, if I can use the word "discuss", by correspondence. They corresponded on it.

  Q24  Mr Bacon: You said when you repeated it, and I wrote it down, "As I said earlier, it is not possible for one person to evaluate it", but actually what you said the first time was, "For a project of this complexity it is not possible to have one person in charge". Why not?

  Mr Fraser: Because these programmes—and it is not a single programme, there are a number of programmes—fall within the responsibility of different departments, therefore different accounting officers and different ministerial authority and, therefore, what we are doing is seeking to co-ordinate cross-government activity in this area.

  Q25  Mr Bacon: To say it is not possible to have one person in charge, the Olympics has got one person in charge of the building programme. It has got a thousand contractors, lots of subcontractors, they are building something twice the size of Terminal 5 in half the time to an immovable deadline on a contaminated site and there is one person in charge, we know who it is and we see him on this Committee. Complexity is not a reason, is it? The accountability lines might be a reason, but you could do something about that as well, could you not, put one department in overall charge and call one of the people the accounting officer for that? This is talked about by the Cabinet Office, is it not, co-ordinating cross-departmental budgets with cross-departmental ministers in a way that currently does not exist?

  Mr Fraser: I think both complexity and accountability are issues in this case given the breadth of these programmes. It would certainly be theoretically possible to draw these budgets together and put one person in charge of them. It would not have been possible in the structure of the departmental responsibilities that were in place when the strategy was put in place. I certainly think that it is possible for us to identify a clearer senior responsible officer or group of senior responsible officers who have that shared accountability perhaps or lead responsibility for the programmes.

  Q26  Mr Bacon: So you agree with the recommendation on page nine: "a clear allocation of responsibility for achievement of the aims of the strategy, for example, by the designation of a senior responsible owner for the strategy"? That was singular. You would agree that is possible?

  Mr Fraser: That is certainly something I would agree that we should consider. I am not clear that it is the best approach, to be honest with you.

  Q27  Mr Bacon: I do not want to lose sight of the fact that a lot of the work that is going on is terrific and certainly in the Citizens Advice Bureau I have seen in my own constituency the work they do on debt advice, and they have retired building society and bank managers who are helping, is probably extremely worthwhile and very good value for money as well because there are a lot of volunteers and so on and so forth, there is no dispute about that. The stuff that you are doing on the face-to-face is less than a quarter of the expenditure in this area and without having anybody in overall charge, on page 31 at paragraph 3.25 it talks about the fact that the Ministers group did not meet and the Officials group last met in March 2006. I have to say, that does not make it sound like it was a high priority or something really urgent otherwise presumably you would not have gone three years without a meeting even of officials. Also, no single department took responsibility and no shared programme management function was established. This is the sentence that interests me, and it should interest you as an accounting officer: "There is therefore an inadequate control environmental to manage the risks of poor value for money, for example, ensuring that the programme responds to changing economic circumstances, or the growth in private sector provision". You have to sign a statement of internal control, as do your fellow accounting officers, and if between you in signing your SICs you do not collectively have a tight grasp or overview then you face a risk of inadequate control, do you not?

  Mr Fraser: As I have already said, Mr Bacon, we recognise that the co-ordination could have been more effective. However, there is no evidence in this Report that because there were shortcomings in the co-ordination there is any lack of value for money in the delivery of the different programmes. That is not evidenced in this Report. Indeed, in my own case, in the programme that is under consideration in this Report the conclusion is that good value for money was achieved. As an accounting officer, in my own case I feel fairly comfortable and I am grateful for the conclusion the Report has reached. I agree that it is desirable for those accounting officers responsible and, indeed, ministers, to meet and co-ordinate a cross-government approach of this sort, and I accept that recommendation from the Report.

  Q28  Mr Bacon: You say there is no evidence, but if you had been closer to the users you might have known, as the NAO found out, that quite a few of them would have preferred—I think the figure was 25%—a telephone interview, which of course is cheaper. Ms Lewis may want to answer this. Even though you did achieve reasonable value for money, you might have achieved better value for money and got more out of the same pot if more of them had been done by telephone and if you had identified earlier that more of them could have, if you had known more about the preferences of the people using the service, you would have squeezed more out of the same lemon, would you not?

  Ms Lewis: Both BIS and ourselves were slightly puzzled by that finding and we would like to delve into it in a bit more depth. If I might digress slightly, we have just finished a Pathfinder on money guidance which is the new service the Chancellor announced last week, and in that Pathfinder we have found that people did not like using the telephone very much, they liked face-to-face, they liked the internet. In the light of that recent evidence this finding, as I say, is quite puzzling to us and we would like to find out a little bit more about what underlies it.

  Mr Shapcott: I think we would endorse the view that the internet advice is something that people like. One of the difficulties in this area is that is a very personal and delicate area for people and some people do find it difficult in the face-to-face and prefer less direct methods of communication.

  Q29  Mr Bacon: In light of that, on page 29 it talks about understanding consumer needs and one of the things it says in paragraph 3.16 is that BIS does not currently include profiling of the behaviours, attitudes and preferences of its consumers in the project. Are you planning to change that?

  Ms Lewis: If I might say, Mr Bacon, we have conflicting evidence on the use of the telephone and the preference. The best thing I can say at the moment is we should do further research on this.

  Q30  Mr Bacon: You have got that planned, have you?

  Mr Fraser: We are certainly discussing the appropriate format of future provision of advice after 2011 and this will be one of those issues for discussion because clearly we want to provide the best advice as economically and efficiently as possible and, therefore, being clear about who benefits most from which form of advice is a part of that.

  Q31  Mr Bacon: Whichever government wins the forthcoming General Election, realistically, at the end of next year or when we get into the new Spending Round it is unlikely there will be more money available for this.

  Mr Fraser: Therefore it is important that we achieve the most effective and efficient delivery possible. I agree with that.

  Q32  Mr Bacon: Finally, is it possible to get some sort of summary of the £600 million that is referred to on page 12, in other words, what it is comprised of? You mentioned I think earlier the help with avoiding repossessions on mortgages, which is presumably one component of it, but could we have a chart sent to the Committee perhaps?

  Mr Morse: Can I offer to furnish our chart to the Department and, if you find it accurate, it can be sent on, if that is helpful.

  Q33  Nigel Griffiths: I see that 270,000 people were helped at a cost of approximately £311 per person, which makes a total of £83.97 million. That is £59 million short of the £143 million total. What was the rest of the money spent on?

  Mr Fraser: That was not the whole programme, Mr Griffiths, because the target was to reach, I think, 400,000 so that is work in progress. Perhaps Mr Coates could give more detail.

  Mr Coates: Mr Griffiths, could you point to the particular numbers?

  Q34  Nigel Griffiths: I cannot. That part is in my general briefing. I am not sure if the Comptroller can home in on it.

  Mr Shapcott: The position briefly is that they have spent £84 million so far. The £130 million is what the projected spend is at the end of the programme period. Is figure 7 what you are talking about?

  Q35  Nigel Griffiths: £143 million all together, I think, from the Report.

  Mr Fraser: That includes the National Debtline.

  Q36  Nigel Griffiths: That is the figure so far. Is the £16 million—that is page 27, 3.11—to research loan sharks a separate sum from the £143 million or the £130 million?

  Mr Coates: That is an entirely separate sum of money being spent on illegal loan sharks.

  Mr Fraser: From within the BIS programme.

  Mr Coates: It is part of the £600 million number and not part of the debt advice number.

  Q37  Nigel Griffiths: Has it been value for money?

  Mr Coates: That programme is currently being evaluated.

  Q38  Nigel Griffiths: Will part of that evaluation look at the cost, as the Report says on page 27, of securing only 100 prosecutions, which would be at a cost of £160,000 per prosecution of a loan shark?

  Mr Fraser: In fact, Mr Griffiths, the latest figures we have are that 900 so-called loan sharks have been identified, 150 have been prosecuted, 10,000 people have been helped by this programme and about £30 million worth of the illegal debt has been written off, so I think there would appear to be value for money coming through this programme, quite clearly, but I think it needs to be evaluated. As a Department, we consider it to be a successful programme.

  Q39  Nigel Griffiths: Let me come to those figures, because 600 were identified by the time the Report was written and for the £16 million that was £26,000. However, prosecution did not occur for 500 of them. What you are now saying is that it is 900, is it, and that 750 have not been prosecuted?

  Mr Fraser: We are saying 900 identified and 500 prosecuted at this point.

  Q40  Nigel Griffiths: I thought you said a moment ago 150 but I may have misheard you.

  Mr Coates: I am sorry. That was successful prosecutions.

  Mr Fraser: I apologise.

  Q41  Nigel Griffiths: It is 150?

  Mr Fraser: Yes.

  Q42  Nigel Griffiths: It does not jump out to me as being value for money, around about £100,000 per successful prosecution.

  Mr Fraser: Of £16.5 million spent on the programme, as I say, £30 million of debt has been written off, so people are benefiting from the programme. I do not know if one would cost it by prosecution. I would have to seek advice from the NAO as to how best to evaluate value for money in the programme.

  Q43  Nigel Griffiths: Paragraph 2.15 highlights the cuts in the service, and I am concerned to know what sort of forward planning and analysis was done as the UK joined the world going into recession, when there were not sufficient resources, and two key providers stopped taking on new clients. At a time of what was likely to be peak demand, how come the planning in BIS did not, with the Treasury, look at how to meet that demand and in fact the result has been a poorer service, in a non-existent service, in those two key areas?

  Mr Fraser: Of course, the recession has hit hard in this part of the economy as in others. In fact, in response to the recession a number of steps have been taken. First of all, £10 million was put into ensuring that Citizens' Advice Bureaux were open longer, had longer opening hours, to help deal with people applying for advice. Secondly, actually, there has been a 10% increase in the amount of advice offered within the existing budget, so there has been a productivity increase. We have increased by 50% the capacity of National Debtline, the telephone service, to respond to the increasing demand and we have introduced a new sort of self-help kit to try to filter out the less acute cases so that we can focus the advice on those most in need. That is one form of triage. In fact, if you look at figure 13 on page 23, a number of the new approaches to cope with increased demand are identified there. That is not to say that we have met all the demand. I acknowledge that the increase in demand, which I think is put at 28%, has led to increased pressure on the services.

  Q44  Nigel Griffiths: That would be reassuring if it has impacted on paragraph 2.15 on page 19. Has that ensured that the waiting periods have reduced? It says waiting times have increased here, a six-week waiting time, and two providers have closed. Has that done anything?

  Mr Fraser: Two providers have closed down their lists. Can I ask Mr Coates to give you the latest information we have on waiting times.

  Mr Coates: The reason you close a list is because from a best practice point of view people are finding that if they are making appointments eight to nine weeks out, then they get a lot who do not attend. It is more effective to close the list for a period, clear the backlog and then reopen the list. The sorts of waiting times we are getting: there are some projects with five-week waiting times but many now have two to three weeks' waiting time at the moment.

  Q45  Nigel Griffiths: I am a CAB-trained person; indeed, I opened a CAB in Wester Hailes before I came into Parliament but I am not sure it is adequate to say that because there are a lot of no-shows waiting lists have been closed because that penalises those who show up. My time is short. I want to move on to page 12, which Mr Bacon touched on. There are 51 different initiatives in this strategy. Which do you think has been the least effective? [1]

  Mr Fraser: I am not in a position to answer that, Mr Griffiths, because these are strategies which, as I said, are the responsibility of a wide range of departments, authorities and local administrations and I could not myself take a view on which is the least effective.

  Q46  Nigel Griffiths: Might I suggest that when you do produce the annual report, you might want to put that in and then you would have it at your finger tips.

  Mr Fraser: I certainly think it is something that we should consider in the co-ordination of the programmes going forward.

  Q47  Nigel Griffiths: Age is mentioned as being a factor, and young people are more likely to be in debt. Were they part of any of the target group initiatives? Which initiative covered them and has it been successful and, if so, is it being rolled out elsewhere?

  Mr Fraser: I can only speak about the provision of face-to-face advice on over-indebtedness in this Report, Mr Griffiths, and clearly, the risk categories that were identified are very useful. We have used the indicators in figure 19 in trying to target the people who we believe fall into the category of over-indebted and the advice has been targeted in that direction. I do not know if Mr Coates wants to add anything more on the age profile.

  Mr Coates: I could just add a little on the age profile of the project. We are seeing that about 22% of our clients are in the age group 25-34. The largest single demographic age group is actually 35-49 year olds, where we get something like 41% of our clients.

  Q48  Nigel Griffiths: How much extra was put in as a result of the recession and other factors?

  Mr Coates: In terms of the recession, we put an extra £5.85 million into the National Debtline. That answers something like 220,000 calls now instead of 150,000 previously. We invested £10 million for one year and are now putting an extra £5 million in Citizens' Advice to extend opening hours. That has allowed Citizens' Advice in the past year to reach over 300,000 clients, with about 800,000 problems actually being solved because people are presenting with more than just debt problems; with redundancy based problems or housing problems, during recession. We as a Department have put £500,000 into self-help, which is designed to get as many people as possible who can help themselves out of the advisers' offices as quickly as possible, freeing up the adviser time to support the vulnerable. Finally, we have also put in a small amount of extra money, £300,000, just to help debt advice agencies during a particularly busy time. That allowed them to extend working hours for part-timers, to bring back some people from maternity leave, that sort of thing. That helped an extra 1,200 clients.

  Q49  Nigel Griffiths: Mr Coates, summarising that, which is encouraging, how much extra is that if you roll those elements together?

  Mr Coates: If you roll all of that together, it is around £22 million.

  Q50  Nigel Griffiths: That is meant to cover the 28% that is listed in the Report in the extra clients now approaching the various agencies?

  Mr Coates: Yes, it is on top of the spending on an annual basis of around £30 million on the face-to-face project anyway and the £1 million a year that we were already putting into National Debtline.

  Q51  Mr Carswell: I just had one very general question. You might feel it is slightly too broad for the Report but it is just a general one. I would be grateful if you had any comments. Tackling indebtedness is obviously very important; it is vital that we do it, but do you not get a feeling that in a way, what we are dealing with—what you are dealing with—is the symptoms and however effectively you might be doing that, or however ineffectively critics might say you are doing that, do you not think we need perhaps to deal with the cause? Might it not be that for 40 or 50 years we have had successive governments that have allowed a monetary policy that in effect encourages consumption and spending over production and saving, and that public policy has in effect undermined thrift, and you are really just a band aid, however effective, on a far more serious wound?

  Mr Fraser: I do not think I can comment in this context on the rather wide-ranging policy issues.

  Q52  Mr Carswell: But you are a senior public official. You must have some view on it.

  Mr Fraser: Those are policy matters which are not principally the responsibility of my Department. What I can say is, of course, credit is a vital part of our economy. It is true that household debt has risen in recent years but also household wealth has risen so we need to look at the balance of these things. It is true also that the debt to income ratio has risen in recent years but also the housing stock value has risen and actually a very large proportion of debt is secured debt. Often what you find in the cases that we are dealing with here, the most difficult cases, are people with unsecured debts with very limited assets against those debts and we are trying, as you say—I would not say it is a band aid but you are seeking to, if you like, remedy the acute manifestation of over-indebtedness in that part of society.

  Q53  Chair: That concludes our hearing, Mr Fraser. I have to say that I am "underwhelmed" by your performance and that of your colleagues this afternoon. This is an extraordinarily important subject. The amount we owe on mortgages, credit and store cards stands at almost £1.5 trillion. We have got used in this Committee to talking about first millions, then billions and now £1.5 trillion. Consumer debt equates to some 160% of household gross annual income and averages out at around £56,000 for each and every household in the country. Now, a lot of good work, of course, is being done by dedicated people who you employ on the ground but your overall strategy, frankly, is a triumph of bureaucracy over practicality. You have a hugely complex system, over 50 different projects and initiatives, a number of funding streams, and we have seen that the co-ordination that we have investigated this afternoon is, frankly, hopeless. So what we want from you, Mr Fraser, when you next return to this Committee—and you may want to comment, because it is only fair that you should have the last word—is for you, because you are the accounting officer and you are in front of us here this afternoon, to commit yourself to putting somebody in charge of the strategy as soon as possible and having proper evaluation and control. Are you prepared to do that, Mr Fraser?

  Mr Fraser: Chair, I am very pleased that the NAO found that that part of this strategy for which I am responsible has been successful and has delivered good value for money, and that is a pleasing conclusion for my Department. I have recognised that, on the broader cross-government strategy, for which I am not the accounting officer but I am one of those involved, there have been some shortcomings in the co-ordination mechanisms that were put in place at the start. I have also pointed out however that there have been a number of other forms of co-ordination since which have led people to conclude that the Government has actually been effectively and actively engaging in this area. I am not in a position to make the commitment you asked for because I am not the official responsible for the whole strategy. I am however prepared to take that message back and, as I told you, I have already written to my Permanent Secretary colleagues concerned, suggesting that we review both the policy priorities going forward to ensure maximum efficiency and the co-ordination mechanisms between Departments.

  Chair: Mr Bacon wants to come back in.

  Q54  Mr Bacon: It is actually something you prompted me to question you on in your last answer when you said, "I am pleased to say the NAO found the bit that I am responsible for is going well." You reminded me of the Permanent Secretary for the Northern Ireland Department that the Committee saw when we went to Northern Ireland a few years ago. We were investigating a thing called the Navan Centre, which, if you can imagine something like an Iron Age earthworks combined with visitor number projections like the Dome, you get some idea of the sort of thing we were looking at. This Permanent Secretary said in answer to the first question, "I am very glad to say, Chairman, I am only responsible for 2% of this budget." Nonetheless, she was responsible for more than anybody else, which was why she was in front of us. You are responsible for £143 million together with the Treasury out of £600 million. I am glad you are talking to Permanent Secretary colleagues but what shouts at me out of this Report is that there is nobody in charge and one of the National Audit Office's clear recommendations is that there should be a—singular—senior responsible owner. Can you just tell us for the record if you agree with that?

  Mr Fraser: All I was doing, Mr Bacon, was quoting back the first sentence of paragraph 15 of the Report.

  Q55  Mr Bacon: Yes, and I am quoting to you page 9, third bullet point under (c), and what I would like to know is do you agree, as the senior official representative of BIS, with the National Audit Office Report, which said that there should be—I think this is an agreed Report, is it not?

  Mr Fraser: Yes.

  Q56  Mr Bacon: Do you agree with the sentence that there should be a senior responsible owner for the strategy?

  Mr Fraser: I agree that there should be a clear allocation of responsibility for achievement of the aims of the strategy and the NAO suggest, for example, that that might be done by the designation of a senior responsible owner for the strategy.

  Q57  Mr Bacon: Yes, I can read too. I can see that it says "for example"; what I am asking is, do you agree with that?

  Mr Fraser: I agree that we should consider that. I have pointed out some of the complications relating to diverse responsibilities between Departments so it is certainly something that we should consider.

  Q58  Mr Bacon: I would like to ask the Treasury, because you, after all, are responsible for the ring-fenced portion of the money that is going in effect via BIS but in this Report it is listed as Treasury money on page 12. It actually says HM Treasury £129 million and BIS £13.8 million. That is because it is ring-fenced, I take it, but the point is, Ms Lewis, you are also responsible as Treasury for the other £454 million, the other 78% or whatever it is that is not covered specifically by this Report but is mentioned in the £600 million figure at the bottom of page 12. You are responsible for all of that, so what is the Treasury going to do to make sure there is somebody in charge?

  Ms Lewis: Mr Bacon, other Departments are responsible or accountable for the various elements of it. So, for example, the Growth Fund comes under the Department for Work and Pensions, et cetera. In the widest sense, yes, the Treasury is responsible—

  Q59  Mr Bacon: You are responsible in two ways: you get the money in from taxpayers and then you dish it out to the other Departments. My point really comes back to what Mr Griffiths was saying when he asked Mr Fraser about this list of the 51 things. After all, these 51 things were in the strategy that was launched jointly by BIS and DWP in 2004. When Mr Griffiths asked Mr Fraser, "Of these 51 things, which is the least effective?" Mr Fraser could not answer; he said he is not in a position to because he is not in charge of all of it. Surely, this is the problem, that there is nobody in charge, and there needs to be. You would probably get more out of it if there were, and you are entering an economic climate where you are going to need to get more out of it because there is going to be less money to go round. Once again, going back to the recommendation of the NAO on page 9, do you agree, as the Treasury, that their suggestion that there should be a designation of a senior responsible owner for the strategy is something that should be put in place? Yes or no?

  Ms Lewis: I think I would say not this collection of projects which is shown in figure 18 because I do not think that is the strategy; I think that is a collection of projects.

  Q60  Mr Bacon: Is it not?

  Ms Lewis: For example, some of these were not in the original 2004 plan, for example, Save Christmas, which came along later on. So I think there is a set of projects for which there should be a senior responsible owner. I am just not convinced that this is the set of projects, and I think we should indeed, as my colleague Mr Fraser has said, and I agreed earlier, look at the governance of a set of projects which contributes to over-indebtedness but I am not quite sure this is the exact set.

  Q61  Mr Bacon: It just seems to me that the money gets spent quite easily and the governance and the control mechanisms seem to come later, if at all, and that, in the climate we are entering, is probably the wrong way round.

  Ms Lewis: I think within each individual Department the responsibility, accountability and control, as Mr Fraser said earlier, is right. I think your question is, is there something sitting over the top of this, and the answer to that question is no, there is not.

  Q62  Mr Bacon: Mr Fraser, of the ones that you are responsible for, which is the least effective?

  Mr Fraser: Can I add a comment to your last question, Mr Bacon, and then answer that, because I think there is a second part to the recommendation, which is the establishment of a board of senior officials from Departments to co-ordinate its delivery, and I think that is something we should definitely be pursuing in a much more effective, tight-knit way than has been the case.

  Q63  Mr Bacon: But there is going to have to be in effect somebody in charge of that board, making sure it meets, making sure that the action points from it are driven forward and that might mean chasing around people in several different Departments, might it not?

  Mr Fraser: That could certainly be one individual.

  Q64  Mr Bacon: And that person would in effect be the senior responsible owner for the whole lot, would they not?

  Mr Fraser: They would be in charge of ensuring the co-ordination worked.

  Q65  Mr Bacon: What about my other question? Of the ones for which you are responsible, which is the least effective?

  Mr Fraser: I do not have the list of which ones I am responsible for immediately before me. I cannot answer that immediately.

  Q66  Mr Bacon: Even the ones that you are responsible for? I think that illustrates the scale of the challenge that we face.

  Mr Fraser: Well, no, to be fair, I have been focusing very much—

  Q67  Mr Bacon: You can write to us with that.[2]

  Mr Fraser: —on the Report in front of us, Mr Bacon, which was on one particular thing.

  Chair: If you write, it has to be very quick, because we have to publish this Report in 10 days, so you have to write to us within three or four days, if you are going to write to us at all.

  Q68  Mr Bacon: With respect, I do think that illustrates the scale of the problem. I thought Mr Griffiths put his finger very firmly on it, and you gave a fair answer, which is that you are only accounting officer for some of them, not for all of them, but even those for which you are accounting officer it is not easily possible to say which is the least effective when it probably should be when you have to account for how the money is spent.

  Mr Fraser: These are very different programmes, a lot of them addressing very different things, so whether they are directly comparable is one question. I have been focusing very much on the Report before the Committee and I would need to consider your question on a much broader basis but I am not sure whether the evidence, properly validated evidence, is available to answer that question at this present time.

  Mr Bacon: You are getting better at this, Mr Fraser. You are sounding more and more like Sir Humphrey Appleby each time you come before us!

  Chair: And less and less like the diplomat that you would much rather be. I think Mr Griffiths is emboldened to have another question. So although I said it is the end of the session, it is like the encores at an opera.

  Nigel Griffiths: I did want to say, Mr Chairman, that I thought that your summary was a little harsh. I think at a time when unemployment shot up, indebtedness shot up as well, it is really a tribute to the work that has been done by BIS and colleagues in this strategy that repossessions did not go through the roof, if that is not an inappropriate metaphor, and that indebtedness has not resulted in considerably more misery than it has. It is clear that the National Audit Office feel that good value for money is being delivered but also there are the shortfalls that both you and Mr Bacon have highlighted. If I might say, in terms of the presentation of evidence in my 12 years on and off this Committee, if the witnesses were to look at our last session, when Mr Paul Hayes, Chief Executive of the National Treatment Agency for Substance Misuse, came before us and gave evidence to us, his testimony was among the most impressive that I have heard and I think worth every civil servant studying as a model of clarity and mastery of the brief. Perhaps—I know this is a complex issue too—studying that might help a future appearance before this Committee.

  Chair: Put it in a video in the Civil Service College! Thank you very much. Thank you, lady and gentlemen.





1   Ev 14 Back

2   Ev 14 Back


 
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