The budget and structure of the Ministry of Justice - Justice Committee Contents


2  The direction of travel

Structural changes to improve governance and accountability

21.  The MoJ is a large Department, controlled from a small central core. In order to carry out its responsibilities it devolves the delivery of many of its functions to Arm's Length Bodies (ALBs). In addition, there are certain functions of the justice system, such as the appointment of judges, which must be independent of the Executive. Such functions are also performed by ALBs that require governance, funding and policy arrangements, but are independent of direct political control. Because of this structure, the MoJ must ensure it has the right internal structures to monitor performance and has effective oversight of its sponsored bodies. Additionally, it must also consider whether its structure provides for the right level of accountability, so that ministers or the accounting officer are suitably placed to take responsibility for the actions of the MoJ.

THE DEPARTMENTAL BOARD

22.  Prior to the General Election in May 2010 the MoJ was run through the Corporate Management Board, a corporate body operating within a framework of strategy and policy agreed with the Secretary of State. It was chaired by the Permanent Secretary; and its job was to make a reality of the ministerial vision for the MoJ.[28] Since May 2010, the MoJ has been run by the Departmental Board which has overall responsibility for the MoJ's strategic direction. The new Board is chaired by the Secretary of State and membership includes the ministerial team, the Permanent Secretary, DG Finance & Corporate Services, DG Transforming Justice, and Non-Executive Members.[29] This arrangement, as well as directly involving ministers, was in line with central Government guidance that the Board should have three Departmental Executives represented. Initially, other Directors General were invited to join Board meetings when appropriate, but over time the MoJ took the view that this structure was causing a problem. Sir Suma told us:

[w]ithout the heads of delivery bodies there, we could not discuss some of the strategic issues, the change management issues and the delivery issues we needed to discuss properly. We were having to have, if you like, second order debates with them as well, out of the room. It did not make a lot of sense. Although, because of that, it is a larger board, the discussions have improved as well.[30]

As a result, the Chief Executives of all the delivery agencies (HMCTS, LSC, and NOMS) are now full members of the Board.

23.  The Ministry of Justice has taken a pragmatic approach by adapting its top level structure to ensure all delivery agencies have a seat on the Departmental Board. These changes will speed up internal processes, and allow all agencies to have a direct input into Departmental decision making, which now rightly involves ministers directly. We commend this flexible approach and wish to see it continue: if circumstances or demands change, it might be necessary for the composition of the Board also to change.

24.  In 2010-11, nearly half the MoJ's expenditure (over £4 billion) and 74% of its staff belonged to NOMS.[31] In 2007, the then Lord Chief Justice appeared before the Constitutional Affairs Committee, a predecessor of this Committee, and warned that the amalgamation of responsibilities and budgets in the new MoJ could lead to a "real conflict of demand on a single budget".[32] The Prison Reform Trust also claimed that "decisions about budget allocation are skewed by the long term commitment to fund prison places, [...] [and] such a massive disparity inevitably places the prison estate at the centre of the criminal justice system".[33] By comparison, in 2010-11 the MoJ distributed more than £2 billion to the LSC, almost £1.5 billion to courts and tribunals, and more than £0.4 billion to the Youth Justice Board.

25.  We asked Board members whether the dominant presence of NOMS presented difficulties for the MoJ, to which Matthew Coats, Chief Executive, Legal Services Commission, responded "While we might be smaller in head count terms, our budget is more than a quarter of the Department's budget, so I have not felt us to be without influence at all. I could see why you might ask the question, but that has not been my experience".[34]

SPONSORED BODIES

26.  The MoJ sponsors a wide-range of Arm's Length Bodies, including three Executive Agencies (EAs) and nine executive Non-Departmental Public Bodies referred to in paragraph 9.[35] The Department is reliant upon its NDPBs and EAs to deliver its functions. The Cabinet Office provides guidance to departments to assist in the classification of Public Bodies, and distinguishes between Executive Agencies and Non-Departmental Public Bodies as follows:Table 3: Classification of Public Bodies
EXECUTIVE AGENCIES EXECUTIVE NDPBs
Executive Agencies are part of a Government department.

They are defined business units headed up by a Chief Executive (who is often supported by a Management Board).

They operate with a degree of autonomy from Ministers and the main department. Ministers do not concern themselves with the day to day running of Agencies - but are directly accountable to Parliament and the public for the overall performance of Agencies and for their continued existence.

They may provide services or functions on behalf of other Government departments, Devolved Administrations.

They do not have a separate legal personality.

They are staffed by civil servants.

They typically deliver a service.

They do not have their own vote but come under the Department's vote. They publish their own Annual Report and Accounts. Accounts are consolidated into those of the parent department.

Executive NDPBs are usually established by Statute or under the Companies Act. A small number of NDPBs have been established by Royal Charter. They are (with a couple of exceptions) not part of The Crown but have their own legal personality.

They carry out a wide range of administrative, commercial, executive and regulatory or technical functions which are considered to be better delivered at arm's length from Ministers.

They have a regional or national remit. Bodies which operate at a local level, or an international level, are rarely NDPBs.

They have varying degrees of operational autonomy and independence from Ministers and the sponsoring Department - but all work within a strategic framework set by Ministers. They are directly accountable to Ministers who, in turn, are ultimately accountable to Parliament and the public for the performance of their NDPBs and their continued existence.

They are headed by boards (or occasionally office-holders). Board members are usually appointed by Ministers or by The Queen on the advice of Ministers. Appointments are typically made in line with the Code of Practice issued by the Commissioner for Public Appointments.

The board usually appoints a CEO with day-to-day responsibility for managing the body. The CEO, and staff, are not usually civil servants. The CEO is also usually the Accounting Officer for the NDPBs and the sponsor department's permanent secretary, as principal accounting officer, is usually involved in the appointment.

They do not have their own vote. Funding is usually delivered through a grant or grant-in-aid - although many executive NDPBs also generate additional income through other sources. Some are funded by levies on particular sectors and receive no central funding

They are accountable for their own budget and publish their own Annual Report and Accounts. Most will have their accounts consolidated (as they are considered central Government for ONS purposes). NAO is the external auditor.

Data Source: Categories of Public Bodies: A guide for Departments, Cabinet Office, April 2011

27.  Several of the MoJ's Public Bodies have been or are being reorganised:

  • The National Offender Management Service (NOMS) was originally created in June 2004; in May 2007 its responsibilities were shifted from the Home Office to the new Ministry of Justice. In April 2008, NOMS became an agency and in line with the objective of 'end-to end management of offenders', brought HM Prison Service into NOMS.[36] HM Prison Service and HM Probation Service remain distinct bodies, but they are jointly responsible for protecting the public and reducing reoffending. More recently NOMS has changed its operating model from a regional to a functional model. The Agency is now structured around its core functions of commissioning; contract management; and system integration whilst also establishing a resilient structure for the management of public sector prisons.[37]
  • Her Majesty's Courts and Tribunals Service (HMCTS) is an Executive Agency of the MoJ, created on 1 April 2011 through the merger of the Tribunals Service with Her Majesty's Courts Service (HMCS). The new entity is a partnership between the Lord Chancellor, the Lord Chief Justice, and the Senior President of Tribunals and is responsible for the administration of the criminal, civil and family courts and tribunals in England and Wales, and non-devolved tribunals in Scotland and Northern Ireland.[38]
  • The Legal Services Commission (LSC) which runs the legal aid scheme in England And Wales, is a Non-Departmental Public Body which has suffered from poor performance and criticism in a number of areas for several years. Following a review by Sir Ian Magee in March 2010, it was announced that the LSC would be replaced with a new Executive Agency, which is due to be established from April 2013.[39]
  • The Youth Justice Board (YJB), which has responsibility for justice services specifically for people under 18, is a Non-Departmental Public Body that the Government intended to abolish via the Public Bodies Act, with its functions transferred into a new Youth Justice Division within the MoJ. Subsequently, due to opposition in Parliament, during consideration of the Bill, the Government decided not to pursue its abolition. The MoJ has since sought to establish closer working between itself and the YJB, and remains of the view that ministers should have more direct accountability for youth justice.[40]
  • The Judicial Appointments Commission (JAC) was established to maintain and strengthen judicial independence by taking responsibility for selecting candidates for judicial office out of the hands of the Lord Chancellor and making the appointments process clearer and more accountable. Its current Chairman was given a steer on appointment by the Secretary of State that the costs and time involved in making appointments had to be reduced, and that the focus must be on getting the highest possible quality of judicial appointments.[41]
  • HM Inspectorate of Court Administration (HMICA) has been abolished by means of the Public Bodies Act 2011. During consultation on its abolition, concerns were raised that there would no longer be independent scrutiny of HMCTS, but the Government disagreed, noting that external oversight would be provided by the National Audit Office.[42]
  • The Administrative Justice and Tribunals Council (AJTC), which reviews the administrative justice system, has been scheduled for abolition via the process introduced in the Public Bodies Act 2011. The AJTC said it was puzzled and frustrated by its proposed abolition, and was "deeply sceptical that the [MoJ] could, should or would [...] take over [the] functions".[43] The responsible Minister, Jonathan Djanogly MP, Parliamentary Under-Secretary, has argued that the formation of HMCTS had changed the tribunal structure, with most tribunals within HMCTS and subject to common standards,[44] adding "over the last year [...] tribunals have got stronger".[45]

Independence

28.  The Chief Inspectors of Prisons and Probation and the Prisons and Probation Ombudsman jointly submitted written evidence which said there was confusion in the MoJ about their independent status. They were also concerned that their actual or perceived independence would be damaged by applying the MoJ appraisal processes to them; by moving their offices to the main MoJ building; by stopping their independent websites; by restricting their ability to recruit the diverse staff they required; and by prolonged budget uncertainty.[46]

29.  We note the concerns of the Chief Inspectors of Prisons and Probation and the Prisons and Probation Ombudsman. As they have a role as watchdogs it is particularly important that they have independence from the Department. We call on ministers to discuss these concerns with the Inspectors and Ombudsman, and in response to this Report to outline what steps they are taking to allay fears regarding their independent status.

30.  Where the function of an Arm's Length Body requires it to be protected from political influence, it is important that the appropriate arrangements are in place so that this is the perception as well as the reality. We recommend that, where necessary, the Ministry of Justice establish or revise Framework documents so that they recognise the importance of real and perceived independence.

Accountability

31.  The Committee of Public Accounts reported in January 2011 that the accountability of the 53 Arm's Length Bodies (some 350 organisations including sub-bodies) was a matter of concern for the MoJ. Two of these bodies (NOMS and HM Courts Service) were Executive Agencies and most of the rest were NDPBs. The MoJ was satisfied that it was able to oversee the activities of its Executive Agencies. However, with regard to its management of NDPBs, the MoJ considered that there was a mismatch between the Department's accountability for these bodies and the extent to which it could exercise effective oversight. Until recently, the MoJ had not had the systems in place to require bodies to notify it of emerging problems. For example, senior management had not always received feedback from audit committees. It also played no part in selecting Arm's Length Bodies' management teams; it did not have appropriate levers to enable it to intervene if things went wrong; and it had not always used its framework agreements to best effect to specify its information requirements.[47] When we raised the issue of ministerial oversight of Public Bodies with Rt Hon Jack Straw MP, former Secretary of State for Justice, he commented that he did not believe he had sufficient control of NDPBs.[48]

32.  The MoJ has recently taken steps to improve the accountability of NDPBs. As referred to above, the MoJ recently changed its relationship with the LSC, following the Commission's poor performance, to mimic the arrangements the Department has with Executive Agencies prior to the LSC formally becoming an Agency with effect from April 2013. These changes will ensure greater accountability for ministers in terms of financial management of legal aid. The closer control by central MoJ has also removed responsibility for a wide range of areas, such as policy development, from the Legal Services Commission. This change was welcomed by the Law Society who told us in written evidence "[t]he existing structure of legal aid provision through the LSC has proved sub-optimal due to duplications and conflicts in policy work between the LSC and MoJ".[49] It was hoped that the transition of the LSC would allow the Agency to focus on developing skills and expertise in the areas it had responsibility for: commissioning and administering legal aid services. When the Law Society appeared before us at the first evidence session in this inquiry they told us it was heartening that the Government was listening to the sector in delaying the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act for a year, recognising that time was required to get it right. In addition, they hoped the LSC would now streamline its contractual arrangements and develop a longer term strategy on which providers could rely and which would provide a level playing field.[50]

33.  The MoJ also tried to change the accountability arrangements it had for youth justice policy. The Government's written evidence to our inquiry into the proposed abolition of the YJB stated:

[the change] will restore direct Ministerial accountability for youth justice so that Ministers, not an arm's length body, will be responsible for youth justice. Increasing the Ministerial accountability for youth justice will create a strong impetus for improvement. Ministers are better placed to influence policy across government and they will ensure that other departments play their part in stopping young people from becoming involved in crime and reoffending.[51]

34.  In our Report we raised concerns that, over time, the strategic priorities of NOMS might dominate and overwhelm the proposed new Youth Justice Division within the MoJ. We therefore recommended that the new Youth Justice Advisory Board be given a specific responsibility to assess and report on the independence of the Youth Justice Division.[52] Following opposition in Parliament, and defeat in the House of Lords, the Government decided not to proceed with the Board's abolition. However, the Government's response to our Report states, "[the Government] remains of the view that Ministers should have more direct accountability for youth justice and we are currently working with the YJB on how this can be made a reality".[53]

35.  Where there is no requirement for the function of an Arm's Length Body to be protected from political influence, it is important that ministers are held accountable, and have influence on the performance of that function. Notwithstanding retention of the Youth Justice Board as a Non-Departmental Public Body, we recommend the Ministry ensures that the YJB works as efficiently as it would as an Agency, with similar accountability requirements.

36.  We note that the Ministry of Justice will be reviewing regularly the functions of its Arm's Length Bodies, and wish to be informed of any proposals to alter governance arrangements.

Performance monitoring

37.  In April 2011 the MoJ established an ALB Governance Division, which has responsibility for driving up standards to ensure that its Arm's Length Bodies are supported by consistent governance arrangements with clear lines of accountability.[54]

38.  Sir Suma told us:

[T]he story of 2007-08, when the Ministry of Justice was put together, was one where there was no consistent approach to the arm's length bodies whatsoever. The sponsor relationships existed, but there was not a central division that looked across the piece and you were pretty much at the mercy of individual relationships between the sponsor person in the Ministry and the chief executive, or the chair, of the arm's length body. So we created an arm's length body governance division to give us some sort of consistency, and to look across. Then we asked that division to take a risk­based approach, to look across all the arm's length bodies and try and work out—basically on the size of budget and the risks contained in the work they are doing—how much oversight the Ministry should have and what the relationship should be. That was a major development.

The second thing we did was that I started having meetings, every quarter, with the accounting officers of the most serious arm's length bodies—of course, the sponsors now see them more frequently—and we can compare across much better than we used to be able to.

Finally, in the last [...] nine months to a year we have tried to get them to embrace Transforming Justice as well. Again, the first phase was very much within the Ministry and the executive agencies only, but the NDPBs are also much more involved. It is a much more systematic approach to it. We obviously fed into the Public Bodies Bill as well and, now, into the triennial reviews too. It is one of the areas in which the NAO and the PAC have actually commended us for our work.[55]

39.  In addition, The Government's response to our Report on the abolition of the YJB states, "the MoJ is [...] strengthening the framework documents that set out the relationships between the Department and its [NDPBs]. [...]We expect this document to be launched later this year".[56]

40.  We acknowledge the improvements that the MoJ has made to its oversight of Arm's Length Bodies. However, these are improvements from a situation that the Committee of Public Accounts described as "a matter of concern for the Ministry".

41.  We welcome the establishment of the Arm's Length Bodies' Governance Division. This Division should endeavour to support and monitor the ALBs so that poor performance and duplicated processes, as previously seen in the LSC, are not repeated elsewhere.

42.  We recommend that the MoJ report to us on a regular basis - perhaps twice a year - on the work of the ALB Governance Division, drawing on its risk-based approach, and flagging up any significant risks identified, and the mitigating steps taken to manage those risks.

Cultural change through Transforming Justice

43.  In its 2010 interim report on the Transforming Justice programme, the Institute for Government (IfG) identified key challenges facing the MoJ as a new Department. First, as a post-merger organisation, the MoJ had a diverse set of structures and organisational cultures. In particular, it was still working out how its relationship with its main Executive Agencies would operate and which decisions would be made at each level. Secondly, although individuals had clear frameworks for thinking about the parts of the system associated with MoJ's predecessor organisations there was no common conceptual framework.[57]

44.  The IfG also reported in 2010 that there were apparent cultural differences between those officials with operational backgrounds and those with policy backgrounds. Policy was the most valued skill-set for progression to senior levels in the civil service, and operational expertise was undervalued. But there was also an increasingly confident and vocal cadre of operational managers operating at senior levels, in part due to a significant increase in external appointments into the civil service.[58] In 2011 it reported that the difference in culture was still present, but the balance between the different groups was different. By early 2011 the policy group was being seen as needing to adopt more of a programme management-style approach if it was to meet the deadlines necessary to take forward the transformation. The policy function itself has been reformed, with policy teams having been brought together to form a single group with much greater focus on how resource is deployed to meet business critical requirements.[59]

45.  Given the MoJ's history, the IfG concluded that it was remarkable that by January 2010 the MoJ had developed around the Transforming Justice programme a "clear coalition of around 20 senior civil servants coming from across MoJ's business groups".[60] In addition, the MoJ increased its efforts to connect to those working nearer to the front line of justice services. MoJ staff who wanted to become more involved in change efforts were invited to sign up online as 'Transformers', who would be invited to provide ideas, act as a testing ground for early propositions and work on emerging initiatives. Sir Suma Chakrabarti and Jonathan Slater held a web-chat with all staff to explain Transforming Justice to staff across the MoJ and its Agencies - an event that was followed by a series of 'roadshows' in which senior MoJ staff visited all parts of the country.[61] The Transforming Justice programme is ongoing and has been extended to 2020. We examine the future of the programme in chapter 4.

46.  We welcome the achievements of the Transforming Justice programme in uniting the Ministry behind this brand. This work has helped the Department to coalesce around a common purpose. We further welcome the efforts that have been made to involve front-line staff in these changes at an early stage, and found evidence of the understanding of and commitment to the programme among staff at every level when we toured the Ministry's and NOMS headquarters on an 'open access' basis.

47.  There has been a historical tendency throughout government to favour policy at the expense of delivery. We welcome the change in culture in the Ministry, with an increasing recognition of the importance of programme management as well as policy. We recommend that greater efforts be made to alter the balance from policy creation to its implementation. It should be a prerequisite that officials at a senior level have had hands-on experience of delivery or project management.

Prison Service and Probation Service relations

48.  Throughout this inquiry we have been told about a less harmonious relationship within NOMS. The Prison Reform Trust argued that the attempt to create an integrated and co-ordinated correctional service was misguided and created more problems than it has solved. It claimed that the Prison Service and the Probation Service had different cultures and needed to operate in different environments, but now the Probation Service was in a chain of command dominated by Prison Service managers, and communication between prisons and probation was not working in many areas.[62] In addition, the Howard League's evidence said the creation of NOMS was rightly described as a probation take-over by the Prison Service.[63]

49.  We raised with Phil Wheatley CB, Former Director General, NOMS, the concern that there were so few people from the Probation Service in senior positions in NOMS, to which he responded:

In terms of who could become senior managers, the crucial thing was to get the best people able to lead that degree of change. If you look at most probation services, with exceptions [...] they were small organisations, not feeling politically accountable to the centre. They tended to be led by people who were used to running small organisations without direct political accountability. They also had no competitive pressure on them and probably with the committee feeling quite loyal towards "their" probation service, which is how committees used to feel. That was not a very challenging environment and did not help grow the sharpest managers.[64]

50.  The Probation Chiefs Association's reaction was:

we [...] have found [Phil Wheatley's] comments in relation to the management capability in the probation service, as a generalisation, to be unjustified. It is impossible to reconcile the comment that "Probation Service [...] probably was not the sharpest of managers" with the accolade given by the British Quality Foundation in November 2011, when the Probation Service in England and Wales became the first public sector organisation to win the British Quality Foundation's coveted Gold medal for Excellence, the most rigorous business award scheme in the UK.[65]

51.  Michael Spurr, Chief Executive, National Offender Management Service, denied that NOMS was prison-dominated and reiterated the importance of close links between the Prison and Probation Services. NOMS had over 100 people in the central agency with probation experience—both directly employed and on secondment from the Probation Service—and most were senior managers. NOMS had also been trying to attract to its Board a non-executive with probation experience. Structural differences between the two services may lead people to think the service is prison-dominated. Unlike prison staff who are directly employed by NOMS, probation staff are employed by probation trusts which are non-departmental bodies independent of NOMS.[66]

52.  We have long argued that the difficulties NOMS has experienced in reducing re-offending are inherent in its current structure and that there should be a more ambitious integrated system of offender management involving the commissioning of both prison and probation services in defined geographical areas. While we appreciate that efforts have been made to bring prisons and probation closer together, such efforts amount to little more than a sticking plaster; they do not address the fundamental structure of NOMS, which is currently inadequate to fulfil its aspirations. As such, the rigidities in the current structure militate against doing what works. Furthermore, probation does not enjoy the same status as prisons in NOMS, which reflects the fact that non-custodial sentences do not have the same status as custodial sentences throughout the system.

Change of emphasis - understanding the business

53.  Demand for the services provided by the MoJ is driven largely by external factors. This was demonstrated by the riots of August 2011, which led to a swift increase in workloads at individual courts as well as a spike in the prison population.

54.  Throughout this inquiry we have heard of examples which indicate that the MoJ does not have sufficient understanding of demands, resources and responses within the justice system:

  • The Institute for Government reported in 2010 that information systems did not yet connect across the MoJ. Different data systems focused on different entities - some tracking cases and others individuals. This meant that policy-makers were not able to use operational data for policy decisions and relied instead on models that estimated system flows and impacts. In addition, the evidence base for 'what works' in driving the outcomes that the MoJ is responsible for was notoriously weak.[67]
  • A 2010 NAO study concluded that "practitioners in the youth justice system do not know which interventions have the most impact on reducing reoffending. 76% of Youth Offending Team managers agreed with the statement, "it is difficult to find evidence on 'what works' for certain areas of our work". There has been little research published in this area by the Board or Ministry since 2006. With the prospect of resources reducing in the near future, the youth justice system is, therefore, in a weak position to know which activities to cut and which to keep to ensure that outcomes do not deteriorate".[68]

55.  The Law Society's written evidence stated:

[T]he Ministry of Justice does not appear to have a sufficiently developed understanding of costs in relation to the impact of proposed changes to the legal aid scheme, and frequently publishes Impact Assessments (IAs) alongside consultation papers that are lacking in sufficient detail.[69]

It gave the example of the Impact Assessment for the Green Paper consultation, Proposals for the reform of legal aid in England and Wales, where the MoJ recognised the proposals were likely to be associated with "wider social and economic costs", but there was no attempt to assess what these knock-on costs might be. It also gave the example of the 'Telephone Gateway'. Here the estimated savings fell from £40-60 million per year to £1-2 million per year in a seven month period. The Law Society suggested this showed the proposals were not based on very reliable data.[70]

56.  At the time we also commented on this in our Report, Government's proposed reform of legal aid, and concluded:

We are disappointed in the dearth of evidence on legal aid expenditure at case level to enable the identification of key influences on cost. [W]e believe that a series of small-scale domestic qualitative research studies, examining the drivers of cost per case, would provide the Government with more valuable data to inform its efforts to reduce spending.[71]

The Government's response grouped this conclusion with another separate conclusion and stated:

The Government is confident that its programme of reform is well evidenced and represents the most proportionate and effective package of measures available to meet our objectives for legal aid reform.

The Government accepts that the evidence base available to inform policy making can always be improved. The Impact Assessment [...] draws on the existing evidence base to assess the impacts the programme of reform is expected to have. [...] These identify a number of areas where we would ideally have liked more information. [...] However, there is a pressing need for reform to meet our objectives for legal aid, including delivering substantial savings during the current spending review period and we must therefore proceed on the basis of the information that we have.[72]

57.  We recommend that the Ministry provides a follow-up response to our 2011 conclusion on the dearth of evidence on legal aid expenditure and its outcomes, so that we can use it as a case study of the progress the Department has made. We note the inclusion for the first time in the 2011-12 Annual Report of figures for the average cost per case of legal aid accounting; we welcome this progress.

58.  The Impact Assessment for the Green Paper consultation was also raised during the MoJ's appearance before the Committee of Public Accounts on its financial management. Sir Suma told them:

The Law Society clearly does not like the legal aid reforms and it is, of course, right to pursue its agenda. What the impact assessment clearly does do is try to tackle all the direct and indirect costs and benefits, whether to the benefit of those arguing for legal aid reform or not. It is signed off by the chief economist and by the Minister responsible. [...]

As a former economist, I have been through it myself [...]. It does exactly what it is meant to do: it follows Government guidance on impact assessments. It does not attempt to quantify or monetise the costs and benefits of wider economic and social costs, for which there is no data.[73]

59.  The MoJ has sought to tackle long-term data and systems problems by including a 'management information' programme in its Transforming Justice work.[74] The MoJ informed us that it had made significant improvements in its modelling capability so that it could forecast demand for criminal, civil and family justice.[75]

60.  When we visited the MoJ Headquarters we were told that the Department was: placing more emphasis on understanding its cost-drivers; improving its analytical function and ensuring policy was evidence based (this included strengthening links with relevant academics); and, trying to make better use of data, including considering the possibility of sharing a single statistical unit with the CPS. Additionally, officials who were working on policy had to develop transferable skills which could be used in different policy areas, rather than focusing on one area of policy for a whole career. As such they now formed part of a single policy group.

61.  Another way the MoJ has improved its modelling capability is through a general improvement of its finance skills, both at senior levels and amongst operational staff. The MoJ is aiming to achieve a good representation of finance skills at senior level, and a suitable understanding of finance among operational staff. A new training strategy has been put in place and all senior civil servants and budget holders are now required to have a financial objective in their annual objectives.[76] It is hoped these measures will help the MoJ to improve its understanding of the cost implications of policy proposals. To identify whether the financial implications have been sufficiently well costed all new policy proposals raised internally are subject to review by corporate finance, with assistance from analytical services, before being submitted to the Board.[77] In addition, the Institute for Government reported that the MoJ had brought in high-calibre analytical specialists, with many coming from the Department for Work and Pensions, a Department that was recognised as being particularly strong at generating operational data that could be used for policy decisions.[78]

62.  The MoJ informed us that recent reforms - legal aid, sentencing and the rehabilitation revolution - have all been informed by improved analytical modelling to ensure that their costs and benefits, and impacts on customers are fully understood. The estimated effects, models and assumptions are set out in Impact Assessments, which are signed off by the Department's Chief Economist and ministers, and are published to ensure proper public and Parliamentary scrutiny.[79] In addition, Ann Beasley CBE, Director General - Finance and Corporate Services, Ministry of Justice, told us that during the spending review the Department was able to start from an understanding of what drove their costs, and were then able to see what the policy options were to stop those drivers.[80] Although the MoJ had a large and growing evidence base on the effects of different measures and interventions across the justice system, there were some areas where their evidence was limited or incomplete and this was considered when developing analytical and research programmes.[81]

63.  We welcome the improvements made in modelling and the use of analytical techniques. We recommend that the Department further improves its analytical function, and its evidence base, so that evidence of effectiveness can lead policy. The Department should bring together all its analytical and policy capacity, both in the MoJ and in NOMS, to provide a central strategic function. The Department should further develop its work with other departments to take account of the wider social and economic costs of crime, particularly with a view to reducing the number of people entering the criminal justice system and the inherent demands upon it.

BENEFITING FROM EXPERIENCES OVERSEAS

64.  Throughout this inquiry, we have sought to establish to what extent the MoJ has considered building on examples of good practice overseas. In addition we have attempted to establish to what extent comparisons of justice systems can be made, for example to establish what different aspects cost.

65.  In its written evidence, the Prison Reform Trust highlighted Canada as having an integrated and co-ordinated corrections service, which includes shared management systems, accountabilities and IT, and compared this to NOMS which it said required closer working arrangements.[82] It should be noted, however, that Canada has a system of both Federal and Provincial correction services.

66.  The Department told us that it tried to draw from international experience, and gave the example that some of the offending behaviour programmes it used were drawn from Canada originally. However, it admitted there was a difficulty as other justice systems were very different to England and Wales, which meant that adaptation was quite hard.[83] These difficulties were commented on in the conclusion of an MoJ research paper, International comparison of publicly funded legal services and justice systems.[84] It said that although it seemed that legal aid in England and Wales was significantly more costly than elsewhere, the same did not apply to the overall costs of the justice system as spending on courts and public prosecution was comparatively low in England and Wales. This implied that looking at legal aid expenditure in isolation risked missing important structural differences between justice systems. In addition, there was also an element of 'path dependence' that would inhibit a major overnight shift to a lower spending system.[85] We raised the scope and eligibility for legal aid with officials in Denmark and Norway when we visited in April this year. In Norway the scope for legal aid was limited to certain civil cases for those with an income under 200,000NK (approximately £21,000). It could be available in divorce cases, though these were mainly dealt with administratively. It was available for family law and social security cases, but not for contract law. In comparison to Denmark, legal aid cost Norway less but there was a wider scope.

67.  Peter Handcock, Chief Executive, Her Majesty's Courts and Tribunals Service (HMCTS), told us that from time to time HMCTS had made individual comparisons of components of the electronic case management systems used in other jurisdictions. It was difficult to make whole system comparisons because systems and processes varied a lot, and the published data varied so much that it was difficult to match it to make meaningful comparisons. For example, HMCTS had looked several times at the systems used in Singapore's civil justice system, but found that the obstacles to an insightful comparison were almost overwhelming and hard to resolve at a reasonable cost. Additionally, he added that very substantial investment was required to make comparisons across jurisdictions meaningful.[86]

68.  We requested a briefing from the National Audit Office which compared crime and criminal justice data from a number of different countries and set out some of the challenges of making such comparisons. The briefing found that whilst international comparisons seldom provide a 'silver bullet' answer, they could provide valuable information about how similar problems were tackled in different jurisdictions.[87] It additionally commented that a great deal might be achieved by studying practices in other countries and piloting them in England and Wales.[88] It also identified the following as areas where it could be beneficial for the Ministry or others to do additional comparative work:

  • Fines were the most common type of sentence in England and Wales in 2009-10.[89] We have seen recent evidence that fine collection has improved, and this must continue. Cross-border comparisons of fine collection systems could be beneficial, if there are better results elsewhere.
  • In 2011, the average cost per prisoner in England and Wales was £37,163. The MoJ should conduct more work to see how this compares to other countries.[90]
  • The Netherlands and Finland had seen reductions in their prison populations in recent years. It could be helpful to gain insight from their experience as the MoJ tries to manage prison capacity whilst meeting its savings requirements.[91]
  • The rate of reoffending is a key measure, and it would be highly desirable if more could be done to compare rates in different countries, or produce a regular international survey.[92]
  • Due to the way that crime was recorded in Canada, its Government could report on the changing severity of recorded crime as well as the change in the recorded crime rate. There could be merit in the Home Office and the MoJ reporting in a similar way from time to time.[93]
  • Most other countries are also undergoing fiscal consolidations, so there would be benefit to the MoJ of forging new links or finding other ways to share good practice with other jurisdictions.[94]

In addition, the National Audit Office highlighted a future major study from the European Social Survey 'Trust in Justice' project which will look at perception and legitimacy in criminal justice throughout Europe.[95]

69.  Whilst there are difficulties in making straight comparisons between different jurisdictions, the MoJ should continue to draw on examples of innovative or efficient practice in other justice systems. We recommend that the Department takes note of the National Audit Office's briefing, Comparing International Criminal Justice Systems, which indicates where further work may be beneficial. This includes in particular: research into prison systems, such as those in the Netherlands and Finland, which have seen reductions in the prison population; a comparison of fine collection rates, which is an area where further improvement is required; and improved sharing of positive experiences across jurisdictions of how services have been provided at a lower cost. There are also potential lessons to be learned by comparing the distinct criminal justice systems in Scotland and Northern Ireland with that of England and Wales. The Department should, in its response, set out how, if at all, it intends to learn lessons from other jurisdictions.

Addressing poor financial management

LAYING THE ACCOUNTS ON TIME

70.  The Ministry of Justice has had a number of ongoing problems related to its financial management. Most critically, for the past two years it has not been able to lay its Annual Report and Accounts before Parliament prior to the summer recess in accordance with HM Treasury's timetable for central Government bodies.

  • In 2009-10, the Ministry was the only Department to submit its resource accounts late. It blamed the delay on a change in accounting principles governing its prisons property portfolio, and also stated that there were timing issues with probation trust accounts, which operate to local authority timetables, rather than central Government timings.[96]
  • In 2010-11, the Ministry again failed to produce its accounts before the July Parliamentary recess. It explained that this was due to timing difficulties in accounting for probation trusts in the National Offender Management Service, and the late completion of accounts for 2009-10 which had led to a late start to the process for 2010-11.[97]

71.  Sir Suma Chakrabarti, the then Permanent Secretary, told us that the Department's performance had improved each year, and that the MoJ was aiming to lay its 2011-12 accounts pre-recess, but after the new 30 June deadline required under the new Clear Line of Sight initiative.[98] He particularly highlighted the challenge presented by consolidating the 35 probation trust accounts into NOMS accounts as these NDPBs worked to a September accounting deadline. The MoJ has been able to persuade them to bring their processes forward so it can meet a recess deadline, but considered it unfeasible to expect them to meet an end of June deadline. He also stressed the progress made by the LSC, whose accounts are to be consolidated with the MoJ for the first time. Last year it produced its accounts by October, but this year it did so by early July.

72.  Sir Suma commented that expecting all bodies to produce their accounts in time for consolidation and for the NAO to do its two­week check, all before the end of June, was undeliverable at this stage. He considered that the same applied to a number of other departments with large numbers of external bodies. He queried the difference between the Clear Line of Sight deadline, the end of June, and the statutory deadline, the end of January, and said:

If we cared so much, why not move the statutory deadline forward? I do not understand why this target has been set, quite honestly. I am sure it is a good thing to do because we should get our accounts done as soon as possible, and I do not disagree with that, but the revealed preference of Parliament is for the end of January.[99]

73.  On 12 July, Ursula Brennan, Sir Suma's successor as Permanent Secretary, told us that the Departmental accounts, and those of the sponsored bodies, had been laid before Parliament that day. Whilst this showed further improvement, as expected it did not meet the agreed deadline of 30 June.[100]

74.  Not adhering to the deadline for submitting departmental accounts, agreed across Government, is unacceptable. It creates the impression that the Ministry of Justice is a poor-performing Department with poor financial controls.

GAINING A CLEAR AUDIT OPINION

75.  A second criticism of the MoJ's financial management was that the accounts of the Legal Services Commission were qualified for the third year running.[101] The LSC's accounts were qualified by the Comptroller and Auditor General in 2008-09 because of estimated overpayments of £24.7 million. By 2009-10, the estimated level of overpayments rose to £78.6 million, meaning the accounts were qualified again. In November 2010, Carolyn Downs, the Chief Executive of the LSC at the time, explained the overpayments to the Committee of Public Accounts, saying "the majority of providers are not making fraudulent claims. Our fee schemes are complicated and very different. There are add-ons, fixed fees and so on, which creates a complex system".[102]

76.  The MoJ explained that the LSC accounts for 2010-11 were qualified because the error rate figures extrapolated by the NAO from the LSC's own projected error rates were higher than the auditor's maximum. The picture developing from 2010-11 actuals reveals a significant fall in error rates. Additionally, a significant and ongoing programme of work has been instigated in an effort to ensure the LSC delivers timely accounts and continues to reduce error rates for the year 2011-12.[103]

77.  The Committee of Public Accounts reported in March that the MoJ had improved the management of finances at the LSC, evidenced by a reduction in the estimated level of error on the accounts from £75 million to £50 million, although this was still too high for the accounts to receive a clear audit opinion. However, the scale of the challenge at the LSC remains very high, as it must also ensure its errors are sufficiently small not to impact on the Ministry's accounts.[104]

78.  Matthew Coats, Chief Executive, LSC, told us how the LSC sought to gain control of its finances:

The LSC has made substantial progress in this regard and reduced the level of estimated mis-payments to legal aid providers. [...] [W]e anticipate that error levels will have been significantly driven down over the last two years [,but] we recognise we still have a lot more to do to reduce errors to immaterial levels and remove the relevant accounts qualifications.

Mr Coats added that the LSC had recently launched the latest phase of its financial stewardship improvement work, which focused on three main areas:

  • Intensifying the reduction of errors in the areas responsible for the majority of mis-payments, through a combination of IT controls, targeted audit testing and staff training.
  • Completing work to overhaul the organisation-wide approach to all areas of governance, assurance and audit.
  • Continuing to improve financial management capability, including the further strengthening of the finance and assurance functions and by implementing a modern accounting system.[105]

79.  Ursula Brennan told us that the LSC's accounts for 2011-12 were again qualified due to the error rate in payments to legal aid providers. The NAO quantified the level of error at £35.7 million, a 28% reduction from the previous year. This reduced error rate has meant that the Departmental accounts, into which the LSC's accounts have been consolidated for the first time, have not been qualified.[106]

80.  The Legal Services Commission must establish a clear plan for how it intends to reduce significantly its error rate. The ongoing qualification of the LSC's accounts raises concerns that public expenditure is being used inappropriately.

PRESENTING ROBUST EVIDENCE TO SUPPORT THE ACCOUNTS

81.  A third criticism of the MoJ's financial management was that the Comptroller and Auditor General (C&AG) issued a disclaimer of opinion on the HMCTS Trust Statement, meaning he was unable to arrive at an opinion on whether the accounts gave a true and fair view. This was the first time the C&AG had disclaimed the accounts of any Whitehall body since January 2006.[107]

82.  In 2010-11, the Department was required for the first time to produce a separate set of accounts (the Trust Statement) to record the court fines, confiscation orders and fixed penalties collected by the MoJ on behalf of the Exchequer. Because of limitations in the MoJ's case management systems, it was unable to provide a sufficiently detailed transaction listing to support the Trust Statement, and consequently the C&AG disclaimed his opinion for 2010-11.[108]

83.  On 15 December 2011, the Secretary of State made a Written Ministerial Statement explaining why the C&AG issued a disclaimer:

This reflects the fact that the IT systems used in the enforcement of impositions are live "case management" systems, rather than accounting systems: they are fully effective in reporting the value of money owed to ensure targeted enforcement, but cannot be used for retrospective reporting of individual transactions for audit. The IT system was rolled out in 2007-8: the requirement to produce a trust statement first arose for 2010-11. We estimate that to implement a new accounting system for these purposes would cost at least £3 million, and would not present good value for public money. We are, however, taking steps to ensure that we are better able to evidence the robustness of the historical figures for audit purposes in future.[109]

84.  In March Peter Handcock, Chief Executive, HMCTS, explained to us why the Trust Statement was a problem for the Agency:

The Trust Statement is not an account of the operating costs of HMCTS; it is a statement of third-party money in effect. It is money that is collected on behalf of Government by HMCTS. [...] We simply do not have an accruals accounting system to manage that money. We have never required one. The Treasury introduced a new requirement, but we do not have a system that can deliver what is required.

We have an accounting system that looks a bit like old-fashioned machine ledger cards, where somebody makes a payment and you put it in a machine, crank a handle and it prints the amount of the payment. From that system you cannot produce a properly consolidated auditable report of all those accounts. NAO simply were not able to say whether the Trust Statement was accurate or not.

85.  Sir Suma explained how progress in this area had been addressed:

Since [2010-11], we have completed extensive work with the supplier of the case management system which records fines and confiscation orders enabling us to produce more robust evidence to underpin the figures in the Trust Statement.[110]

He also highlighted the challenge of providing quality information about fixed penalty notices, for which the end-to-end imposition payment systems are the responsibility of separate constabularies and are therefore beyond the level of the MoJ's control.[111] The MoJ will be discussing with HM Treasury whether the MoJ is best placed to report on these items, and this an issue we address in paragraphs 112-115. The 2011-12 draft Trust Statement has been prepared, and is in the process of being audited by the NAO. It is anticipated that it will be laid before Parliament in early September, as agreed with HM Treasury.[112]

86.  We acknowledge the difficulties presented in producing the HMCTS Trust Statement for 2010-11. We note the progress made to provide robust evidence for 2011-12 for fines and confiscation orders. If the 2011-12 Trust Statement does not demonstrate significant improvements we will require ministers and officials to explain to us why the Department is failing in this respect.

IMPROVING FINANCIAL MANAGEMENT

87.  The Department routinely uses contractors to supplement its accounts production teams. For the 2010-11 accounts it used KPMG to provide support on the Departmental accounts production and the production of the HMCTS Trust Statement. The total value of the contract, encompassing both these elements, was £244,000. There was a clause in the contract with KPMG so that if the MoJ delivered its accounts pre­recess, KPMG would receive a bonus payment. This was not awarded as the deadline was missed.[113]

88.  When it was unable to deliver the 2010-11 Departmental accounts before the summer parliamentary recess in 2011, the MoJ asked the Chartered Institute of Public Finance and Accountancy (CIPFA) to conduct an independent review of its accounts production process.

89.  In light of the findings of that review, and a reorganisation within Corporate Finance, the MoJ contracted with Liberata to support the production of the 2011-12 Departmental accounts. This takes the form of providing interim staff to fill vacant posts within accounts production teams across the Department and project management resource. The contract is worth approximately £4 million, of which half of the costs are offset by what the Department would have spent if existing vacancies in permanent staff structures had been filled (taking into account salaries, on-costs and recruitment costs). Resource usage by Liberata is under regular review to ensure the MoJ is achieving value for money for the taxpayer.[114]

90.  Following the CIPFA review of the 2010-11 accounts production process and the lessons the MoJ is learning during the current 2011-12 process it will look at what the longer term resources and operating model for the delivery of the Departmental accounts need to be to enable production of quality and timely accounts.[115]

91.  Additionally, as part of a wider Finance Improvement Programme, the MoJ has re-designed its finance structures to ensure it meets its future reporting requirements and timetables. Structural changes both at the Senior Civil Service (SCS) level and the structures below have been implemented with an expectation that the restructure concludes by the end of the 2011-12 financial year.[116] The NAO reviewed the MoJ's progress on improving financial management over the Summer/Autumn of 2011. Their report acknowledged significant improvements the MoJ had made. The Department had moved from a financial maturity score of around 3 to nearer its target score of level 4 (against the NAO 5 level system). The NAO also acknowledged that the MoJ had taken action to improve its production of the accounts, and that it had engaged CIPFA to review the reasons for the Department not meeting a pre recess lay date.[117]

92.  Sir Suma told us that the MoJ was not strong enough on its financial management or management accounts control going back several years. He also emphasised that it had got better, not to where it should be, but it was now regarded in the top quartile in Whitehall.[118]

93.  We recognise the progress being made in improving financial management, but this comes from a low base. It seems to us that, until recently, there has been an unacceptable complacency about the Department's performance. We fear that there is still a defeatist mindset within the MoJ on this issue, exemplified by the outgoing Permanent Secretary's apparent dismissal of the possibility of meeting the Government's own deadline of laying accounts by 30 June. This is not acceptable. If the circumstances of the MoJ are genuinely unique—which we doubt—the Department should negotiate different arrangements with HM Treasury. If they are not, then repeated failure to meet deadlines is unprofessional and shoddy. It should be a priority objective for the new Permanent Secretary to sort this out, and her performance should be measured against it.

BENCHMARKING OF COSTS

94.  In 2010, the National Audit Office criticised the MoJ for not understanding its costs, commenting that its "incomplete knowledge of the costs of its activities and policy proposals reduced its ability to make decisions on the efficient allocation of resources".[119] The NAO's follow-up report in 2011 said that within NOMS the understanding of costs had been advanced through the specification, benchmarking and costing project. This project aims to specify the minimum legal and safe requirements for services delivered in the prison and probation services and quantify how much these services should cost. By November 2011, this work was over 90% complete and the MoJ had provided details of the results on its website, although providers of services will not be required to demonstrate that they have made use of specifications until later in 2012. The Ministry has stated that this work has helped inform both budget allocations and its tendering for contracts for private prisons.[120] HMCTS was also producing similar activity-based costings in the Crown and Magistrates' Courts as a matter of priority.[121]

95.  In January, Sir Suma told us that the fact that people in the Prison Service and the Courts Service understand their costs much better was a major advance. For example, it enabled a prison governor to say, "Reception costs this much. The benchmark is this much. I am trying to get close to the benchmark." Sir Suma noted that this was something that did not happen before, and had come about because there had been work on financial management.[122] The MoJ also informed us of the following impacts that the Specification, Benchmarking and Costing Programme is having: Improved effectiveness; improved economy; improved efficiency; greater freedom for providers to determine how to deliver services; improved transparency; more effective commissioning and competitions; and improved strategic planning.

96.  We welcome the progress made through the Specification, Benchmarking and Costing Programme in NOMS, and the activity-based costings in HMCTS. Both are further examples of how the Ministry of Justice's financial management is gradually improving, and how knowledge of its costs is providing the basis for decisions throughout the Department. We await further details about the benefits these programmes are bringing, and whether similar work can be done elsewhere in the MoJ.

Working with others

97.  Through the Transforming Justice programme, the Ministry of Justice has tried to "sort its own house out by working better within what it controls".[123] The next phase of Transforming Justice will be about working better with other Government departments. We focus on the Department's future plans in this area in Chapter 4. However, there are some issues concerning how the MoJ has engaged across the justice system since its creation which are more appropriately addressed at this point.

98.  As the Institute for Government (IfG) highlighted in 2010, due to the breadth of the MoJ's Departmental mission many of those who are needed to lead justice system change are not within the MoJ's organisational control. Making improvements to the justice system requires leadership and consent from a range of groups, including: judiciary and magistrates; unions; other Government departments; local government and other local agencies; and politicians.[124]

OTHER GOVERNMENT DEPARTMENTS

99.  The Institute for Government's 2010 report contrasted the radical approach the MoJ had taken to engage its own staff in the transformation process with the discussions it held with other Government departments, whose policies may have an impact on the numbers of people using the justice system. It explained that the MoJ had not attempted to engage other departments heavily in its internal thinking about Transforming Justice,[125] but it was "the department that picks up the pieces when other departments have let people fall through the cracks".[126] By the time of the IfG's 2011 report, most interviewees felt there was more integrated working with other departments (Home Office, Department of Health and Department of Work and Pensions) but that this was still at an early stage and should be strengthened. We examine the MoJ's plans to strengthen this area in Chapter 4.[127]

100.  A notable improvement is the modelling that MoJ has introduced for assessing the cost implications of policy changes proposed by other Government departments. Based on the results, the MoJ negotiates with other departments about how those costs are to be borne. We were told that this had led to a better relationship with the Home Office because the MoJ could now assess the cost impact of policy changes and decide with the Home Office how they would be paid for.[128]

101.  In most cases, other departments' policies which increased their own costs usually delivered benefits to the MoJ. The work by the Department for Education on troubled families was highlighted as an example: "the more [the Department for Education] engages, educates and ensures that troubled families are dealt with across Government, the less demand, hopefully, there will be on the justice system. Through the business planning process, we are trying to get other departments to assist us in a positive way".[129]

102.  The MoJ has also worked closely with other departments on youth justice policy. Until June 2010, this had been an area of joint responsibility between the then Department for Children, Schools and Families and the MoJ, but is now the sole responsibility of the MoJ. The Youth Justice Board told us that this change had simplified reporting processes as it now only had to feed into one department's reporting arrangements.[130] However, the YJB recognised some risks that arose from the change to single departmental oversight:

[Our] main concern is that over time the DfE's focus on youth justice will diminish. An example of the risk is that initial guidance for the new DfE combined Early Intervention Grant (EIG) did not make clear that funding could be directed towards youth crime prevention, despite the ending of a previous DfE youth crime prevention funding stream.[131]

103.  During our inquiry into the proposed abolition of the Youth Justice Board, Crispin Blunt MP, Parliamentary Under-Secretary, Ministry of Justice, told us that as the Minister for youth justice, he had to make sure that other Government departments and local authorities "step up to the plate" to play their part in the delivery and funding of youth justice. He stated that "I am concerned that I am being engaged later than I would wish [...] in the process to ensure that there is proper financing for Youth Offending Teams on the ground, to make sure that before the local authority and other departmental budget settlements are cleared, youth justice is getting a proper shout from inside the Government".[132]

104.  In the context of improving cross-departmental working, we explored the effectiveness of cross-department ministers, such as the appointment of Nick Herbert MP as Minister for Policing and Criminal Justice on which he reports jointly to the Secretary of State for Justice and the Home Secretary. The IfG argued that effectiveness could be increased if a joint minister was able to dismantle or at least manage cultural barriers across departments, although junior ministers could face problems exerting authority in more than one department.[133]

105.  Sir Suma gave the development of criminal justice video technology and secure email as examples of cross-departmental success. The Minister had been able to persuade all police authorities, the CPS, and the courts to sign up to the programme of modernisation. In the early stages, when he had police reforms to deal with, it had been very difficult for him to focus on the cross-departmental agenda, but he had been able to do that more in recent months. Additionally, having objectives that were mutually consistent across departments was also fundamental.[134]

106.  Kenneth Clarke MP, Secretary of State for Justice, gave the example of the preparation of a case in the criminal courts as an area where having a joint minister had been advantageous. He said that having all the interested parties sitting around the table with one minister brought them out of their silos and open to discussing improvements to the system, the results of which the Minister would present to Parliament in this Session.[135]

107.  If the potential benefits of having joint ministers working across departments are to be realised, they require the allocation to joint ministers of an appropriate range of responsibilities, giving them a realistic opportunity to be effectively involved in both departments.

108.  We raised with the Secretary of State whether there were aspects of the justice system that could be better located in another department. On the overall division of responsibilities between the MoJ and the Home Office he said:

It has been divided up very oddly, [...] but it does not create any great problems in practice. Personally, I would leave it alone, certainly for the foreseeable future. My experience of reorganising the size, shape and name of Departments is that it is usually a disruptive and rather disappointing procedure. It means that for about six months nobody does anything.[136]

On specific responsibilities he said:

There is no obvious part of my Department, in my opinion, that ought to be moved somewhere else or vice versa. There is a slight query—and you really get a departmental turf battle between some of the people involved—on the division of responsibility for children in litigation between the Department for Education and ourselves, which is a bit odd. [...] That has been partially dismantled, though not entirely, but it is not for me to be concerned with these things anyway. I should always move cautiously before you start moving things about.[137]

109.  Sir Suma commented that the division of European and international justice and home affairs (JHA) issues could be better organised between the MoJ and the Home Office:

Increasingly, as the two of us talk a lot about JHA with the Home Office, that sort of thing, and also beyond Europe, with the international work we do, quite often, when either of us goes abroad, we are reading out a brief across the Home Office and ourselves, and Theresa May and Helen Ghosh will be doing the same. I do wonder whether an international directorate that covered both Departments would not be a sensible thing to have, but that is probably a personal opinion.[138]

The Secretary of State expressed some sympathy with that opinion when he continued:

At the moment, for European Councils of Ministers, a Home Office team, including a Minister, go out on a Thursday and a Justice team and a Minister go out on a Friday. We usually say hello to each other at the airport. Unfortunately, the agenda of the Council does not always 100% match that. So usually Thursday is Interior Ministers and Home Office and usually Friday is ours, but, as all the countries are divided up slightly differently, I think Suma's idea is quite interesting. Why we are having these two separate teams, like an American football team, running off and running on, I am not quite sure.[139]

110.  We recommend that the Ministry of Justice and the Home Office establish a single team to support their responsibilities for European and international justice and home affairs issues. This is an obvious area of unnecessary duplication.

111.  During this inquiry, and through the work of the National Audit Office into the MoJ's financial management, we have become aware of the anomaly that all of the Government's confiscation order debt book appears on HMCTS accounts. There has also been a dramatic increase in the value of confiscation orders outstanding, from just over £500 million owed at the end of 2006-07 to over £1.25 billion four years later. The MoJ told the Committee of Public Accounts that 60% of this amount was unlikely to be collected, as the assets concerned were either abroad or very well hidden, but there was a clear benefit in maintaining these orders as live as they limited the ability of criminals to move any proceeds of crime back to the United Kingdom.[140] The MoJ recovered on average 68% of the value of the orders for which it was responsible, but admitted that this was largely because they were responsible for lower value orders which were easier to collect. High value orders were typically the responsibility of the Serious Fraud Office and the Crown Prosecution Service.[141]

112.  Peter Handcock, Chief Executive, HM Courts and Tribunals Service, said the confiscation order debt book should not be on the HMCTS accounts as he was only responsible for enforcing 18% of the debt book, and it resulted with HMCTS receiving a qualified Trust Statement. He added that there were other things he would like off the HMCTS accounts, such as fixed penalty notices from police forces.[142] We referred to this earlier in paragraph 84.

113.  The Committee of Public Accounts reported that the MoJ had been involved in setting up a cross-Government board, chaired at ministerial level, to discuss confiscation orders and consider the appropriate action.[143] Ann Beasley CBE, Director General - Finance and Corporate Services, Ministry of Justice, explained to us they were working with the Home Office, which led on confiscation orders, to try to encourage them to improve progress. The Home Office had set up the Criminal Finance Board, chaired by James Brokenshire MP, Parliamentary Under-Secretary, Home Office, who is responsible for crime and security.

114.  The current system for the collection of confiscation orders appears muddled. The administrative responsibility for a confiscation order, or other type of fine or penalty, should fall on the organisation whose duty it is to collect it. This would be a clear and transparent approach. We recommend that those confiscation orders that are not HMCTS's responsibility to collect are removed from their accounts.

RELATIONSHIP WITH THE JUDICIARY

115.  When the then Prime Minister announced the creation of the MoJ, the then Lord Chief Justice, Rt Hon Lord Phillips of Worth Matravers, declared publicly that the announcement raised "important issues of principle". He stated that "structures are required which will prevent the additional responsibilities taken over by the new [MoJ] interfering with or damaging the independent administration and proper funding of the court service" and "the continuing problems of prison overcrowding and the availability of resources to provide the sentences imposed by the courts necessitate public debate" as, on account of the strains on the prisons' budget, judges might feel under pressure to impose sentences they did not believe to be appropriate. Provided that these concerns were addressed, he concluded that "there would be no objection in principle to the creation of a new ministry with responsibility for both offender management and the court service."[144]

116.  In February last year, Lord Phillips, now President of the Supreme Court, warned that the Court's independence could not be properly guaranteed because of the way it was funded by the Government. He said the court was dependent on what it could persuade the MoJ to give "by way of contribution", and argued that the court's budget should be pre-set and ring-fenced.

117.  In response, the Justice Secretary said "Of course we have judicial independence, it's at the heart of our freedom in this country. The Government is bound by the law, it doesn't actually determine judgements of courts. [But] I'm afraid Lord Phillips cannot be in some unique position where the court decides on its own budget and tells the Ministry of Justice and the Government what it should be".[145] There had been a deep suspicion that the courts would be starved of money to pay for prison, but that suspicion was fading.[146]

118.  We received written evidence from the Lord Chief Justice of England and Wales which stated that the April 2008 Framework Document, that created a unique partnership between the Lord Chancellor and the Lord Chief Justice, contained "elaborate, and with hindsight perhaps over-elaborate, provisions relating to the finance, resource allocation and business plans for HMCS". It further stated:

Whilst HMCTS remains an agency of the MoJ, both the Senior President and I have been impressed by the independent position it has adopted in respect of many of the issues it has had to address in the short time since its creation last April. I am well aware of the very keen interest the board takes in performance and timeliness, whilst of course also underlining the fundamental need to protect judicial independence.[147]

The Justice Secretary told us that "the top of the judiciary are pretty well up for efficiency and change" and were receptive to sensible suggestions. He and the Lord Chief Justice have an annual dialogue in relation to the allocation of financial resources to HMCTS for the following year. Additionally, the Lord Chief Justice did raise the reduced budget available for training and similar activities as a particular matter of concern.[148]

119.  We note the inevitable tensions between the Lord Chancellor and the Lord Chief Justice on funding for the courts and tribunals service, but welcome the annual dialogue in relation to the allocation of financial resources. We believe that this is the appropriate mechanism through which any concerns about funding can be raised, and agreement reached. Essential though judicial independence is, we agree with the Secretary of State that that does not mean the judiciary can set its own budget without reference to the constraints on overall public expenditure.


28   Ministry of Justice, Annual Report and Accounts 2010-11, pp 12-13 Back

29   Ibid. pp 13-14 Back

30   Q 439 Back

31   National Audit Office, Financial Management Report 2011, HC 1591 Back

32   Constitutional Affairs Committee, The Creation of the Ministry of Justice, HC 466, Q 75 Back

33   Ev 119 Back

34   Q 501 Back

35   Ministry of Justice, Annual Report and Accounts 2010-11, pp 6-10 Back

36   Justice Committee, Eighth Report of Session 2010-12, The Role of the Probation Service, HC 519-I, paras 15-17 Back

37   Ev 109 Back

38   Ministry of Justice, Annual Report and Accounts 2010-11, p 187 Back

39   Q 186 Back

40   Ministry of Justice, Government response to the Justice Committee's Report: The proposed abolition of the Youth Justice Board, Cm 8257, January 2012, para 4 Back

41   Q 443 Back

42   Ministry of Justice, Response to consultation on reforms proposed in the Public Bodies Bill, December 2011, p 10-18 Back

43   Public Administration Committee, Twenty First Report of Session 2010-12, Future oversight of administrative justice: the proposed abolition of the Administrative Justice and Tribunals Council, HC 1621, para 32 Back

44   Ibid. Q 125 Back

45   IbidBack

46   Ev 164. We do not consider in our Report the independence of the judicial appointment process. We will consider whether to do further work on the judicial appointment process when the proposed changes set out in the Crime and Courts Bill reach their House of Commons stages. Back

47   Committee of Public Accounts, Ministry of Justice Financial Management, HC 574, paras 3-4 Back

48   Qq 79-80 Back

49   Ev 124 Back

50   Qq 59-62 Back

51   Justice Committee, Tenth Report of Session 2010-12, The Proposed abolition of the Youth Justice Board, HC 1547,
paras 5-7 
Back

52   Ibid. para 13 Back

53   Ministry of Justice, Government response to the Justice Committee's Report: The proposed abolition of the Youth Justice Board, Cm 8257, January 2012, para 4 Back

54   Ev 107 Back

55   Q 440 Back

56   Cm 8257, para 4 Back

57   Institute for Government, Transformation in the Ministry of Justice: 2010 interim evaluation report, June 2010, p 41  Back

58   Ibid. p 39 Back

59   Institute for Government, Transformation in the Ministry of Justice: 2011 interim evaluation report, June 2011, p 20 Back

60   Institute for Government, Transformation in the Ministry of Justice: 2010 interim evaluation report, June 2010, p 36 Back

61   Ibid. p 34 Back

62   Ev 121 Back

63   Ev 128 Back

64   Q 103 Back

65   Ev 169 Back

66   Qq 397-403 Back

67   Institute for Government, Transformation in the Ministry of Justice: 2010 interim evaluation report, June 2010, p 43 Back

68   National Audit Office, The Youth Justice System in England and Wales, HC 663, para 19 Back

69   Ev 123 Back

70   Ev 124 Back

71   Justice Committee, Third Report of Session 2010-12, Government's proposed reform of legal aid, HC 681-I, para 30 Back

72   Ministry of Justice, Government response to the Justice Committee's Report: The Government's proposed reform of legal aid, Cm 8111, June 2011, p 4 Back

73   Committee of Public Accounts, Seventy Fifth Report of Session 2010-12, Ministry of Justice Financial Management, HC 1778, Qq 48-49 Back

74   Institute for Government, Transformation in the Ministry of Justice: 2010 interim evaluation report, June 2010, p 43 Back

75   Ev 129 Back

76   National Audit Office, Financial Management Report 2011, HC 1591, Paras 2.6-9 Back

77   Ibid. Para 2.15 Back

78   Institute for Government, Transformation in the Ministry of Justice: 2010 interim evaluation report, June 2010, p 42 Back

79   Ev 131 Back

80   Q 176 Back

81   Ev 176 Back

82   Ev 121 Back

83   Q 209 Back

84   Ministry of Justice, International comparison of publicly funded legal services and justice systems, October 2009 Back

85   Ibid. p 36 Back

86   Qq 346-349 Back

87   National Audit Office, Comparing International Criminal Justice Systems, March 2012, Introduction, Para 7 Back

88   Ibid. Para 1.13 Back

89   Ibid. Paras 2.33-35 Back

90   Ibid. Para 2.45 Back

91   Ibid. Para 2.48 Back

92   Ibid. Para 2.58 Back

93   Ibid. Para 2.6 Back

94   Ibid. Para 3.7 Back

95   Ibid. Para 2.74 Back

96   Committee of Public Accounts, Ministry of Justice Financial Management, HC 574, Para 7 Back

97   Committee of Public Accounts, Ministry of Justice Financial Management, HC 1778, Paras 12-13 Back

98   Letter dated 16 May 2012, from Sir Suma Chakrabarti, Permanent Secretary, Ministry of Justice, to Rt Hon Margaret Hodge MP, Chair, Committee of Public Accounts Back

99   Qq 455-456 Back

100   Letter dated 12 July 2012, from Ursula Brennan, Permanent Secretary, Ministry of Justice, to Rt Hon Margaret Hodge MP, Chair, Committee of Public Accounts Back

101   National Audit Office, Financial Management Report 2010, HC 187, Paras 11-14 Back

102   Committee of Public Accounts, Ministry of Justice Financial Management, HC 574, Q 131 Back

103   Ev 139 Back

104   Committee of Public Accounts, Ministry of Justice Financial Management, HC 1778, Para 15 Back

105   Ev 169 Back

106   Letter dated 12 July 2012, from Ursula Brennan, Permanent Secretary, Ministry of Justice, to Rt Hon Margaret Hodge MP, Chair, Committee of Public Accounts Back

107   National Audit Office, Financial Management Report 2010, HC 187, Paras 11-14 Back

108   Letter dated 16 May 2012, from Sir Suma Chakrabarti, Permanent Secretary, Ministry of Justice, to Rt Hon Margaret Hodge MP, Chair, Committee of Public Accounts Back

109   HC Deb, 15 December 2011, col 128WS Back

110   Letter dated 16 May 2012, from Sir Suma Chakrabarti, Permanent Secretary, Ministry of Justice, to Rt Hon Margaret Hodge MP, Chair, Committee of Public Accounts Back

111   Ibid. Back

112   Letter dated 12 July 2012, from Ursula Brennan, Permanent Secretary, Ministry of Justice, to Rt Hon Margaret Hodge MP, Chair, Committee of Public Accounts Back

113   Q 129 Back

114   Ev 174 Back

115   Ibid. Back

116   Ev 139 Back

117   Ibid. Back

118   Q 457 Back

119   National Audit Office, Financial Management Report 2010, HC 187 Back

120   National Audit Office, Financial Management Report 2011, HC 1591, Paras 3.5-3.6 Back

121   Ev 131 Back

122   Q 147 Back

123   Q 437 Back

124   Institute for Government, Transformation in the Ministry of Justice: 2010 interim evaluation report, June 2010, pp 32-3 Back

125   Ibid. pp 31-2 Back

126   Ibid. p 21 Back

127   Institute for Government, Transformation in the Ministry of Justice: 2011 interim evaluation report, June 2011, p 21 Back

128   Q 178 Back

129   Q 179 Back

130   Justice Committee, Tenth Report of Session 2010-12, The Proposed abolition of the Youth Justice Board, HC 1547,
Ev 35 
Back

131   Ibid. Ev 36 Back

132   Ibid. para 8 Back

133   Institute for Government, Shaping up: A Whitehall for the future, January 2010, pp 88-9 Back

134   Q 446 Back

135   Ibid. Back

136   Q 436 Back

137   Q 447 Back

138   Ibid. Back

139   Q 447 Back

140   Committee of Public Accounts, Ministry of Justice Financial Management, HC 1778, Para 10 Back

141   Ibid. Para 11 Back

142   Q 358 Back

143   Committee of Public Accounts, Ministry of Justice Financial Management, HC 1778, Para 11 Back

144   Constitutional Affairs Committee, Sixth Report of Session 2006-07, The Creation of the Ministry of Justice, HC 466, para 2 Back

145   "Supreme Court independence 'threatened' by funding", BBC News, 9 February 2011, http://www.bbc.co.uk/news/uk-12400913 Back

146   Q 453 Back

147   Ev 168 Back

148   Ibid. Back


 
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Prepared 18 August 2012