House of Commons - Work of the Permanent Secretary (April-December 2011)

Work of the Permanent Secretary (April-December 2011) - Home Affairs Committee Contents

Report

1. On 17 January 2012, the Committee took evidence from the Permanent Secretary of the Home Office, Dame Helen Ghosh DCB. This was the second time the Committee had heard evidence from Dame Helen, who took up her post on 1 January 2011. The Committee intends to conduct regular six-monthly evidence sessions with her, as part of an ongoing programme of scrutiny that focuses on effectiveness and delivery across the whole range of responsibilities of the Home Office and its Agencies, as well as on procurement and value for money in the Home Office. The Committee wishes to comment briefly on some of the matters that arose from the most recent session.

Financial reductions

2. Under the Comprehensive Spending Review settlement, the budget of the Home Office will fall by 25%, or £2.5 million, in real terms between its 2010-11 baseline and 2014-15. Dame Helen told the Committee that the Home Office was showing "a significant underspend" on its 2011-12 budget.[1] She attributed this to several factors, including good procurement practices and the fact the Home Office was "slightly ahead of the curve" on staffing reductions.[2] She commented that the underspend "frees up money both to carry forward into 2012-13, which is obviously a high pressure year for us with the Olympics, but equally to do things like meet riot damages costs."[3]

Riot damages

3. On the issue of when those awaiting payments under the Riot (Damages) Act 1886 would receive their money, she stated: "Nick Herbert, the Minister [for Policing and Criminal Justice], and I have been working very closely, in particular with the Metropolitan Police, to ensure that they and the insurers are getting the money out of the door as quickly as possible."[4] Around 5,000 claims were made under the 1886 Act in relation to the August 2011 riots, of which about 10% were from uninsured individuals or businesses and 90% from insurance companies to compensate for payments made to their policyholders. A report by the Metropolitan Police Service in March 2012 stated that the Metropolitan Police has received a total of 3,405 claims, 342 of which were from people who were uninsured. Of these 342 uninsured claims, 181 had been settled. It has also settled 396 of the claims it had received from insurers.[5] This leaves an unacceptable level of claims outstanding. As the Committee noted in its December 2011 report on Policing Large Scale Disorder, it is vital that those who have made legitimate claims under the Riot (Damages) Act 1886 receive their payments quickly. The Committee recommends that the Home Office work with police authorities to publish a timetable for the payment of outstanding claims, so that people who are still awaiting the settlement of their claims have a degree of certainty about when they can expect payment. All those who have made legitimate claims under the Riot (Damages) Act should receive their payments by the first anniversary of the riots at the very latest.

Procurement savings

4. Dame Helen told the Committee that the Home Office Group Commercial team had generated savings of £41.7 million in the third quarter of the 2011-12 financial year. This is more than in the previous two quarters combined and brings the total savings so far in the 2011-12 financial year to £75 million. To put this in context, the Home Office is required to reduce its total budget by £1.8 billion over the present Parliament.[6] Dame Helen commented that the savings had been "achieved through negotiating price reductions on existing contracts, grouping our needs to benefit from volume discounts and stopping spend where appropriate to do so" and also included "savings on new goods and service requirements generated through effective negotiations with suppliers."[7] She told us that the majority of the savings made in the third quarter—some £24.2 million—were on information and communications technology, and particularly the purchase of hardware, software and ongoing support. The Committee welcomes these savings.

Number of suppliers

5. The following table shows the number of suppliers used by the Home Office and its agencies in the past three financial years:[8]

Financial Year Number of suppliers used

2009/10 3,351

2010/11 3,751

2011/12 (AP1-AP9) 2,692

Table source: letter from Dame Helen Ghosh to the Chair of the Home Affairs Committee, 15 March 2012

The figure for 2011-12 is for the nine months up to and including December 2011, so although the number of suppliers used in this financial year appears to have dropped by more than 1,000, it is possible that this total will change when the figures for the whole financial year become available. In theory, the Committee would see nothing wrong with the Home Office consolidating the number of its suppliers in order to achieve efficiency gains. However, this must not be at the expense of supporting small and medium-sized suppliers. Dame Helen told the Committee: "The Home Office is committed to the small and medium sized enterprises agenda and is implementing a 5 point plan to stimulate greater engagement with the sector." She also explained that the Home Office had held an event in October 2011 targeted at small and medium sized enterprises who wanted to supply goods and services to Government.[9] The Committee welcomes these efforts to engage with small and medium-sized enterprises and will continue to monitor the Home Office's performance in this respect. A full list of the suppliers that make up the numbers in the above table has been published on the Committee's website.

6. The Committee notes that recent "commercial and operational managers procuring asylum support services" (COMPASS) procurement project, resulted in three preferred bidders: Serco, G4 and a joint venture between Reliance and Clearsprings. These companies will be involved in the provision of accommodation and transport for asylum applicants. The combined maximum value of all the contracts published in the Official Journal of the European Union in April 2011 was £1.7 billion, but the Home Office estimates that in practice the contracts will be worth £620 million over seven years.[10] Dame Helen, referring to awarding of these contracts, commented:

That is not to say that the UKBA has not considered the position of Small and Medium Enterprises (SMEs) within these contracts. There are obligations on all our preferred bidders to manage and maintain a suitable supply chain and I am assured that more than 25% of the contract value will be delivered by SMEs. This exceeds the aspirations set by the collation Government.[11]

The Prime Minister expressed his support for small and medium-sized businesses in a speech on exporting and growth in November 2011. We are anxious to make sure that this is put into effect by the Home Office and its agencies.

Use of consultants

7. The Home Office's spending on consultancy services fell by 60% between 2009-10 and 2010-11. The Department's Annual Report states that this was achieved "by in-sourcing work, re-negotiating rates and ending programmes with high consultancy costs."[12] Dame Helen stated that "one significant element" of the savings was the ending of the identity card programme.[13] The ending of the identity card programme helped the Home Office to make significant savings on consultants in 2010-11. The Committee expects the Home Office to demonstrate ongoing savings in this area of expenditure, to demonstrate that the reduction does not simply reflect the closure of one programme, but a changed attitude to the employment of consultants, including the use of in-house staff wherever possible and the better letting and management of contracts with consultants.

Police procurement

8. As Dame Helen noted, the Home Office expects police forces to achieve a £200 million saving in non-IT procurement over the period from 2010-15.[14] The Home Office now has responsibility for non-IT police procurement, as part of the phasing out of the National Policing Improvement Agency. Dame Helen commented: "We see our role as facilitating, helping them [police forces] to do that with a little bit of a stick as well as a carrot." She outlined two areas in which progress was being made. Firstly, she said that the aim was to have everything a police force might want to buy in the National Police Procurement Hub—in effect, a central catalogue, which forces use to order goods and services—by the end of the year.[15] She added, that if forces found an item at a price that was genuinely cheaper than that in the Hub, "including all the overheads, [and] the subsequent maintenance...we would want to hear about it and put it in the catalogue."[16] She stated that use of the Hub would ultimately be mandatory.

9. Secondly, Dame Helen confirmed that the Home Office would consult on extending compulsory national framework agreements for police procurement. The frameworks currently apply to four categories of equipment: body armour, police vehicles, IT commoditised hardware,[17] and IT commercial off-the-shelf software. Categories that could be subject to compulsory national framework agreements in future include mobile phones, utilities and consultants.[18] In its report on the New Landscape of Policing, the Committee welcomed the introduction of compulsory national frameworks for police procurement and called for them to be extended to other categories of goods and services The Committee is pleased that the Home Office is acting on this recommendation. Once the consultation has taken place, the Committee urges the Home Office to extend the frameworks to the new categories as quickly as possible.

10. On 22 March 2012, the Committee heard from the Chief Constable of West Midlands Police, Chris Sims, and the Chief Constable of Surrey Police, Lynne Owens, about the joint procurement exercise that the two forces are undertaking. The overall costs for the procurement process are estimated at £5 million. The Home Office has agreed to contribute up to £2 million. West Midlands and Surrey Police will fund the rest on a 2:1 basis, with contributions of £2 million and £1 million respectively.[19] The precise scope of the services that the procurement exercise encompasses is still unclear to the Committee. Chief Constable Chris Sims described the process as follows:

What we are, in effect, doing is inviting the private sector companies that are interested in partnering us to bid against, if you like, some outcomes for policing. This is all about improving the service that we offer. It is not about making short-term savings.[20]

Chief Constable Lynne Owens was very clear when asked whether "certain frontline duties traditionally undertaken by the police" would be undertaken by private companies under the new contract. She said: "The answer is no, they definitely 100% won't be."[21] However, when the Committee asked whether there was a list of jobs that would be included within the scope of the contract, and jobs that would be excluded, Chief Constable Chris Sims replied:

The short answer is no, but as we enter an OJEU process, as we go into procurement, we have to say which parts of the organisation are potentially going to be affected by the partnership activity, and from my perspective, every single part of West Midlands Police will be affected by it, because it is about uplifting our technology and changing the way we work, but none of it is as straightforward as simply saying, "Now, company X, you do this on our behalf".[22]

11. One of the Committee's members, Lorraine Fullbrook MP, managed to sum up the position succinctly:

It is not the case that you can't tell the Committee specifically what functions will be done, because you are not really in a procurement process? What you are doing is business process re-engineering of your forces to improve outcomes. So at this stage of the business process re-engineering, you can't be specific about the functions and how they would work. [23]

Chief Constable Chris Sims agreed with this assessment, although added "it is about procurement, because the business process re-engineering is through the medium of a partner agency."[24]

12. The Committee has a number of concerns about the joint procurement exercise currently being undertaken by Surrey and West Midlands Police. The Committee is not clear about the scope of what is encompassed in the procurement exercise. More worryingly, the Committee is not convinced that Surrey and West Midlands Police fully understand, or are fully able to articulate, the process they are undertaking. The Home Office is partly funding the procurement process, at a cost of several million pounds, and has some responsibility for ensuring that there is an effective communications plan in place to explain the process to interested stakeholders and ultimately to the wider public. The Committee is also concerned about the timing of the procurement exercise. It would have been preferable to wait until Police and Crime Commissioners were in post, in November 2012, before proceeding with this costly process.

Mobile technology for police forces

13. Shortly after the Committee's evidence session with Dame Helen, the National Audit Office published a critical report on Mobile Technology in Policing, which found that the benefits for most forces of a programme to equip police officers with mobile devices such as BlackBerrys did not extend beyond a basic level and had not achieved value for money, given the £80 million of expenditure. Mobile technology offers the potential to reduce police bureaucracy and to free-up frontline police officers to spend more time on the streets, so the Committee was concerned and disappointed to learn that the programme had not succeeded as well as might have been expected. Dame Helen told the Committee that the Home Office agreed with the National Audit Office about "the importance of learning from those forces where mobile devices have been most effectively implemented".[25] The Committee is aware that our colleagues on the Public Accounts Committee are currently inquiring into this matter and we await their findings with interest.

Redundancies

14. In 2010-11, 2,574 staff left the Home Office. Of these, 140 worked for the Identity and Passport Services. Dame Helen stated: "the majority of Identity and Passport Service departures would have been due to the cancellation of ID Cards."[26] The Home Office spent £1.88 million on redundancy payments between 1 March 2011 and 29 February 2012.[27] However, as the Committee noted above, overall the programme of staff reduction is leading to savings for the Home Office. The Home Office was unable to confirm how much it and its agencies had spent on employment agency fees in the last 12 months.[28] The Committee considers this a shortcoming and recommends that in future this information be collected and recorded centrally.

Pay of senior staff

15. Dame Helen wrote to the Committee on 31 January 2012 to confirm that the Home Office and its associated agencies and non-departmental public bodies have 15 members of staff who earn more than the Prime Minister's salary, which is £142,500. These are staff at Senior Civil Service or equivalent grades. The staff concerned and their salaries in bands of £5,000 are listed below:

Dame Helen Ghosh DCB, Permanent Secretary, Home Office (£180,000-184,999)
Helen Kilpatrick, Director General, Home Office (£180,000-184,999)
David Seymour, Legal Adviser, Home Office (£145-149,999)
Bill Crothers, Director, Home Office (£145,000-149,999)
Rob Whiteman, Director General, UK Border Agency (£175,000-179,000)
Matthew Coats, Director, UK Border Agency (now moved to the Legal Services Commission) (£145,000-149,999)
Sir Denis O'Connor, Chief Inspector, Her Majesty's Inspectorate of Constabulary (£195,000-199,999)
Zoe Billingham, Inspector, Her Majesty's Inspectorate of Constabulary (£185,000-189,000)
Drusilla Sharpling, Inspector, Her Majesty's Inspectorate of Constabulary (£190,000-194,000)
Roger Baker, Inspector, Her Majesty's Inspectorate of Constabulary (£185,000-189,000)
Bernard Hogan-Howe, Inspector, Her Majesty's Inspectorate of Constabulary (now moved to the Metropolitan Police) (£190,000-194,999)
Nick Gargan, Chief Executive Officer, National Policing Improvement Agency (£145,000-149,999)
Paul Minton, Director, National Policing Improvement Agency (£145,000-149,999)
Trevor Pearce, Director General, Serious Organised Crime Agency (£145,000-149,999)
Malcolm Cornberg, Executive Director, Serious Organised Crime Agency (£145,000-149,999)

Home Office boards

16. Before January 2011, there was a single Home Office Board, chaired by the Permanent Secretary, and consisting of the Home Office Directors General and two non-Executive Directors. Dame Helen explained that, since then, the Home Office "has adopted an enhanced departmental board structure...in line with charges to departmental governance introduced by Francis Maude."[29] The Home Office now has a new Supervisory Board, which is chaired by the Home Secretary, and consists of Ministers and senior officials, and an Executive Management Board, which consists of the Department's senior management and which provides "corporate strategic leadership" and oversees the day-to-day running of the Department.[30] There are four Non-Executive Directors on the Supervisory Board, one of whom is also on the Executive Management Board. Dame Helen stated that the four Non-Executive Directors on the Supervisory Board "spend on average around 2-4 days per month on Home Office work" , with the exception of the Non-Executive Director who also sits on the Executive Management Board, who spends on average "5-8 days per month, depending on the flow of business."[31] The table below shows the membership of the two boards.

Membership of the Home Office Supervisory Board

Ministers

Rt Hon Theresa May MP Secretary of State for the Home Department

Damian Green MP Minister of State for Immigration

Nick Herbert MP Minister of State for Policing and Criminal Justice

James Brokenshire MP Parliamentary Under Secretary of State for Crime Prevention

Lynne Featherstone MP Parliamentary Under Secretary of State for Equalities and Criminal Information

Officials

Dame Helen Ghosh Permanent Secretary

Helen Kilpatrick Director General, Financial and Commercial

Charles Farr Director General, Office for Security and Counter-Terrorism

Stephen Rimmer Director General, Crime and Policing Group

Mike Anderson Director General, Strategy, Immigration and International Group

Rob Whiteman Chief Executive, UK Border Agency

Non-Executive Directors

Philip Augar Formerly Group Managing Director of Schroders

Val Gooding Non-Executive Director of the BBC, Standard Chartered PLC and J Sainsbury's

Johan Allan Chairman of Dixons Retail PLC

Dianne Thompson Chief Executive of Camelot UK Lotteries Limited.

Membership of the Home Office Executive Management Board, staff and budgets managed

Officials Staff (full-time equivalent) Budget (Main Estimate 2011-12) (£000s)

Resource Capital

Dame Helen Ghosh,
Permanent Secretary (Chair)
24,601.19 9,597,919 472,000

Helen Kilpatrick,
DG, Financial and Commercial
656.74 116,845 0

Charles Farr,
DG, Office for Security and Counter-Terrorism
415.41 888,017 140,500

Stephen Rimmer,
DG, Crime and Policing Group
442.68 6,295,739 145,900

Mike Anderson,
DG, Strategy, Immigration and International Group
3,820.80 560,000 34,700

Kevin White,
DG, Human Resources
236.32 25,456 0

Rob Whiteman,
Chief Executive, UK Border Agency
10,831.41 1,585,054 148,500

Brian Moore,[32]
Chief Executive, UK Border Force 7,465.61

Yasmin Diamond,
Director, Communications
147.14 17,738 0

David Seymour,
Legal Advisor
61.15 4,223 0

Non-Executive Directors

Philip Augar,
Formerly Group Managing Director of Schroders
— — —

Source: Letter of 26 April (Ev 18)

17. In addition to the staff and budgets which fall within the responsibilities of the members of the Executive Management Boards, the Government Equalities Office has 87.52 full-time equivalent staff, a resource budget of £66 million and a capital budget of £1 million, and other groups (private offices and Home Office science) account for 439.41 staff, £38.8 million of revenue expenditure and £1.4 million of capital. The Responsible Officers of these units do not sit on the Executive Management Board.

e-Borders

18. Dame Helen explained that the e-Borders programme is now split into two distinct elements, the first of which is designed to ensure that there is a functional system in place for the Olympics and the second of which will encompass what Dame Helen described as "the expansion into shipping and rail and the capacity we need to integrate the systems so we can do proper exit checks."[33] The pre-Olympics element of the programme is based on legacy systems and is being delivered by Serco and IBM. There is also a contract with Specialist Computer Centres Ltd. Dame Helen explained:

IBM has been contracted by the UK Border Agency to rebuild the Semaphore system in secure data centres with effective disaster recovery capability. Semaphore was originally a pilot system developed by IMB and they continue its operation. The rebuild was necessitated by the termination of the contract with Raytheon, as they were due to deliver replacement systems. As part of the rebuild project, the UK Border Agency contracted with Specialist Computer Centres Ltd for the supply of hardware (servers, storage and racking) and maintenance. The supply contract was let in April 2011. The supply contract includes an element for three years software support and one year's hardware maintenance for the storage. The maintenance contract was let at the same time and expires in April 2014.[34]

19. The contract for the post-Olympics element of the e-Borders programme, which will be a much more significant undertaking, has not yet been awarded. Dame Helen commented: "the programme board I chair will be looking at the issue of which bits of work we will leave with the legacy systems and with those contractors you described [IBM and Serco], and what we will be putting into the new procurement."[35] The e-Borders programme has proved highly problematic since work on it began in 2003. The predecessor Home Affairs Committee published a critical report in December 2009 outlining its concerns. This was followed by the termination of contract with Raytheon Systems Limited in July 2010, the outcome of which is still the subject of arbitration. The Committee remains concerned about progress on the programme. The letting of the post-Olympics part of the contract will be a crucial determinant in its overall success or failure.

1 Q 17 Back

2 Ibid. Back

3 Ibid Back

4 Q 20 Back

5 Metropolitan Police Service, Strategic Review into the Disorder of August 2011-Final Report, March 2012, p 134 Back

6 HM Treasury, Spending Review 2010 (Cm 7942), p. 54. The Home Office does not have a designated procurement budget (letter of 26 April). Back

7 Letter from Dame Helen Ghosh to the Chair of the Home Affairs Committee, 28 February 2012 Back

8 Letter from Dame Helen Ghosh to the Chair of the Home Affairs Committee, 15 March 2012 Back

9 Letter from Dame Helen Ghosh to the Chair of the Home Affairs Committee, 31 January 2012 Back

10 Letter of 26 April 2012. Back

11 Letter from Dame Helen Ghosh to the Chair of the Home Affairs Committee, 5 March 2012 Back

12 Home Office Annual Report and Accounts 2010-11, p 85 Back