Public Accounts - Minutes of EvidenceHC 110

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Oral Evidence

Taken before the Public Accounts Committee

on Monday 13 May 2013

Members present:

Margaret Hodge (Chair)

Guto Bebb

Chris Heaton-Harris

Meg Hillier

Mr Stewart Jackson

Fiona Mactaggart

Nick Smith

Justin Tomlinson

________________

Amyas Morse, Comptroller and Auditor General, National Audit Office, Gabrielle Cohen, Assistant Auditor General, NAO, David Corner, Director, NAO, and Marius Gallaher, Alternate Treasury Officer of Accounts, were in attendance.

MEMORANDUM BY THE COMPTROLLER AND AUDITOR GENERAL

Failure of the FiReControl Project Update: Progress in minimising waste and achieving original objectives through other means

Examination of Witnesses

Witnesses: John Bonney, Chief Fire Officer, Hampshire Fire and Rescue Authority, Paul Hancock, Chief Fire Officer, Cheshire Fire and Rescue Authority, Peter Holland, Chief Fire and Rescue Adviser, and Sir Bob Kerslake, Permanent Secretary, Department for Communities and Local Government, gave evidence.

Q1 Chair: This is our second hearing on what was a really pretty awful project; indeed, it is probably one of the worst examples of waste we have seen as a Committee. This hearing has been called on the back of requests by Committee members to return to the issue. Rather than go back over the old history, which I think we all agree was shambolic and dreadful, we want to look at where we are now. As I read the Report, my main question was twofold. Either the project was set up to solve some important problems with national resilience and co-ordination between fire authorities, in which case, if it has been scrapped, how are you going to handle those issues now? Or, looking at one of the figures in the Report, your £82 million is buying you everything that the original project was intended to do, so why on earth didn’t we do that in the first place? I could not, from reading the Report, work out which of those two questions was the right question. Either you are not getting the outcome you wanted from the original project, or you are, for the 82 million quid, so then why on earth didn’t we do that straight away?

Sir Bob Kerslake: Chair, you have put your finger on the most important question here, so it is worth all of us saying something about that question if we can. I think the first thing to say is that you are not buying, through this project-the new project-what you were getting from FiReControl. It is really important to say that. FiReControl was a national scheme that created a system across the whole of the country in a uniform way based on new regional centres.

What we put in place following the termination of the FiReControl contract was a very different model that worked on building mutual resilience, better operability and greater efficiency across the existing Fire and Rescue Authorities. There has been a high level of collaboration between those authorities, so I think we have got quite a lot of what was intended through FiReControl.

Q2 Chair: What haven’t you got?

Sir Bob Kerslake: What you haven’t got is a national model that covers almost any eventuality in one centre.

Q3 Chair: So what couldn’t you do?

Sir Bob Kerslake: You couldn’t, for example-other colleagues will come in on this-automatically say that if the whole system went in one place you could take it to anywhere else in the country. You couldn’t do what the original system-the national system-did with FiReControl, which was that in effect you could back up one place from anywhere else in the country. What you can do through this is have automatic back-up pretty much across the country from another service. That is the difference. So our view is, very strongly, that it doesn’t provide what FiReControl is doing, but it does provide the level of resilience that we need for this country now, and it does it for a lot less money.

Q4 Chair: I am a bit muddled-or you are a bit muddled. So it doesn’t provide national resilience-so what does that mean? If there is a terrorist incident somewhere in the country, what aren’t you getting that you would have got, and how are you then going to cope?

Sir Bob Kerslake: There are arrangements for providing resilience at national level, based in London. My point was that there was a particular kind of formulation through FiReControl.

Q5 Chair: What does that mean?

Sir Bob Kerslake: By that I mean that it was setting up a set of control centres that literally could interoperate between every single one of the control centres across the network. We aren’t building that kind of network-

Q6 Chair: So now they would have to ring each other.

Sir Bob Kerslake: Whereas now we are talking about coverage and fall-back arrangements, but with paired-up authorities, rather than this national network scheme based on regional centres. This is not a single national model with uniform approaches. This has been adapted to the needs of individual fire authorities, and the collaborations that made sense for them.

Q7 Chair: I am pushing you a little bit: what aren’t you getting?

Sir Bob Kerslake: Well, as I said earlier, you are getting a very high level of resilience, but you are not getting a national and regional set of centres run as a network.

Q8 Chair: So in what circumstances would you have wanted that nationally?

Sir Bob Kerslake: Frankly, it is a good question whether we ever needed what was being proposed by FiReControl.

Q9 Chair: So if we never needed it-this is not addressed to you, because you were not there, and I do not know how many of you were in your jobs at the time; we have probably got the usual old thing of people having moved on-why on earth did we then go down the other road?

Sir Bob Kerslake: I will let other colleagues come in, but I think it is fair to say that it was built on a particular model of regional centres that was actually not appropriate to the needs of the country. Peter, do you want to say something?

Peter Holland: It was tied into the Sir George Bain report of 2004, which talked about how, if you remember, at the time there were votes for regional assemblies that were planned in three areas. If those areas had voted for regional assemblies, there would have been regional fire services in those three areas. That didn’t happen. As Sir Bob said, the nine were set up based on those regions, and when that had gone the question remained: what does the Fire and Rescue Service need? From 2004 onwards, when the work really started on the project, it was the only game in town in terms of control centres, and Fire and Rescue Services were in desperate need by the time we got to a couple of years ago when the project was cancelled, so we really had to do something to establish control facility for services. That is when the Department asked Fire and Rescue Services to bid to build their new controls. As I am sure you are aware from the papers, they have collaborated particularly well.

Q10 Chair: So basically, we were so driven by the fact that we were going to have regional government that you were not able to look pragmatically at how you could first modernise your fire control capability, and secondly get a bit more cross-authority working to have a bit of resilience. Is that what I am hearing?

Sir Bob Kerslake: I think it is two things. One is that it was based on a regional model, and the other was that it was, in my view, significantly over-specified for what we required by way of resilience. You didn’t require a system where you could, in any part of the country, provide the back-up to another part of the country in that way. You did need automatic back-up from one authority to another in a collaborative way. It is a different cost and a totally different model.

Amyas Morse: I shall ask a question just to be clear in my mind-

Chair: You will have to speak up.

Amyas Morse: Sorry. I am being criticised for having too soft a voice.

Sir Bob Kerslake: I know the feeling.

Chair: It is because you are down at that end of the table.

Amyas Morse: It is flattering to be likened to you, Sir Bob.

I remember that Report well, of course. As I recollect it, one reason why it did not succeed was because a lot of Fire and Rescue Authorities declined to take part and use those centres. They hadn’t agreed to it beforehand, and when it came on, they said they wouldn’t take part in it. I don’t mean this as an unkind question, but are we now looking at a solution that is politically possible rather than one that is necessarily optimal?

Sir Bob Kerslake: There was clearly a lot of concern, and in my view justified concern, by Fire and Rescue Authorities about the direction that the project was going in. Let’s not beat about the bush. My personal view is that, give or take a bit, there would have been a way of bringing those authorities on side. What absolutely killed the project was that we had no confidence that we could get the IT to work. It was as simple as that.

The problem-Peter has nailed it-was that we were at risk of having nothing. Not only did we not have a working system that would do the job we intended it to do, but we had lost a huge amount of time to do basic essential improvements to the existing systems. When you put those three things together-a set of pretty unhappy Fire Authorities, an ICT system that was not only not working but in which we had no confidence of getting to work, and a huge delay in doing vital improvements-it all added up to a-

Q11 Chair: So, answering Amyas’s question?

Sir Bob Kerslake: I am really saying that I don’t think it was just that we could not persuade Fire Authorities to use the buildings. Had the ICT worked, I think probably the project would have gone ahead broadly as intended, not least because the Government intended to provide the money, but the thing that absolutely killed it was the delay and the lack of confidence in the ICT. I would not want to put it down to the small "p" politics of the Fire and Rescue Service.

Amyas Morse: May I ask one more question? I am asking it because I hope it will be helpful clarification and a link. The second question is: that being so, suppose the project had been persisted with, had the functionality and the systems had been working properly. Would that have provided a higher level of functionality than what you will now have?

Peter Holland: Part of the specification that has been built into the new control rooms that are being built is that they will have everything that was in there. As Sir Bob said, the only thing it won’t have is the-

Chair: Interoperability.

Peter Holland: Absolutely.

Q12 Chair: Where are you based?

Peter Holland: Eland House. I am the chief fire and rescue adviser.

Q13 Chair: So you actually work for DCLG?

Peter Holland: Yes, I do now. I was a chief fire officer previously.

Q14 Chair: So the systems cannot talk to each other.

Peter Holland: Which systems?

Chair: The local systems-what we are ending up with. I think we are going to end up with different local systems.

John Bonney: That is not exactly right. Let me just pick up on your earlier point. There was a lack of confidence that the ICT would work, because users felt that with the old project, they had not been involved enough. They felt that it had been a centrally directed project that was covering the whole of England and that they were somewhat excluded. I do not think that it was about what is now politically possible; it is much more about learning the lessons and involving Fire and Rescue Services in the solutions. When you talk about resilience and capability now, what has happened is that the ingenuity of Fire and Rescue Services has been allowed to enter the fray. What we see across the country is Fire and Rescue services working together, and working with suppliers to come up with some of the features that now exceed the possibility of the original FiReControl project.

Q15 Chair: It does sound to like there is a bit of bolshiness. You know-"It wasn’t my game, so I wasn’t prepared to play, and now it’s my game, I am prepared to play and we will get the outcome that you want". That does not really sound like a convincing argument.

John Bonney: I don’t think so. If you look, you will see that a number of Fire and Rescue Services had not committed to the project, but the vast majority had.

Q16 Chair: Well, if they had, we’d have had it. What you are saying is, "We weren’t committed to the project. Now we are driving it, we are committed." You are now coming up with solutions that you might have been able to come up with on a national project. In a way, that is the first time that I have heard that so explicitly expressed.

Sir Bob Kerslake: I was closely involved in, and part of, the decision to terminate the contract on FiReControl. It was not the issue of lack of co-operation from Fire and Rescue Authorities that drove the decision. It absolutely was not that. I think it is right to say that one of the reasons why the project struggled was that it did not get buy in at the start, and that is what the NAO said, but it was not the reason why we terminated the contract. The reason we terminated it was because we had no confidence that we would get what we were seeking in a reasonable time scale; it is as simple as that.

Q17 Chair: What is puzzling is that we were here at the first hearing and we were all completely shocked by what seemed to be an absurd set of decisions taken over a long period of time, but you said earlier on, Sir Bob, the reason we could not go ahead was partly because they had not bought in to it and partly because you could not get the ICT solution. What we are now hearing is, "Ah, we suddenly got into the driving seat and we miraculously found the ICT solutions." What I am left feeling is that it is difficult to believe that bolshiness was not a factor in preventing people from finding the necessary ICT solutions to improve co-ordination and to modernise the system.

Sir Bob Kerslake: The point is that it was not open to the individual Fire and Rescue Authorities to find the best local solutions. It was not that they just refused to play because they had not been involved. The Government took a conscious decision to run this as a national project, to develop its own ICT system, and to develop new regional centres that would all be standardised in the way they worked, so the space for a different, more locally based innovative approach just was not there. Once you had terminated the contract and gone down a different route of seeking proposals Fire and Rescue Authority by Fire and Rescue Authority, the space opened up for people to find the right, most cost-effective local solution.

Q18 Chris Heaton-Harris: Sir Bob, I am sure that that was the reason given at the time for the change in direction on this, but our Committee’s conclusions and recommendations included the fact that delivery of the project was fatally undermined from the outset by the Department’s failure to acknowledge the independence and local accountability of local services or secure their support for the project. The Department failed to apply effective checks and balances from the start and management and oversight were weak. There was the IT thing. No one was accountable; in many ways, we get used to that here. A whole host of different factors were the problems that this Committee found, and a whole host go on.

I was a Member of the European Parliament-a regional elected official, I guess you could say-for the East Midlands. No one in the East Midlands was particularly keen throughout this period of time on merging the various fire authorities into one great big building at Castle Donington, or thought it would work. While I completely hear what you are saying about why the final decision was taken, there were a whole host of other factors involved in the build-up.

I am particularly interested in what we have now. Is it not the case that because money is tight, solutions are being found that would probably not even have been considered when money was flush?

Sir Bob Kerslake: I think solutions are being found at local level through natural collaborations between authorities. Bear in mind that 15 of the proposals came through as collaborations. The vast bulk of them were collaborations. The fact that we opened it up to local proposals allowed for sensible, natural collaborations between Fire and Rescue Authorities, and for sensible investments to improve resilience. Very basic things such as-

Q19 Chris Heaton-Harris: Mr Bonney is very kindly nodding his head. I do not know whether he has any views on what I said, but on your point, Sir Bob, the Northamptonshire fire service has come into collaboration with fire services that are not in our region. They make perfect sense, they seem to be delivering a good job and everybody seems relatively comfortable with the direction of travel. Because of the heavily centralised "this is what you’ll have" view, those were just ignored when these decisions were taken.

Sir Bob Kerslake: It is absolutely right. I also agree with your view that having a tighter sum of money focused people’s minds on the things that would make the most impact. I don’t know if you want to add to that.

John Bonney: Apart from my national role, I am chief in Hampshire. Originally, our regional control would have been in Fareham and covered nine Fire and Rescue Services in the south-east, but now we are in collaboration with those to the west of us, because that makes more sense. What you find is that Fire and Rescue Services, because they understand their locality, the relationships with their neighbours and where people are in terms of technology and their own projects, find solutions locally, as opposed to by central direction, which does not always fit with what people need. That has been the real lesson learned from the original FiReControl project.

Q20 Chris Heaton-Harris: Not that I am a lover of the Fire Brigades Union, but at least in some of the new arrangements being found now, there seems to be a greater engagement with the people who work to deliver the service on the ground.

Paul Hancock: Good afternoon. My name is Paul Hancock. I am the Chief Fire Officer of Cheshire Fire and Rescue Service, but I am also the project director for the north-west FiReControl collaboration.

I would add that one of the key drivers for the north-west control project is firefighter safety. We have talked about resilience and the network of nine regional control centres. One of our key focus areas is improving firefighter safety. The improvements that local Fire and Rescue Services will see include, for example, a computer in a fire engine, which will provide risk-critical information for firefighters entering dangerous buildings. Data can be transferred from the control centre to fire engines at the press of a button now, and it appears on a screen, rather than via a voice communication over the radio. One of the key drivers for the north-west is improving firefighter safety, as well as delivering significant savings in these challenging times for the sector.

Q21 Chris Heaton-Harris: Can I conclude by asking a quick question? We have the wonderful Castle Donington memorial, which remains unsold. How much is that costing us or your Department, Sir Robert, and how likely are you to get rid of it in the near future?

Sir Bob Kerslake: I need to find the number for Castle Donington, so bear with me.

Chair: The figure I have got is £5,000 a day for Donington.

Sir Bob Kerslake: I am sure your arithmetic is right. These are very expensive centres. They cost on average, just for the rent alone, over £1.4 million and-

Chair: It is £5,000 a day.

Sir Bob Kerslake: That is the all-in cost, but just the rent alone is about that much, so they are very expensive. They are high spec; they have high security costs; they have high maintenance costs. You will know that we have, we think, five identified as usages, including one where we have principles agreed. The four remain to be marketed, but I cannot give you a date as to when we will secure-

Q22 Chair: So we have no idea with Donington?

David Corner: We have. The rental cost is £1.3 million. Facilities management is £372,000.

Q23 Chair: Per annum?

David Corner: Yes. Utilities is £45,000, and estates is £81,0001.

Q24 Chair: And there is no end date?

David Corner: That is still 2032.

Q25 Chair: No, there is no end date when it is going to be taken over. There is no proposition on the table.

Sir Bob Kerslake: We have no proposition for that.

Chair: There is no proposition on the table. Right. Meg and then Justin.

Q26 Meg Hillier: Where to start? Early on, Sir Bob, you talked about no confidence in getting the IT to work in the original scheme. Perhaps we can recap on that first. How many bidders were involved at the outset of the procurement process for the IT in the original scheme? Do you know?

Sir Bob Kerslake: I honestly do not know. I do not have the number of bidders.

Q27 Meg Hillier: Well, then you might not know the answers to the other questions I have, but maybe you could let us have a note.

Sir Bob Kerslake: I have not gone back into all the previous details, but I could find that out.

Q28 Meg Hillier: I just want to get the information on that to compare with where we are now. Perhaps you can give us a note on how many bidders were involved at the outset of that process.

Sir Bob Kerslake: The people next to me, who were around at the time, say it was three.

Paul Hancock: I am pretty sure it was three.

Q29 Meg Hillier: Do you know how many bids survived to the point at which they were given to Ministers? How many did Ministers choose from? Was it all three or were there one or two-

John Bonney: It was all three.

Q30 Meg Hillier: They saw all three, so there was no difference; they saw all the people who had originally got involved. That IT procurement led to one company winning the contract. Who is now doing the contract for the IT that you talked about, Mr Hancock, in the cab? Is that different for each collaboration? Perhaps you could talk us through that procurement, because the procurement process was part of the problem first time round presumably.

Paul Hancock: The straight answer is that there are a number of different suppliers in the market that are providing the system moving forward across Fire and Rescue Services. For example, in the north-west, we have a main contractor with two subcontractors, and they will work with Airwave to make sure that the radio interface linking to the mobile data terminals is effective. They are working together against a project plan to deliver-

Q31 Meg Hillier: Airwave is the individual radios that firefighters use?

Paul Hancock: Yes. It is what is termed the main scheme radio, which enables fire crews to respond back to the control centre, either via voice or through data.

Q32 Meg Hillier: Is that the same for every fire service-

Peter Holland: And the police and the ambulance service.

Q33 Meg Hillier: So when, Mr Hancock, you talk about the different people involved in different regional collaborations, is that lots of different procurements that are taking place?

John Bonney: Yes.

Q34 Meg Hillier: So how many different procurement processes are now under way for the new scheme?

Sir Bob Kerslake: There are 22 individual bids or projects. There may well be more than one procurement in each one of those, Peter, I guess, so we cannot give you the exact number of procurements.

Q35 Meg Hillier: And they are being run by each fire service in each area?

Peter Holland: Each collaboration.

Q36 Meg Hillier: Okay. One of the things this Committee has repeatedly come back on, and Sir Bob tends to agree with us about this, is project management challenges in the civil service and the changes there, but what we are hearing now is that you are doing the procurement at a lower level than Whitehall. Whitehall is beginning to try to get its house in order in terms of procurement skills. What procurement skills exist in individual fire services? Okay, I am in London, so it is big, but at borough level it is a very small management structure. My fire commander locally is not going to be fussed about-he is not going to be doing much procurement, frankly, so he won’t be very expert in that, however good he is at other things. Where is your expertise and how are you-

Paul Hancock: If I just give you the north-west example, we went out to a pre-qualification questionnaire in February 2002. We had 11 suppliers express an interest. We provided a shortlist of five, invited five suppliers to respond to the tender-

Q37 Chair: You are not really answering the question. Where are the skills? Have you got the skills? It’s really about the skills. You have given us a late report that says that seven of the 22 projects are already late. Two projects have slipped by up to 12 months-one by five months. The estimated completion dates for several projects are now three months later than originally required. There is a reduction in the overall benefits achieved. Only 30% of the planned improvements had been delivered by 2012. It does not look very brilliant.

Paul Hancock: I want to emphasise the time scale from February’s pre-qualification questionnaire to the tender in July. Contracts were issued in November, so we have taken our time during the procurement process to ensure that we have the system that we want to deliver a solution.

Chair: We need an answer to the question. If you have the skills, why on earth are we now beginning to see-

Q38 Meg Hillier: With all respect, Mr Hancock, I have worked with some very good civil servants, very good firefighters and very good people in the public sector-they are all committed-but procuring IT is quite a specialist skill. What specialist IT procurement skills do you have?

Paul Hancock: We have a project team that includes legal, financial and technical expertise from across the four services of north-west Fire and Rescue Services.

Q39 Chair: So why are a third of the projects already behind schedule?

Sir Bob Kerslake: Our current estimate is that we will finish all the projects by March 2015. That is three months later than we identified when we put the proposal together.

Chair: This is your own report, Sir Bob.

Sir Bob Kerslake: It is. Some of them are behind, but we will deliver all the ambitions by March 2015. The savings are a couple of million pounds less than we estimated. At the moment, we are pretty much on track with a potential delay of some three months across the whole programme.

Q40 Meg Hillier: On value for money, we have had one procurement process that got to a very late stage and now we have empty control centres and all this money has been spent. First, have any lessons been carried forward to this from that? Secondly, what learning is going across the different consortia? You have all these different projects doing the same, but going through separate procurement processes, which is potentially very costly.

Sir Bob Kerslake: It may be worth saying a few words about the lessons learned in general, and I will then come back to procurement. In terms of the lessons learned from FiReControl, we have already talked about the first one, which is engaging the service properly and consulting with them before we firm up the way in which we are going to use the funding and how we are going to run the project. That was done in January 2011, and the overwhelming view was that we should be allowed to make the changes and improvements at local level. Secondly, we have run this as a programme-notwithstanding the fact that the work is done at local level-with programme and project management expertise. Thirdly, we have a strong senior steering group. Fourthly, we have had peer review, led from within the service, of each of the projects to see how they are progressing.

There is pretty strong learning from FiReControl and what we have done since to improve it. You are of course right to say that procurement happens at local level on the projects, but there is also a lot of collaboration and peer support.

Q41 Meg Hillier: Is there a framework agreement for the bidders? Is there anything at all from the centre?

Sir Bob Kerslake: We have not specified a framework agreement. As I said earlier, we have focused on the local leadership of the project, and then running the procurement service in the way that they do for a whole range of other services that they have at local level.

Q42 Meg Hillier: I remember learning about helicopter and fixed-wing aircraft procurement by police authorities when I was a Minister. In that case, police authorities were very keen not to share their flying stuff, and it was badly procured. I am not suggesting that it is the same here, but it would be interesting to hear your comments because having your own helicopter or-I will not name the police authority-fixed-wing aircraft certainly generated some kudos. It was badly procured and was done because each authority decided it needed its own thing. I am not convinced of the benefit of procuring locally. I can see that there were problems with central procurement, but doing it locally and choosing which local collaborations take place, with different IT systems, could mean that there is much less scope in future for shifting around in different ways if that is what demand requires. How can one region talk to another if you have decided on these collaborations among yourselves?

Sir Bob Kerslake: John has led the peer review of the project, so perhaps he would be best to answer the question.

John Bonney: Part of that £81 million that was given as grants to the individual Fire and Rescue Authorities is used to buy in procurement expertise. A proportion of that grant supports peer review and the peer support team. That team will assist projects by sharing good practice around procurement. It will share details about where people have procured things previously, so lessons have been learned. But some projects are running ahead of others. It will also ensure that there are common standards and interoperability between the systems that are procured. What happens is that, while there are a number of projects and they are running separately, Fire and Rescue Services are learning from each other as they go.

We run a knowledge hub, and that information is used by all the different projects so that they can see where other projects are up to, where the difficulties have been, where there have been advantages in the procurement methodology used. They can share that type of best practice. That is the way I think you accommodate the idea of not having it run centrally but running it at a much more local level.

Q43 Meg Hillier: So, you are sure, Mr Bonney, that in future if fire incidence decreased, for instance, and you needed to collaborate across a wider area, those two systems-the thing in the cab and the control centre-could talk to each other, and that would not be a problem?

John Bonney: That is inevitable in future. It is not specified in the project at the moment, but in future I think you will see just that.

Chair: I am tired of hearing-

Q44 Meg Hillier: Can we just be clear? You will see just that-that they will actually be able to talk to each to other; even as they are upgraded over time, it is all built in that they will talk to each other?

John Bonney: The idea is that people will work to common standards and the technologies will be able to talk to one another.

Q45 Chair: Sorry to interrupt, but it is always in the future. If you actually look at where the new projects are now, you are running up to two years late on some of them. Sir Bob sits there: "We’ll finish it all by 2015." There is nothing that gives me confidence-maybe I will give you a final chance to do it for me-that you are going to deliver any better, if your own interim assessment demonstrates that much slippage. Peter Holland, you had better answer as you are in charge of it presumably. Are you the accounting officer for it?

Peter Holland: No, I’m not.

Q46 Chair: Who is the accounting officer?

Sir Bob Kerslake: I am the accounting officer for the whole project. The senior responsible officer is here as well.

Q47 Chair: Does Peter Holland work on your behalf?

Sir Bob Kerslake: Peter works on my behalf as the adviser on all issues to do with Fire and Rescue Services.

Q48 Chair: Is he not the project officer? Who is the project officer?

Sir Bob Kerslake: The project officer, who works in the team within the Department, is here today supporting us.

Q49 Chair: How long has he been in the job?

Sir Bob Kerslake: She, actually.

Q50 Chair: She, good. Well done, brilliant. How long has she been in the job? This is one of the areas that I use as an example. I think it had five different project managers over about a year or two. Maybe I am being ungenerous. How long has this woman been in her job?

Sir Bob Kerslake: Jane has been in charge of the project since-

Q51 Chair: Is she sitting behind you?

Sir Bob Kerslake: Yes. She has been in charge of the project since we terminated the contract. So she has run with the project from the point of the new project, if you like. She has programme and project management experience.

Q52 Chair: So she has been in charge since 2010?

Sir Bob Kerslake: Since the end of 2010.

Chair: I would really love her to give evidence.

Sir Bob Kerslake: You could have invited her if you had wanted.

Q53 Chair: I always get these things too late. We always say we want the project officers. Is she going to stay until 2015 in the job? You are her boss.

Sir Bob Kerslake: I can’t dictate how long she will stay in the job. That is not in my gift.

Q54 Chair: Is it your intention, as her boss?

Sir Bob Kerslake: My intention would be that she would stay with the project, obviously.

Can I deal with your point? As you rightly say, some of the projects are bound to have moved back in the time scale. I am not denying that fact. Quite a lot have kept to the time scale. I am giving you a clear indication that, on our assessment of programme progress, we can deliver all the projects by March 2015. That is our commitment. I don’t mind your holding us to account for that, because that is our clear intent. That is three months later than we originally estimated when we set up the programme.

Q55 Chris Heaton-Harris: And on the original budget as well?

Sir Bob Kerslake: On the original budget; there is no additional funding for the project.

Q56 Meg Hillier: Can I just come in again? In terms of what was procured originally, the IT must have got to a certain point. How much has that been used to build on, rather than starting from scratch again?

Sir Bob Kerslake: The IT from the original project?

Meg Hillier: Yes.

Sir Bob Kerslake: Colleagues will come and have their say, but I suspect the bulk of it was aborted costs. Do you want to come in, John?

John Bonney: There are certain pieces of IT equipment that are legacy pieces that can be used.

Q57 Meg Hillier: Equipment. What about the software? Was that completely redundant?

John Bonney: No, not the software.

Sir Bob Kerslake: Essentially, it was aborted costs.

Q58 Chair: I just want to bring in NAO, then I have got Justin and Guto.

David Corner: We have heard a lot about the need for common standardisation of systems, but one of the key things that our Report on FiReControl found was that the individual fire forces could not agree standard ways of working, which are almost as important if you are talking about interoperability.

Sir Bob Kerslake: That is why one of the projects that was funded through the £81 million is specifically to develop standard ways of working.

Q59 Meg Hillier: That takes us full circle back to the beginning. The original proposal came in the aftermath of a big FBU dispute. It is difficult for local fire authorities to vote for themselves effectively to be either abolished or overridden by Whitehall. Weren’t those challenges a big part of the reason for the failure, as well as the IT?

Sir Bob Kerslake: They were some of the challenges in getting the project up and running. Bear in mind that it was hugely delayed all along the way but, having spent a lot of time going through the project when I came in as permanent secretary, I genuinely think that the biggest problems were not about those issues. They affected the quality of the progress of the project, and it was not the right way to do a project like this, but at the core of why the project fell over in the end was a failed IT system that was not going to deliver and in which we had no confidence.

Q60 Meg Hillier: I am still nervous about why we should have confidence in the new system. Mr Bonney has given us some words of comfort, but what is the key difference?

Sir Bob Kerslake: The key difference is that we are not implementing a central, top-down, complex system against the wishes and ambitions of the local-[Interruption.] Let me just finish the answer to the question. We are taking it forward using developments on existing systems in collaboration between authorities that are taking it in a staged way in order to ensure that it works. That is why we are doing it with such a high level of care and a high level of programme management of the changes, but we are not reliant on one mega-project with hundreds of staff working on it, basically centralised from London; it is a different approach. It does not depend on every bit of it working in order for the new thing to work-that is the difference.

Chair: Okay. I will go to Justin, Guto and then Fiona.

Q61 Justin Tomlinson: Going back to the earlier conversation about the five empty control centres, I was a bit concerned when you said that four of them have not even been marketed yet.

Sir Bob Kerslake: No, I did not say that. I said that they are all being marketed. We put intense effort into marketing them from day one, on a three-stage process. First, we marketed to the Fire and Rescue Authorities, because clearly that was the best use. We managed to identify that six were potentially usable and three were agreed in the end. Alongside that, we then marketed to public sector bodies, and we are now doing a very strong private sector marketing process, so we have done all three. I was saying that I cannot give you an assured date as to when we will get somebody to take it up.

If I could give you one example. The FiReControl centre in Wolverhampton is on a business park. The building next door is a flexible office space, completed in 2007. It is still empty. These are high-cost, high-spec, bespoke buildings; they are going to take some shifting, which is why I am very cautious about giving you a date, but we will bust a gut to do so. In the meantime, we have done a huge amount to cut the running costs to avoid haemorrhaging costs while we are doing it.

Q62 Justin Tomlinson: So initially you marketed to other fire authorities, and then you tried the public sector. When you say the private sector, does that mean that it is now on the open market?

Sir Bob Kerslake: Absolutely.

Q63 Justin Tomlinson: How long has that been the case?

Sir Bob Kerslake: We have been running that process for at least six months now.

Q64 Justin Tomlinson: Presumably, you are looking to get money in to get access to those buildings. If so, will there come a point at which you just decide to say to somebody, "Here are the keys. Take them and take the running costs." If so, at what point will you get to that stage?

Sir Bob Kerslake: With any building, you make a judgment about the deal and obviously I would not want to prejudge that. On the ones that we have done, we have already had to put in some funding in order to make them work-rent-free periods and so on-and we will have to look at each one on its merits and see what offers we get. Clearly we want to see, because if we can pass over buildings, we cut our maintenance and operating costs, so we will do the best deal that we can on the buildings, but I want to say that we are reconciled to the fact that in my view it is inconceivable that we will fully recover the rental costs on these.

Q65 Justin Tomlinson: You have professionals marketing these properties. What have they suggested are the potential sectors that may be interested in taking them over?

Sir Bob Kerslake: As I said, some of them are public sector bodies. Often it is about whether there can be collaborations between public sector bodies to occupy them. It is not necessarily just the Fire Service. Quite a lot of the collaboration that is happening now is with others. The Coastguard service is a good example. They came into the building. The nature of these buildings is that they have high resilience and so on, so any public body that needs that kind of high resilience is worth looking at. They are very big, so to make them useful you have to collaborate.

The other thing we are looking at is whether it is worth investing funds to convert some parts of the building to make them more usable. Those costs are quite high. At the moment we have stopped short of that, but we are exploring every avenue to use up the four remaining buildings. We have one more that is under offer.

Q66 Guto Bebb: A lot of my concerns have been raised by Meg. As someone who was not on the Committee when the original Report was looked at, I was quite shocked to see that of the project team cost of almost £90 million, 75% went to outside consultants. Since 2010, what sort of percentage of the expenditure on the project team goes to outside consultants?

Sir Bob Kerslake: I would say very low. I would not say it is zero, but it would be very low indeed.

Q67 Chair: Can someone behind you give a figure?

Sir Bob Kerslake: We will supply you with a figure for that. If the team have got it I will bring it to you in a minute. The vast bulk of the work is being done through the in-house team within the Department, and crucially with our other partners in CFOA. As we said earlier, the peer review is being done, as the name suggests, by the Fire Service itself. We are not, as was the case with FiReControl, employing large numbers of external consultants to do the work. We are drawing on the expertise of the Department and the Fire and Rescue Service.

Q68 Guto Bebb: In terms of the change, is that because there has been an improvement in the expertise available within the Department or is it just that a different financial situation has forced your hand?

Sir Bob Kerslake: It is probably two things. One is definitely an increase in the expertise in the Department on programme and project management. We have invested a lot of effort into increasing our number of people who can do this both in terms of general awareness and specialists on programme project management. Secondly the nature of the FiReControl project was such that in effect the Department was directly running a huge, complex IT project. It did not have and never was going to have the skills to do that, so the only choice was to buy them in. This is not being implemented in the same way now. It is a lot of locally driven projects, drawing on local expertise, and that means you can do it without lots of buying in of consultants. Peter, do you want to add anything?

Peter Holland: That is absolutely the case. Before I retired as a chief fire officer, and I was involved in the same consortium that Mr Hancock is involved in, I know that members of the Fire Authorities who are involved in that consortium were very conscious of concerns around employing consultants and the previous wastage. Paul, do you want to add to that?

Paul Hancock: I have no specific costs for the consultant reviews in the north-west. What I can say is that we have bought in some assurances in terms of project delivery and project governance-gateway reviews, for example. We have also used a company to do some testing of our roster for the new ways of working within FiReControl for the staff who will be TUPE’d across. Again, very minimal costs but we use some of those consultants.

Q69 Guto Bebb: Just to clarify, from the figures I saw it looked as if the project management costs-not the software development costs-were £90 million, of which some 75% went to outside consultants and £42 million to one company. I am looking for some assurances that that figure has fallen dramatically.

Sir Bob Kerslake: It is not even in the same league as that. We are talking about much more modest, targeted sums. The vast bulk of the work is being done by the Department and by the Fire and Rescue Authorities.

Q70 Fiona Mactaggart: Mr Hancock, you were saying earlier that under this new system a computer will send data straight into a vehicle which is going to be dealing with an incident. As I understand it, and it was largely before my time, the original scheme was that if there was a major incident-say, a big factory in Slough burnt down-that would involve fire officers from London as well as from the Berkshire Fire Authority. In this present system, is that going to work? If an incident involves more than one fire service, do all the appliances going to it know the same information?

Paul Hancock: From a north-west perspective, as an example, all of the project team are working on common ways of working whenever they can. They still have a requirement to fulfil their requirements under their individual risk management plans-the IRMPs, as they are called. There are common ways of working which will be passed down to the computers in the fire engines, but there is also different information put on to those computers to deliver local requirements for local fire services, so it is very flexible. If you have a large-scale incident and you have fire engines coming from other fire services, they can link into the technology; that is part of the specification for the supplier.

Q71 Fiona Mactaggart: Was that a yes? I am really sorry, but I do not know whether the answer was yes or no.

Paul Hancock: Yes.

John Bonney: Yes.

Sir Bob Kerslake: Yes.

Peter Holland: Yes. I can give you an example: there was a big fire in Windsor last week and 20 fire engines went to it from Berkshire, Buckinghamshire and London. They all have the same radio system and they can all communicate into the single control, so actually it is already working in many respects.

Q72 Fiona Mactaggart: I did not ask whether they had the same radio system-

Peter Holland: Well, it is part of it.

Q73 Fiona Mactaggart: I was interested in the issue that Mr Hancock raised about data that are not verbal data; data arriving inside the appliance.

Peter Holland: That is transmitted on the radio.

Sir Bob Kerslake: The ability to transfer data over Airwave is one of the biggest things that we are doing through the project.

Q74 Fiona Mactaggart: That is good news. Let me ask you, Sir Bob, in the original Report there was a set of recommendations about learning the lessons. Are you responsible for any other projects where there has been a centrally invented solution to local problems and the local respondents are not terribly happy with it?

Sir Bob Kerslake: You obviously have one, so-

Q75 Fiona Mactaggart: No, actually I don’t. This is an inquiry and I am asking you a question. Are you?

Sir Bob Kerslake: I see. I do not believe that we are, actually. We have taken a very different approach to implementing projects-

Q76 Chair: Troubled Families. We have not looked at it yet, but I hope that we will come to it.

Sir Bob Kerslake: There is a huge difference with the way that Troubled Families is being taken forward. Of course, it is a national initiative. Let me give you another example: we are unring-fencing-

Q77 Chair: You are prescribing nationally. You have got a tsar at the centre telling all the local authorities what to do.

Sir Bob Kerslake: No, actually it does not work like that. It is a national project, as was the ring-fencing of the housing revenue account and the changes to the local government finance system. Those are all big projects that had to be nationally led. The replacement on FiReControl is a nationally led project and there is no difference.

The way in which Troubled Families is implemented, though, is collaboratively. We are not telling local authorities how they tackle it; we are saying that this is a priority, we will help to fund you if you manage to deliver some change here and we will develop some common approaches that you can borrow from. That is a completely different model from the way FiReControl was run, which was as a nationally directed, top-down project. We are not running projects that way. We do run national projects, but they are done differently. I am happy do go through examples if you want.

Q78 Chair: May I ask a couple of questions that Mr Holland can answer? The Taunton centre is still empty, isn’t it?

Peter Holland: The Taunton building? Yes, it is empty.

Q79 Chair: I am told that it costs us £137,000 a month. I gather that Devon and Somerset fire authority wanted to take it over, but talks broke down. Why?

Peter Holland: I was not involved in those talks, but I would imagine that, as the control centre is quite large, the cost would probably be too much. I know from my experience in the north-west that there was a discussion about whether they should take over the facility up there and it was looking at an external building, another building, and comparing it to that and how much it was going to cost-

Q80 Chair: It is better to have it filled with somebody. I think it was Justin who raised the issue.

Sir Bob Kerslake: The reason why the south-west one did not happen was because the centre was too large and it was too expensive for them alone.

Q81 Chair: Too expensive, but it would have been better to drop the price than carry on running an empty building with all the-

Sir Bob Kerslake: Even with some subsidies, as we are putting into the other centres, it was still too expensive. The only-

Q82 Chair: But it’s better than leaving it empty. That is what seems so crazy to me.

Sir Bob Kerslake: I don’t think it is for the Fire and Rescue Authorities. Bear in mind we did not compel them to take these centres. They had to choose them.

Q83 Chair: I understand that, but you gave Mr Hancock-I think I am right-a bribe of £1.2 million to go into his.

Sir Bob Kerslake: We have given him a subsidy. The difference in the case of Mr Hancock is that he is forming a collaboration of Fire and Rescue Authorities. All the ones that have taken on the buildings are either very big-London-or they have done a pretty substantial collaboration, as Paul has done, or, in the case of Durham, they have brought in their HQ staff.

Q84 Chair: So if Devon & Somerset had done a collaboration, you would have been prepared to give them a bribe, would you?

Sir Bob Kerslake: We would have been very happy to talk to them about a good deal for use of the building.

Peter Holland: Devon & Somerset is only one Fire and Rescue Service. It is not a collaboration-

Q85 Chair: I understand that. There are two things. In one situation, you give a bribe-sorry, a subsidy-because you are encouraging four to work together. In the other situation, we have an empty building-it is still empty; no tenant looking in-and you are not prepared to give them the same bribe/subsidy.

Sir Bob Kerslake: No, we are prepared to look at subsidies, but even with a subsidy, because it was only one Fire and Rescue Authority, it still did not make sense for them to go in. That is the basic point. It has to be that they can collaborate or they are pretty big like London, or they have an alternative use like Durham. Unless it is something like that, you just cannot make it work, even with a subsidy.

Chair: It doesn’t make sense.

Q86 Chris Heaton-Harris: How does the structure of your budget work? Let’s take Donington, which is £5,000 a day. I think that is what the Chair said it cost. That is a £5,000 hit coming out of DCLG centrally. If you were to have that money, would it be hypothecated towards fire services across the country? If you were to get rid of the ones you have not been able to get rid of, thus creating spare money, where would that money go?

Sir Bob Kerslake: It would be a choice for Ministers to decide how the funding was used. That depends on decisions on the overall budget of the Department. Suffice it to say, every pound we can save on this is available to be invested in either a Fire and Rescue Authority or something else the Department is doing. So there is a huge drive to get these costs down.

Q87 Chris Heaton-Harris: I’m slightly confused, like the Chair. You have got not a willing taker per se, but someone who is interested, and it is still public money, raised in a slightly different way, so it would not come out of your budget directly, but via council tax and various other bits, because it is a fire service. Why weren’t you so keen to incentivise the Taunton site?

Sir Bob Kerslake: I think you’re genuinely misunderstanding the situation. We were very keen for Fire and Rescue Authorities to use these buildings. It was not a question of not wanting to use them-quite the opposite. That is why we took a long time giving them effectively first call on the buildings. It is really important to get that point across. In reality, even with that and even with a willingness to subsidise the use of the buildings to cover some of the FM costs, it still didn’t make sense for that particular fire authority to use that building.

Q88 Chair: But it’s better than leaving them empty. That is what seems so odd. If it is empty, they are somewhere else. They might have needed a bigger subsidy-stroke-bribe, but it’s better than leaving it empty.

Sir Bob Kerslake: Of course it’s better to use a building than not use it. We have worked very hard to get the buildings used by-

Q89 Chair: No, you haven’t. You have rejected these guys.

Sir Bob Kerslake: No, we have not rejected them. I keep saying this. They have chosen not to take up the building.

Q90 Chair: Because you didn’t give them enough subsidy.

Sir Bob Kerslake: I can double-check the detail on this one, but we were offering subsidies, I am quite sure, to this particular Fire and Rescue Authority. They are significant subsidies, as you have said. It genuinely is not the case that the Department has been unwilling to be flexible to get Fire and Rescue Authorities in. The basic problem, as I have said before, is that these were designed as regional centres, and having one Fire and Rescue Authority in a regional centre is a major issue in terms of cost.

Q91 Chris Heaton-Harris: I think I understand where you are coming from. I was slightly confused. Is there any particular reason for not letting part of a building?

Sir Bob Kerslake: We would be open to using part of the building. As I said earlier, the nature of these buildings means that they do not lend themselves terribly well to that kind of use, because of the way in which they are designed. But we are open to any kind of usage that we can secure either from a commercial company or a public company, or from one of the Fire and Rescue Authorities. We have not closed down any option on the use of these buildings, but clearly Fire and Rescue Authorities have made their own decisions about their future now. Many have existing services and have developed automatic back-up through other routes, so why would they move? That is the question.

Q92 Chair: Okay. Going on to one of your projects, Buckinghamshire, and looking at the ministerial press release for when you announced the projects-are you Buckinghamshire? You’re not, are you?

John Bonney: No. Hampshire.

Chair: Buckinghamshire is getting money to increase its number of staff. The press release says, "Buckinghamshire, Cambridge and Suffolk will be enhanced due to greater numbers of control staff being on duty at any one time", creating "a larger pool to ‘recall to duty’". That seems to me to be totally counter to Government policy. You are using that money to recruit more people, rather than trying to find efficiencies.

Peter Holland: I think you’ll find the reason why most services are collaborating is because they are reducing the number of overall staff. That is where the savings are coming from.

Chair: It doesn’t say that. I am just quoting-

Peter Holland: It is quite possible, Chair, that the comments you have got are about staffing for peak demand.

Q93 Chair: No, this is the press release from Bob Neill, when he was Minister there, announcing the outcome of the bids. It says, "Strengthen local resilience: for example, resilience for large incidents and spate conditions in Buckinghamshire, Cambridge and Suffolk will be enhanced due to greater numbers of control staff being on duty"-blah, blah, blah-"and create a larger pool".

Chris Heaton-Harris: It’s not three added together so they are all operating at the same time in the same way, but if there was an issue in one of those three there would be a bigger number overall than they would have had if they had been separate.

Peter Holland: I might suggest that Suffolk would possibly have two or three people on call at night in their control room, and perhaps Cambridgeshire have four or five-something like that. You bring them together, and you might have six people on duty to answer those calls. Actually, Buckinghamshire are no longer in that group. They are part of the Thames valley collaboration.

Q94 Chair: Okay, fair enough.

Page 9, paragraph 3.1 talks about a £3.2 million cost to wind down FiReControl. What was that spent on?

Sir Bob Kerslake: There were some costs that individual Fire and Rescue-

Chair: Is this redundancies?

Sir Bob Kerslake: It is a mix of things. There were redundancies, there was the settling of various contracts, and there were costs that have been incurred by Fire and Rescue Authorities that needed to be covered as well. So it was a range of costs.

Q95 Chris Heaton-Harris: Would you be able to send us a note with the breakdown of that, please?

Sir Bob Kerslake: Yes. I will happily do that.

Q96 Chair: Finally, in the papers it suggests that there will be regular rent reviews under these PFI facilities management deals. What are the terms under which rents can increase, and what control have you got over those for the nine buildings? On page 10, and all over the place, it talks about potential rent increases, unless I have misread it.

Sir Bob Kerslake: I can’t give you the detail. I didn’t think the rents were subject to uplifts.

Chair: Neither did I. That is what rather shocked me.

Sir Bob Kerslake: I am slightly puzzled, unless that is the PFI deals. Can I come back to you on the details, Chair, rather than guess at it?

Chair: Okay.

Q97 Chris Heaton-Harris: I have a question about where things are going now. Obviously, a region was probably not the optimal size for an amalgamation of fire authorities. Two of you are from the north-west, but Mr Hancock and Mr Bonney come from different parts of the country with different population concentrations. My question is, what do you perceive to be the ideal size for a fire authority?

John Bonney: The ideal size for a fire authority?

Chris Heaton-Harris: Yes-to operate a top-notch fire service using the best IT and everything else.

Peter Holland: It might be for me to answer that, as the fire adviser for England. You have a whole range of different models, ranging from London to the Isles of Scilly, for the size of Fire and Rescue Services. Nobody has made any judgment call on what the optimum size is. Certainly, there are views around that 1,500 to 2,000 staff-something like that-is the optimal figure. Given that we are in an environment where these are local decisions, not being directed nationally, it is a matter for individual fire authorities to make judgment calls on the size of fire authorities and the efficiency savings that they have got to make. Clearly, there would be efficiency savings by services perhaps merging together voluntarily.

Q98 Chris Heaton-Harris: It looks as though that is the direction of travel. Many services are combining so many services-

Peter Holland: Only the controls.

Chris Heaton-Harris: Yes, but it is only a short step to going the whole hog. Is that a fair comment?

Peter Holland: It would certainly help a merger if services were using the same controller, if that is what they chose to do, but I do not think you will find that any of those services that are looking to combine the controls are actually looking to combine. There might be things happening that I am not aware of at the moment, but I doubt it.

Q99 Chair: May I ask what I think will be the final question? In your new project, of the £82.8 million you put aside only £1.8 million for interoperability and collaborative working, which was the purpose of the new funding. Why was that so small? Why did you choose to divide the cake up in that way?

Sir Bob Kerslake: I think the principal reason was that that was new territory. We were looking to encourage something across the country nationally, and that was the sort of sum that came back in the consultation as to what would be required. In fact, we allocated slightly less than that. It does not mean to say that that is the only collaboration that is happening, but on the specific task of developing common processes, it felt like a reasonable sum of money to do the job that was needed, and I still think it is.

Q100 Chair: Were all the other projects partially judged on collaboration as a criterion?

Sir Bob Kerslake: Collaboration was one part of what we looked at.

Q101 Chair: A key criterion?

Sir Bob Kerslake: It was an important criterion in assessing the projects.

Q102 Chair: Key?

Sir Bob Kerslake: Yes, a key criterion.

Q103 Chair: So it was one of those ones you had to pass-to have a tick in the box.

Sir Bob Kerslake: No, not all of them had to have that. We did not make it a requirement that they collaborate between Fire and Rescue Authorities, but two thirds of them did, so the bulk did. Those that did not either were very big, like London, or were collaborating with other services such as the police. Collaboration formed an important part of the test, because it was one of the ways of driving value for money.

I am conscious, Chair, that I did not answer your question on the rent issue. I have now checked and it is 2.5% uplift per annum on the rents, which is applied every five years, so that is built into the contract.

Q104 Chair: That is built into the original contract, so it is another mistake in the contract.

Sir Bob Kerslake: You might say that, absolutely.

Chair: Dear, dear, dear.

I think we are there, because this is a follow-up hearing. Thank you very much indeed. We will have to see whether we come back to it a third time; we will monitor progress over time.


[1] Note by National Audit Office: David Corner quoted from the wrong line of figures, answer should have read “Utilities £81,000. Estates £1,100. Rates £45,000

Prepared 18th July 2013