The role of the Probation Service - Justice Committee Contents

Examination of Witnesses (Question Numbers 592-646)

Jane Coyle, Roger Hill and Peter Neden

7 June 2011

Q592 Chair: Welcome, Mr Neden, Mr Hill and Ms Coyle. Mr Neden, you are from what I still think of as Group 4 Securicor—G4S, I believe it is now.

Peter Neden: I think that is right, yes.

Q593 Chair: Mr Hill from Sodexo and Ms Coyle from Blue Bay Support Services.

Jane Coyle: That is correct.

Chair: We are very glad to have you with us. I am going to invite Elizabeth Truss to open the questioning.

Q594 Elizabeth Truss: Thank you. I want to start off by talking about the creation of NOMS and the governance arrangements of probation. If you look internationally, there seems to be much more integration of the Prison and Probation Service. Although nominally we have NOMS, underneath that you still have the structures of Prison and Probation. Do you think that adds to cost in the system and also does it make it hard to provide integrated delivery?

Roger Hill: Would you like me to start?

Elizabeth Truss: Yes.

Roger Hill: You will know from my work history that I have gone through every iteration of NOMS. I would say that the current iteration is quite effective in terms of providing governance for the whole system. As I see it, essentially the NOMS agency is a commissioning body that sits above a range of providers. There are 35 probation trusts in there, each of which is an independent provider. There are some private sector prisons, some public sector prisons and other providers providing other services. I think that has the potential to be both cost­effective and effective in terms of improving services.

Q595 Elizabeth Truss: Can I just ask the others specifically on this division between the Probation and Prison Services, and we have heard in previous evidence sessions that there is a different culture within those organisations? We have just heard in fact from the Local Government Association that the way the prisons work is not necessarily integrated with probation at a local level.

Jane Coyle: We are a very niche company. Our experience is going to be limited. However, the experience that we have found is that we don't feel there is the same sort of will to diversify the market in the Probation Service as there is in the Prison Service. There was a formal tendering­out process, for example, at HMP Birmingham. That doesn't seem to be happening in the Probation Service. That may hinder things. It is certainly hindering things for a small company who is trying to offer services to prisons or probation services. We have been offering services in the prisons. We have been offering pre­sentence reports; we have been offering SARN reports.

Chair: Would you speak up, please, because the acoustics are not very good in here?

Jane Coyle: I am sorry. Yes, we have been offering all different types of reports to the prisons and probation services. They have been taken up on an ad hoc basis, but when we have tried to offer more formal contracted work to the prisons, they seem to have been quite reluctant to use services other than probation trusts. They haven't wanted, in our experience, to think out of the box and use any other providers. We feel that the probation trusts as providers in the prisons have been effectively protected and that has made it difficult for small businesses.

Q596 Elizabeth Truss: Mr Neden, do you find that to be true and do you think there is a conflict of interest between the provider and commission role that the probation trusts have?

Peter Neden: Perhaps I can answer that question in a slightly different way. The creation of NOMS goes back to 2003 and the idea was to bring the Probation and Prison Services together. Since that time, we have had two separate organisations that have very different structures. The Prison Service is a very centralised structure, whereas probation services are in over 40 different structures. We think inevitably that leads to additional cost and it must be very difficult to manage that as an organisation. In terms of Roger's observation, I think in the last couple of years we have started to see more coherence, but that has been a very long time coming, in our view. In terms of the conflict of interest, there does need to be greater clarity between the commissioner and the provider, and, at the moment, with probation trusts as commissioners and providers, I do not think we are there yet.

Q597 Elizabeth Truss: Having regard to the way we were talking about it in the previous session with offenders being given sentences, do you think there is a continuum, or there should be a continuum, between various types of sentences: the custodial and non­custodial community sentences? Do you feel that continuum gets broken by the different cultures?

Peter Neden: I think it can do. I think inevitably it is more difficult.

Q598 Elizabeth Truss: How would you see it working in the best-case scenario? Are there examples that you can point to where the Prison Service has integrated with Probation and works effectively at providing a sort of end­to­end offender management solution?

Roger Hill: I think I agree with the premise you have just put forward and that integration does boil down to how you commission services and not to the organisational state of the different providers. The logic of your question really is that you then commission around either a locality or a group of offenders. My colleagues may correct me, but I am not aware of any particularly strong examples of that. There are some ad hoc examples. For example, the Social Impact Bond at Peterborough Prison is one option, and I am sure we will talk more about that this morning. In my previous role as director of offender management for the south-east, certainly an initiative around integrated offender management, which was the under 12-month prisoner group exclusively, getting the Prison and the Probation Service to work together, was a significant task for me, but I do not think that has been done to scale and I think it is an opportunity missed.

Q599 Elizabeth Truss: You have just talked about UK experiences. Are there any experiences elsewhere of commissioning both prison services and probation services together?

Jane Coyle: I am not aware of any, no.

Peter Neden: Not that we are directly involved in.

Q600 Chair: It is our job to find out, so we will.

Roger Hill: I think there are, but I don't know of them.

Elizabeth Truss: I think there are as well, but it would be good to have more detail on that.

Q601 Chair: I think, Blue Bay, you said in your submission that there are "structural barriers" in place within the criminal justice sector "that actually prohibit the promotion of cost­effectiveness" and that the sector is "institutionally anti­competitive".

Jane Coyle: We did say that, yes. Our experiences are mainly anecdotal because we are working from the bottom up and so they are the experiences that we have found. Over a period of five years we have been constantly knocking on the doors of probation services and probation trusts. We have written to NOMS. NOMS told us to write to DOMs. DOMs told us to write to the trusts. We wrote to the trusts and this is annually, I hasten to add—we have done this every year—and our experience has been that the trust hasn't generally got back to us. Why this is I don't know, but we can only surmise that there is a form of protectionism within the trusts and they don't want other services to do this kind of work. It makes me wonder what their incentives are for others to do this kind of work. Why do they need to bother to get other people to do the work? I don't know. All we know is that there has been an awful lot of rhetoric. We have heard what people have said. It's great for small businesses like us, but in practical terms this has not really come to fruition. So we do feel that we have sort of reached a glass ceiling when it comes to probation trusts.

Q602 Chair: Is that a picture which anybody else finds?

Peter Neden: I think we would say progress has been disappointing since 2004 when contestability and market testing was put at the heart of the Carter Review.

Q603 Chair: What has been the consequence of removing the regional tier of NOMS for regional-based commissioning?

Roger Hill: Just to add to the last question, Chair, it is my view that that is a problem. I think the removal of the regional tier, frankly, makes little difference, although I was very much part of that regional tier. What matters is a construct that is based on a belief that a range of providers is a good thing for the system. I think the Probation Service are quite frightened of competition and, although they may describe a view that is similar to what I have just said, they don't really mean it. So long as we ask the system to reform itself, in my view, that reform is unlikely to happen. If I could give an example of the Community Payback competition, from the perspective of probation trusts, that, I think, was an extremely unwelcome decision, but, once the decision was made, the vigour and the ingenuity with which the probation trusts have begun to enter that process is positive. My own organisation is a framework provider for Community Payback and we hope we will win some of that work. But I think it is a reasonable assumption that, having put that work in the marketplace, in the very near future there will be a range of providers delivering those Community Payback arrangements and you will have the opportunity as Government to look at the different outcomes achieved by different providers.

Q604 Chris Evans: I want to start with a straightforward question. What does the private sector have to offer that probation trusts currently do not provide?

Peter Neden: Can I make a suggestion that I think it is more the answer Roger has just given? It isn't the private sector per se that has something to offer. It is that a market that leads to a mixed economy has something to offer and that, over time, having a diversity of providers will lead to innovation that can either be a better service or more efficiency or lower cost or some mix of those things. It is the ongoing effectiveness of the market in competition that drives that. The players that win in that market will just be the players that the commissioners choose. I would hope that the private sector would be successful in a market like that. I am sure the private sector has something to offer. But it is not just about the private sector. I think it is about the market that is established, and that is a longer-term goal.

Q605 Chris Evans: How are you going to establish a market when there is a monopoly in place?

Peter Neden: I think that is the role of the commissioners.

Q606 Chris Evans: How are you going to break up the monopoly of the Probation Service provider at the moment when there is no market there at the moment? You are just creating a false market. Also, based on your point as well, how can you guarantee an efficiency or innovation in providing probation services?

Peter Neden: I think we can influence the creation of markets, but in all Government services it is up to our client to decide they would like to have a mixed economy. Could you just remind me of your second question?

Q607 Chris Evans: What was my second question? I was saying that there is a monopoly there at the moment. How do you envisage that post­monopoly then, basically? How do you envisage the market developing in the delivery of probation services?

Peter Neden: The market would develop by commissioning a range of different services, which could be Community Payback. It could be other interventions such as drug treatment programmes. It could be offender management services, although I recognise that, particularly with the prolific and more dangerous offenders, that would be difficult perhaps for us reputationally and possibly difficult in terms of appropriateness.

Q608 Chris Evans: My major concern about this is that in any market there has to be some level of competition. How are you going to introduce competition between providers if you are just awarding a contract, if you see what I mean? When you are awarding that contract, you are awarding a monopoly to that company for x amount of years. How do you introduce competition into the market?

Jane Coyle: Could I answer that question? We have had direct experience of answering a formal tendering process. This is at the Lancashire Probation Trust. This is an example of a very good working relationship; so it has not all been negative. They put this process out. We completed a tender. We submitted that tender. There were obviously others going for that tender. We were successful and we won that tender. We won it because we have demonstrated that we are good at what we do and we can provide cost­effectiveness. The difficulty is that other trusts are engaging with our services on a very ad hoc basis. That cannot promote any form of competition when it is on such an ad hoc basis. It has to be a formally set-out tendering process, which Lancashire have done. They have done it. Why can't other probation trusts do it? There is no formal or consistent process that is going on throughout the service. It seems completely arbitrary.

Q609 Chris Evans: How would you introduce the consistency that you have seen in Lancashire at the moment across the board? How would you suggest that is rolled out by Government then?

Jane Coyle: I am not an expert in deciding how those kinds of things come about.

Q610 Chris Evans: What is the best feature of Lancashire compared to your experiences with other probation trusts?

Jane Coyle: Well, if Lancashire can do it, why can't another probation trust do it? Why can't they tender out different processes—different parts of offender management? Ours is pre­sentence report writing skills services. There are many different parts of the offender management model that could be tendered out. We are probation officers. We have the skill to do it, but we can do it cheaper.

Roger Hill: You are describing a commissioning problem. The reason that there isn't a market and there isn't active competition is because the commissioners are not putting work to the market. It is providers and, as providers, we can influence that and we do it on a weekly, sometimes daily, basis. We are very keen to compete amongst ourselves and with the public sector. But until the commissioning decision is made, rather like the example I gave of Community Payback—and they are difficult decisions to make; I know they are because I have been on that side of the fence—there is any number of views as to why you shouldn't do it or, if you have to do it, why you shouldn't do it now. Those decisions have to be the first ones. Once you start to make them and become more confident, and NOMS becomes more confident as a commissioner, and I think it will under this new construct, then that market will develop. That is how markets do develop.

Jane Coyle: But this does seem to have been in place for a while, though. That is why we are here now because nothing seems to be done. All the rhetoric is there, but there has been no meaningful action, as far as I can see.

Roger Hill: That may be true and I am probably asserting that it will develop a little more confidently than perhaps I should. I do have some confidence in the new model of NOMS which came into place a few months ago.

Q611 Chair: What do you mean by the "new model"?

Roger Hill: The move away from regions. So the centralised model—

Q612 Chair: This is seen as problematic by quite a lot of people because the Community Payback commissioning system is based on fairly arbitrary areas which are not the same as areas used for a variety of other purposes. There is none of the coterminosity which we were hearing about earlier and which is thought by some of the smaller, not-for- profit organisations to be too large then to be contracted to.

Roger Hill: If I can comment on that, the issue of the size of the Community Payback lots is seen to somehow indicate that because they are large they cannot deliver locally. I don't agree. To create an operational model to ensure delivery, you can very easily build in locality. The councillor who was on your previous panel talked about a wish to join a local criminal justice board. I believe he was from West Yorkshire. That is about localism. How you construct the Community Payback lots to ensure that you get efficiency into the scale of what you are offering doesn't for a moment mean that you don't expect us as providers to build in local decision­making into Community Payback as a delivery. I don't believe those two things are a poor fit with one another. Quite the contrary: I should think they will fit together quite well.

Peter Neden: I think there is some good evidence of that in the electronic monitoring contracts that are effectively let nationally, but there are obligations on the providers to deal locally with police, youth offending teams, criminal justice boards, local magistrates and so on.

Q613 Elizabeth Truss: If it was sliced up in a different way, so it was by a group of offenders or locality, then presumably that Community Payback lot would be put with other services so that it could be done more locally. Because all the things are being sliced up into categories at a national level, to make it efficient you have to do it over a larger area.

Roger Hill: I think it boils down to choices actually. It goes back to how the commissioners decide to construct the market. What they have done so far, you are quite right, is to take a lateral slice through the market and say, "We will put this theme of Community Payback out there and see who can deliver it more effectively and efficiently." I think the only other way you can do it is to take a locality. So you take a place like—

Elizabeth Truss: Vertical slicing.

Roger Hill: Yes, vertical slices such as Bolton or Brighton or something, and you say, "For the whole package of services in that locality, can you deliver a better service?" It is probably the case that the vertical slicing, which links quite strongly back to Patrick Carter's original model of offender management and following the individual through the system, makes, in my view anyway, for a more effective approach.

Q614 Chris Evans: I just want to finish my final question. The Government intends to publish a comprehensive competition strategy for prisons and probation in June 2011—this month. What discussions have you had with the MoJ and NOMS about what you would like to see in that strategy? That is to all of you.

Peter Neden: We have put our arguments reasonably consistently over the previous five years. We see that the private sector has a useful role in the delivery of justice.

Q615 Chris Evans: But have you spoken to the MoJ or NOMS about what you want to see in that?

Peter Neden: Yes, at many levels, with Ian Poree and Michael Spurr, indeed.

Roger Hill: We have too, and we have also responded to the Green Paper. We would like to see the development of a market in the community. Sodexo employ me to be in a position to respond to that. We would like to see the continuing competition of public sector prisons and we would like to be part of constructing how payment by results, locality­based commissioning, place­based budgets and all of that develops, because we take the view that there isn't a straightforward simple answer as to how to do that. It requires a lot of thought and a lot of discussion and we would like to be part of it.

Jane Coyle: Ceaselessly. I think I have probably explained that. We have not stopped knocking on doors and writing to people explaining that we can offer a very high quality service a lot cheaper. It is frustrating when those examples are ignored and trusts are continuing to employ employment agencies to do the work that we can do a lot cheaper.

Chris Evans: I noticed that earlier in your response, yes.

Q616 Mr Buckland: We started talking about payment by results. We know in other areas of Government that already exists. For example, payment by results has been used by the Department for Work and Pensions and the Department of Health. What lessons do you think can be learned from the experience with those Departments with regard to delivering payment by results in the context of criminal justice? That is a question to each of you.

Peter Neden: I can speak for the DWP because we are involved in that. I am not so familiar with Health. I think the first thing is that the answer isn't obvious and immediate. It might be a simple concept, but delivering it in reality is quite complex. The second point I would make is that it is not all or nothing. We haven't gone from a world where people are just paid money for trying to do things to a world where we are only going to be paid for outcomes. There is a transition period that allows us as providers to become more confident about the payment-by-results system and to build the evidence base that is in the interests of both our clients and us as providers to be able to make those steps.

The third point I would make is that there are lots of different ways of doing this. When we think about that in relation to criminal justice, softer measures may also be helpful. It could be that completion of programmes is akin to output, even if it is not as good as ultimate reoffending rate. But it may at least be achievable, and we shouldn't make the ideal the enemy of the good as we walk down this journey in criminal justice. There is a lot that could be done there.

Q617 Mr Buckland: Do you think there need to be more tests than just reducing the rate of reoffending—that there needs to be a more subtle approach?

Peter Neden: I think it might need to be more subtle and more nuanced, particularly as the evidence base just is not there at the moment.

Roger Hill: I don't know a great deal about Health or DWP. I would make two comments. First of all, the extent to which you can use a payment-by-results mechanism to be cash­releasing is more straightforward, I believe, in DWP than it is in criminal justice. For example, if you get somebody into work and they stop claiming benefit, you have instant cash release. If you get somebody on to a sentence in the community who does not use a prison place, that is not instantly cash­releasing. There is that complexity built around the criminal justice side of it.

Jeremy Corbyn: Well, it is cash-releasing actually. It costs less.

Q618 Mrs Grant: Somebody gave evidence earlier saying that, if somebody goes to prison, the average cost is about £55,000 a year. That cost is triggered from the moment they go through those gates.

Roger Hill: That is right.

Q619 Mrs Grant: I don't see the question—

Roger Hill: There are a lot of fixed costs in having the cell, whether somebody is in it or not. You can't simply stop funding the cell. That is the point.

Q620 Mrs Grant: But, as soon as they are in and eating food and requiring attention, that £57,000 is clocking up, isn't it?

Roger Hill: Yes.

Q621 Mrs Grant: So why are you saying there can be no real equation in terms of results?

Roger Hill: I am saying when somebody stops claiming benefit because they have found a job—

Mrs Grant: I have got that bit.

Roger Hill: —there is no other cost attached to that, so that releases the cash. When somebody doesn't use a prison cell, you still have the fixed costs of the prison cell. You are right: you don't pay for their food. The variable costs reduce very slightly. But you still pay for the fixed resource, which is the prison.

Q622 Ben Gummer: Until you get enough people to close down the site.

Roger Hill: That is right. The cash­releasing mechanism, whilst ultimately there, is slower and more difficult.

Q623 Mrs Grant: But it can be calculated, obviously, because there is not a human body requiring attention going through the gate, is there? There isn't, is there?

Roger Hill: The variable cost can be calculated because there isn't a person in the cell, but the cost of having the prison remains a fixed cost.

Mrs Grant: Of course.

Q624 Chair: Until you get to the point where you have reduced the demand and you don't need that prison.

Roger Hill: Absolutely, yes. They are simply more difficult steps along the journey. It is the same journey ultimately, but there are some quite significantly more difficult barriers within it. That is my first point. Secondly, you need to be absolutely clear what the result is that you are trying to purchase. The outcome results of somebody in employment and rather less outcome results, I think, in health of whether somebody got better are slightly—well, you need to clarify those. In a payment-by-results mechanism, you have to be clear about what the result is that you are trying to buy. Are you trying to buy the fact that somebody offends less, or are you trying to buy the fact that somebody completed the sentence that the court imposed, for example? They are two issues that you need to differentiate within a PbR model.

Q625 Mr Buckland: Wouldn't another issue be the cause of the improvement? Sometimes it is difficult to work out precisely why it is that somebody stops reoffending.

Roger Hill: Absolutely, yes. You are stealing my third point.

Mr Buckland: I am sorry. I am speeding things up.

Roger Hill: The cause and effect argument is absolutely enormous, as you say. But in a sense that doesn't really matter to the purchaser if you are clear about what the result is that you are buying because you transfer the risk at the point that you do that to the provider.

Q626 Mr Buckland: Of course we could argue that it is a bit of a red herring and we don't need to get so hung up about it.

Roger Hill: Absolutely.

Jane Coyle: We have no real experience of the DWP or Health Service models, but the point that we have to offer is that payment by results can lead to improvements because we are evidence of that. We are effectively paid by results. If we don't produce pre­sentence reports to the courts that have gone through the quality assurance process, we won't get paid. Every time the court uses us to produce a pre­sentence report, the probation trust saves itself, to be precise, £59. That is another way of looking at it, but that is a payment by result. We think that for small businesses payment by results might be quite difficult to manage. I agree with what Roger is saying in that it depends what your outcomes are. Again for small companies, if it was reoffending, it would be very difficult for us to manage.

We have recently created an e­learning programme for male perpetrators of domestic violence. How would we manage that by payment by results? Would it be that in two years' time, if they reoffended, we would have to give some money back or we would only get a certain percentage of what we were going to get? It would be quite difficult for a small business. It would be easier for a large company to manage payment by results. The other point I would like to make about payment by results is that, maybe, that is something that could be given to the trusts to consider. As an incentive for probation trusts, they could be paid by results.

Q627 Chair: Can I just go back to something you raised earlier in the light of what you have just said? You are a relatively small company.

Jane Coyle: We are, yes.

Q628 Chair: You have had difficulties, which you describe, but they seem to be much more difficulties of lack of interest or response from trusts.

Jane Coyle: Yes.

Q629 Chair: Have you been in situations where the basic structure of a contract which you could fulfil your part of was denied to you just simply because of the way the contract had been set up? It was designed in a way which would not enable a small provider to bid.

Jane Coyle: Yes. It is a very interesting point because it has hindered us. We know where there are good staff. They are employed by probation trusts at the moment. We need proper contracts to give those staff job security. We have found that we have been offered short­term contracts—three-month contracts, for example.

Q630 Chair: Isn't that just the nature of the business you are in?

Jane Coyle: But this is what we are trying to move away from. We are trying to move to a more formal business so that we can retain and keep the best staff, because that is what it is all about. It is providing quality work. It is almost impossible to work on these very short­term contracts. With Lancashire, we have entered into a call­off contract with them which offers them a very high degree of flexibility. It is really thinking out of the box. They have really gone that extra step. It is essentially a three­year contract that we have with them.

Q631 Chair: The point I was getting at was those circumstances where the minimum size of contract, minimum area covered and things like that would simply preclude you. It was not that the work was difficult for you to provide on what was almost like an agency basis, filling in somebody else's gaps, but simply you were disqualified from applying because you had to be of a certain size or make a certain bid. You haven't had that particular experience.

Jane Coyle: We haven't had that directly with probation trusts. We have had that with the private prisons.

Q632 Mrs Grant: Jane, I think you may have covered it, but I just wanted to clarify this. You are a smaller company. If in future a larger part of the work that you did, say, 75%, was related to payment by results, do you think it would be manageable for you to work the cash flow of your firm and pay everybody and keep it going on that method, or would you have to have a fairly significant proportion of other work to help your cash flow?

Jane Coyle: It is a very good question and it is something that obviously we have thought about. When we saw what the questions were going to be, we thought about exactly what you have said. It is difficult to answer because we haven't gone down that road yet. I think we would possibly need some assistance in terms of how we could manage that, whether that would be working with others, in partnership with others. I do not think anything is impossible and, if that was definitely going to be the way that we would have to work, we would certainly find a way of doing it.

Q633 Mrs Grant: But cash flow is going to be key, isn't it?

Jane Coyle: Cash flow is going to be an issue for a smaller business, definitely

Peter Neden: Helen, could I suggest that that is not just related to small businesses? It is an issue for large businesses. But it is not just cash flow. It is also about certainty. In a world where there just isn't enough evidence, businesses don't just take wild guesses. They take informed investment decisions. Cash flow is one aspect of that, but certainty is the other.

Q634 Mrs Grant: I see the planning point as well, but sometimes with larger businesses there are other streams of more certain revenue coming in—not all, but certainly in the legal sector, for example, there might be, whereas you have a much smaller firm. You might be more dependent and that could have a very severe effect on whether you can continue to provide that service. I do take on board what you are saying, but that was the particular issue I was concerned about.

Peter Neden: It was certainly a factor in the Work programme, where I think we have around 300 subcontracting providers and many of those would not have been able to contract because of these issues.

Q635 Chair: You have around 300 subcontractors?

Peter Neden: Yes.

Q636 Jeremy Corbyn: I am interested in that last answer, but it doesn't sound very satisfactory if you are getting a contract with the Probation Service or any other provider of justice and you then subcontract that to 300 other people. It sounds to me like a repeat of the disasters of Railtrack and its 1,000 subcontractors. But my point is that you are in this to make money. How profitable is it for all three of you?

Jane Coyle: I think there is an awful lot of work out there.

Q637 Jeremy Corbyn: No. I said how profitable is it?

Jane Coyle: Do you mean in terms of figures?

Q638 Jeremy Corbyn: For your companies, yes.

Jane Coyle: I would actually find that quite difficult to answer, if I am honest. Is that something I could put in writing to the Committee?

Peter Neden: How profitable is what?

Q639 Jeremy Corbyn: Your contracts with the Probation Service.

Roger Hill: We don't have any contracts with the Probation Service, so they don't make any profit.

Q640 Jeremy Corbyn: What about your other contracts within the judicial system?

Roger Hill: We have contracts for prisons which clearly do run with a profit element, but we provide a service for an agreed contracted price and we have won that contract in the market against other providers for that price. Interestingly, we have just made a bid for two prisons and lost them, predominantly on price. That is the nature of the private sector operating in that market. The difference that you have between our companies and the public sector is that you do have a service guaranteed at a price that you have contracted with.

Q641 Chair: What do you tell your shareholders in your annual report about the current and prospective profitability of this area of work as compared to the other areas in which you operate?

Roger Hill: Chair, I am sorry, I cannot answer that question. I don't know the answer.

Chair: We will have to look at your annual report.

Peter Neden: I am not sure that we do, but our margins are around 7%.

Q642 Jeremy Corbyn: What about your subcontracting arrangements? I am quite surprised by that. Who are these subcontractors?

Peter Neden: For the Work programme we have a whole range of partners that we are working with to accommodate the need to keep the supply chain of a very large number of voluntary and other private sector organisations. That was a requirement of the bid. That is the reason for that. There is a whole range of small charities that help people with particular needs where we think they can do a good job for us.

Q643 Jeremy Corbyn: Isn't this a management nightmare?

Peter Neden: No. One of the things we bring is the ability to manage that supply chain. We have systems, process and management in place that will do that for us.

Q644 Chair: This is the final point. There are three groups of people I just want to mention whose confidence in the system is rather important. They are sentencers, like the Magistrates' Association we heard from this morning, the victims and the public in general, all of whom might doubt whether the private sector is going to earn their confidence. To what extent do you think it is possible to write into the contracts engagement with those categories of people? Are they measurable things or do we just rely on the good nature of your organisations or, indeed, the commercial advantage in establishing good relations with those groups of people?

Roger Hill: My organisation is a very values­driven organisation. We opt out of markets where we can't use our values. In fact we rule ourselves out of more than half the corrections markets across the world because of the death sentence or the fact that staff are required to carry guns. We stand very strongly by our values. It is arguable whether you should have to, but I think you can and it would be a good thing to write into contracts as you describe. It is very interesting that in my last job I was director of offender management for the south-east, which was the point in my career at which I became much more convinced by a market­driven philosophy. I talked a great deal to a great many groups, including a lot of sentencer groups, about what mattered being the provision and not who provided it. I never had anybody disagree with me on that. Whatever you want as a service, you can build in whatever expectations you like into those contracts, and all the organisations that want to bid for it should be able to convince, because there is a proper story to tell, the three groups that you have described.

Peter Neden: Also, you are talking really about governance and, in addition to operating in the legislative framework, each of these contracts operates under a professional framework. So we employ people with professional qualifications. We operate under the client scrutiny of contract governance, which is something that in state monopolies often doesn't happen actually. But then we also operate under the various inspectorates—the IMBs. So there is quite a lot of governance placed upon us. If we wanted to add another layer to that, I don't think that would be difficult because that is part of doing business.

Q645 Chair: One other group which is sometimes mentioned in this context is your actual clients, service users, people who have committed offences and who can sometimes contribute quite useful knowledge and experience into what you do. Should you be required to engage with them in particular ways over and above their actual sentence in order to establish their response to what has happened to them? Is that something you should be required to do or is it something you would do anyway?

Jane Coyle: If I could comment on that point, certainly that is something that goes on within the Probation Service at the moment. It has been a number of years since I have worked as a probation officer, but certainly when I was involved there was a form that offenders would have to fill in. It would be part of the end-to-end offender management process, and they would have to give their opinion on the service they had received. That piece of paper was not just then thrown away. Those results were accumulated and they were taken on board as serious comments. That is something that is in place. Any organisation working with the Probation Service needs to use the structures that are already in place because obviously that is where the quality of work is. There is a lot of quality of work there. If I may also mention about the sentencers, that is something that is very relevant to us in terms of how we gain their confidence. Again, as someone who has worked in the Probation Service and worked in the courts, the comments of sentencers are crucial. Taking probation officers out of court is potentially problematic and not getting that direct feedback from sentencers, and also I think the pre­sentence report and the OASys assessment is the crucial document to give sentencers the confidence to impose non­custodial sentences. Having a well­argued document in front of them makes them less likely to impose short custodial sentences and go with the non­custodial options. A probation officer in court is going to improve dialogue between the sentencers and the service.

Q646 Chair: Thank you very much indeed. We are very grateful to all three of you. Did you wish to add something?

Roger Hill: I just wanted to add something on the issue of service users, Chair. It is an issue about which I feel very strongly. You probably know that in the Peterborough Social Impact Bond project, the service delivery organisation, which is the St Giles Trust, uses ex­offender mentors to work with those prisoners being released. I have looked at the research and I know the St Giles organisation well, and I think that is a model that has very considerable opportunity for development. I believe, fundamentally, that service users or ex­service users, if we can call them that, should be used in the design of services, just asking people what worked or what would have worked for them in this context. Before I left NOMS, I was a very strong advocate of the view that a service user perspective should be built into the specification for the Community Payback bidding round. I think you are absolutely right. There is considerable scope for a service user and ex­service user involvement in both the process of service design and delivery, and it is a largely unexploited market.

Chair: Thank you very much indeed. As I say, we are very grateful to all three of you.

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