Wednesday, 20 March 2019

Obfuscation Masterclass 5

Q98 Shabana Mahmood: Moving on to your re-procurement process and what is going to happen going forward, I was a little surprised, Sir Richard, at your rather robust defence of the commercial skills and the first-time-round procurement of these services. You said this had been procured well and that the problems related more to policy design features, but both of you also said in your evidence that elements of it were done at breakneck speed and that your job was to see it through. Sir Richard, is that the extent of your job—just to see something through? 

Sir Richard Heaton: No. I think I probably misspoke earlier. I really didn’t mean to say that the contracts were great contracts. They were too complicated, the PbR did not work, and so on. All I was saying was that the people whose job it is to contract—the commercial folk—can’t be held responsible for the decisions that generated PbR and so on. I didn’t mean to say the contracts were perfect. Of course they are not. We have spent an hour and a half explaining, I hope, frankly and candidly the extent to which these contracts did not deliver in the way that was expected of them. So I’m sorry if I misspoke, and I apologise to Sir Geoffrey as well. 

Q99 Shabana Mahmood: That is a very helpful clarification, because the approach you take moving forward does matter; you are going to re-procure these contracts. In figure 15 on page 40 of the NAO Report, one of the first points raised is about the 15-month timescale that you have for the re-procurement going live. That is another very challenging procurement timetable. What is your assessment of whether that timetable can be met? 

Sir Richard Heaton: There are some pretty tough dates in there. I’m going to slightly dry up at this stage, but only to this extent: I don’t want to describe our future state, because that will be for Ministers to describe. There was a very compelling recommendation, although I think we would have got there by ourselves, in the NAO Report, which said we should pause to reflect on what the correct model is for delivering these services. We can’t afford to pause, in time terms, for the reasons you have just mentioned, but we will certainly metaphorically pause, and you will not see from us a blind re-procurement along lines that you would recognise from this experience. It will be better and different. 

Q100 Shabana Mahmood: I apologise, 

Sir Richard: I have literally no idea what “metaphorically pause” means. Please could you tell us? 

Chair: You have momentarily flummoxed the Public Accounts Committee. 

Sir Richard Heaton: The recommendation was pause before you press ahead, and I am saying we don’t have time to pause, but we certainly won’t press ahead unthinkingly. That’s all I meant. 

Shabana Mahmood: Well—let the record show my scepticism once again. 

Chair: And laughter around the room. 

Sir Richard Heaton: I’m sorry— 

Q101 Shabana Mahmood: Well, here’s the problem, Sir Richard. You had a challenging timescale first time round. You have a challenging timescale again. Our fear is that we are just going to have déjà vu further down the track with the second attempt to procure the very same services that have failed utterly first time round. Is there anything you can say to us today about this timescale, and what you are doing with it, that will give us some confidence that we are not going to have the same dog’s dinner served to us in a few months’ time? 

Sir Richard Heaton: As I think Ministers have said, you will see a model from us—I cannot give you any details, because decisions have not been made—that is better integrated and picks up lessons from this experience. It will not be a déjà vu experience 

Michael Spurr: I would just add one thing that I hope might give some reassurance. This was a major, first-generation outsourcing. What we are going to is not that. We have tonnes of evidence and learning; the NAO Report summarises it all. We are not doing a completely new thing now. We are taking a set of arrangements and we will undoubtedly improve them through the revised arrangements. The timescale is very tight, and we are very clear that we need some contingency on that, but it is not quite the same as previously. The points that the NAO put together in the Report give us a clear framework of things that we mustn’t do, which makes it more straightforward. 

Chair: Free consultancy from the NAO. Ms Mahmood? 

Q102 Shabana Mahmood: Mr Spurr, I appreciate that the first time around it was a really big change that was being planned for—a transformation— but this time you are picking up the pieces of a pretty major public policy failure. In respect of not having déjà vu, one problem at the outset of the first run at this was the lack of piloting and testing, but no piloting or testing is planned for this second occasion either. How can I possibly have any confidence that you guys will get this right the second time around? 

Sir Richard Heaton: We haven’t set out what we will do, so you do not know that we will not pilot parts of it. 

Chair: Okay. You might pilot it. 

Q103 Shabana Mahmood: So you might take that on board. I live in hope. 

Sir Richard Heaton: There is not a single lesson in the Report that we will not take on board. This has not been a great experience for the delivery of public services. Shabana Mahmood: Sometimes, Sir Richard, it would be helpful if somebody could come and show us that a lesson has been learned, rather than showing us a plan to learn a lesson, but let’s not go down that track. 

Q104 Chair: Just to be clear, you might pilot? This will matter for Mr Spurr’s successor. 

Sir Richard Heaton: There will be a roll-out. I cannot tell you what we are going to roll-out; I would rather leave it to Ministers to explain that. 

Q105 Chair: Okay, but the danger is that, if Ministers announce that too late, Mr Spurr’s successor, Dr Farrar, will have challenges implementing— 

Sir Richard Heaton: As Michael says, we are aware of the hard deadline for the termination of contracts, and we are working on contingencies that would give us more time. 

Chair: Okay. That is helpful to me. 

Q106 Shabana Mahmood: Paragraph 3.15 on page 42 of the NAO Report says: “The Ministry believes there is strong interest in its future contracts, based on its early market engagement events.” Could you define what “strong interest” looks like? 

Sir Richard Heaton: The sector remains engaged. I think that the changes we made to the contracts have encouraged them. They are encouraged by our saying, with political cover, that we want the future market to be mixed, with the private and voluntary sectors and the Government all playing a part. All the people we have been talking to, including some new players, are interested in continuing to deliver probation services on behalf of the public. 

Q107 Shabana Mahmood: I am pleased that you said there are new players. How many new players are we potentially talking about? 

Sir Richard Heaton: I don’t know. 

Q108 Shabana Mahmood: In the early market engagement events, has there been a good level of new players, or have they mostly been the same faces that have delivered the current mess that we are working through? 

Sir Richard Heaton: I don’t know the answer to that question. Do you, Michael? 

Michael Spurr: There are other—I have not been involved in the market engagement events, but there are definitely people who do not now provide probation services who have expressed an interest. There will be other potential options. The key thing is that, while this has been so difficult, it has been difficult for the providers as well, who are making losses, as the NAO Report makes absolutely clear. The point to be made is that, despite that, there is a recognition that this was a first-generation set of contracts, and there are a range of people who still want to be involved in this and are still actually committed to our sector. That is true in both the private provision and in the third and voluntary sectors as well. 

Q109 Shabana Mahmood: Mr Spurr, did you say that you have actually been to these early market engagement events? 

Michael Spurr: No, I said I haven’t. 

Q110 Shabana Mahmood: You haven’t. Have you been to them, Sir Richard? 

Sir Richard Heaton: indicated dissent. 

Q111 Shabana Mahmood: I recommend that you both go. Do you have any sense of how many of those potential new providers have experience in this sector? 

Sir Richard Heaton: [Interruption.] I have just been told that more than 40 organisations attended the market engagement, plus those from the voluntary sector. 

Chair: So the voluntary sector is on top? 

Q112 Shabana Mahmood: On top, or included? 

Sir Richard Heaton: Forty, plus those from the voluntary sector. 

Q113 Shabana Mahmood: Okay. Does whoever is sitting behind you know how many of that 40 were new people with some experience in probation and how many were people already involved in delivering these services? 

Sir Richard Heaton: I am almost certain that the next iteration will have to be a letter. 

Chair: Perhaps if you are passed a note, we can pick it up when you get the information, or you can write to us. 

Q114 Shabana Mahmood: That would be helpful. Just on your desire to move away—obviously—from the payment-by-results model to target cost contracts, I want to return to this idea of the commercial skillset within your team. Target cost contracts would obviously involve a real change in the way things are done. On page 43, the NAO set out all of the things that are needed in order to make those a success. What confidence can you give us today that if this is the route that you pursue, you have the skills to do this? 

Sir Richard Heaton: It slightly depends on what model we go for. Again, there is no blueprint—I just want to stress that the NAO Report does not comment on a blueprint, because we do not have one yet. We have got access to a commercial team that is now part of a Government commercial function, which helps us more than it did before. It means that we can draw on a Government-wide organisation, not just our own commercial staff. We have got a large number of commercial staff in the Department and access to a wider Government resource. Clearly, the more complicated, difficult and innovative the contract—if that is the way we go—the more difficult it will be for us. One of the things that we will be looking for is simplification, because one of the things that has not quite been drawn out of the conversation is just the sheer complexity of the current contract, which is not something that I would like to repeat. 

Q115 Shabana Mahmood: That is helpful. Can I go back to the discussion around the NPS and CRCs and the separation between the two, in the sense of which is involved at court. That is obviously NPS; CRCs are not involved in any part of that process. I appreciate that that is part of the legislative framework and the design of how this policy has been enacted. It seems to me a bit of a design dysfunction, because you are having to find lots of workarounds to try to correct for the fact that CRCs, or what would be their successor, are not involved in the court process. Would it not be easier simply to design out that dysfunctionality and have a change in the framework? 

Michael Spurr: There was a specific parliamentary requirement to have advice to court given by public servants, so it is not straightforward to take that away. I know that was debated at the time with some significant involvement and concern. It is right in terms of, even if that is retained, how do you ensure that we get the provision that CRCs are delivered before the court, so that they understand it better? There is no reason why you cannot have CRC staff being at court to provide support. There is a cost implication for that if you are going to do it—that is what we have got to work through in the next generation. I do not think there is any suggestion that we will change the advice to court on sentencing—it should come from a public servant. There is an issue about how you get the right information before the court, so that they better understand what options are available for sentencing. That is definitely something in the new procurement that we need to take further. 

Sir Richard Heaton: I would just pay tribute to the professionalism of the probation profession across the country, in the private and public sector. They care about outcomes and quality advice to court, and they have worked well. There is a really good example from Durham and Tees Valley of placing a dedicated member of staff in court to support the NPS, and there is something in the. That professionalism is really welcome and good to see. You are right to say that it mitigates a point of friction, so to some extent it is a workaround. Nevertheless, it is just a tribute to the professionalism of the people on the ground. 

Q116 Chair: Is that just the two examples? 

Sir Richard Heaton: Those are the two examples I have, but there may be others. 

Q117 Chair: If it is good, one would ask why it is not happening everywhere. Do you know? Is it something that you could do everywhere, if that is working in those examples? Sir Richard Heaton: The mechanism for spreading out good practice is there. Sometimes good practice goes around the country quickly; sometimes it does not. We are certainly encouraging behaviour like that. 

Q118 Chair: It is a bit vague, I must say. 

Michael Spurr: We have a tool that the NPS are rolling out that will help sentencers to understand what is available in their areas from CRCs. That has been trialled in the north-west and is now being rolled out. We have sentencer buy-in from that, which will demonstrate to the senior presiding judge that there is a good deal of work that has been going on to try to improve that engagement with sentences. 

Q119 Shabana Mahmood: Obviously, I would also wish to pay tribute to the professionalism of the staff who have to deliver these services. I have to say, though—for the people that are corporately responsible—it seems to me that this has been in operation now for some years. We have known about this point of friction on access to courts for CRCs. The best examples we have are basically common sense in action—a little bit of co-location of workers and the possibility of the forum. It should not have taken so many years to think that you should perhaps have a forum for all the different providers to be able to talk to one another, or that co-location should be piloted somewhere. Why has it taken so many years to learn something so basic? 

Michael Spurr: Again, frankly, we gave opportunities to providers to do things differently. Naturally, I think co-location is a good idea—I would start with a view of co-location—but some providers wanted to move into rather better accommodation and enable their staff to work with greater flexibility, and they moved out from being co-located. 

Shabana Mahmood: Mr Spurr— 

Michael Spurr: Can I just finish? The reason that that was done was because, if you are giving people flexibility and saying, “It’s for you to determine how to run that,” you take away some of the things that you might choose to do that might improve that. So you have to go back and say, “This isn’t working so well. We want you to come back together.” It goes, I am afraid, back to the view that you were giving people flexibility, which was one of the things that was part of the policy. 

Sir Richard Heaton: It did not help either that CRCs and the National Probation Service areas are not coterminous. That is something that we are determined to fix if we have another generation of this sort of model— to have a single regional person whose job it is to integrate CRCs and NPS performance across an entire region. Again, that was not part of the design. We had areas that were not coterminous with the national ones. 

Q120 Shabana Mahmood: I will come back to that in a moment. Mr Spurr, I have to challenge you. This is not a point about innovation. This is, as you say, a friction that was designed into the process because of the requirements of Parliament. With respect, that is not about driving innovation; that is a systemic issue that is being brought in because of the legislative framework. Surely the common-sense workarounds were the responsibility of you and the Department, rather than leaving it to the innovation capabilities of CRCs themselves at a grassroots level. 

Michael Spurr: The co-location was not part of any legislation. The legislation is about advice to court. Previously, probation colleagues would have been in the same offices. A number of CRCs, for understandable reasons, moved a lot of their staff to different locations—they wanted to do the work differently. Those were decisions they made in their bids and their business cases, which we could not prevent from happening because that was how they were going to deliver their business. That exacerbated some of the issues that you have just described. That has to work its way up. There are workarounds to try to make that work, and we have been addressing that, as I say. 

Sentencer forums have always been there, and the NPS has been a part of them. The point was how much input was the CRC going to do in those partner forums, and they have done much less than we had anticipated, partly because it is not a requirement of their contracts and they are pressed in terms of how they are going to deploy their resources. That all comes back to the point about what we were anticipating getting in terms of innovation and additionality, and what we have actually had as a result of the way the contracts have worked in practice. 

Q121 Shabana Mahmood: Paragraph 3.18 of the National Audit Office Report says: “The Ministry has also created a forum to enable magistrates, the NPS, CRCs, court staff, prosecutors and others to discuss challenges and opportunities for improving joint working.” How is the forum that you have now created different from all the other forums that exist, which are presumably also in existence to improve joint working? 

Chair: The second half of paragraph 3.18 on page 42 in part three. 

Michael Spurr: Thank you. I’m sorry. 

Chair: Don’t worry—it takes a while. 

Michael Spurr: How is it different? We have national forums and we have sentencer forums at a local level. We have simply been putting more NPS engagement into those forums and encouraging CRCs to be engaged. The senior presiding judge has actually met with all the CRC providers to reinforce her expectation of their involvement with us to improve sentencer confidence. We are effectively trying to improve the means by which we are engaging. That is what I think that paragraph is about. 

Q122 Shabana Mahmood: When there has been some improvement in joint working and people have made some changes, either in the west midlands or elsewhere, as referenced earlier, what are you doing to make sure that it is adopted more widely across the system? 

Michael Spurr: I go back to my previous answer. What we have done is made a very clear priority of improving sentencer confidence, which means engagement with CRCs at national level, which we have done, with the senior presiding judge taking a personal interest in this, and an expectation that there will be much closer involvement at local level. It is that very process that we are expecting will improve the confidence and the understanding at sentencer level. 

Q123 Shabana Mahmood: But if you have best practice, or something that has emerged as best practice, in various parts of the country, why not mandate that it is taken up? 

Michael Spurr: I cannot mandate providers in that way—

Q124 Shabana Mahmood: Or put some pressure on to ensure that common sense is shown and that this workaround actually works? 

Michael Spurr: You can absolutely encourage people to do it, and the providers generally will want to do that, but I cannot mandate, because it is not in their contracts to deliver in that way. 

Chair: Not in the current ones. 

Michael Spurr: Not in the current ones. That is exactly the point.

To be continued....

Obfuscation Masterclass 4

Q66 Chris Evans: I want to move on to the contracts. When I first came into this place nine years ago—would you believe?—I served on the Justice Committee between 2010 and 2012. Serious issues were being raised at the time, especially within the justice system and NOMS, about payment by results. That was raised by the Justice Committee on several occasions even after I left. Why did you use payment by results in this case, even when there were concerns for the probation service? 

Sir Richard Heaton: As Mr Spurr tried to explain earlier, there was, I will not say a philosophical belief, but a belief, on some evidence, that if you incentivised providers to do the thing we cared about most, which was to reduce reoffending, they would economically be driven to do things that achieved that result, and therefore a payment-by-results mechanism would be the right mechanism to incentivise and reward them. There was some evidence for that, I think, from the early signs from the Doncaster and Peterborough trials—that actually there were innovative, amazing things that new providers could do, with fresh insights, that would improve recidivism. I think on the back of that evidence, payment by results was imposed. 

There was one aspect of payment by results that we have not mentioned, which has also caused us difficulties—in a spirit of complete candour. There is nothing wrong with payment by results to provide a top-up where something has been achieved, that you want. I think a failing in these contracts—or a flaw in these contracts—was that we failed to safeguard the core costs of delivery. What you should not do when you are designing a payment-by-results contract is allow the core costs of public service delivery to be jeopardised by failure to achieve payment by results. If you are trying to achieve a public service you need to pay for it. Payment by results as a top-up for an additional benefit is, I think, more respectable. 

Q67 Chair: I am going to ask Mr Lodge, from the National Audit Office, to give us some clarity on this point. 

Oliver Lodge: I just wanted to point out for clarity, as it has been mentioned a couple of times, that the Peterborough and Doncaster pilots were quite different from the model pursued under Transforming Rehabilitation, in the sense that they were based within prisons. My understanding is that participation in them was voluntary, as well, rather than compulsory. So there were some significant differences. 

Sir Richard Heaton: You are quite right, and the Peterborough one was a social impact one, which is absolutely not the model we have used here. I only adduced them to illustrate what was in the air, which was that there was a feeling that if you created the right financial incentives people would do interventions which would— 

Chair: We have certainly covered this in previous work we have done— that these were not piloted. We have talked today about the breakneck speed, so we know some of the challenges. 

Q68 Chris Evans: Rather than innovate, payment by results placed additional financial pressure on CRCs. 

Sir Richard Heaton: It did, indeed. 

Q69 Chris Evans: How did that come about, if you were just looking for results and innovation? 

Sir Richard Heaton: As I say, I think because the measure was not one sufficiently within their control, partly because of the time lag and partly because reoffending is really complicated and depends on factors like housing and access to benefits and so on; and partly because—I think 18% of the contract value was through payment by results—effectively it put too much at stake, and if they failed to achieve the targets not only did they not get that reward but their cost base was undermined, so it was an element of the contract, which, I think, looking back on it, we should have done differently. 

Q70 Chris Evans: Before I move on from this section, obviously lessons have to be learned. What has been learned about the payment-by-results model, and about contractors’ overcost? 

Sir Richard Heaton: For me, it would be the point I have just made: you must not put payment for core services at risk. Secondly, the reoffending rate is possibly the wrong measure, because it is too attenuated. I would go for proxy outcomes instead. Thirdly, I think, it assumes that the system is prepared to accept zero intervention. In other words, it assumes that the system is ambivalent as to whether an intervention takes place, whereas, as we have discussed, the system, including ourselves and including the inspector, actually requires interventions to be made. So payment by results, which implies you can do nothing if you think that is the best way to achieve a result, is not satisfactory. Those would be my main learnings on this point. 

Chair: So they will inform your next procurement. 

Q71 Chris Evans: I want to go on now to ICT systems, and I have to say this is like groundhog day. It seems every Government Department in front of us has problems with IT. Could you just go through the problems you have had with the gateway system, please? 

Sir Richard Heaton: I will start and Mr Spurr may wish to fill in the details, again. When the probation trusts came into the Ministry they brought with them, as you might expect, many different computer systems, none of which were compatible, and many of which were not very good. A successful effort was made to choose the best of those and to create a national system. There was then a commitment made, during the course of transfer of rehabilitation to the CRCs, that we would deliver what we called a strategic partner gateway, which was quite a complicated software gateway into our system, so people could plug into it. We were 12 months late in delivering that. We did deliver it in September 2016, but 12 months too late. That commitment was probably made at a time when things were moving very quickly. Again, in retrospect, it probably was not the right commitment. A better one would have been to say, “We’ll put our national system on to the cloud and provide modern API interfaces, and you can simply plug into them,” which is how we would do it these days. We promised a rather cumbersome, old-school way of connecting up, and it was 12 months late. We acknowledge that that was a fault. 

Q72 Chris Evans: You have paid out £23.1 million in compensation to various CRCs. Do you think that this has damaged your reputation, and the confidence that CRCs have in working with you in future? 

Sir Richard Heaton: I hope not. We have a very constructive relationship with the CRCs, both the probation officers on the ground, who are excellent, and their management. I hope that we dealt with this in the course of our long and difficult contractual relationship in a professional way. I do not think that it has undermined their overall confidence in us. It was one of those things that did not go as well as it should have done. Do you have a different perspective? 

Michael Spurr: No, I think you have summed that up right. Getting a national system for probation was difficult in itself. That took longer. We did put it in place. We were delayed in putting in the partner gateway. A lot of the providers themselves have found their own difficulties in developing their own systems to link into that gateway, which demonstrates for all of us that this is tricky. The world moves on very quickly. The cloud options were not seen then in the way that they would be today. That makes things more straightforward. Having a national system, whoever is delivering the service, so that everybody has one care system to work through is important. That is one of the things that we take from this. 

Q73 Chris Evans: Why are so few CRCs using the gateway system? Is the lack of confidence a reason? Why are they opting not to use it? 

Michael Spurr: The majority of them have chosen to continue to use the national system that we produced, nDelius, itself directly without using their own. Two are using the gateway to link into our system, and some have developed some of their own, but there are various reasons why they have done that. Forgive me for saying this again, but they have spent some money on this in terms of innovation; I suspect that they have decided to spend no more money on it, given where we have got to. 

Q74 Chris Evans: Could you clarify something in the report? Paragraph 1.11 says: “By January 2019, only two CRCs were using the gateway, seven were still working towards introducing their own systems, and 12 CRCs had decided to retain HMPPS’s systems rather than introducing their own.” Could you clarify that? 

Michael Spurr: I think that is what I was trying to say—12 of them have decided not to put their own systems in place, but to use ours. That was an option for them. The reason for the gateway was to say, “You can take the case data that we have from the central system, but if you want to use it in a different way within your own system, as long as we have the information on the central system, you can do that.” Initially, everybody thought that they wanted to do that; 12 of them are simply using our national system. They have not invested in doing other things with that. 

Q75 Chair: Presumably they pay you a fee to use the national system—do they? 

Michael Spurr: I don’t think they pay a fee. We want everything on the national database, so— 

Q76 Chair: So it is cheaper for them to use the national system. 

Michael Spurr: Well, they haven’t had to develop their own system, so— 

Chair: Exactly, so it is a lot cheaper for them. That is presumably a driver. 

Q77 Chris Evans: If you are able to, and it is not commercially sensitive, could you tell us how many legal claims you have against you for delays and the impact of those delays? 

Sir Richard Heaton: I think we have settled, as part of the negotiations, so I do not know the detail. 

Michael Spurr: I think on the IT we have settled, but we can let you know. 

Chair: You can write to us. 

Q78 Chris Evans: How much was the cost? Would you be able to share that with the Committee? 

Chair: You can share it with us privately, if not publicly. We would like everything to be public. 

Sir Richard Heaton: I will do what I can in the meeting. I might have it here, but if not— 

Chair: That is a couple of things that we have asked you to write to us about. 

Q79 Chris Evans: I will just end with two last questions; I know that my colleague wants to come in. I want to talk about parent company guarantees. They froze out the voluntary sector, and did not protect the taxpayer. What have you learned from that? 

Sir Richard Heaton: You are right: it made it a difficult field to enter for the voluntary sector. Having said that, parent company guarantees serve a purpose. They mean that the taxpayer and the system are protected from the insolvency of a subsidiary. They are useful in some situations, and not in others. It is fairly standard Government contracting practice to seek one. The Government are not the only player that seeks guarantees of this sort. It is one of the obstacles to voluntary sector players being prime providers in this field, but not the only one. 

Q80 Chris Evans: Okay. Voluntary organisations obviously play a massive role in the justice system. How are you going to ensure in the future that they are involved in any procurement? 

Sir Richard Heaton: That is absolutely going to be part of the design for the next iteration of these services, when Ministers announce them. We would like there to be greater voluntary sector involvement in this field. 

Q81 Shabana Mahmood: Before we talk about the future of probation services and your re-procurement process, can we talk about Working Links? Why were the three Working Links CRCs not brought back into public ownership at the point at which it became obvious that the company was going to go into administration? 

Sir Richard Heaton: We were aware in advance that Working Links was in difficulty and we prepared a number of contingency plans. It would have been possible to bring them into public ownership. On a balance of risk and cost and operability, we decided that this outcome was the correct one in the interim. The work has been taken over by a small CRC, which is doing well, and persuaded us that it was well able to take the work on. As a pragmatic move, that seemed the right way to go for us. 

Q82 Shabana Mahmood: Are you confident that that decision will result in the best possible outcome for the taxpayer when we are picking up the tab further down the track? 

Sir Richard Heaton: By definition, it is a short-term outcome, because the contracts are now due to terminate earlier, but yes—of the various options available to us, it was the best outcome for the taxpayer. 

Q83 Shabana Mahmood: Aurelius is the German venture capital company that bought Working Links in June 2016. Can you tell us whether they are the purchasers’ guarantor for the Working Links contracts? Sorry—the parent guarantor. 

Sir Richard Heaton: No; the parent company guarantee in this situation remained with Working Links and Aurelius did not offer us an alternative parent guarantee. 

Q84 Shabana Mahmood: Will that risk transfer to the Ministry of Justice? 

Michael Spurr: Working Links are in administration. We are going through a process of administration. They hold the parent guarantee at the moment. We will have to work that through with the administrator. 

Sir Richard Heaton: We have reserved our rights under the parent guarantee vis-à-vis the defunct company. 

Q85 Shabana Mahmood: So we will have to see how the administration process unwinds. What is your assessment of the current state of probation services in Wales and the south-west, given the collapse of Working Links? 

Sir Richard Heaton: Michael might have a better operational view, but I think I would distinguish between Wales and the south-west. The southwest, as you will know from the inspector’s report, was not in a great state. Wales was in a slighter better state. We are confident that the new provider has got the bandwidth, resources and motivation to do well. 

Q86 Shabana Mahmood: What is the current operational assessment of the quality of the services in those two regions? 

Sir Richard Heaton: Poor, in Devon and Cornwall. Better in Wales. Do you have more detail than that, Michael? 

Michael Spurr: That’s it. Unacceptable provision, frankly, in the southwest. Wales is significantly better. Unacceptable, as evidenced by the inspection and by our own audits, which was why we stepped in, alongside the administration. The two went together. 

Q87 Chair: What about the continuity? I have a constituent who is trying to move from London to Wales. There have been a lot of hiccups, which I may write to you about. Do you think that is anything to do with the handover from Working Links to the new provider? 

Michael Spurr: Continuity for? 

Chair: Of case load. 

Michael Spurr: Oh, I see what you mean. 

Q88 Chair: If someone is in the system, are they guaranteed a seamless service? I only have one anecdote, but how should it be? 

Michael Spurr: I don’t think the operation was working—well, I know the operation wasn’t working well. Ms Flint asked before about staffing numbers. The staffing numbers are not sufficient to make that work properly in the south-west. 

Chair: In the south-west and Wales. 

Michael Spurr: Yes. That is one of the reasons that we needed to address that. That is something that we have said very directly that we need addressed. That will be addressed. I am sure that will have affected some of the transfers, but I don’t know the precise detail. It is less so in Wales, so I would have expected it be easier to have achieved that in Wales. 

Q89 Chair: But you are sure that the handover is being worked through. 

Michael Spurr: At the moment, we are very happy with the way that that has been going, but I am not underestimating how difficult that is going to be, given that that service provision in the south-west has been so poor. 

Q90 Chair: Did staff TUPE over? 

Michael Spurr: Yes. 

Sir Richard Heaton: If you have a constituent’s case that shows otherwise, please do let us know. 

Chair: I certainly will, if I need to. Back to Ms Mahmood. 

Q91 Shabana Mahmood: How confident are you that your contingency plans can handle the failure of bigger providers such as Interserve? 

Sir Richard Heaton: We are pretty confident that we have good contingency plans. 

Q92 Shabana Mahmood: Pretty confident? 

Chair: For the record, Ms Mahmood is looking sceptical. 

Shabana Mahmood: Can you try to bottom that out? 

Sir Richard Heaton: We have a large contractual exposure across every part of our business, and we have had to step in in all sorts of ways: after Carillion, for example, with the management of Birmingham prison, and with Working Links. So I think we have good contingency plans. 

Q93 Shabana Mahmood: Previous failures have given you some good experience to draw on, but given that no company can control more than 25% of the total market, what practically are you going to do if somebody else fails? 

Michael Spurr: As in this case, we have the option to step in directly, and we will step in— 

Q94 Chair: But that is now your only option. 

Michael Spurr: It depends on which provider we are talking about, doesn’t it? It is not the only option for all those providers. We have a range of options, which include, if we are able to do this, using other providers, and stepping in directly. 

Q95 Shabana Mahmood: Finally, on the employees of Working Links, what action have you taken in respect of pensions? 

Sir Richard Heaton: I assume the staff have been TUPE-ed over in the ordinary way, but I can write to you if there is a particular point on that. 

Q96 Shabana Mahmood: Yes, I think pension liabilities and what would happen were discussed previously, so if you could— 

Sir Richard Heaton: I will write to you on that. 

Q97 Chair: Of course, it depends on which pension scheme. There may be lots of issues. If you could write to us with what exactly is happening to staff who have been TUPE-ed over— 

Sir Richard Heaton: Yes, of course.

To be continued....

Tuesday, 19 March 2019

Obfuscation Masterclass 3

Q46 Chris Evans: Before I begin, I would like to declare an interest. My sister, Cara Chapman, works for Working Links in Cardiff. Sir Richard, I want to pick up on something you said earlier. You said measures like successfully placing offenders in housing is a proxy for better measures. Can you tell me, then, why of the 23 men who were interviewed on the day they were released from Cardiff prison, only 13 had a definite place to stay? 

Sir Richard Heaton: I cannot tell you specifically. In an ideal situation, the number would be much, much higher than that. Housing is a responsibility of both the Welsh Government and local authorities. The CRCs can do their part as well. We are trying to make a better join-up between the CRCs and National Probation Service and the statutory and non-statutory housing providers, but from the numbers you have suggested, it is not working as well as it should be in Wales. 

Q47 Chris Evans: Am I right in saying that your target is for 90% of released prisoners to have some sort of accommodation? In that, Sir Richard, do you include tents? 

Sir Richard Heaton: Sorry?

Chair: Tents. 

Michael Spurr: No is the answer. Settled accommodation is what we would generally look at; tents would not be settled accommodation. And I don’t think it is quite as high as 90%. 

Q48 Chris Evans: Mr Spurr, moving up the country from Wales to Humberside, Lincolnshire and North Yorkshire, we have evidence from a probation officer who said, “We do have people who leave custody and have nowhere to live. Staff are still informally giving people tents.” What is your view on that? 

Michael Spurr: I am sure that is accurate. It is a huge, huge issue for us—releasing people who do not have accommodation. As I think the NAO Report brings out, that is why reducing reoffending involves a whole range of parties and is not just about what we do in prisons or in probation. As Sir Richard says, we do not have the mechanisms to provide the accommodation. We need to work with others to provide the accommodation and do more to support offenders getting accommodation. 

Where colleagues have done things that—somebody is saying they are going out and doing that, and I do know they have given, on occasion, tents. That is not what you want to do, but that was the humanitarian act of saying, “Actually, this person has nowhere to go.” I am not condemning that, because they are trying to help. Of course it is not what we want, but the sad reality is that people do leave prison, sometimes, without accommodation to go to. That is a reality. We want to reduce that. It has been difficult; accommodation has been difficult across the country, in England and in Wales, over recent years. Most probation colleagues would say it is one of the hardest things that they have to deal with—working with local authorities and others to find appropriate accommodation for offenders leaving custody. 

Q49 Chris Evans: Mr Spurr, I find that statement absolutely amazing. You have just used the word “humanitarian” about giving somebody a tent. Would you expect them to pitch this tent? Are you actually encouraging rough sleeping—yes or no? 

Michael Spurr: I am not encouraging anyone—I accepted that if somebody said that they had done that, it had happened. It is not our policy to give people tents when they leave prison. Our policy is to attempt to help people to have accommodation to go to on release. If they leave the prison and do not have accommodation, we still have to release people, and we give them a discharge grant. I agree with you it is not an acceptable position for people to go out and not have accommodation. I have been working as hard as I can, for as long as I can remember, to try to improve the opportunities for people leaving custody or in the community. I am simply talking about the reality. It is not true to say that everybody leaving prison goes into accommodation. We work with others to try to reduce the number who go out of prison and not into accommodation. Our aim is to have everyone in settled accommodation, not in bed and breakfast—

Q50 Chair: Can I ask you this, then? You have been 35 years a civil servant and nine years in this role. Where do you rank the current housing situation? We all represent constituencies where there are housing problems or different challenges. Is it worse now than it has ever been, or has it always been this bad? Has anything changed? 

Michael Spurr: I think it has got worse in recent years. I think most probation colleagues—as I go round, talking to people in probation and CRCs, finding accommodation is undoubtedly one of the hardest things that people— 

Q51 Chair: Has the Ministry of Justice given any thought to buying more hostels? I have been dealing recently with a constituent who is in a hostel, for instance. 

Michael Spurr: Yes, we have certainly given thought to a whole range of things. For example, we have been expanding the number of approved premises places. We are looking to expand the number of approved premises places specifically because we need to do more of that. But we are not a housing provider, and that is the reality. 

Chair: Absolutely. That is what the NHS always say to us when they have housing problems too. 

Q52 Caroline Flint: I just want to share with you a statistic from Doncaster, because obviously I represent a constituency there. There were 216 releases from Doncaster prisons to Doncaster between April and August 2018, 51 of which were to no fixed abode. The releases from Doncaster prisons represent 70% to 80% of the total number released to Doncaster from all prisons nationally, so it is very much a Doncaster prisons to Doncaster issue. This came up during a discussion with our ALMO, St Leger, about the shortage of available housing and the pressures in the private rented sector. Do you feel the figures that I have just presented are high? Some 51 people released in those few months did not have anywhere to go. 

Michael Spurr: Yes. I do think they are high—I think they are too high; 51 people not having somewhere to go is a risk. We want people to go into accommodation. We know that that helps reduce the risk of somebody reoffending immediately they go out of custody. Accommodation is critical for that. It is a really, really important priority for us, but it is tough. 

Q53 Caroline Flint: The problem, going back to the Chair’s point, about housing, is that you could have the CRCs and what-have-you in the Doncaster area trying to work with landlords in our low-rent, low-value private rented sector, trying to take a piece of that action. We have already got problems in Doncaster. We are meeting our agreed requirements on the resettling of asylum seekers and refugees, and we are being asked to do more on that front. We have a whole lot of people who live in Doncaster who aren't offending, and there is no social housing, and they are trying to compete with all those other groups in the private rental sector. You say the Ministry of Justice is not a housing provider, but is there not a case for building more homes and accommodation, so that you are not robbing Peter to pay Paul when it comes to trying to get a home in an ever-shrinking private rented sector? 

Sir Richard Heaton: Just two points: I am absolutely sure there is a compelling case for building more homes but, as Mr Spurr says, we are just not funded to do that. Our job is to work with partners in the Government, and that is what we can do uniquely. I am pleased that the Ministry of Housing, Communities and Local Government is working with us on a rough sleeping strategy. It may sound like small amounts of money, but we are not a well-funded Department—we are investing £6.5 million in a joint scheme to support individuals released from three prisons. That is not Doncaster, but Leeds, Pentonville and Bristol. This is exactly where we want to put our energy. Speak to any probation officer in the country. They work incredibly hard, and they will tear their hair out, because housing, employment and access to benefits are the three real drivers of recidivism. We desperately want it to be better. We are not a housing provider, but we have got some leverage with the MHCLG. 

Q54 Chris Evans: Can we go to the Report, please, Sir Richard, and look at paragraph 2.3 on page 28? Could you talk us through that paragraph about the lack of piloting for the system? 

Sir Richard Heaton: Lack of piloting of TR? 

Chris Evans: Yes. It begins: “The Ministry did not pilot how transformed probation services would be delivered in practice.” Could you explain the reasons for that statement? 

Sir Richard Heaton: I will do my best to reconstruct the reasons that existed at the time. It is partly, as Mr Spurr said, that there was a desire to get on with it and to keep the momentum going and to deliver before the 2015 election. The model did not lend itself to piloting, once the sentencing framework had been set in statute, because it is quite difficult to pilot different sentencing regimes unless you have statutory cover to do so. 

Nevertheless, the decision not to test out in shadow form the CRC and National Probation Service relationship or to test out how the courts were to use the framework of intervention measures so that we could better predict what sort of orders they were to give the CRCs—our inability to do those two things meant that we launched the programme on a national basis, with a full roll-out, and had to pick up the consequences as we went along. Looking back on it, in terms of project success, it was not a good thing to have done. It would have been better had we been able to test some aspects of this out in real running form before the thing went live nationally. 

Q55 Chris Evans: I understand, Sir Richard, your being under political pressure with the 2015 general election coming up. Considering you are dealing with public safety, did you not think to apply the brakes and step back and say, “This is not going to work”? 

Sir Richard Heaton: I am sure there was a lot of consideration in the Government. I was in the Cabinet Office at the time, but not involved in this project. I am sure that there was a lot of consideration in Government, both in the MOJ and at the centre, about the scale and pace of the programme. 

In defence of everyone who worked on the programme, all the checks, balances and assurances available to a major Government project all gave the programme the green light. It went through Treasury clearance and major projects review group clearance at the centre and all the rest of it. I am sure that there were anguished decisions about whether we were going too quickly, whether we should slow down or whether we should pilot or test bits of it. I was not privy to those discussions. However, the decision was taken to go ahead. 

Q56 Chris Evans: But why did you take the specific decision to cut probation in half and then introduce new interfaces, which brought friction where there wasn’t any before? Surely that should have been picked up at least by the major projects group, and perhaps by the Treasury? 

Sir Richard Heaton: I am absolutely sure—Michael can speak to what was going on at the programme board—that that risk was recognised at the time. I think that the interface between the NPS and CRCs has probably gone better than we feared. However, that was not part of the original design. It was simply that there was a desire to outsource probation, and then there was a recognition that the public would not accept some serious cases being dealt with by the private sector and so those would have to remain in-house. Lo and behold, you then have a two-tier probation service; you have engineered a split.

It was a consequence of a design that was then aimed off for the serious cases, which gave you the two-tier model. I do not think—I was not around for this bit—that anyone set out to design a two-tier probation service. It was a consequence. 

Q57 Chris Evans: Mr Spurr, you have more experience of this than anyone in this room. What are your thoughts? Did you think at any point at the beginning that this would cause friction in a unified service? 

Michael Spurr: Fragmenting the system was clearly going to cause some friction. The question was whether that was necessary and whether it could be managed. The reason why we went down this route was because a decision was taken to retain sexual and violent offenders—high-risk offenders—under the management of public sector probation officers. There were alternative options. It could have been that there was an outsourcing, for example, of a whole trust to the private sector, with some retained in the public sector. There were different options. 

However, the main policy drive was to drive reductions in reoffending through a payment-by-results model. The reoffending rates of higher-risk offenders are relatively low, but obviously the consequence of a higherrisk offender reoffending is very great. The reoffending rates of shorter sentenced offenders in prison and community-sentenced individuals are higher, and the potential to reduce reoffending rates and reoffences with them is much greater. 

The combination of wanting to retain much more direct oversight of the highest-risk offenders and a desire to deal with the biggest cohort of those who create most harm through reoffending, in volume terms—the shorter sentenced offenders—led to the decision to separate it into the NPS and different CRCs. There was a rationale for it at the time, but it was driven by those issues. It is perfectly legitimate to say that there would have been alternative models, and of course you are entirely right to say that separation causes a degree of friction. That is not ideal, but it was done for the reasons I have set out. 

Q58 Chris Evans: But it is not just friction. The Report says that the CRCs are detached from the court process, that sentencers to do not have confidence in the CRCs and that the NPS does not have knowledge of or confidence in CRC services. This is a serious crisis. You have two institutions that do not trust each other. 

Michael Spurr: I think the Report accurately reflects several things. I think it is true that sentencers have become less confident about community sentences, partly because they don’t have CRC colleagues in court—advice is given by the NPS—and therefore do not deal directly with CRCs in the way they once dealt with the unified probation service. In the new generation of contracts, one of the first things we set out was that there would be a single probation head in every English region and in Wales who would be responsible for both parts, so a single voice would be speaking to sentencers. That is really important. I think that that is accurate. 

We have been working to build sentencer confidence. I have had regular meetings with a senior presiding judge, we have worked with the judiciary to look at what we can do with that and we have provided better information on what CRCs do, both at a national and local sentencer forum levels. Those are important. That work has been going on. It is true to say, however, that that has been an issue and it comes out in the NAO Report. 

Q59 Chris Evans: That lack of confidence has led to judges going for short sentences over community sentences. I am right in saying that, am I not? There is a move towards that. Sir Richard Heaton: I am not sure what the evidence is on that. If that were the case, we would have seen an uptick in the short sentence prison population, which I do not think we have. I do not want to underplay the judicial confidence piece, but I think I am right in saying that we have not seen that consequence. It has not come through in custodial sentences, but it is anecdotally picked up by all sorts of sources, including the NAO, that that confidence is not there and needs to be. 

Q60 Chris Evans: We know from the evidence that the prison population is at breaking point, and that is due to more people being sentenced to prison. Do you know how much it costs per place for a prisoner every year? 

Michael Spurr: Per place for a prisoner? Depending on which way you look at it, about £36,000 a person. 

Q61 Chris Evans: I have got the cost per place as £40,843. 

Michael Spurr: It depends what you are looking at. Chair: Where did you get that from? Can you cite the source? 

Q62 Chris Evans: This is from the MOJ’s latest data, the costs per place and costs per prisoner information release on 25 October 2018. It was £40,843 per place for 2017-18. To send someone to Eton next year is £40,668. You have to say that that is a huge cost to the taxpayer, because you have not reformed community sentences. If we had community sentences, the Government could be confident about reducing short sentences down to a maximum of six months and therefore reducing that figure. Am I right? 

Michael Spurr: I absolutely agree about increasing sentencer confidence in community sentences. I absolutely think that prison should be used only where it is absolutely necessary. All the evidence indicates that if someone can be managed in the community, the outcomes are generally better. It is for sentencers to determine what is right, but I agree with all that. It is absolutely the case that prison places cost a lot of money, and on that basis, they should be used only where appropriate. That is for sentencers to determine. You are right that one of the reasons for making the changes we are making in the future reforms is to make sure that we can give back greater confidence to sentencers in community provision. 

Q63 Chris Evans: So it still costs more to send someone to prison than to Eton, at the end of the day, according to figures from the MOJ. 

Michael Spurr: I do not know how much it costs to send to Eton. It costs what it costs to send to prison. We have the set of figures. The rate varies depending on what type of prison you send people to. It is about £36,000 on average. 

Q64 Chris Evans: Sir Richard, you said that when the system was designed, you were not sure what the long-term changes to sentencing practices would be. Why was that? They were disastrous, particularly for the CRCs. Were you talking to the MOJ at the time? 

Sir Richard Heaton: Was the MOJ talking to who? 

Q65 Chris Evans: Talking to the probation service. In particular, why did you not foresee the long-term changes to sentencing practices? 

Sir Richard Heaton: I am not sure, sitting here. I suspect it was partly the case mix coming to court—in other words, the types of offenders that the police were charging. You may find this surprising, but it is surprisingly and frustratingly difficult to get a forecast of the sorts of case load that are coming into the courts. We saw an increase in serious cases coming to the courts and a decrease in less serious cases coming to the courts. That was partly it. 

We failed to anticipate accurately how the courts would make use of the various sentencing outcomes at their disposal. They preferred quicker, cheaper interventions that brought less revenue into the CRCs than we had modelled, I think. To this day, I am not quite sure that we have put our finger on why that happened. 

In an ideal world, either we would have forecast that better, or we would have created a model that was more flexible to variations in the case load coming to the CRCs. We were caught in the unfortunate position of not getting the forecast right and having a model that turned out to be inflexible and not having tested it. You have put your finger on a very difficult issue for us.

To be continued...