13.The Home Office’s 2012 business case for modernisation set out to deliver a range of benefits including cost savings, service improvements, and wider benefits such as a more user-friendly system and portable disclosure certificates. The Home Office told us that the expected lifetime savings of £37 million a year (15% to 20% of contract value) had not yet been achieved from the contract. DBS was unable to tell us how much it now expected to save. Following our evidence session, DBS wrote to us stating that the ticket price reduction means the contract costs have reduced by £37 million since 2014, with further contract savings expected in 2018–19 if modernisation is completed. However, these calculations are preliminary forecasts which are liable to change depending on the outcome of negotiations with TCS. They are also calculated using the current levels of demand and the change in contractual ticket price since 2014, ignoring the cost of developing the IT system. Because demand has increased, this calculation may not be comparable to the numbers in the 2012 business case.
14.The programme was meant to improve the service DBS offers its customers by moving away from a paper-based system to a system that is digital. DBS has achieved some of this, for example the new basic disclosures and checks against barring lists have been made electronic, but the delays to modernisation mean DBS’s disclosure certificates, DBS’s most used product, are not yet fully digital. Savings for paying customers have not been delivered, as DBS is charging £13 for the annual subscription to the update service instead of the £10 expected in 2012.
15.The original business case in 2012 also included wider benefits for safeguarding. For example, improved matching algorithms to better match applicants against police databases and general improvements to safeguarding information whereby employers could recheck employees more often if the employees were using the update service. The Home Office told us that it was not its role to look into how organisations use the information provided by DBS—it leaves this to regulators such as Ofsted—but it does not get regular updates from them that would tell it how much DBS has contributed to safeguarding. DBS told us that in 2014 it reset the business case and reduced the forecast demand for the update service, which it now considers to be an “optional, voluntary product”. DBS is no longer sure what wider benefits mean for the programme and is not yet tracking any wider benefits. Because of the delays DBS was unable to tell us whether benefits such as improved customer experience or cost savings would be delivered before the end of the TCS contract.
16.In 2012, the Home Office also decided that DBS should introduce a new update service that would enable employers to check whether the information on a disclosure certificate was still up to date. If the update service confirms there to be no new information available then employers would be able to rely on old certificates when recruiting or rechecking employees. This would reduce the number of certificates DBS would need to issue.
17.The update service was expected to reduce the demand for disclosure certificates and the Home Office forecast it would be used by 2.8 million paying users by 2017–18. But actual usage is much lower, at around one million paying users. The Home Office now accepts that its original forecast was unrealistic, and that the decision to charge individuals for the update service when principally employers pay for the other disclosure certificates was not properly researched. It introduced the update service without piloting, testing or advertising it.
18.DBS agreed that more could have been done by the Home Office, but has done little to promote demand for the update service. DBS has not made any changes to the update service and has been content to allow demand to follow a much lower forecast without taking action to look into what has gone wrong or understand whether the business case still stacks up. DBS told us that it intends to do more user research this year, including regional events for employers, but has not delved into the reasons why take-up is lower. The Home Office agreed that customer research needs to be prioritised by DBS in future, but has not given any deadline for changes to be made. Despite this lack of activity, DBS told us that the update service has a 92% satisfaction rate and renewal rate of 70%.
19.Although DBS is charging its customers £13 a year for the update service instead of the £10 a year expected in 2012, it currently makes a loss on the update service as it costs DBS £22 a year for each user. One of the problems is that lower demand means that DBS’s fixed costs are spread over a smaller number of sales. DBS said it ideally wanted to break even on all its services, but that while it planned to review its products to work out how it could reduce unit costs, it did not yet have any views on how this would be achieved.
20.The loss on the update service is more than covered by profit from DBS’s disclosure certificates. For example, DBS charges people £44 for an enhanced disclosure certificate and in 2016–17 DBS’s accounts show this cost it £37 to process. Because demand for disclosure certificates has increased substantially, DBS is building up a surplus that is forecast to reach £114 million over six and a half years to 31 March 2019, despite the loss it is making on the update service.
21.DBS told us that this cross-subsidisation of one product by another is allowed by Treasury rules and that other products, such as free certificates for volunteers are cross-subsidised, as well as barring cases. Since 2012, DBS has neither reduced its fees nor passed any money back to either its customers or the Home Office. The Home Office accepted that there needs to be a full and thorough review of how DBS’s services are priced but it is apparently waiting for a successful resolution of the contractual dispute to better understand what DBS’s services cost.
24 , para 1.5
25 Q 27
26 Qq 38, 41
27 Correspondence, , 28 March 2018
28 Q 45
29 Qq 28, 29, 32, 50–55
30 Qq 36, 37, 56
31 Q 30; , para 4.11
32 Qq 163–167
33 Qq 62, 138
34 Qq 50–51, 65–66
35 , para 2.6
36 , para 2.9–2.10
37 Qq 116–117, 137; , para 2.11
38 Qq 136, 138, 188
39 Qq 138, 141, 144–145
40 Qq 148, 149
41 Q 138
42 Q 186;
43 Qq 182–187
44 , Figure 10
45 Q 45; , Figure 4 and paras 4.4–4.5
46 Q 124
47 Qq 117–118
Published: 25 May 2018