Justice CommitteeWritten evidence from the Ministry of Justice

Executive Summary

(i) Since the Ministry of Justice (MoJ) was formed in 2007 it has significantly reduced its budget (by £878 million),1 whilst maintaining levels of performance and in a number of areas dealing with an increased workload.

(ii) The MoJ is currently in the middle of one of the largest transformation programmes in Government (Transforming Justice).2 This programme seeks not only to reform the way in which justice services are delivered to the public but also how the Department operates.

(iii) The Department has made significant steps to improve its understanding of the costs of its services and has plans to live within the significant budget reductions that the Spending Review settlement presents (well over £2 billion annually by 2014–15).

1. What should the core objectives be of the MoJ?

1.1 The Ministry has responsibility for the courts, tribunals, prisons and probation services. Our work spans criminal, civil, family and administrative justice, and making new laws. We work in partnership with other Government Departments and agencies to improve the Criminal Justice System, to serve the public and support victims of crime.

1.2 The MoJ has set out its vision of Justice Transformed 2015; there are two objectives, to transform justice and transform the Department. We have described the future of our services under the following three headings:

increasing the power and responsibility of the citizen;

changing how we provide services to the public; and

working differently, saving money and focussing on the frontline.

1.3 The MoJ’s Business Plan 2011–15 is brigaded under five headings. We have connected these objectives to the vision as set out below:

DEPARTMENTAL
OBJECTIVES

JUSTICE TRANSFORMED 2015 CORPORATE VISION

STRUCTURAL REFORM PRIORITIES

Introduce a Rehabilitation Revolution

Increasing responsibility and power of the citizen

Reform sentencing and penalties

Transforming Justice

Assure Better Law

Changing how we provide services to the public

Reform courts, tribunals & legal aid and work with others to reform delivery of criminal justice

Transforming the Department

Working differently, saving money and focussing on the frontline

Reform how we deliver our services

1.4 As an example, sentencing reform will increase the responsibility of the citizen; improving access to alternative dispute resolution methods will change how the Department provides services to the public; and changes to the Arm’s Length Bodies of the MoJ will mean that we can work differently, save money and focus on the frontline.

2. Which functions provided by the MoJ are essential, and which could be best provided by others or not at all?

2.1 There are a number of functions that the Department is legislatively required to carry out directly; these primarily involve issues regarding the judiciary and certain offender management activities. Outside of those areas the Department regularly considers whether functions ought to be provided by it directly or through the private, voluntary or community sectors.

2.2 MoJ’s strategic principles for competition are set out in the Offender Services Competition Strategy.3 They are:

competition activity should be focused on achieving mid to long-term savings, not finding the cheapest solution at the expense of quality;

competition should be used to deliver public sector reforms, ensuring providers are more effectively held to account for the outcomes they deliver;

providers should be involved early to identify where efficiencies could be realised in national or process-based functions through competition;

small and medium sized enterprises (SMEs) and the voluntary and community sector (VCS) should be encouraged to participate to drive innovation; and

competition should be widely applied, with public sector providers allowed to bid where we are competing localised services and robustly held to account where successful.

2.3 Having set out the strategic principles of competition the MoJ is working to see how to best apply them in a way which will allow better identification and assessment of services that could be improved though competition. The Department will take an open-minded, outcome-focused approach, involving suppliers at the earliest opportunity to ensure that the services commissioned meet the objectives. This may require the Department to radically re-shape the way it thinks about the services it currently delivers.

2.4 The Department is currently reviewing the future shape of probation services in England and Wales. This will consider different models for delivering offender services in the community, including the scope for further competition. It will also look to drive efficiency and build on recent improvements in the delivery of probation services, such as the move to Trust status. The overarching aim of this work is to create a long-term direction for probation which is consistent with the Government’s key objectives for reform of public services.

2.5 Public safety will always be of paramount importance in considering how probation services are delivered. The Department will set out our preferred approach later in the Autumn of 2011, which will take account of the Justice Committee’s recent report on the role of probation.

3. Does the MoJ have sufficient understanding of costs to enable it to model the impact of future change?

3.1 The Department has developed robust plans to deliver savings of over £2 billion required to meet our Spending Review settlement, including policy reform, a new operating model and front-line efficiencies. These plans have been driven by our growing understanding of MoJ costs and the extensive range of analytical and financial models that have been developed. This is fundamental to ensure savings plans are robust and deliverable, and are consistent with achieving MoJ’s vision of justice transformed.

3.2 The major policy changes being taken forward—legal aid reform, sentencing reform, and the rehabilitation revolution—have all involved analytical and financial modelling to ensure the impacts, costs and benefits of the changes are fully understood, including impacts on customers. The estimated effects, models and assumptions are set out in Impact Assessments, which are signed off by the Chief Economist and ministers, and are published to ensure proper public and Parliamentary scrutiny.

3.3 The Department has made significant improvements to its modelling capability, developing a suite of caseload forecast models that underpin robust assessments of the impacts of proposed policy changes. For example, the New Justice Framework models policy effects across the justice system, the first time this has been possible.

3.4 Analysis of the legal aid reform package used detailed cost information from the Legal Services Commission (LSC) to estimate expected savings, as well as to identify the impact including from an equalities angle on clients and on providers. The proposals were subject to public consultation and the large number of responses further enhanced the evidence base and ensured that the final proposals were based on the best possible understanding of stakeholder impacts.

3.5 Detailed assessment of the sentencing reform options was essential to understand the potential impacts on the workload of NOMS, the courts and wider Criminal Justice System (CJS) agencies. To understand these impacts, robust analysis of workflows has been undertaken and cost data (including unit costs) has been used to assess the financial impact on different parts of the MoJ. This work continues as part of the review of indeterminate sentences of Imprisonment for Public Protection (IPP), the consultation on squatting and work to assess the financial impact of recent civil disorder.

3.6 The Department’s improved understanding of costs has also supported the development of plans to deliver front-line efficiencies. This has involved extensive new analysis of costs in a range of areas to ensure that we get value for money from the planned changes. For example, work to specify, benchmark and cost (SBC) services delivered in prisons and probation and to develop activity-based costing (ABC) for the Crown Court and the Magistrates’ Courts—a major undertaking—is well underway and is being managed as a priority in NOMS and HMCTS respectively.

3.7 In another example, the Prison Cost Analysis allows NOMS to identify which prisons are expensive relative to their peers and target efficiencies appropriately. Competition is also being used to deliver efficiencies in NOMS, again supported by analysis such as of the relative efficiency of different prisons.

3.8 In HMCTS, the courts estate model informed the courts closure plan, through estimating the most efficient use of Magistrates’ and County Court estate, and activity based costing is supporting the annual business planning process.

3.9 In NOMS, significant progress has been made on projects to capture the “does cost” of specified services in prisons and probation. Systems known as INview (for prisons) and PREview (for probation) go a step further than Prison Cost Analysis to record the actual (or forecast) spending by service. Probation Trusts are starting to use PREview information to compare the resources they use to deliver activities and determine whether they are delivering at high or low cost.

3.10 The Department’s savings plans are brought together in an overall financial planning model—the Financial Planning Model—to provide a single, consistent picture of our financial resource requirements and, savings plans. The model also incorporates the Department’s future workload pressures from the suite of forecast models, key economic assumptions (notably on inflationary pressures) and other financial information to determine the MoJ’s overall financial position, including the assessment of financial risks. This medium-term financial position is used to inform decisions on financial allocations across business groups and is aligned with the Department’s strategic and performance planning. The model is updated regularly (at least quarterly) and updates presented to the Departmental Board on a six monthly basis or more frequently as required.

3.11 The Department has moved away from annual budgeting to a multi-year financial planning model. This is supported by full and clear “assumption books” that outline the inputs, assumptions and methods behind financial and savings plans (such as for key policy reforms). These are shared with stakeholders, including agencies, to ensure consistency.

3.12 This costing work complements existing performance information, for example on court timeliness and re-offending rates, to help the Department deliver value for money. The MoJ has also improved the data available publicly, such as on impact indicators and unit costs, to enable the assessment of the amount spent on services and what is being received for these services. For example the headline cost per prison place and cost per prisoner are published alongside previous period comparators in quarterly updates on the business plan. Over the next year the Department will further increase the data available at a local level to allow comparisons of the cost of services and the impact these have.

4. What changes to the current structure of the MoJ could contribute to improved performance or efficiency savings?

4.1 The MoJ Spending Review settlement required the Department to make savings of well over £2 billion by the end of 2014–15. The Department has plans to make over £500 million of these savings through changes to its operating model and over £1 billion overall through frontline and operating model efficiencies.

4.2 In 2010 the MoJ created a new Operating Model Blueprint (OMB). The OMB sets out the principles and design choices that have been made to transform the Department over the Spending Review period. These choices result in changes to the management structures, how back office functions are undertaken, and savings through procurement and ICT efficiencies.

4.3 The Department is currently part way through implementing the OMB. The Department is now structured around four Business Groups: Justice Policy Group (JPG); Corporate Performance Group (CPG); HMCTS and NOMS, with the majority of Arm’s Length Bodies (ALBs) being sponsored by JPG.

4.4 The OMB seeks to ensure that: all policy is undertaken in a single Business Group and is focused on Ministerial priorities or changes required by delivery bodies; wherever appropriate, corporate services are provided on a shared or combined basis, including to ALBs; there is a small strategic core that supports Ministers, provides a strategic framework and ensures governance; and delivery bodies can focus on their core mission of leading the delivery of services.

4.5 Restructuring the Senior Civil Service (SCS) has already been undertaken. Since December 2009 the Department has reduced the numbers of Deputy Directors by 22%. Directors by 32% and Directors General by more than half. Further restructuring at lower levels is ongoing.

4.6 The Public Bodies Bill seeks to abolish a number of ALBs, in many instances this will allow their functions to be undertaken more efficiently within the Department. This includes the Youth Justice Board (YJB) which is planned to be abolished as an Executive NDPB and its functions brought into a discrete Youth Justice Division within the MoJ.

5. Does the MoJ have the right processes and measures in place to manage robustly the organisations it sponsors?

5.1 The Department has significantly strengthened its sponsorship of its ALBs. On 1 April 2011 the ALB Governance Division was established to drive up sponsorship standards across the MoJ. The Division ensures that ALBs are supported by consistent governance arrangements, with clear lines of accountability and regular periodic reviews and performance monitoring.

5.2 Each ALB has a named policy sponsor who has regular accountability meetings with the lead official in the ALB.

5.3 The level of scrutiny of an ALB is proportionate with and determined by a formal, consistent and documented risk analysis that is signed off by the Principal Accounting Officer and the Executive Management Committee of the Board. The risk analysis looks at the level of risk posed to the Department by each of the ALBs across a range of criteria including financial exposure, reputational impact and the complexity of the service provision. It assists sponsors to select proportionate controls and determine appropriate levels of reporting.

5.4 The risk analyses have been moderated by a group including the Head of ALB Governance and the Head of Internal Audit. Further moderation will be undertaken on an annual basis.

5.5 All ALBs and Executive Agencies are in scope of the MoJ requirements on financial and business planning and allocations and receive communications throughout the year. Delegation letters are sent to all Chief Executive Officers of NDPBs and Executive Agencies early in the financial year setting out the budget delegation and the conditions under which the delegations are made. The Permanent Secretary directly line manages the Chief Executives of NOMS and HMCTS and Directors General within MoJ headquarters.

5.6 In June 2011 the Department reviewed the financial governance and supporting documentation of executive NDPBs and their internal documentation. ALBs and the MoJ are now taking the recommendations of the review forward.

5.7 The MoJ Internal Audit function provides audit services to all of the Department’s Executive Agencies and all but four of its ALBs (the Department is looking to bring the audit functions of the LSC, CCRC, Information Commissioner’s Office and Legal Services Board in-house when their current contracts end and maintains close links in the mean-time). The Head of Internal Audit, or designate, regularly meets with senior management of the ALBs and undertakes an agreed programme of audit. Any significant findings are reported to the Accounting Officer and presented to the Corporate Audit Committee.

5.8 In line with the Minister for the Cabinet Office’s announcement the Department is planning to commence triennial reviews of its NDPBs. These will look at both the function of the NDPBs and their control and governance arrangements.

6. Will the transition of the administration of legal aid from the Legal Services Commission to an executive agency within the MoJ lead to more effective and efficient performance?

6.1 The Department believes that the transition of the LSC from an NDPB to an Executive Agency will lead to more efficient and effective performance.

6.2 After transition there will be clarity over roles, responsibilities and accountability for legal aid, both politically and financially. The MoJ’s Principal Accounting Officer and Ministers will have more direct control of risks and potential risks to the legal aid fund. However, decisions on the grant of legal aid in individual cases will continue to be taken at arm’s length from the Lord Chancellor.

6.3 The transition of the LSC will allow the Agency to focus on developing skills and expertise in the areas it has responsibility for (commissioning and administering legal aid services) rather than having to focus on a wider range of areas including policy development.

6.4 Over the 2011–15 spending period the transition to Executive Agency will result in an estimated £8.4 million saving against the 2010–11 administrative budget. The anticipated savings will come from the greater use of shared and centralised services from the Department, use of shared accommodation and streamlined governance and senior management structures. Savings will also accrue from changes to employer pension contributions and savings on VAT payments due to the change of status. Savings from the transition will be recurring, there will, however, be one-off costs which are estimated to be £8 million over this spending period.4

7. Does the relationship between the MoJ and NOMS, and the relationship between prison and probation, contribute to effective and efficient working?

7.1 As well as being an Executive Agency, NOMS is also a Business Group of the MoJ. Its Chief Executive is a member of the Executive Management Committee of the MoJ Board and representatives from NOMS attend all MoJ Board sub-committees. At all levels of the organisations there are close working relationships between officials.

7.2 To drive efficiencies, the new MoJ Operating Model places greater emphasis on grouping and sharing resources to deliver agreed priorities and reducing the burden on the frontline through streamlining the tiers of management needed to monitor and assure delivery.

7.3 In addition, the Government’s proposed step change in reducing re-offending through the Rehabilitation Revolution will mean a greater focus on local delivery with the ambition to deliver greater accountability to local communities. This, coupled with the changes to the MoJ operating model, has had a major impact on NOMS operating model which has moved from a regional to a leaner functional model.

7.4 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.

7.5 These changes have provided the following benefits to the relationship between the Ministry and NOMS and prison and probation:

An increased shared services approach to core functions including ICT, estates and procurement, and common finance and HR services.

Greater collaboration between NOMS and MoJ policy to develop a policy programme focused on Ministerial priorities with duplication and overlap removed.

Clear line accountability for public sector prisons: maintaining operational grip, reducing risk and driving efficiencies whilst developing innovative models of public sector delivery to respond to competition and the Payment by Results model.

Greater emphasis on effective outcome focused contract management with the Director for Probation and Contracted Services responsible for providing clear consistent oversight of an increasing mix of providers, supporting provider development and promoting effective engagement and partnership working at a local level.

7.6 The Agency is considering further the relationship between NOMS, prisons and probation as part of the work looking at the future of probation and in response to the recent Justice Committee report.

7.7 The youth justice system, by virtue of wider responsibilities to welfare and statutory education, relies more heavily on links to local providers and Local Authorities (LAs)—who manage the Youth Offending Services in their area. Here, the MoJ and Youth Justice Board (YJB) are striving to increase the effectiveness of delivery to its resettlement provision through a range of measures:

Dissemination of effective practice linked to Resettlement Support grants and Welsh resettlement panels.

Setting up and encouraging expansion of the regional resettlement consortia, which promote joint planning and commissioning activity between custodial establishments, Youth Offending teams (YOTs) and their partners in the voluntary and statutory sectors.

Piloting a number of financial incentives schemes, as set out in Breaking the Cycle Green Paper, to explore further incentives for LAs to reduce youth offending. In particular, the sharing of the financial risks with the youth custody budget to LAs, thereby providing incentive to improve youth justice performance and decrease custody rates.

The reforms to young offender education contained in the Apprenticeships, Skills, Children and Learning Act 2009 made LAs responsible for securing suitable education provision for young people in custody and introduced a range of duties on LAs to share information about young peoples’ learning. This should also allow greater continuity of learning and consistency of provision between community and custody.

Announcing new financial support for social workers in Young Offender Institutions which should ensure better links to support in the community.

8. How effectively does the MoJ use IT, and does the MoJ have the right balance between centrally and locally commissioned IT?

8.1 MoJ uses ICT extensively: in administration (eg delivering shared services); for business operations (eg case management systems); and to supply digital public services (eg Money Claim OnLine).

8.2 Our ICT Transformation Programme was completed last year, and whilst maintaining levels of operational service and improving project delivery it contributed to more than £20 million of cost savings. Over the next three to five years it is intended to further reduce “run and maintain” ICT costs by over £100 million through replacing or renewing all major ICT supplier contracts under our Future ICT Sourcing (FITS) programme. In procuring by service tower we will standardise services across MoJ, making them much more economic.

8.3 The Department’s view (in line with the OMB) is that best value for money can be achieved by providing shared ICT services, with local solutions being considered where they might provide better value. Our ICT business plans are developed and agreed across the Ministry to ensure the balance of local and central ICT initiatives is appropriate to meet overall business goals (this is implicit in the FITS model).

8.4 Our approaches to effective IT also include completion of current infrastructure programmes; reduction in the number of data centres; implementation of a single MoJ network; delivery of a standardised desktop infrastructure; the use (and development of) government standards; and completion of the NOMIS programme.

9. Does the MoJ have procedures in place in order to realise its objectives of having more services delivered by the voluntary and community and private sectors?

9.1 Through the MoJ strategic principles for competition, the Department is seeking to develop its ability to identify, scope and exploit opportunities to compete current services or functions.

9.2 One of our principles is that small and medium sized enterprises (SMEs) and the voluntary and community sector (VCS) should be encouraged to participate in competitions, particularly in order to drive innovation in service delivery.

9.3 By developing service specifications in partnership with the market and supplier representative we will aim to ensure that competed services provide the maximum possible scope for innovation and market diversity.

9.4 We aim to ensure that commissioning arrangements level the “playing field” for voluntary sector organisations in line with the renewed Compact between the Government and voluntary sector organisations in England.

9.5 Breaking the Cycle Green Paper announced that we would develop at least six new payment by results pilots, and that the principles of payment by results would be applied to all providers by 2015.

9.6 There has been significant interest in the issues surrounding payment by results and a growing and varied market place of potential providers who are interested to participate in the projects. We will consider the specific barriers for all providers, to help us determine how we can successfully develop a mixed market of provision.

9.7 Where it is not possible or desirable to open competitions directly to smaller enterprises, we will work with larger prime providers to ensure that the right incentives are in place for them to encourage SME and VCS specialist providers in their supply chain.

10. Does the MoJ have the necessary skills to ensure value for money contracts for the public purse and to effectively manage those contracts?

10.1 MoJ Procurement Directorate employs 314 staff (temporary and permanent)5 working across Category Management and Logistics, ICT Procurement, Major Contracts and Compliance divisions. 60% of the permanent procurement staff are fully or partly professionally qualified (MCIPS—Member of the Chartered Institute of Purchasing and Supply).

10.2 MoJ Procurement Directorate operates a Category Management approach whereby goods and services are only procured by individuals with in-depth experience of the items procured to ensure that best value for money is achieved. Individuals typically procure a limited range of related products to ensure they have wide category knowledge—as an example, the food category management team concentrate on the procurement of prison food, vending services and catering equipment and do not procure goods and services outside a general definition of food and catering.

10.3 MoJ Procurement seeks to increase the skills of the permanent procurement staff. Staff in MoJ Procurement are supported in gaining professional qualifications from the Chartered Institute of Purchase and Supply (CIPS). In 2010–11 32 members of the Procurement Directorate undertook Professional CIPS training. MoJ Procurement also has a Competency Framework which sets out the technical skills procurement practitioners need for every procurement post in the business. The competencies are based on standards set out by the Chartered Institute of Purchasing and Supply (CIPS). All procurement staff are assessed against the Competency Framework as part of annual performance reviews and skills gaps and areas for development are identified.

10.4 Ensuring that MoJ Procurement is resourced and can recruit and retain professional procurement staff able to deliver value for money contract and savings is a departmental priority. The Procurement Resource Plan is discussed monthly at the Procurement Committee. It provides a comprehensive list of both current and known pending procurement activity, highlights pressure points where demand for procurement activity is outstripping supply of resource and enables the availability of procurement resources to be considered in policy and commissioning decisions. Where resource gaps are identified MoJ Procurement has recruited resource in order to meet this demand.

September 2011

1 This figure represents a comparison of the total DEL reduction from November 2007 until the latest published accounts in April 2011

2 Information on Transforming Justice is available on the Department’s website at
http://www.justice.gov.uk/about/moj/tj/index.htm.

3 See Offender Services Competition Strategy at
http://www.justice.gov.uk/downloads/publications/policy/moj/competition-strategy-offender-services.pdf

4 The business case for the LSC transition sets out the full costs and benefits and is available on the MoJ website at
http://www.justice.gov.uk/downloads/publications/bills-acts/legal-aid-sentencing/abolition-lsc-business-case.pdf

5 July 2011

Prepared 14th August 2012