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

Conclusions and recommendations

The creation of the Ministry of Justice

1.  We agree with the objectives set out at the formation of the Ministry of Justice, and believe there are benefits in having a separate Ministry of Justice dedicated to achieving them. We welcome the emphasis the Department places on re-offending, but believe the Department still has structures in place which do not assist in achieving that objective. (Paragraph 6)

The Departmental Board

2.  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. (Paragraph 23)

Sponsored Bodies

3.  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. (Paragraph 29)

4.  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. (Paragraph 30)

5.  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. (Paragraph 35)

6.  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. (Paragraph 36)

7.  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". (Paragraph 40)

8.  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. (Paragraph 41)

9.  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. (Paragraph 42)

Cultural change through Transforming Justice

10.  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. (Paragraph 46)

11.  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.
(Paragraph 47)


12.  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. (Paragraph 52)

Change of emphasis - understanding the business

13.  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.
(Paragraph 57)

14.  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. (Paragraph 63)

Benefiting from experiences overseas

15.  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. (Paragraph 69)

Addressing poor financial management

16.  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. (Paragraph 74)

17.  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. (Paragraph 80)

18.  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. (Paragraph 86)

19.  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. (Paragraph 93)

20.  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. (Paragraph 96)

Working with others

21.  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. (Paragraph 107)

22.  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.
(Paragraph 110)

23.  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. (Paragraph 114)

24.  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. (Paragraph 119)

Financial planning model and the new Operating model

25.  As well as having good financial control over what it has spent, the Ministry also needs to have detailed knowledge and budgetary control of its future spending plans. This is particularly the case as the Ministry is susceptible to shocks in demand as seen following the riots in the summer of 2011. The steps the Ministry has taken in this area should help to mitigate this risk. (Paragraph 129)

26.  We welcome the introduction of the new operating model which has enabled corporate and back office functions to be shared by all parts of the Ministry to avoid duplication. However, we believe that further integration is required so that the MoJ is a single delivery body. (Paragraph 133)

Reducing staff costs

27.  The MoJ has taken the correct approach by focusing the highest proportion of job losses in senior management grades in order to safeguard frontline jobs. We call on the Ministry to go further in removing unnecessary layers from their management structures in order to free up resources for the front line. (Paragraph 138)

28.  The difficulties in recruitment raised by the Chief Inspectors of Prisons and Probation and the Prisons and Probation Ombudsman are a matter for concern. In the response to this Report the Ministry must explain why previously agreed posts had subsequently been withdrawn. The Chief Inspectors and Ombudsman have a role as watchdogs and, although they will also be subject to efficiency savings, they must be able to recruit the staff they require in a reasonable fashion. (Paragraph 139)

29.  Concerns have been raised with us that the Ministry does not have the skills in place to meet the increased demands of commissioning and contract management. This places the Department, and the public purse, in a dangerous position when it enters into negotiations with private sector firms. We call on the Department to demonstrate in its response that it has the necessary skills to deliver its plans in this area, and to set out the steps it has already taken and will be taking to ensure its workforce has the necessary capabilities. (Paragraph 142)

30.  As competition for the Ministry's services increases there will be greater opportunities for staff to move from the public to the private sector and vice versa. This experience should be beneficial for individuals and the Department as a whole. Whilst it is not clear that the Department has a problem in attracting staff, we recommend that it creates a strategy for attracting and retaining talented individuals. (Paragraph 145)

31.  The Department has made some progress in reducing its previously high levels of spending on agency staff. Given that the Department has assessed its structures and introduced new operating models, it should have a clear idea where the capability gaps amongst staff are. We recommend that the Department redeploys and retrains its existing permanent staff where possible to fill current gaps. If there are full-time vacancies then the Department itself should seek to recruit. Consultants and agency staff should only be required on specialised projects and during seasonal or unexpected peaks in work. We expect the expenditure in this area to continue to decrease significantly. (Paragraph 147)

Smaller estate

32.  There remains significant scope for rationalising and improving the prison estate, which should continue to be pursued while taking full account of the available evidence of the impact of prison location on the effectiveness of rehabilitation. It is essential that when the Ministry chooses to sell off parts of its estate it receives the best possible value. Furthermore, it should ensure that where land or property may appreciate it has in place appropriate claw-back provisions in all cases.
(Paragraph 153)

33.  While our emphasis in this Report is on managerial and operational issues, we need to re-iterate a policy concern which lies at the heart of the MoJ's work. The Government appears to be locked into the 'predict and provide' model of prison provision which characterised its predecessors. There is a disturbing anomaly at the core of our criminal justice system: if a sentence says that a criminal is to be imprisoned, the Government accepts as an unarguable imperative that a prison place must be provided. No such imperative exists in relation to non-custodial sentences. Despite Parliament legislating for the provision of a plethora of non-custodial options, sentencers are routinely restricted from stipulating that these options should be attached to sentences, because the money is not available to pay for them. This approach demonstrates indifference to the views of legislators and an unacceptable curtailment of judicial choice. The present Departmental structure needs to be reformed so that it does not inhibit effective sentencing, be that custodial, non-custodial, or a combination of the two. Proper consideration should be given to the possibility of local commissioning of both custodial and non-custodial provision. (Paragraph 159)

34.  Consolidating the MoJ's headquarters is a good idea. First, it will free up unnecessary office space that can then be disposed of. Second, as more bodies use the main headquarters they too can draw on the shared services facilities available. Third, it should help the separate bodies, agencies and the core Department collaborate more effectively and reduce any possible barriers that physical distance may bring. We recommend that the Department speeds up its consolidation of headquarters, bringing in all appropriate NDPBs. (Paragraph 161)

Targeted IT changes

35.  We welcome the Ministry's commitment to securing 'better for less' from its ICT and the improvements that are already in hand. For the future, we recommend that ICT should be an integral part of the MoJ's business strategy. At a time when funds are scarce it is essential that the MoJ knows where to target improvements so that the greatest benefit can be achieved through the minimum cost. (Paragraph 172)

36.  We welcome the improvements made to project management, following criticisms related to the C-NOMIS project. ICT projects in central Government are renowned for their ability to be delayed, go over budget, and not deliver what was initially intended. Better project management should help to keep control of the ICT projects the MoJ chooses to proceed with. We recommend that for any future ICT projects the Project and Programme Management Leader be appointed on the basis that, wherever possible, they will follow that project from inception to implementation, and be the senior responsible owner for it. (Paragraph 173)

37.  There is no excuse for the Legal Services Commission's failure to implement a system of online submissions by solicitors and we recognise that the Law Society suggests providers to the MoJ are willing to adhere to a fully online process. For future contracts there should be no choice for providers but to interact with the MoJ in a way that achieves the greatest efficiency. This should be decided at an early stage, so that a clear and certain message can be delivered to providers, the minor practical problems can be overcome, and providers can be confident in making the necessary investment decisions. (Paragraph 175)

Income generation

38.  We urge the Department to promote its shared service centres to other Government departments, in order to gain additional income. (Paragraph 177)

39.  It is right that the Department is trying to achieve full cost recovery for court fees. However, there is a danger that higher fees can act as a disincentive for individuals seeking access to justice. Therefore we welcome the Ministry's approach to reducing costs so they match as low a fee as possible. The impact of higher fees on demand should be recorded and analysed so as to inform fully future decisions on fees. (Paragraph 180)

40.  Although it may not generate a large amount of income, the work of the aged debt pilots seems to be having a level of success by making offenders pay. It is important that there is confidence that methods of punishment used in the justice system are carried out. In response to this Report, we ask the Ministry to set out how these pilots will be taken forward, and whether a similar approach would be beneficial in relation to other areas of fine collection. (Paragraph 182)

41.  The Ministry is taking some interesting steps in promoting both its own services and the wider justice system to an international audience. It is not clear to us whether the Department has analysed all its activities to assess which might have a commercial appeal domestically and internationally. We recommend it should do so and that a senior leader in the organisation be appointed to champion this work across all business units within it. (Paragraph 185)

Outsourced services

42.  We reiterate our earlier recommendation that the Department needs to convince us in its response that it has the necessary skills to deliver its plans for increased competition of services, and to set out the steps it has already taken and will be taking to ensure its workforce has the necessary capabilities. The review of how the Department commissions services should involve an independent assessment of capability by those used to implementing best practice in the private sector. We call on the Government to let us have access to the full findings of this review as soon as it is available. (Paragraph 196)

43.  We recommend that the Department makes use of the knowledge and expertise of its provider firms at the outset of devising a new contract. The examples of problems within the MoJ's commissioning show a tendency for them to be poorly designed. It seems clear that the Department has insufficient experience and skills to commission effectively, so the MoJ should draw upon the experience of others. (Paragraph 209)

44.  We recommend that once the Department has designed its competition process, more is done to make the stages clear to the potential bidders. In addition every stage must be robust and transparent, and each stage must whittle the contenders down by an appropriate amount. The commissioning process involves a lot of resources both for the MoJ and the bidders, so unrealistic applications should be removed at the earliest stage, and only those with a serious chance of providing the competed service should reach the latter stages. (Paragraph 210)

45.  We recommend that the MoJ reviews its guidance for feedback so that it is part of a meaningful process for the bidders. (Paragraph 212)

46.  The Language Services Framework Agreement has been in place nationally for HMCTS since February 2012. It is not clear whether the very serious problems experienced at the start of the contract have been resolved, or are in the process of being resolved. We intend to take evidence on this matter in October.
(Paragraph 214)

47.  We welcome the steps the MoJ is taking to use small and medium sized enterprises and the voluntary and community sector. In response to this Report, we request an assessment of how the MoJ has reached the figure of 33% of its Departmental spend going to small and medium enterprises. (Paragraph 218)

48.  The Department appears to be sending mixed messages about how it wants to engage with small and medium sized enterprises and the voluntary sector. On the one hand it has done some good work to increase its spending to them, and it is trying to change its processes so they can more easily do business with the Department; on the other hand, there seems to be an general impression that the Department will move to a system whereby they set a prime contract with a large organisation, leaving it to the prime contractor to interact with SMEs and the voluntary sector. We further examine the difficulties this presents, and how these can be mitigated. We call on the Ministry to give a clear message about the circumstances in which it will opt to engage directly with SMEs and the voluntary sector. (Paragraph 228)

49.  We recommend that the Ministry assesses how it might aid the voluntary sector in bringing together organisations to form consortia for those contracts it issues at a large scale that prohibits smaller organisations competing for them on their own. (Paragraph 231)

50.  We recommend that the Ministry of Justice assesses how its policies for suppliers compare to the Department for Work and Pensions' Merlin Standards and considers whether it too should regulate the prime to sub-contractor relationship.
(Paragraph 238)

51.  We recommend that the Department considers how it can use prime contracts to incentivise and increase the involvement of small and medium sized enterprises. (Paragraph 239)

The Ministry's long-term policies

52.  As many of the costs associated with the Ministry of Justice are driven by demand for its services, at times when expenditure has to be reduced it is sensible that attempts are made to reduce demand. However, this should be balanced by other steps the Department can take to reduce spending, such as reducing costs incurred through other drivers and working in more efficient ways. (Paragraph 245)

53.   We recommend that the Department further improves its analytical function so that any future policy proposals are supported by high quality Impact Assessments that enable the fullest public scrutiny. We recommend that the Impact Assessment contains a statement of how the policy proposal fits with the label "better for less". We reiterate that in the longer term, the Department should consider how best it can work with other departments so that Impact Assessments take into account the wider social and economic costs of a policy proposal. (Paragraph 246)

Payment by results

54.  We recognise the potential benefits of payment by results, but are concerned that this potential may not be realised because of structural problems in NOMS and the MoJ which we have identified earlier in this Report. We will continue to monitor the progress of the Department's payment by results programme and call on the Department to report to us on the steps they are taking to mitigate the risks involved with this process, such as the risk that contractors will 'cherry pick' the individuals they chose to work with in order to maximise profit. (Paragraph 260)

The next stage of Transforming Justice

55.  One of the pre-requisites for justice to be transformed successfully is for all involved in the delivery of services to work more effectively with other partners. The Department has made good progress in breaking down silos within its own organisation. We are not convinced, however, that sufficient energy or attention has yet been given to engaging stakeholders in other Government departments, other parts of the public sector beyond Whitehall, the voluntary sector, and the private sector. We applaud the work done on Transforming Justice to date; the Department now needs to tell us how it will build on this work to make the justice system truly joined up. (Paragraph 269)

56.  Achieving "better for less" is a challenge faced by all departments. The Transforming Justice Programme has made some progress on making the Department better, in terms of being more effective and efficient, but we have indicated in this Report that further structural change and integration will be needed to carry this forward. We recommend that the Ministry sets out how it will measure a "better for less" justice system from the perspective of clients or users and the wider public. (Paragraph 280)

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Prepared 18 August 2012