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 haveI readily acknowledgenot 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 programmesand
it is not a single programme, there are a number of programmesfall
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
preferredI 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 millionthat is page 27,
3.11to 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 withwhat you are dealing
withis 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 sayI 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
Committeeand you may want to comment, because it is only
fair that you should have the last wordis 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 asingularsenior 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 beI 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. PerhapsI know this
is a complex issue toostudying 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.
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