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To be published as HC 457-i




Treasury SUB-Committee

Money Advice Service

Monday 24 June 2013

Caroline Rookes CBE

Evidence heard in Public Questions 472 - 586



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Oral Evidence

Taken before the Treasury Sub-Committee

on Monday 24 June 2013

Members present:

Mr George Mudie (Chair)

Mark Garnier

Mr Andrew Love

John Mann

Mr Brooks Newmark

Jesse Norman

John Thurso

Mr Andrew Tyrie


Examination of Witness

Witness: Caroline Rookes CBE, Chief Executive, Money Advice Service, gave evidence.

Chair: Thank you very much for coming. Mr Tyrie is going to start.

Q472 Mr Tyrie: Could I begin, Caroline Rookes? You have had quite a lot of critical comments fired at your organisation, including about the quality of the website and the lack of clarity over its purpose, and some trenchant criticisms from the citizens advice bureau as well. Are these criticisms fair?

Caroline Rookes: I do not think that I can comment on whether they are fair or not because I think they were comments that were made some considerable time ago-some of them over a year ago. I can tell you how I see the organisation four and a half months in, and I think that it is doing very well. I think it has turned a corner and that it has some real achievements under its belt.

Q473 Mr Tyrie: Could you perhaps just articulate an achievement and the purpose of MAS in a sentence or so?

Caroline Rookes: I would say that the purpose of MAS, in a sentence-in a nutshell-is to help people to manage their money, either directly through its own services, or in partnership with other organisations. We do that through money advice; we do it through debt advice; and we do it through, if you like, a leadership role. We try to bring together the financial capability sector to make sure that we are all working effectively together.

In terms of achievements, I would point to the 3.5 million people who have been helped by the Money Advice Service so far and the fact that while numbers are certainly not everything, we have exit polls that tell us that satisfaction ratings are very high-over 80%. Three quarters of people who have used the Money Advice Service have found the information they needed and taken action. On the debt advice side, last year we increased productivity by over 50%, so I think there are some real achievements there.

Q474 Mr Tyrie: When you took over, did you take a look at whether, were MAS not to exist, the space would be filled by voluntary action?

Caroline Rookes: I did not particularly because I was recruited to run MAS, so I was not looking at what would happen if MAS was not there. I have been looking at, and indeed talking to, the whole range of stakeholders that are out there to consider what their role is and what they are doing so that we can work collaboratively with them.

Q475 Mr Tyrie: Have you looked at whether MAS should be smaller?

Caroline Rookes: I am conscious of the need for MAS to demonstrate value for money at all times. At the moment, we are in the process of developing a three-year plan and our next year’s business plan, and it is in the context of that that we will need to look at the funding that we require.

Q476 Mr Tyrie: So you might need more money.

Caroline Rookes: I do not anticipate that we would need more money, but we have not yet done our planning-or, rather, not yet completed it. We are in the process of doing it now.

Q477 Mr Tyrie: Your current business plan states that you will use a range of qualitative and quantitative research methods to develop: "A richer understanding of our audience, their behaviours and the levers that can be used to make a real difference to people’s financial capability". What that means, I think, is that you are intending to try to get to know your clients. There does not seem to be much detail on the methods that you intend to use. Have you specified them anywhere else in such a way that we could assess your performance?

Caroline Rookes: We are in the process of putting together a document, which we intend to publish next month, on the basis of setting out the findings from a major piece of research that we have done, both qualitative and quantitative. That is research that we are going to repeat quarterly. What that has done is it has surveyed 5,000 people to ask them about their money and how they manage it. Of those 5,000 people, 800 of them are Money Advice Service customers, and our intention is to continue to carry that survey out on a quarterly basis so that we can build up a picture of the financial capability of the UK.

In addition to that, we have carried out some qualitative research. We have carried out a number of types of research, but the biggest piece is something called an ethnographic survey, where 72 families have been followed-not continuously-with their agreement for a year, and filmed in their money dealings, so that we can get a better understanding of what people do with their money and why they do it, rather than what they say they do. The idea for us is to pull all that together into a research report into a baseline survey of the financial capability of the country, which we will then use going forward to assess how effective we are being.

In addition to that, we of course monitor the number of people who we see, who use our telephone service and who use our website. We use exit polls to establish whether they have got the advice they want and whether, having got that advice, it has helped them to take the action that they want. We have quite a range of ways of measuring our performance, and if you would like more detail, we can send it to you.

Q478 Mr Tyrie: We would like some if we could, because there is nothing coming along with this statement that you are going to get to know better the people whom you are trying to serve.

Caroline Rookes: That will be primarily the research that we publish next month. We will be publishing it probably in about two weeks, and that will give a much fuller, richer picture of people in the UK.

Mr Tyrie: It would be helpful, too, if you could take a look at the language to see if you can simplify as much as possible some of the statements that are being made in your documents. This is only one of a good number of examples of rather curious phraseology that can be reduced to very simple thoughts if, in this case, you want to get to know the people you are serving.

Q479 John Thurso: May I ask a simple question? Who are the core customers?

Caroline Rookes: Our service is a universal offering. It is there for everybody, but we are focusing on three main groups: young people; families with young children; and, indeed, those with older children. We did a piece of work based on some Experian data on financial segmentation. We have looked at segments-I think they had about 50-against a series of outcomes or elements that we think represent good money management: keeping debt under control; saving regularly; saving for retirement; insurance; and provision for dependants. We have looked at these segments against those five outcomes, and there are three segments, which are the ones I listed, where we have the most concern. We will be particularly targeting those groups, but I do say again that that is in the context of a service that is universal and will provide coverage for all.

Q480 John Thurso: I suppose what I am driving at is that there are a lot of people who are moderately savvy about money and so on and who know they need advice. They will go and look and get advice. They are perfectly bona fide customers. There are also a lot of people who do not know they need advice and who find out they are in trouble when they get into trouble. I am really trying to understand, given you are a relatively new organisation in quite a complex area, to what extent you are focused on the problem end, if you like, as opposed to the general advice end.

Caroline Rookes: I think I would answer that in two ways. The problem end is partially the debt advice end. As you say, though, these are people who are in trouble. Sometimes they have left it too-well, not too late, but they have left it late. With the debt advice, we were given the role last year to co-ordinate funding for face-to-face debt advice, but also to raise standards across free debt advice. One of the things we want to do, apart from raising standards, is to ensure that debt advice is accessible to all, and we are working with the main organisations like Citizens Advice, StepChange and the Money Advice Trust to make sure that people can access debt advice easily and quickly.

On the money advice side, I think what you have hit on is the real issue: how do you engage people who are not interested in money and probably will not be until it is too late? I think that is an issue that all of us in the sector are grappling with. I have had meetings with most of the big banks and that is the same conversation we have with them. They have people who they can see are tipping over into difficulties, but they are people with whom, even when they offer help, it is rejected.

Having said that, we do not have a magic wand. Our first step is raising awareness of the service. What we spent our marketing budget on last year was to increase awareness of the service so that people know that the Money Advice Service is here. We are also working through a lot of partnerships to draw people to the advice service. For example, we have partnerships with things like Mumsnet and Emma’s Diary so that at life stages when people have children, they are referred to our website. Those are the sorts of routes that we are taking to make the content engaging and draw people.

Q481 John Thurso: Your own business plan makes the very obvious statement: "We are a very new organisation with a wide and complex remit". Do you think, now you have been in post for a while and had a chance to grapple with it, that it may be too wide and too complex, and that Parliament would have been better giving you something somewhat narrower and simpler?

Caroline Rookes: No, I do not think it is. I think it is essential that someone has that wide remit, because for me it is those two very wide statutory objectives-to raise people’s understanding and to raise people’s ability to manage their money-that give us, if you like, the locus to work with the financial capability sector, to draw the organisations that are working in this space together and to try to ensure that we are moving forward as efficiently as we can, without too many overlaps and gaps, so that we are actually working together. That is very much how I see the Money Advice Service’s role developing over the next few years.

Q482 John Thurso: By sheer coincidence, I attended quite recently a meeting in my part of the world where there was a young lady from Money Advice who was giving some advice to some fairly disadvantaged people. I asked the question, "How many of you can access the internet?" and the answer was there was not one in there, unless they came into this particular group. Looking at, if you like, with those people who you are just trying to give advice to, obviously working online is fine, but for those who are in difficulty, very often they are also digitally excluded. How can you assess the scale of that problem and what can you do about it?

Caroline Rookes: Well, in terms of assessing the scale of the problem, I come back to the research I was talking about at the outset to get a feel for the real size of the problem. I think what we can do about it is to ensure that our services are well publicised, that people know about them and that they are available. For instance, the jobcentre is clearly a place where a lot of people who have difficulties will be going. We advertise our services there, and, in fact, we are just in the process of putting up a whole new set of posters in jobcentres. It is making sure that our services are publicised in areas to which those sorts of people will have access.

John Thurso: Okay. Thank you very much.

Q483 Chair: I was just going to ask about the idea that you intend to reach 10.2 million people. Now, in Money Marketing, there was an article that said you were dropping these huge targets that we raised questions about and that you were going to focus on behaviour-that is the headline. Have you dropped this business of getting to 19 million people as your target audience?

Caroline Rookes: We do not have that as a target. We have assessed the size of the target population. We have assessed the size of the three particular groups we are focusing on to try to get real behaviour change, because we need to assess the size of the challenge in front of us. That is the group that we have estimated to be around 10.2 million. You will have seen that we have estimated our starting point this year as half a million outcomes towards effecting behavioural change. Yes, those figures are still there, but our target is not to hit a particular number as such. It is much more focused now on trying to effect behavioural change.

Q484 Chair: I do not think we twigged in the first session, when we gave Lord Turner a very hard time because we took him as being responsible for agreeing your budget. It emerged that he had been in frenzied correspondence and discussion with a Minister because he felt he did not have sufficient powers actually to alter your budget or refuse your budget. Now the FCA has come along. You have put through a budget. Was it accepted without comment? Was it accepted without change? Did it make any suggestions to you? You might as well deal with the bigger question. There is a memorandum of understanding knocking about. Have your organisation and the FCA come to some conclusion about who has ultimate responsibility?

Caroline Rookes: Yes, I believe there is a clear understanding between the FCA, the Treasury and ourselves. The FCA is responsible for agreeing our budget and our business plan. That is clear. We are accountable to the FCA and Parliament for what we spend. I am accountable for delivering the business plan that I have agreed with the FCA. We have set that out formally, as you say, in a memorandum of understanding, but we also have very close working relationships now with the FCA. I have meetings. I have met the chair, John Griffith-Jones, several times and with Lesley Titcomb, the Chief Operating Officer. I also meet their Director of Policy and Risk, Chris Woolard, who is a fairly new appointment. One of my directors meets regularly with the team that is responsible for oversight of the Money Advice Service and we exchange information on a monthly basis. We have very, very close working relationships. I am satisfied that the relationships and the accountabilities are clear, and to my knowledge, although I cannot speak for the FCA, it is, too, as indeed is the Treasury.

Q485 Chair: That is very helpful, but I just did not exactly catch the first phrase you used in terms of, "Yes, the FCA is." Let us put it this way: Lord Turner clearly was not happy with salaries and was not happy with elements of the budget, but he felt it impossible actually to force change on the Money Advice Service. The FCA has taken over. If the FCA said to you, "We do not accept the content of this budget and we will not approve it," is that decision accepted by the Money Advice Service? We could not get Lord Turner to say he could do this and we now see the reason why. Has this been resolved? Is it that the Minister and, particularly, the regulator can indentify details of your budget and ask your board to rethink them?

Caroline Rookes: Absolutely, yes.

Q486 Chair: Yes, good. Well, that is a step forward at least, because if we are unhappy about your budgets, we can have words with you, but it is the FCA that carries the can, is it not?

Caroline Rookes: Yes.

Q487 Chair: Very good; you are in the clear.

Mr Tyrie raised the question of your language. You are too young, but Private Eye used to have "Pseuds Corner", if you remember. I think MAS would win it every week for your business plan.

Caroline Rookes: Oh dear.

Chair: I am glad somebody out there is nodding. Your business plan states as one of your deliverables that you will: "Optimise interventions to drive action against our outcomes and longer-term behaviour change. This includes developing our existing tools and content and developing specific outcome-specific content". Can you tell us what that means?

Caroline Rookes: Can you tell me where it is, and then I will-

Q488 Chair: While you are thinking that one out, page 7 of your business plan says: "We will focus our measurement of impact on value and outcomes where we can. Where this is not possible, we will measure our activities and outputs". Then there is another one that I just started off but did not have the heart to write out, which says: "A new baseline for financial capability".

Caroline Rookes: Tell me where the first one was.

Chair: Who wrote this? Please, Caroline, tell me you did not write it.

Caroline Rookes: I did not write it.

Q489 Chair: Very good. Are you still employing the person who did?

Caroline Rookes: Tell me where it is and I will explain it to you. Or would you rather I just made a commitment that in future we will ensure that the language is simpler?

Q490 Chair: I would settle for that. We will stay in the dark for a year as long as there is hope in the future.

Caroline Rookes: We will make sure that next time round it is simpler.

Chair: Okay.

Q491 Jesse Norman: Ms Rookes, when you said that the Money Advice Service had turned the corner, what did you mean?

Caroline Rookes: What I meant was having read the transcripts of the hearings last year and having seen a lot of the publicity, I knew that there was a lot of concern about the Money Advice Service and what it was not doing. I hear the points about the language in the business plan, but I think it is a good business plan. We published results at the end of March or the beginning of April for the Money Advice Service’s performance last year, and they were good. So, what I meant was that I think it is an organisation that is performing well. It is a new organisation. It is still evolving and developing, and there is still a long, long way to go, but my view is that it is going in the right direction.

Q492 Jesse Norman: Because our concerns were not merely that it was not doing its job properly and it was very expensive, but that we were not clear why it should exist at all.

Caroline Rookes: Well, I am clear what its role is. The Government took the decision to set it up. It does exist. I am quite clear that it has a role to play in terms of providing a source of impartial generic advice, but that is only one tool in trying to raise financial understanding and ability across the UK. Its other big role is collaborating with the many other organisations in this sector and working together with them, and providing leadership, so that we all get the most from the resources that we have.

Q493 Jesse Norman: Have you had a chance to get your head around the financials in the annual review?

Caroline Rookes: Some, yes.

Jesse Norman: Some.

Caroline Rookes: Yes, sorry, I have; yes.

Q494 Jesse Norman: Okay, thanks very much. In the annual review, it says that your redundancy costs were £4 million in the year ending 2012 and are £250,000 in the year ending March 2013. Why have they fallen so much?

Caroline Rookes: Because the redundancy programme is complete. Most of the redundancies either took place in the previous year, or were agreed in the previous year and were accounted for in that year, rather than this year.

Q495 Jesse Norman: Do you accept that there is something slightly odd about a two-year-old service having £4 million worth of redundancy costs last year?

Caroline Rookes: It was the nature of the service. Obviously, I was not there, but the service was set up by taking an arm of what was then the FSA, and the organisation has been through an enormous transformation programme to create the organisation we need to deliver the Money Advice Service and leadership to the sector.

Q496 Jesse Norman: When you were recruited to this job, how long were you given to understand it would be for?

Caroline Rookes: I am sorry, could you repeat the question?

Jesse Norman: Was there some period in office discussed when you were recruited for your current job?

Caroline Rookes: My contract is for three years.

Q497 Jesse Norman: What kinds of assurances were those who recruited you able to give you about the longevity of the service itself?

Caroline Rookes: I did not ask them about the longevity of the service. My assumption was that a service that had been set up by statute would have a future, providing it was able to demonstrate clearly that it was offering good value for money and an effective service. As you probably know, we have the National Audit Office reviewing our value for money at the moment, and we hope that that will have a positive outcome. But my sense is that as long as we can provide, and demonstrate that we are providing, a good-quality service, we will continue to exist.

Q498 Jesse Norman: You cut the budget this year by something like £2.5 million. How was that done?

Caroline Rookes: A lot of that came through spending less on marketing than we had in the previous year. The previous year the marketing spend was around raising awareness across the population. This year we are focusing down more, so we are spending less there.

Q499 Jesse Norman: There had been a lot of criticism of the size of the marketing budget, hadn’t there?

Caroline Rookes: Yes, there had.

Q500 Jesse Norman: Do you think that will go down further next year?

Caroline Rookes: We have not set our plans for next year. I would anticipate that the spend would probably be around the same level, but we have not set our plans yet. Sorry, I have lost the question you were asking me about.

Jesse Norman: Just on the nature of the savings you made in the budget.

Caroline Rookes: The savings, yes. The other element that contributed to the savings was that we brought a number of posts in house. We decided to bring our IT development team in house, rather than relying on contractors. That, too, is cheaper. The business model generally has changed. That has, as I say, released a number of savings, some of which have been put back into areas like policy development, stakeholder management and partnerships, and the overall net effect is the £2.5 million saving.

Q501 Jesse Norman: This business plan of 2013 that has been put out: did you have a hand in drafting that?

Caroline Rookes: Yes.

Q502 Jesse Norman: As it were, you signed off on it before it was issued?

Caroline Rookes: I have signed off on it, yes.

Q503 Jesse Norman: I must say that I share the Chair’s worry about some of the language in it. I worry not just about the language, but about what the language is supposed to refer to, because inevitably one of the things it refers to is a large expenditure of public cash. On page 41, you have a resource summary analysis, which contains a phrase that I think actually needs to go down in legend: "Proposition development: £2,755,000. Description: to develop our proposition to deliver against our outcomes." Could you explain what that means?

Caroline Rookes: Again, I accept the criticism of the language. Proposition developments are the tools that we use on the site. A proposition would be the budgeting tool, the mortgage calculator tool, or one of the savings comparison tables. Those are our propositions.

Q504 Jesse Norman: This is some kind of software development.

Caroline Rookes: It would include that, yes.

Q505 Jesse Norman: I think the worry that I would have is that these choices of language do not merely reflect a certain fuzziness, but a mindset that really is so bureaucratised that it is not really able to engage with the real issues involved. "Service delivery costs", "Action and behaviour-change communications": you can see the worry, can you?

Caroline Rookes: I can see your point that you do not understand the language and that therefore it is not clear what the money is there for.

Jesse Norman: There is someone in there who is actually trying to write English. This is rather a nice line: "Money needs awareness: £3,900,000. Description: prompt people to overcome their inertia"-I think that is pleasingly clear-"and engage with managing their money using channels such as radio, press, outdoor and DRTV". Perhaps that clarity of expression could be extended elsewhere.

Q506 John Mann: I would just like to follow up, if I may, because I am reading this and scratching my head, as nobody has ever raised the Money Advice Service with me in any discussion ever, other than in this Sub-Committee, and I see constituents with money problems all the time. I am just looking at this claim that 46% of the population have heard of the Money Advice Service. I am just wondering whether, in fact, that is "have heard of a money advice service of some kind", because I find that quite remarkable. I wondered what the question asked was.

Caroline Rookes: I cannot tell you off the top of my head what the precise question was, but I can assure you that the research that we have done has been very robust. That is the response, and over 80% of people remember the advertisements.

John Mann: I remember lots of advertisements, but I do not know what they are for.

Caroline Rookes: Well, if you would like us to give you more detail on the research that we have done, we can happily do that.

Q507 John Mann: I am going to do better than that because I have some events of my own coming up, so I am going to carry out my own research and that will be available. That is only one little snapshot.

I am looking at your annual report, and there is a financial report-you could never have guessed-that came out of the Financial Services Authority. You paid bonuses. What did you pay bonuses for?

Caroline Rookes: We have not paid any bonuses to directors this year. We have paid bonuses to more junior staff for exceptional performance.

Q508 John Mann: Are they not getting paid a good deal already, these junior staff?

Caroline Rookes: They are getting paid market rates, yes.

Q509 John Mann: I am looking at one who gets a bonus. They were paid £160,000 as basic salary and got a bonus on top.

Caroline Rookes: We have not paid bonuses to anyone paying-sorry, which page are you looking at?

John Mann: I am looking at your annual report.

Caroline Rookes: But which page?

John Mann: Page 47. Karen Broughton has been paid £6,000; Mark Flander £5,000; Lesley Robinson £6,000. That is £17,000 in bonuses.

Caroline Rookes: Yes, the note above that is, "No discretionary bonuses". They are not bonuses.

Q510 John Mann: What are they, then?

Caroline Rookes: There are elements to the salary that-

John Mann: Are these bonuses from the year before?

Caroline Rookes: Well, I cannot comment on that, I am afraid. I was not there.

Q511 John Mann: So you have stopped paying bonuses.

Caroline Rookes: We have paid no bonuses for this year.

Q512 John Mann: Are you going to pay in the future?

Caroline Rookes: It would depend on performance, but for the 2012-13 year, we have not paid any bonuses to any senior staff.

Q513 John Mann: How are you going to measure performance to justify a bonus in the future?

Caroline Rookes: The bonuses available to senior staff now are exactly the same as those for junior staff. That is, I believe, up to 10% for very exceptional performance, and that would require the directors to have delivered against all of their objectives and more.

Q514 John Mann: That is a subjective analysis to create a bonus.

Caroline Rookes: To a large extent; not entirely.

Q515 John Mann: It is very banking, still.

Caroline Rookes: As far as we can tie it down we will, but there will always be an element of subjectivity. It is inevitable.

Q516 John Mann: It is not based on performance; it is based on your judgment of performance?

Caroline Rookes: It is based on performance. It is not based on my judgment. It is based on an assessment of how they have performed, and the decision is made by the board, advised by our remuneration committee.

Q517 John Mann: You are paid significantly less than your predecessor. Is that because you are not very good?

Caroline Rookes: I am paid less because, as you will remember, there was a view that my predecessor was paid rather highly for the job. I have been paid what I consider to be an adequate salary. I took the job on this salary, and I am happy with it.

Q518 John Mann: Is there any suggestion that you are not as good-and significantly not as good-as your predecessor?

Caroline Rookes: I have not heard that from anybody, no.

Q519 John Mann: So why are some of your staff being paid more than you?

Caroline Rookes: Because they were recruited some time in the past on those terms. I cannot alter those.

Q520 John Mann: I am not doubting that, by the way; I have not heard that. If you are comparable with your predecessor, if you were to find ways of cutting down the pay of those who are paid more than you, there would be no reason why those people, who are as good, should not be paid less.

Caroline Rookes: They are in their positions at the moment. As and when directors leave and come to be replaced, we will look at the prevailing conditions and the job, and then consider what the rate of pay should be.

Q521 John Mann: They are paid more than school head teachers. They are paid more than the Prime Minister and the Cabinet. I am looking at the output that comes from that, because last year-Mr Norman did raise this-it does look like you spent pretty much half your money on marketing and brand awareness.

Caroline Rookes: We spent a substantial amount. We did not spend half-we spent £18 million-but it is not just about awareness. It is about engaging people with the service. If they do not know we are here, they are not going to engage with it, and this is the very people who we are all concerned about: those who do not seek help until it is too late.

Q522 John Mann: It is nearly half your budget on marketing and brand awareness but, looking at your staff, you are not experts in marketing and brand awareness, so why are your staff getting paid so much if you are spending all your money on outside consultants doing marketing and brand awareness?

Caroline Rookes: Because the one thing that we do need is people who understand what they are doing and can operate as an intelligent customer. If we are going to get value for money, my staff need to know exactly what they are buying, to be able to specify clearly what they are buying, and to understand the contracts to which we are signing up.

Q523 John Mann: How many school pupils are you giving financial education to each year?

Caroline Rookes: We do not give direct advice to children in schools.

Q524 John Mann: How many of my constituents are you giving financial advice to face to face each year?

Caroline Rookes: I cannot tell you that.

Q525 John Mann: What is the breakdown across the country? How does that break down regionally, for example?

Caroline Rookes: I do not know if we have regional breakdown, although we certainly have a breakdown by the four countries. I can have a look at whether it breaks down below that. Certainly, the debt advice will, and some of the face-to-face money advice will. Advice that is being given through the telephone and via the web will probably be more difficult, but we can have a look at that.

Q526 John Mann: If you are dealing with constituents-well, perhaps you are doing face to face in my area.

Caroline Rookes: I expect we are doing some.

Q527 John Mann: I have missed it. On the vulnerability of the client group, you are not doing this at school, so what is the literacy level of the average target group that you have?

Caroline Rookes: That is the research that we are doing at the moment and we will be publishing in the next couple of weeks.

Q528 John Mann: What is the spec on the research?

Caroline Rookes: Sorry, I am not sure I understand your question.

John Mann: Well, if your target group of those who are not asking for information already is people with low levels of literacy, but you are heavily reliant on the internet, there is a bit of a problem.

Caroline Rookes: We do recognise that not everybody will use the internet, absolutely, and that is why we provide face-to-face and telephone services as well.

Q529 John Mann: If your budget was halved overnight, what would be the measurable impact on the advice given to those who are not able to seek advice by going on and other such websites? What would be the measurable impact?

Caroline Rookes: Well, we would have to make a decision as to how we wanted to use our funds. Obviously, face to face is hugely more expensive than telephone. An average face-to-face interview is around £60. Telephone is £8, and a web visit is 50-something pence. What we would have to do would be to have a look at how we wanted to spend our resources if they were halved.

Q530 John Mann: It would be helpful if we could get a constituency breakdown of the face to face, just to see where they are taking place.

Caroline Rookes: We can do that. Do you want it for your constituencies?

Chair: You tell us your suggestion.

John Mann: Yes, that would be a good cross-section.

Caroline Rookes: Okay.

Q531 Mr Tyrie: I am just going back to the resource summary. Can I just say also, Caroline Rookes, that you are new to your job and this is your first time in front of the Committee, so you probably have not been made as fully aware as you are now about the scale of concern in this Committee about what has been going on over at MAS. I am not going to carry on in the same vein as Jesse Norman by reading out more of this resource summary, but it is completely meaningless. Even with the explanations you are giving, it gives us only a very rudimentary notion about what is going on. Do you know, or have you asked, what the ratio of overhead to service is for each of these areas?

Caroline Rookes: Well, yes, I can tell you the ratio. Overheads on the Money Advice Service are around 10% of the total budget, and the same on the debt advice side.

Q532 Chair: Could you say that again for me, please?

Caroline Rookes: The overheads-HR, IT, finance, staffing-represent 10% of the costs of the Money Advice Service.

Q533 Chair: The total service with debt thrown in?

Caroline Rookes: Yes.

Q534 Chair: You would be saying it would be £8 million, then, if it was 10%?

Caroline Rookes: Yes, it is just slightly over that-the two together.

Q535 Mr Tyrie: If we were to ask you for that broken down by main heading-main function-would you have that readily available, or would you have to work that out? I am not asking you to be able to remember it off the top of your head but, to be frank, if I was running the organisation, that would be one of the first questions I would ask.

Caroline Rookes: I can let you have that, yes.

Mr Tyrie: But the question I am asking you, though, is is it-

Caroline Rookes: I do not have it with me. I would have to let you know.

Q536 Mr Tyrie: No, the question is: are you confident it has already been done, or are you going to have to ask for it to be done?

Caroline Rookes: I am going to have to ask for it to be done.

Q537 Mr Tyrie: Do you know what the staff component of each of those overheads is?

Caroline Rookes: I know what the total staffing is but, to go back to your previous question, have I looked at it, or do I have it heading by heading? The answer is no, although I know it is available.

Q538 Mr Tyrie: At a time of financial stringency, this Committee is deeply concerned to get value for money from what is being spent. There is considerable unease about how this money is being spent, as you can hear. I think it would be helpful to have a good deal more thoughtful detail on the resource summary than has been made available in this report.

Caroline Rookes: Okay.

Q539 Chair: Can I just gently, because you have just arrived here, say this: last year we were livid as a Committee about the fact that you were spending a quarter of your income on marketing. It has not improved. You have spent £18 million on marketing.

Caroline Rookes: Yes.

Q540 Chair: Let me just break it down so that we see what we are playing with. On your debt advice, do you get that from BIS, or do you get Money Advice Service money from BIS? You get one from the financial industry-

Caroline Rookes: Not any more. The money on debt advice-the funding of debt advice-used to come from BIS. It is now funded by levy.

Q541 Chair: Right. Now, your income from that in 2012-13 was £34.5 million. You actually handed out £30.2 million to Citizens Advice and other people. It is a great step forward that you are not pursuing putting these people out to tender and taking their work, etc. That is a great improvement, but what is not an improvement is that you are taking the £34 million that should be going to debt advice and spending only £30 million, yet that pales totally into insignificance compared with the money you spend on the bigger part of the money, which is £46.5 million that you get for Money Advice Service. Your own report says you spend on service delivery-out of that £46 million-£8.8 million. Now, on the debt side, your service delivery is £30 million out of £34 million. On your Money Advice Service of £46 million, you spend only £8 million. Now, that is the underlying unease we have about the flowery language in this report. We do not know what the hell you are doing with it.

Caroline Rookes: Okay. Well, can I-

Chair: No, I will tell you what you are doing with it, but why you are doing it and how you can justify it: £18.1 million on marketing; £2.6 million on core operatives or operations-this is in my writing, so I am having some difficulty with it-and £6.8 million on transition costs. Well, what are transition costs? Then at a time when every day of the week queues are forming around the block for the citizens advice bureau in my place, you are under-spending on debt advice and handing back, or keeping, the £3.9 million surplus. If you cannot find a way of delivering a service on money advice and you have to spend it on marketing, transition costs and core operations, and that adds up only to something like £30 million, it leads us to believe your organisation does not know what on earth it is doing on money advice. We can see the position on debt advice: it is going out and citizens advice bureaux and other organisations are taking the money, adding to that money with their own volunteers and delivering a much needed service. A bigger amount, £46 million, is going to money advice and being spent in headquarters on this or that. Now, I am just marking your card, I suppose, and I hope that I am doing it as gently as possible, but the big question is: you now have a budget for 2013-14, so how much is in it for marketing?

Caroline Rookes: For 2013-14 it is £12.5 million.

Chair: That is this year.

Caroline Rookes: Yes.

Q542 Chair: How do you break down the rest of the money on the Money Advice Service side? You had £46 million.

Caroline Rookes: Well, certainly £12.5 million is your marketing. Around £9 million-

Q543 Chair: Caroline, when do we get your budget? When do we see your budget? When is it published? Because I do not want to put you through this, seriously, if you want to send us your budget and we are able to see it-

Caroline Rookes: I am happy to do that. The resource summary for this year is on page 41 of the business plan.

Q544 Chair: Well, go through the headings just for the record.

Caroline Rookes: Digital, £1.17 million; finance £354,000-

Chair: Sorry?

Caroline Rookes: Finance. That will be our finance people-the people who manage procurement and manage our accounts.

Q545 Chair: They must be in your core operations, mustn’t they? What are the headlines?

Caroline Rookes: This is the whole resource-

Q546 Chair: There is £12 million on marketing, yes. So you now have £32 million left.

Caroline Rookes: IT, £2 million; HR-

Chair: Headquarters.

Caroline Rookes: Well, I can add together-the headquarters, the overheads, are 10%.

Q547 Chair: No, you are moving away from what we are trying to get at. Of the £34 million that has gone to debt advice, £30 million of it is going to organisations that open the door, bring people in and give them face-to-face advice?

Caroline Rookes: That is right, yes.

Q548 Chair: You proudly say that 158,000 saw and got debt advice?

Caroline Rookes: Yes.

Q549 Chair: Right. On the other side, there is £46 million going in. What is happening to it that is spent outside on face to face with people? Most of it is being spent in head office.

Caroline Rookes: A lot of it is being spent on developing and delivering the web service. It is not head office in the sense-

Q550 Chair: The web service. You have had three years of these millions going into developing it.

Caroline Rookes: Yes, and it will continue because that is the nature of it.

Q551 Chair: Why?

Caroline Rookes: Because all the time tools are changing. For instance, now the main channel that people want to use is the mobile phone. If you want to keep up with engaging with young people, and young people are the groups that we need to-

Q552 Chair: Well, how does that work, then? Caroline, I do not see where you get that from, because mobile phones are expensive and people with problems do not go on their mobile phone. They play hell about using an 08 number with HMRC because it is expensive. These are people who are broke; every penny counts. What they want to do is to go through a door and see someone.

Caroline Rookes: There are a whole different range of people-

Q553 Chair: When are you going to get some of your money moved out of head office and into front-line services delivered by organisations that could be expanded and that are there doing good work now throughout the country in every region? That is what you are trying to do and have done with the debt advice, but on money advice, you are intent on doing your own thing in your own way without face to face.

Caroline Rookes: No, not without face to face, but-

Chair: A minimum face to face.

Caroline Rookes: Primarily our service is a digital service. That is the only way we are going to meet the millions of people. However you define the advice gap-Otto Thoresen estimated it was 19 million; the ABI estimated it was 30 million-there is a whole range of estimates of the numbers of people who need advice, and there is no way anyone could afford to provide it on a face-to-face basis. The only way we can afford to do it is by primarily offering a digital service. Were we to put all our money into face to face-

Chair: I have not suggested that for a second.

Caroline Rookes: No, but just for the sake of comparison-

Q554 Chair: How much are you spending on face to face for money advice?

Caroline Rookes: Around £6 million. I believe it is £6 million to £7 million.

Q555 Chair: Is that this year, this coming year, or last year?

Caroline Rookes: This coming year. Let me see, do I have that-

Q556 Chair: Okay, if it is £6.6 million, it is down on last year. You spent £8.8 million.

Caroline Rookes: £7.7 million is our service delivery.

Q557 Chair: We would like to see your budget, so if you could send it to us.

Caroline Rookes: Just to be clear, it is £7.771 million on service delivery, which is face to face and telephone.

Chair: Well, it is down on last year. It was £8.8 million last year.

Q558 Mark Garnier: You will be relieved to hear that I am going to steer you away from your financial reporting, although I think they are going to come back to it in a minute, and move on to financial education. If you have been following the Banking Commission and the work of this Treasury Committee over the last couple of years or so, you will have noticed that a great many of our witnesses put a huge amount of importance on financial education in schools. Do you agree with that importance?

Caroline Rookes: Yes, I do.

Q559 Mark Garnier: Good. What discussions have you had with the Department for Education about this?

Caroline Rookes: We have discussions. We have had a lot of discussions regularly with the Department for Education about what having financial education on the curriculum will mean and how it will be achieved.

Q560 Mark Garnier: Do you want to expand on that?

Caroline Rookes: Well, our view is that it is very, very welcome and we applaud those who led the charge, if you like, to get it on the curriculum. Our view is that the Department for Education probably should be funding teachers’ training for that, and that is what we have been talking to it about. So far we have not had any success in getting them to sign up to that.

Q561 Mark Garnier: Why not? This is a very, very important point. Upskilling those people who are going to be delivering this financial education is incredibly important.

Caroline Rookes: I agree with you.

Q562 Mark Garnier: What do you think is the resistance from the DFE, and what is its answer to it?

Caroline Rookes: The resistance is resources, and my understanding is that the nature of the curriculum is such that while the subjects are specified and teachers are trained generically in teaching skills, as far as the specifics go, it is for the teachers and the schools to arrange the training that they need. That is my understanding of it.

Q563 Mark Garnier: What is your assessment of the skill of teachers in schools in terms of delivering financial education?

Caroline Rookes: I cannot give you an assessment. I am not close enough to it.

Q564 Mark Garnier: It is quite important, though.

Caroline Rookes: Yes, I know, but four and a half months in, I have not yet had an opportunity to really review it.

Q565 Mark Garnier: But does MAS have a corporate view?

Caroline Rookes: The Money Advice Service’s view is that financial education is very important. It is important that it is taught in schools. We believe it is important that it is taught in primary schools as well as secondary schools. We support that view. We think that our role on financial education is to add value where we can. We think there is a huge amount of good work going on in terms of schools and secondary schools. At the moment, our focus is on three things. One is very young children and their parents. Another is preparing young people for leaving school, whether going into the workplace or university. A third is looking at best practice for evaluation. The research we did that we published last year suggested that there is a lot of activity going on, but a dearth of information about what really works. That is where we want to do some work and to try to add value most to the sector.

Q566 Mark Garnier: I still want to press back on this upskilling the people who are actually going to be delivering this. I am very pleased to hear that you agree that primary school is where it should be starting. That is very good, but I still am very keen to hear how you think that is going to be delivered. If it is up to the schools to upskill the teachers themselves, that is not necessarily dealing with the problem, is it?

Caroline Rookes: It is not dealing with the problem. I do not think any of us know, I suppose, if there is a problem and, if so, what the size is. One of the pieces of work that pfeg is leading is a landscape survey of what is happening. I hope that that will tell us the extent to which it is happening and whether it is to the sort of standard that we want. We can then think with all the organisations in this space about what we might do about it.

Q567 Mark Garnier: How do you think your involvement might look in the future in terms of helping this?

Caroline Rookes: I cannot tell you at this point. The three areas I know we are going to be working with are the ones that I have spoken to you about. Honestly, I am not really in a position to say anything further; I just do not know at this stage.

Q568 Mark Garnier: On a slightly different subject, as you know there are a number of financial institutions that go into schools to help with education-banks and accountants and that kind of thing. Have you ever considered developing a kitemarking system to demonstrate that those institutions are valid, viable and good at what they do?

Caroline Rookes: I do not believe we have, no.

Q569 Mark Garnier: Might you in the future?

Caroline Rookes: I do know that pfeg has a quality mark on resources for teaching.

Q570 Mark Garnier: You do not think that MAS should be doing it as well?

Caroline Rookes: Well, we certainly do not want to duplicate what pfeg is doing.

Q571 Mark Garnier: You have mentioned pfeg on a couple of occasions. What is your view of pfeg?

Caroline Rookes: I think it does a very, very good piece of work-sorry, not a piece of work; I think it provides a huge input to financial education. We work very closely with it. I meet Tracey quite regularly, and I think it does some very, very good stuff.

Q572 Mark Garnier: I am pleased to hear it. Do you think there is a more formal role for it to play in this?

Caroline Rookes: I cannot really say. I think what it is doing is great.

Q573 Mark Garnier: But you see it as a partner, rather than a deliverer of an outcome?

Caroline Rookes: Sorry?

Mark Garnier: You see it more as a partner in terms of trying to drive an agenda?

Caroline Rookes: Yes.

Q574 Mark Garnier: Rather than necessarily actually trying to be, if you like, an executive arm almost of MAS in terms of trying to-

Caroline Rookes: Yes. Yes, I do.

Mark Garnier: All right. Okay, I think I am done.

Chair: Well done, Mark. What a civilised man you are. Why are you on this Committee?

Q575 John Mann: My point, Chairman, is just a request for information rather than a question. It would be useful to get further details of what you are providing digitally via mobile phones.

Caroline Rookes: We are not yet. Some of our services are available on the mobile phone, but we know that actually our web does not come across as well on the mobile phone as it should. That is one of the areas we want to look at. We are also looking at developing one or two apps that might help youngsters particularly to save.

Q576 John Mann: So it is apps?

Caroline Rookes: Primarily it is not apps. Primarily it is about being able to see and view the website properly on a mobile phone. We need to do some work to make sure that ours is accessible effectively on the mobile phone.

Q577 Jesse Norman: What is the total amount that you spent on software development over the last year and the year before that?

Caroline Rookes: I cannot tell you, but we can have a look and let you know.

Q578 Jesse Norman: Just take the apps you were describing just then-how much was spent on those? When we looked at the proposition that you described earlier in your resource summary, which I think you said was for two online tools, that was just under £3 million.

Caroline Rookes: Yes.

Q579 Jesse Norman: Have you done any work to establish whether you are getting good value for money from that expenditure, because technology costs are notoriously variable, and you can often get very good results for very little and very bad results for an enormous amount?

Caroline Rookes: The key tools are those mortgage comparison tables, the mortgage calculator and the budgeting tool. I know the health check has come in for criticism, but we know that a lot of people value that. We have information on the extent to which people use those tools and the extent to which they think that helps them. That is probably as much as we have. Just going back to your question about what we spent on apps, we have not spent anything yet. It is under consideration.

Q580 Jesse Norman: That would be another line item of technology expenditure, would it?

Caroline Rookes: That would be within the proposition development.

Q581 Jesse Norman: So proposition development might go up if it included proposition development via apps.

Caroline Rookes: Well, it might go up, but it would go up, if it did, at the cost of something else. Something else would have to go down to pay for it, and it may be that we would reduce our development elsewhere, which we will do anyway because our new budget planner will be coming on stream in the autumn-our new health check will. So, work will stop on those, and we can start up on new things. But if we are going to deliver a digital service-effectively what Thoresen recommended was that primarily it would be digital, because it is the only way to reach people-we have to keep up with ways of engaging people and with the most effective routes for getting through to people.

Q582 Jesse Norman: Yes. I guess I am just asking whether any work has been done on how cost-effective those routes are and how cost-effective the technology provision that you have made is.

Caroline Rookes: I think the cost-effective calculation will be more global, but I can have a look at what we have-at whether we have anything more granular around the propositions.

Q583 Chair: On budgets, you started in April 2010, so you had 2010-11, 20110-12, 2012-13 and we are now in 2013-14, so you have had three years of £70 million to £80 million, and you are still spending money on-why are you shaking your head, Caroline?

Caroline Rookes: Because the £80 million includes debt, and we only got debt last year.

Q584 Chair: Okay. Well, in fact, Caroline, you have helped me, because you have had more than that. If you take the debt service off, because you did not get it until later-

Caroline Rookes: Around £40 million a year.

Q585 Chair: I am speaking about money advice. You have had £30 million to £40 million for three years, and you are still developing and you are still spending. It is very interesting. In your own report, you say you are spending of your money-of your £80 million-51% on service delivery. The other 49% is being spent on other matters. Does that not concern you? Do you not feel worried about that? You see, you are new enough, I hope, to pick up the worries of the Committee and to see there has been movement on the debt side and on chief executive salary, but the one thing that is blithely being gone ahead with is spending 51% of the money on service delivery.

Caroline Rookes: Can I just say a few things to that?

Chair: Yes, as you wish.

Caroline Rookes: I do hear your concerns, and I do absolutely understand them. I am probably not doing justice to the information that is available. In terms of service delivery, I do not think it is quite as binary as that. The 51% will be the face to face and the telephone. What you cannot quantify as easily is the web offering. If you are delivering through the web, which we are going to have to because it is the only way of getting to such huge numbers of people, it is absolutely essential that we are constantly keeping up to date with developments. I know that marketing has been a considerable source of concern, and that has come down, but you are right that there is still a substantial amount there. Some of that we would say is less marketing-and you will probably criticise me again for words and fuzziness-but engagement. Within that, we pay for search tools that bring people to the site. It is still included in marketing, but it is not marketing in the sense of television adverts and that sort of thing. It is essential as a way of getting people to our site for us to help them.

Q586 Chair: Do you think Martin Lewis is spending that amount of money on his site, and that he spent that amount to develop his site?

Caroline Rookes: I do not know how much Martin Lewis is-

Chair: I do not think he had that sort of money. Only a Government body could put that amount of finance in.

Caroline Rookes: Well, I think Martin Lewis will have spent a lot, but I am not going to get into that, because I do not know.

Chair: We will ask Martin. That will be the best thing, Caroline.

Caroline Rookes: Absolutely.

Chair: Okay. Anyway, thank you very much, Caroline. Considering you have been there only a few months and you are inheriting the sins of others, you have done very well. Thank you very much.

Caroline Rookes: Thank you.

Prepared 27th June 2013