REPORT
Leadership in the Home Office
1. We took evidence from the new Permanent
Secretary at the Home Office, Mark Sedwill, on 18 June and 10
December 2013. This followed a short session on 26 March, only
a few weeks after he took up his post, focused specifically on
the decision to abolish the UK Border Agency. We are grateful
to the National Audit Office for producing a Departmental Overview
to assist us with our evidence session on 10 December.[1]
2. Dame Helen Ghosh left the Home Office
in September 2012 to take up a new post as Director-General of
the National Trust, after less than two years in post. Mark Sedwill
succeeded her on 1 February, following an interregnum during which
Helen Kilpatrick, Director General of Finance and Corporate Services,
served as acting Permanent Secretary. Mr Sedwill pointed out that
he is the fourth Permanent Secretary to have served under the
present Home Secretary since she assumed office in 2010. He indicated
that he intended to remain in post "for a good term",
to provide "stability in the professional leadership of the
Department alongside the stability we have had in the political
leadership of the Department over the last four years".[2]
We welcome Mr Sedwill's commitment to his role as Permanent
Secretary and hope that his appointment will mark the beginning
of a much-needed period of stability in the senior leadership
of the Home Office, and in particular the membership of the Executive
Management Board. We also welcome the open and transparent way
that Mr Sedwill has dealt with the Committee and the occasions
that he has intervened to facilitate the Committee's work. This
is a refreshing approach from such a senior civil servant and
a model for other departments.
The Civil Service People Survey
2012
3. The Home Office scored below the
Civil Service People's Survey benchmark results across all the
aspects of leadership and management that contribute to how engaged
staff feel with the business in which they work. There was significant
variation between results from the different areas of the business,
with the overall employee engagement index (combining the scores
from the relevant questions) ranging from 36% for Border Force
and 47% for UK Border Agency, to 61% for the Criminal Records
Bureau, 55% for HM Passport Office and 57% for the core Home Office.
4. The Home Office scored poorly in
the leadership and managing change category, averaging just 30%
positive responses across the group (dropping to 17 per cent for
Border Force staff). Given the significant changes currently occurring
within the Home Office group this is of particular relevance.
Only 21% of respondents agreed that change was managed well at
the Home Office, only 18% believed changes at the organisation
were generally for the better, and 26% had confidence in the decisions
made by senior managers.
5. The Home Office's poor results
in the 2012 Civil Service People Survey show that engagement and
confidence in the civil service leadership of the Home Office
are at crisis levels and need to be addressed as a matter of urgency.
It is vital that when significant changes, such as the abolition
of the UKBA, are instituted, the staff are engaged. It is notable
that scores were particularly low in the former UK Border Agency
and in Border Force, two areas which have experienced particular
operational and performance problems in recent years. We recommend
that the Permanent Secretary start an immediate investigation
into the reasons for low morale in the Department, which should
include meetings with groups of staff at all levels in the operational
areas giving most cause for concern. From the results of this
investigation, a strategy of staff engagement should be published
which can be benchmarked against the survey going forward. We
will return to this subject when the results of the 2013 survey
are available later this year.
The spending challenge
6. As part of the 2010 Spending Review,
the Department was required to make resource savings of 23% in
real terms, based on the 2010-11 outturn, by 2014-15. The Spending
Review also required a reduction in capital spending of 49% within
the same timeframe. In the 2013 Spending Round, the Department
committed to further cuts in real terms of 6.1% in resource spending
between 2014-15 and 2015-16 and a 17.6% cut to the capital budget
during the same period.
7. These are challenging targets which
can be met only by a major overhaul of the Department's spending:
halving the administration budget in real terms over the five
years to 2015-16, making changes to police terms and conditions
of service, realising cost savings from the new landscape of policing
and the restructuring of the border and immigration operations
and, crucially, by achieving savings from efficiencies in IT,
procurement and back-office functions. We recognise the spending
pressures placed on the Home Office mean that some difficult decisions
will need to be taken in order to hit these targets. However,
it is crucial that the cuts must not be at detriment to the work
performed by the Home Office and its functions. We recommend that
if savings need to be made they should be, as much as possible,
found in efficiencies in IT, procurement and back office functions.
Procurement
8. Our 2012 Report on Olympics Security
highlighted a problem that has been a cause for public concern
for some time. Major Government contracts are awarded to a comparatively
small number of large providersin the case of the Home
Office, companies such as Capita, G4S, and Sercowith apparent
disregard for performance under previous contracts. We recommended
that the Government establish a register of high-risk providers,
who have a track-record of failure in the delivery of public services,
to provide a single source of information for those conducting
procurement exercises about companies which are failing or have
failed in the delivery of public contracts.[3]
The Government, in its response to our recommendation, told us
that
The Government, through the Cabinet
Office Crown Representative network and supported by departments,
will continue to review the performance of its cross government
strategic suppliers [...].[4]
9. Our concerns about the questionable
performance of some of those large corporations who appear to
have cornered the market in major Government contracts were amplified
in July 2013, when the Justice Secretary told the House that his
Department had identified "a significant anomaly in the billing
practices" of G4S and Serco under their contracts to provide
electronic tagging services. A further audit confirmed that the
companies had been charging for people who were back in prison
and had had their tags removed, people who had left the country,
those who had never been tagged in the first place but who had
instead been returned to court, and those who were known to have
died. In some instances, charging continued for a period of many
months and indeed years after active monitoring had ceased.[5]
Serco has since agreed to repay £68.5m (plus VAT) and the
Government and G4S are still negotiating repayments after an initial
offer from the company of £24 million was rejected. Both
companies have lost the tagging contracts, which are being given
to Capita on a temporary basis at the end of the current financial
year, and are being investigated by the Serious Fraud Office.
10. The Permanent Secretary told us
that these companies' contracts with the Home Office had been
audited and, based on a thorough audit of a sample of payments,
had been found to be "accurate, correct and in line ... with
the contract".[6]
He had nonetheless asked an external auditor to conduct a deeper
dive audit into both Serco and G4S.
11. The Permanent Secretary was right
to commission a robust audit of G4S and Serco's contracts with
the Home Office in the light of the tagging scandal and we are
pleased that, so far, no anomalies have been revealed. It is unacceptable
that the Home Office is still over-reliant on a very small number
of large providers to deliver its major projects, many of whom
appear to have a track-record of underperformance, from the lamentable
saga of e-Borders, through the absent Olympic security staff,
to the placement of asylum-seekers in sub-standard housing under
the COMPASS contracts. We believe that the Home Office's procurement
arrangements could be made more efficient if more thought were
given to how contracts could be made more accessible to smaller
businesses, in order to increase the range of providers who are
able to bid for them. Breaking down great, monolithic contracts,
which can only be tackled by large providers, into smaller components
would increase the complexity of the contract management process,
but it would increase competition for contracts, breaking what
is perilously close to an oligopoly in the provision of contracted-out
Government services, some of which, such as G4S's contract to
deliver security for the 2012 Olympics, have in the past gone
badly wrong. We recommend that the Home Office conduct a review
into all of its contracts with a view of selecting those with
the potential to be split into smaller deals. Those which can
be remodelled immediately with no financial penalty should be
put out for retender without delay, and all others retendered
at the first opportunity.
12. The Government has rejected our
recommendation for a register of high-risk providers. However,
we remain convinced that greater openness and transparency about
providers' failure to deliver on Government contracts would improve
the quality of procurement on major projects. In light of an increase
in the evidence of poor performance from these type of companies
we recommend the Government reconsider its response to the high-risk
register recommendation and adopt it immediately.
Police procurement
13. Some £474 million in savings
are to be found by 2014-15 from better procurement by police forces
of goods and services. The National Audit Office has found that
procurement practice varies considerably between the 43 forces
in England and Wales, and that forces have not agreed common specifications
for many types of goods and services, which has reduced their
ability to make savings by delaying or preventing collaborative
purchasing arrangements being established. It also found that
there was a tension between the Department's centrally-directed
strategies to increase collaboration and national procurement,
and its reforms to increase local autonomy and accountability
for police forces.[7] The
NAO concluded that the Home Office was unable to demonstrate that
the £1.7 billion spent annually on police non-IT procurement
represented good value for money. The Permanent Secretary told
us that, since the NAO's Report, some further progress had been
made towards the development of common standards for body armour,
emergency vehicles and "commodity IT".
14. The quality of the Home Office's
information about police procurement is also poor, something which
the Permanent Secretary readily acknowledged, describing the completeness
of the Department's data about police procurement as "closer
to 5% than 95%". He said that the Department had not made
nearly enough progress so far in improving the quality of its
police procurement information and that this was due primarily
to the range and complexity of procurement arrangements among
the 43 forces. The Department's objective is to raise the level
of procurement data to 80% by the end of the Parliament, and to
that end a team of Home Office officials is being sent out to
forces early in 2014 to try to help them realign their procurement
systems.
15. The Home Office's drive to ensure
better value for money in police procurement is underpinned by
a central police procurement hub, an on-line marketplace through
which forces can procure goods and services. Around 20,000 different
goods and services are available via the hub. The Permanent Secretary
told us that just over half of all forces had signed up to use
the hub, but only 16 were using it actively and it was used in
only 2% of all transactions.[8]
16. The current picture of police
procurement is dismal: forces are making next to no use of the
central procurement hub, and they continue to operate a wide variety
of procurement arrangements, making it difficult to realise the
potential savings that would flow from a more co-ordinated approach.
On top of this, the Home Office's understanding of police procurement
is sketchy, at best. The Permanent Secretary clearly recognises
the scale of the problem, and we are pleased that he has a clear
target to improve the quality of the Department's information
about police procurement by the end of the Parliament. We will
review progress in January 2015 against (a) the Home Office's
information about police procurement, (b) the number of forces
which are making active use of the central procurement hub and
(c) the proportion of transactions which go through the hub.
17. One of the obstacles to adopting
a more consistent approach to procurement has been the tension
between the Department's strategy to increase procurement at a
national level, and its reforms to increase local accountability.
In order to resolve this tension, the Department should enlist
the support of police and crime commissioners in improving their
forces' compliance with national procurement procedures. We recommend
that, before the end of the current financial year, the Home Office
issue detailed guidance to PCCs and chief constables about good
procurement practice, and encourage them to work together to develop
a procurement improvement strategy.
E-borders / Border Systems Procurement
18. The Home Office's largest major
project is still the ill-starred e-Borders programme, now known
as Border Systems Procurement, which is intended to bring in an
integrated information and Communication technology system to
deliver greater border security. The project, which has now been
in development for over a decade, has a lifetime cost of £1.3
billion and is worth as much as the Home Office's two next largest
projectsCOMPASS and the Disclosure and Barring Service
Programmecombined.[9]
19. The history of the e-Borders programme
has been well documented: the original contract was let to a consortium
led by Raytheon Systems Limited in November 2007, but terminated
for cause in July 2010. Raytheon and the Home Office are still
in dispute over the contract termination and the dispute is now
in arbitration. The 2012-13 accounts record the existence of this
dispute as a contingent liability (as was the case in the 2011-12
accounts) with no quantification of the liability being possible
due to the inherent uncertainty surrounding this process.[10]
When originally asked by the Committee to comment on what went
wrong the response from Raytheon UK was as follows:
we are presently in arbitration
with the Home Secretary regarding her decision to terminate Raytheon's
involvement in the e-Borders Programme. As you will appreciate,
the arbitration process imposes certain duties of confidentiality
upon me and my company. In addition, our e-Borders contract itself
contains confidentiality provisions which arguably survive termination.
I trust, therefore, that you will understand that there are some
constraints upon the information that I am at liberty to share
with you.
When he gave evidence to us on 10 December,
Mr Sedwill was unable to provide any further update on the dispute,
due to the confidentiality of the mediation process.[11]
We are appalled at the handling of this matter post-termination
of the contract; and that 3½ years later it still is not
resolved. Neither the company nor the Government are in a position
to explain more. The confidentiality means we do not known what
went wrong and are losing the opportunity to ensure this does
not happen again. To avoid conspiracy theories there has to be
full transparency and lessons need to be learnt.
20. The Permanent Secretary told us
that it was "absolutely still [the Home Office's] intention"
to have exit checks through e-borders and other mechanisms by
the end of the Parliament and that "very substantial progress"
had been made towards that.[12]
He told us that the following benefits had already been realised:
advance passenger information, inbound and outbound, on almost
90% of air travel by the end of 2013,[13]
and the ability to check the data of 75% of passengers coming
in and leaving the UK.[14]
21. We are pleased to see that, more
than ten years after the e-Borders business case was first prepared,
some of the projected benefits are finally beginning to be realised.
However, many of the key benefits, including the ability to count
all foreign national passengers into and out of the UK, are still
a long way off. It is farcical that, given that passenger information
is already collected on departure, exit checks cannot be implemented
to a shorter timetable and we recommend that the Home Office produce
a plan for doing so.
Capita and the Migration Refusal
Pool
22. In September 2012, Rob Whiteman,
then Chief Executive of the UK Border Agency, told us that Capita
had been awarded a contract to locate those missing in the Migration
Refusal Pool. The contract is based on payment by results, with
Capita being paid for the number of people they make contact with
and who leave the UK. He suggested that, under these arrangements,
Capita might earn as much as £40 million over four years,
if their results were good. The contract is based on the following
outcomes:
Outcome
| Target
| Penalty
| Incentive
|
Confirmed departures
| 20% of cohort or higher
| The Contractor will provide a service 'credit' of 10% of the contract price per case for each case less than 20%.
| 2.5% increase in payment per case above target. An additional 10% for each extra case if Capita achieve more than 30% confirmed departures. This is a total potential incentive of 12.5% per case.
|
Traced but individual does not leave UK (barriers to removal)
| 65% of cohort or lower
| | None, as incentives are focused solely on increasing confirmed departures.
|
No trace |
15% of cohort or lower
| | None, as incentives are focused solely on increasing confirmed departures.
|
Source: Letter from Rob Whiteman,
Chief Executive of the UK Border Agency, to the Chair of the Committee,
dated 25 January 2013
23. In October 2013, there was significant
criticism of the contract with Capita following the publication
of information which revealed that some of those contacted by
Capita were in fact British citizens, or otherwise had the right
to remain in the UK. Capita responded that there had been a total
of 143 complaints, and of those, only 14 individuals had been
contacted in error. However, we find it difficult to understand
why such work essential to effective immigration control should
be undertaken by Capita instead of the Home Office itself. In
view of the savings the department has been subject to, which
we referred to earlier, an estimated £40 million seems an
excessive amount to pay an outside contractor, even if it is for
a period over four years.
24. The Committee will continue to monitor
the work of the Home Office directorates on a 3-monthly basis.
Despite Mr Sedwill claiming that:
Don't worry, folks, most of us will
be doing the same job in the same place with the same colleagues
for the same boss.
We note that Mandie Campbell is due
to take over as the new Director General for enforcement on 1
February 2014. We welcome the commitment by Sarah Rapson to improve
customer service but the Committee is yet to see any empirical
evidence of this.
Staff remuneration
25. The Home Office Remuneration Report
shows that 18 senior staff received bonuses in 2012-13. Only those
senior civil servants judged to be in the top 25% of performers
are eligible for a bonus and no bonuses were worth more than £10,000.[15]
The total bonus pot for senior civil servants in the Home Office
fell slightly, from £283,500 in 2010-11 to £280,000
in 2011-12. The Permanent Secretary explained that the bonus arrangements
for senior civil servants were negotiated across Whitehall several
years ago, to incentivise good performance. Whereas the Treasury
allows up to 5% of the total senior civil service paybill to be
allocated for bonuses, the Home Office allocates only about 2%.[16]
He argued that the Home Office would not be able to recruit and
retain high performers if it were to drop the bonus system:
I do understand the Committee's
concern, I do understand the public concern about this, but ...
it is part of the salary structure and for as long as it is, if
I am to attract the best people to the toughest jobs I must not
disadvantage them compared to the rest of the civil service.[17]
26. In 2012-13, 40% of all Home Office
staff received some kind of bonus, and a total of 11,672 bonuses
were paid, with an aggregate value of £6,524,712.[18]
This equates to a mean bonus of £559, equivalent to 1.7%
of the median Home Office salary of £32,799. Bonuses are
taxable but not pensionable and are not consolidated into pay,
so the net value to the recipient in the long term will be considerably
smaller than an equivalent consolidated pay increase.
27. We have noted the fact that Mr
Sedwill will not take a bonus and recognise that this shows leadership.
However, with the current financial pressures on the Home Office
and the increased public scrutiny of bonuses it is irresponsible
of the Home Office to continue to pay out very significant sums
in staff bonuses despite poor performance in many areas. We recommend
that no further bonuses should be paid until a thorough review
of performance against the whole range of Home Office activity
has been undertaken.
1 The performance of the Home Office 2012-13,
National Audit Office, December 2013 (hereafter, "the Overview"):
www.nao.org.uk/wp-content/uploads/2013/12/10330-001-Home-Office-Departmental-overview.pdf Back
2
Q81 (10 December 2013) Back
3
Home Affairs Committee, Seventh Report of Session 2012-13, Olympics
security, HC 531 Back
4
Cm 8500 Back
5
HC Deb (11 July 2013) col. 573 Back
6
Qq117-118 Back
7
National Audit Office, Police Procurement, HC 1046,Session
2012--13 (March 2013) Back
8
Q66 (18 June) Back
9
COMPASS (Commercial and Operational Managers Procuring Asylum
Support) has a budgeted lifetime cost of £687million and
the Disclosure and Barring Service Programme has a lifetime cost
of £710million Back
10
Overview, p. 23. For background information see Independent Chief
Inspector of Borders and Immigration, Exporting the border'?
An inspection of e-Borders, October 2012 - March 2013 (October
2013) and letters from Robert M Delorge, Raytheon UK, dated 3
August 2011,and from Rt Hon Damian Green MP, Minister for Immigration,
dated 22 August 2011, to the Chair of the Committee Back
11
Qq102-106 Back
12
Q107. See also Qq6-9 (18 June) Back
13
Q108 Back
14
Not including the Common Travel area-the UK, the Republic of Ireland,
the Channel Islands and the Isle of Man-within which passenger
movements are not routinely monitored. Back
15
Overview, p. 22 Back
16
Q33 (18 June) Back
17
Ibid. Back
18
Letter from Home Office Information Access Team to Alan Wright,
dated 16 December 2013 (not printed) Back
|