[Relevant Documents: The Second Report from the Justice Committee on the budget and structure of the Ministry of Justice, HC 97, and the Government response, Cm 8433.]
Motion made and Question proposed,
That, for the year ending with 31 March 2013, for expenditure by the Ministry of Justice—
(1) further resources, not exceeding £1,157,003,000, be authorised for use for current purposes as set out in HC 894,
(2) the resources authorised for use for capital purposes be reduced by £19,950,000 as so set out, and
(3) a further sum, not exceeding £385,095,000, be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Greg Hands.)
Today is an estimates day and the presence of pound signs and a lot of noughts on the Order Paper tends to frighten Members away, when really it ought to draw them in to see what on earth the Government are doing with very large amounts of taxpayers’ money. Repeated attempts by zealous reformers to make Parliament pay more attention to expenditure have still not, I think, achieved the degree of success that many of us would like. I am pleased to have the opportunity to open this debate on the Ministry of Justice’s supplementary estimate for 2012-13, with particular reference to the report published by the Justice Committee on the budget and structure of the Ministry of Justice.
This is the first debate on the Ministry’s estimates since it was established in 2007, and I gather that the Minister who will respond is one of two in the Department who were formerly members of the Justice Committee—well, three if we count the Minister for Policing and Criminal Justice, the right hon. Member for Ashford (Damian Green). We are infiltrating our Committee members into relevant positions, which I hope will lead to almost all our recommendations being carried out.
The Ministry’s resource departmental expenditure limit for this financial year amounted to £8.2 billion. The supplementary estimate that provides the occasion for this debate adds a net £379 million in programme expenditure to that total, but MOJ spending, if not huge, relates to crucial areas of great public concern and interest: prisons, probation and legal aid. Most of the expenditure that the Ministry is responsible for is incurred in programmes administered by agencies and non-departmental public bodies. The broad figures of the budget show that the National Offender Management Service—prisons and probation—receives £3.4 billion, that the Legal Services Commission, which deals with legal aid, receives just under £2 billion, that the Courts Service receives £1.3 billion, that the Youth Justice Board receives £300 million and that the Criminal Injuries Compensation Authority receives £282 million. Between them, they account for the lion’s share of the Ministry’s budget.
I said that the supplementary estimate added a net £379 million to the main estimate resource expenditure limit. I will write on behalf of the Justice Committee to seek some further information on the components of the increase, as well as on increases in resource annually managed expenditure; but, in the meantime, it would be helpful if the Minister responded with some of the reasons for the £159 million increase for NOMS in the resource departmental expenditure limit, which is mysteriously described in the Ministry’s memorandum as due to “emergency cost pressures”. Last year, £51 million was included in the supplementary estimate under exactly the same heading. What are those pressures? Is that money part of the £1.2 billion funding agreed in 2007 for prison capacity, following the Carter review, and, if so, when was it carried over into the current comprehensive spending review period and what will the money be spent on?
The supplementary estimate includes provision for a net extra £750 million in round terms in resource annually managed expenditure, the largest elements of which are impairments on the court estate, £326 million, and impairments on the prison estate, £252 million. I hope that the Minister can explain why those elements are there.
I shall turn to the main conclusions of my Committee’s wide-ranging report. We took evidence in the first half of last year and reported in August 2012, and the Government responded in October. We visited the Department during our inquiry, and we did so in an innovative way that I commend to other Committees. We simply said, “We don’t want a formalised tour. We wish to enter every part of the Department and, on a second day, NOMS, and all we want is someone who has got the keys to every door in the building.” That is what we did, and we just wandered about every part of the Department, talked to staff and got a clear picture from them—interestingly, it was to the Department’s credit—of their commitment to the transforming justice programme. We just landed on anyone and asked, “What are you doing? What is your role in all this?” That gave us a much better feel than formal presentations sometimes do for how the Department was functioning, and it was to the Department’s benefit.
We have regularly taken evidence and reported on the annual reports produced by the Ministry. On the broader relationship between expenditure and policy, our predecessor Committee in early 2010 produced a seminal report on the case for justice reinvestment—a strategy for the transfer of resources away from custody to the prevention of crime and the reduction of reoffending. It remains my firm belief that the blueprint set out in that report is the only sensible way forward for a long-term criminal justice policy. Some elements of that philosophy are present in Government policy today, but quite a lot more could be included.
Our report focused on managerial and operational matters, but it also covered some important questions of policy, particularly on the commissioning of prison and probation services and payment by results. Our inquiry was the first major examination of the activities of the Ministry and its associated public bodies. We looked at the background to the setting up of the Ministry, its internal governance, budgetary provision, financial management, commissioning and procurement, the relationship with other public bodies, Departments and the judiciary and the prospects for achieving the Ministry’s radical long-term policies of transforming justice at a time of severe public expenditure retrenchment.
Some of the subjects that we covered, such as the Ministry’s financial management and procurement capacity, may seem technical, but when things go wrong with those functions, as happened recently in the shambolic outsourcing of court interpreting services, excoriated by the Public Accounts Committee and by us, the political fallout and the effect on public confidence in the judicial system can be deeply harmful.
We concluded in our report that the Ministry’s structure and performance had improved since its creation and that progress had been made in integrating the Department, but many of the improvements had been from a low starting point and there had been criticisms and failures. The culture in which the focus was on policy creation previously had changed to an increasing recognition of the importance of programme management. The Department had developed a greater understanding of its cost drivers, although it still did not have sufficient management control of its finances.
We noted that the Ministry had sought to bring its sponsored bodies under closer central control and make them more accountable to Ministers and had streamlined senior management structures and reduced the duplication of functions. We called for further structural change to create an integrated system of offender management, involving the commissioning of both prison and probation services in defined geographical areas. In fact, we look like ending up with roughly the opposite: national commissioning of prisons, which is what we already have, and now of probation, as part of the Government’s probation proposals. The Lord Chancellor defended that on the grounds that, at this stage at any rate, the limited available experience needs to be concentrated to carry out that commissioning function, but that seems to us to be entirely the wrong strategy. The commissioning of ways to deal with offenders really needs to be associated with all the other agencies that are situated in an area. The prisons, police and crime commissioners, local authority social services departments and housing authorities need to work together, as they have done in youth offender teams, for example, to achieve the best results locally.
We expressed doubt about whether the Ministry had sufficient skills capacity to implement the radical change of approach, with the greater outsourcing of the delivery of services, and we pointed to a danger that the way payment by results would be commissioned might undermine the work of voluntary sector organisations, which play, and need to play, a vital role in the justice sector. I think that Ministers have got that message. I am less sure whether they can implement it properly. There is certainly considerable anxiety across the voluntary sector, where so much of the skill and commitment that is required to change offenders’ lives is available. We drew attention to the wide range of public, private and voluntary organisations that need to work together if the wider justice system is to operate more effectively and efficiently when resources are so constrained.
It is difficult to think of any part of the Department’s activities that are not affected by the process of transformation, which has been under way and has gathered pace. In particular, the proposals in transforming rehabilitation document will entirely re-fashion the terrain of probation services. There are welcome plans to extend rehabilitation to prisoners serving sentences of under 12 months who currently receive no such provision. We pitch them back into society with no realistic expectation that they will turn away from a life of crime merely because they have spent a limited time in prison.
More controversially, the plans include contracting out to the private and voluntary sectors of the majority of work with offenders in the community currently overseen by probation trusts. This rehabilitation revolution agenda is in addition to a huge amount of change occurring across other parts of the Ministry’s core business: changes in legal aid entitlement and in the status of the Legal Services Commission, which has moved physically into the headquarters building in Petty France and is becoming an executive agency under closer central control. The Ministry is closing a number of magistrates courts. It has announced plans to transform youth custody by introducing secure colleges. In family justice, Children and Family Court Advisory and Support Service will transfer back to MOJ control effectively from the Department for Education.
On prisons and probation policy, I think we all share the same goal of reducing offending and reoffending, which in turn will free resources currently spent on keeping people in prison, to maintain progress and to have a virtuous circle, rather than the vicious cycle that the system now has. But we remain to be persuaded that the Ministry has at its centre the right people to steer through this monumental transformation process. Most importantly, does it have people with the commercial, technical and legal skills necessary to embark upon a huge range of highly complex and sometimes novel commercial projects?
The transformation agenda coincides with a period when the Ministry, like most Departments, is being tasked with making very large savings. By the end of the spending review period—by the end of the 2014-15 financial year—it needs to make annual real-terms savings of more than £2 billion against its spending review baseline. According to the National Audit Office’s departmental overview, the Ministry still has some way to go to meet its cost reduction target. It aims to make front-line savings of around 10% over the spending review period—it has already saved £244 million—and to reduce back-office costs by around a third, which will contribute about £1 billion towards its target.
The Ministry has projected legal aid savings of about £320 million annually by 2014-15 and sentencing savings of £51 million by the same year, from the changes introduced under the Legal Aid, Sentencing and Punishment of Offenders Act 2012. A further statement from the Minister today gives an accelerated timetable for proposals yet to be spelled out in relation to criminal legal add. Obviously, we will be closely interested in what comes out. We have some indications that things such as cost recovery from offenders will form part of that. Of course, there has been more coverage today in reference to the President of the Supreme Court and anxieties in the judiciary—of course, such anxieties are widespread among lawyers and voluntary organisations—about the effect of the legal changes.
I will make a personal comment, which I think is broadly shared by the Committee. It is widely recognised that we cannot go one having the most expensive legal aid system in the common law world with no real prospect of restraining its potential increase. The Government had to do something, and any Government would have had to do something.
Secondly, and this is a view that the Committee expressed strongly in a previous report, the welfare and tribunal systems are part of the problem. The extent of legal advice necessary in much of the tribunal system indicates a weakness in the way services are delivered in the first place, and in the tribunal system. We ought to have a system under which people receive the right benefit to start with, and, if they do not, the tribunal system should obtain directly the information required to judge the matter correctly. Where Departments in particular fail to achieve that objective and generate a lot of failed appeals—failed on the Department’s side—they should contribute to the cost. It should not be the MOJ budget that bears the cost, but the Department that is not doing its job properly. Change is required in this area.
Savings of approximately £50 million per year are expected from changes to criminal injuries compensation criteria, and there will be other, lesser savings from the closure of courts and prisons, and from rationalising the administration of the Ministry itself and its sponsored bodies. Restructuring the NOMS headquarters is expected to save £91 million. At the same time, there are cost implications to changes that the Ministry is making. Is there any costing for the plan to extend rehabilitation to short-sentenced prisoners? That is welcome, but we have not seen any plans for how it will be paid for. How feasible will it be to fund it by introducing competition into probation?
The Ministry has little control of many things that determine its cost, such as the demand for prison places. One has to ask: how would its transformation and cost-cutting agendas be affected by an unforeseen event. Into that category fell the national riots—they are described as national riots, but it may be fairer to describe them as riots in a number of cities—that occurred in 2011 and generated significant expenditure in the court service and in the prison system.
The Ministry is moving forward with its radical plans for transforming rehabilitation. Payment by results, for example, has not yet been tested in the field of criminal justice. There are a number of pilots up and running, but we do not know what their outcome will be. The Secretary of State clearly feels that to wait, probably for many years, for the outcome of the pilots is to wait too long—he is impatient to get on with developing payment by results. One has to ask, however, how can the Ministry know that it is rolling out programmes that will work and not waste money? How can it learn from the programmes that are up and running, even though we are not at the stage to receive final conclusions?
My Committee took evidence from the Secretary of State last week on the transforming rehabilitation proposals, and put some of those questions to him, including the concern that he makes full use of the voluntary sector that has so much to contribute. Since then, there have been some reports in the press of doubts in the Treasury on whether the payments by results programme can achieve its predicted financial outcomes. I think that those reports came out accidentally in a conference or a seminar on related issues, but they indicate that not everybody is confident that the Ministry can achieve that kind of saving from the programme.
Much depends on getting the basics of financial management right, and our report devoted considerable attention to the effectiveness of financial management in the Ministry and its sponsored bodies. The Ministry did not produce its resource accounts for 2009-10 and 2010-11 before the summer recess, and blamed the accounting arrangements of probation trusts. Last year the Department’s accounts were submitted before the recess, but still after the deadline set by the Treasury. The Committee considered that to be unacceptable.
The Committee was also critical of the regular qualification of the Legal Services Commission’s accounts because of error rates in overpayments—£35.7 million in 2011-12—and called for it to establish a clear plan to reduce those rates significantly.
Our final main concern related to the accounts contained in the Her Majesty’s Courts Service trust’s statement. The Comptroller and Auditor General issued a disclaimer of opinion on those accounts, meaning that he could not say whether they gave a true and fair view. Its chief executive explained that the Courts Service’s accounting system was not able to handle the requirement placed on it by the Treasury to produce an auditable report. The Secretary of State said that the £3 million it would cost to put that right would not represent good value for money.
The Committee was highly critical of the lack of financial management competence in the Ministry and its sponsored bodies. We said that there was “unacceptable complacency” and a “defeatist mindset”. That is strong language, but the Committee think it is justified. The Committee thinks that the Ministry is now taking financial management more seriously, including centralisation and standardisation of processes and standardised forms. The LSC is implementing a new IT system. Frankly, we were horrified when the LSC told us that it could not possibly ask all solicitors to submit claims online, in a world where you and I, Mr Deputy Speaker, and most other people have to use online procedures. This is having to change, thank goodness. The Ministry, however, still faces an uphill struggle with IT legacy systems and its estates. In particular, in the courts many IT systems are old and require a great deal of effort and input to work at all. There is a question regarding whether any useful analysis has taken place to determine whether investing in capital projects now would save money in the longer term.
On European-related issues, the Committee said that the maintenance of separate teams in the MOJ and the Home Office to deal with European, international justice and home affairs issues was a duplication of effort, and that they should be merged. The Ministry has not accepted this recommendation, which seems so obvious to us.
The Government, with some fanfare, announced that they would exercise their right, under protocol 36 of the Lisbon treaty, to opt-out en bloc from justice and home affairs measures, and would consult parliamentary Committees, my Committee included, on their proposals regarding which ones they would opt back into. Up until now, negligible information has been forthcoming from the Government on their plans. The Committee, and other Committees, have had nothing on which to carry out any work. I emphasise strongly that my Committee expects to be provided with the time it requires to scrutinise the Government’s opt-out proposals. The same applies to the other affected Committees too, and we have written jointly on that.
The Ministry of Justice has not yet shown itself able to achieve the full savings to which it has committed, despite some tough decisions and some welcome improvements. The Department is trying to achieve major change, a process that always involves front-end costs with the hope of later savings. We should not be wasting taxpayers’ money on ineffective use of the prison system, where half of those released from prison reoffend within a year—for those on short sentences the figure is 60%. We should not lose sight of the long-term objective, which is to cut crime and reduce reoffending to such an extent that much less money has to be spent on the consequences of crime, whether in the criminal justice system or beyond. For that to happen, we need to spend money to ensure that people are not drawn into crime in the first place. The troubled families programme and early-years education are examples of what the Government are doing and need to build on if we are to cut not only the costs of crime, but the misery it brings to those of our constituents who are victims of crime. We are spending their taxes on trying to keep them safe from crime. That money needs to be spent wisely and that is why it is important that we debate it today.
It is a pleasure to follow the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). This might not be the most eagerly awaited debate the Chamber has ever seen, but the funding of the Ministry of Justice is an extremely important issue, and although I am a new member of the Justice Committee, in my short time I have seen how daunting is the MOJ’s task of balancing the books.
The MOJ aims at having less reoffending, more rehabilitation and a better court, prisons and probation service, and all with less money. I do not envy the Secretary of State’s position, but I know that in endeavouring to meet the task he will consider all areas for savings. One area being considered is funding work opportunities for inmates in custody. It is right that we provide employment opportunities in prisons. Taking part in work programmes helps offenders to retain or—where it is lacking—adopt a work ethic, increases work-based skills, makes inmates more employable on release and reduces reoffending rates. We must ensure that it does not undercut companies not working with offenders or take jobs away from the law-abiding, but giving prisoners work opportunities in custody could help not just inmates, but victims of crime. If the money earned by prisoners can be shared between rehabilitation and payments to victims, there is a dual gain to be made.
It is not only prison work schemes, however, that provide these opportunities. The National Offender Management Service has been identified as a department that could undergo further restructuring. Managing the rehabilitation of offenders is one of the most crucial aspects of the Ministry’s work, and the MOJ is right that someone is not best placed to help prevent reoffending just because they are employed by it. Very often, private companies or charities can assist with the rehabilitation of offenders, so it is worth considering—and, in suitable cases, adopting—the tendering of work currently carried out by the probation service. If payment by results actually gets results, it is worth pursuing, and giving a financial incentive to those who carry out rehabilitative work can only help to reduce reoffending rates. For the first time, we can say that if offending rates are not reduced, taxpayers’ money will not be spent. That seems right to me.
As I understand the system, there will be payment by results. If the results are not achieved, there will be a financial consequence for that company. We will be able to say, “If there are no results, the taxpayer will not have to shoulder the full burden.” To draw an analogy, we would not expect the Ministry of Defence to pay for guns that do not fire, so why should we expect the MOJ to pay when anti-reoffending programmes do not work? We should pay for what works, not for what does not work.
My hon. Friend makes an important point. There is more scope, particularly in family courts, for the increased use of mediation and perhaps non-judicial disposals. We want to see court processes in appropriate cases, but nevertheless we could consider ways of avoiding them, if it is correct to do so.
I was reassured by the Secretary of State’s comments to the Justice Committee last week, when he confirmed that the probation service could also tender for contracts to work with offenders. That is right. The public want less crime; what is less important to them is who achieves it. Whether it is the probation service, a charity or private company matters little; what is vital is that whoever helps offenders to stay on the straight and narrow is successful in that important quest. Payment by results is potentially groundbreaking for the MOJ, but I concede that the devil will be in the detail. We need to ensure that cherry-picking cannot prevail, for example, and that the system recognises tangible improvements in a repeat offender’s behaviour, rather than progress towards good behaviour.
Successive Governments have tried to tackle the so-called revolving door of reoffending—the tendency to come back into the system time and time again, particularly following short-term custodial sentences. There are two approaches to the problem. We can either curtail short prison terms, letting people off without custodial sentences and not having any short-term prisoners, or we can work with such offenders, both in custody and on release. I support the latter approach. It has not been done in the past, but the commitment now to ensure the supervision of such offenders on release is the right approach and very much to be welcomed. The involvement of charitable and private sector organisations in such work has made it affordable. I believe it will be more successful for their presence.
However, it is not just the work of prisons that we need to review; it is also the courts. I worked in the Court Service and saw a very changing environment. In fact, three of the five courthouses I worked in are no longer courthouses, but restaurants, accommodation and so on—I think one is a Zizzi. They have changed beyond all recognition. Although it is sad to see that happening to old courthouses, it is right for the Department continuously to assess the value for money it provides for the taxpayer. It has a difficult balancing act to perform, between the value for money it provides on one side and the interests of justice on the other. Witnesses cannot be expected to travel long distances to vast super-courts. Justice delivered locally is still an important doctrine.
The virtual courts system has been highlighted as a good way for the Department to save money. However, I would urge caution on this approach. Virtual courts can actually cost more. We therefore need an intelligent and targeted use of the system, rather than a blanket approach. I am probably the only Member of Parliament who has used the virtual courts system—I guess I should declare an interest—and I have seen not only its strengths and weaknesses, but its expense to the Department. I am pleased that the Department is also looking at different ways in which magistrates courts can operate. It makes sense to allow them to keep more cases for themselves. That will enable savings to be made without compromising justice. In limited circumstances, magistrates can already sentence adult offenders to 12 months. If we trust them to give such sentences for some cases, why not for all cases? In some courts, the same magistrates who can sentence a 14-year-old to up to two years cannot give an adult more than six months. That needs to change.
The challenges for the Department are substantial. In playing its part in tackling the country’s debt, it needs to find savings, yet they have to be made without compromising justice or the safety of the public. The first job of every Government is to protect the public. I pay tribute to the Department for the enormous strides it has made of late in doing just that, while at the same time finding significant savings in its budget.
It is a pleasure to take part in what has become a rather select gathering, considering the report from the Select Committee on Justice and the estimates for the Ministry of Justice.
It is a pleasure to follow the hon. Member for Dartford (Gareth Johnson). I agreed with a large amount of what he said, although I encourage him to look carefully at PBR. He will find that the reward element, which is the bit companies get should they achieve their targets—we are still not clear what the targets might look like—could be as little as 5% of the value of the contracts. He might find that quite poor or average performance could get 95% of the payment anyway, which is not quite what we are leading people to believe.
It is also a great pleasure to follow the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), who presented his report clearly and fairly, and very politely, given some of the criticisms that he made of the Department. I congratulate him and his Committee on their report on the budget and structure of the Ministry of Justice. I found it an interesting read, but I imagine that it was at times an uncomfortable read for Ministers.
I want to touch on several important subjects: a dysfunctional financial Department, inadequate leadership, evidence-free policy, no progress on improvements for women offenders or for victims of crime, and an overall lack of impact on outcomes in the past three years. In the first paragraph of the report, Members observe that
“this period has been marked by criticism of and, in cases such as the performance of the Legal Services Commission (LSC), failure by, the Department.”
Looking at finance in particular, the Department’s finance team has been performing particularly badly—not that anyone would know it from the Department’s own assessment of its performance, which states that it has
“put a renewed focus on improving financial management across the entire Department.”
The Department has, however, missed the Government’s deadline for submitting accounts for the third year running. If the Ministry were a charity, the Charity Commission would be considering removing its charitable status.
The Government have been reduced to ill-thought-through attempts at random savings through redundancies, and it is striking that the Department’s future budget targets depend on making significant numbers of staff redundant even though the Department does not yet have the necessary resources to fund the redundancy payments. That is chaotic, and one reason for the chaos is the £140 million hole in the Ministry of Justice budget following Ministers’ climb downs on plans to change sentences. I am reminded in particular of the proposed sentence discount for guilty pleas in rape cases, which was abandoned.
The Ministry has to make a massive budget saving, yet it is flailing around attempting to find people to sack. Unfortunately, it risks undermining its ability to do its job. The Chair of the Public Accounts Committee, my right hon. Friend the Member for Barking (Margaret Hodge), said this morning:
“"We are concerned about safety and decency in some prisons…Assaults on staff, self-harm and escapes from contractor escorts have all increased.”
She went on to say:
“We were not reassured that the Agency has done enough to address the risks to safety, decency and standards in prisons and in community services arising from staffing cuts implemented to meet financial targets.”
On offender management in the community, probation trusts, the Probation Association, the National Association of Probation Officers and, significantly, all but a couple of the police and crime commissioners are opposed to the Government’s attempts to squeeze savings out of the Department through the sell-off of probation services by contracting out the supervision of medium and low-risk offenders in the community. I believe that the Ministry of Justice’s proposals in that area are as yet uncosted.
Ministers also have no idea of the extra cost of their plans to supervise offenders serving sentences of less than a year, or whether they will make any difference at all to outcomes. We know from experience that commissioning is not one of the Ministry of Justice’s strengths. The commissioning car crash involving the court interpreters Applied Language Solutions and Capita is something that I am sure officials and Ministers would rather forget, but it illustrates the point that commissioning is not one of the Department’s strengths.
The voluntary sector is likely to get frozen out of rehabilitation services. The Secretary of State has repeatedly said that he wants smaller, voluntary sector and other providers to take on more work relating to the rehabilitation of offenders. There is no argument there, except that the National Audit Office has observed in its response to the Government’s consultation that this desired level playing field is unlikely to materialise. It states:
“Large contracts within the criminal justice system are already held by a few large firms, who could exploit this synergy, compared to smaller or newer players. The Ministry needs to consider whether the size of the contract areas will create barriers to entry for some smaller providers, given the need for greater investment and exposure to risk that these will entail.”
Exactly what is the rationale behind the Government’s proposed 16 areas for probation services, because nobody I speak to seems to know?
The Department has to admit that it has a tendency to favour policy announcements at the expense of delivery. We have had announcements on prisoner working, improved services for victims, revolutionising rehabilitation, mentoring and drug-free prisons. These are all great announcements, and the Government have had no argument from any of us about them, but we are left feeling a little disappointed that the Minister’s hyperbole about a rehabilitation revolution is just that. So far, it is all rhetoric and, I am afraid, no reality. Prisoners are not working more; they are spending longer than ever locked in their cells; and the chief inspector of prisons says he can find no evidence of the rehabilitation revolution—[Interruption.] The Minister says that it is not true, but I have the figures in front of me. If he wants to contradict me in his remarks, I may well wish to intervene on him later.
The justice mandarins are simply not running things properly. The Select Committee says that Ministers need to alter the balance from policy creation to programme implementation, and it is right. Will Ministers tell us how many serving senior officials in the Department meet this criteria and how many of them have experience of managing these projects successfully at a sufficiently senior level? The Department says it wants cultural change through transforming justice, but it is not clear from its own report how many senior managers really have these skills. It believes it will save money by closing older prisons. The Secretary of State says he wants to build a new “supermax” prison, but does he have a budget for it, what is his timetable and where is it going to be?
Perhaps the most important unanswered question is this: at the end of the reforms, what will be happening on the ground that is so different from what happens now? What is the big idea? Where is the evidence to back any of this up? Among all the announcements and statements about restructuring, outsourcing, commissioning, paying by results and reforming, where is the real change that is going to make a difference?
There is recognition on both sides of the House for the work that National Grid has done on reoffending. It has taken more than 2,000 offenders, given them work, mentored them and found bank accounts for them—the right hon. Member for East Ham (Stephen Timms) is a great proponent of that. That proves that someone does not have to be a senior official in the Ministry of Justice to be able to bring forward a good idea that massively reduces reoffending.
The hon. Gentleman makes a good point. We can all cite anecdotes and examples of very good practice, but anecdotes remain just that. There is no systemic sharing of good practice. These opportunities should be assessed, evaluated and made available for all the offenders who need them, but the truth is that they are not. According to the Public Accounts Committee, senior officials at the MOJ have a poor record of managing commissioning, so I am not sure about trying to transform the service through that method. At the moment, there is not enough evidence of a good track record to be able to put much confidence in their ability to do that. The problem with the reforms is that they are all of structure rather than of practice. The Government are rightly disappointed in reoffending rates of around 50%, but for nearly three years they have done nothing of any substance to improve the situation.
Let me deal now with payment by results. Instead of importing a failed policy from the Department for Work and Pensions to the MOJ, why not take a closer look at what works in preventing reoffending? For all the academic studies and Government data, the truth is that there is precious little understanding of what really makes a difference. Plenty of organisations are prepared to tell us that what they are doing works and are prepared to buy reports to prove it, but there is very little objective analysis of outcomes of programmes and interventions. As a result of scrapping probation service PBR pilots, the Government are failing to use evidence that they should have to help them to decide where to spend their money. When the Secretary of State cancelled the pilots, he said, “Sometimes you just have to go with your beliefs.” There we have it: Chris Grayling, Secretary of State for Justice, our very own mystic Meg.
This simply is not good enough. Interventions in health, for example, are assessed. They are monitored and evaluated before public money is used to provide them, and the same should apply to interventions in criminal justice. The rate of reoffending is stubbornly high, so why are the Government not doing what can be done in health? Why are they not asking for interventions to be evaluated and funded only if they prove to be effective, and then insisting that only what works should be delivered in our prisons and in community sentences? There is too much okay practice, and too little sharing of the very best ideas.
We need to know which are the best interventions, which are the best providers of services, and which are the best prisons. We need a value-added measure for criminal justice. The Government should be investing in ways of assessing the performance of establishments, based on the profile of inmates entering prisons and their future reoffending. Establishments should be accountable for their performance: the best should be given greater freedom to innovate, and the worst should be closed down. Farming out the supervision of medium-risk offenders to private sector providers with no idea whether that will work any better than the current arrangements is reckless, ideologically driven and dangerous, and the Government should think again. They are not showing any interest in practice on the ground, but are preoccupied with structures in the organisations without any evidence that they will make any difference.
The Government’s performance in the management of this Department has been woeful. The Department has failed to submit its accounts on time three years running, it has been subject to withering criticism from the National Audit Office over its ability to commission, it has scrapped PBR pilots—thus losing any evidence that payment by results works—and it has failed to show that its mandarins can manage projects and implement policy.
Let me start by thanking my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), the Chairman of the Select Committee, for introducing this short but very high-quality and wide-ranging debate. I am also grateful to him for the way in which his Committee drew up the report, and for the scrutiny that it provides of the Department more broadly.
As the House knows, parliamentary scrutiny of Government Departments is crucial to ensuring that they deliver Government policy properly and offer value for money. We have talked about both those things this afternoon. A large number of subjects have been covered, and I shall try to deal with as many as possible. I shall also say a little about the Department’s priorities, which have also been mentioned today.
Last year’s comprehensive report by the Justice Committee on the budget and structure of the Department focused on many of the changes that it has made to bring it closer to the goal of delivering a justice system that is more effective, less costly and more responsive to the public. At a time of continued financial pressure—to which my right hon. Friend rightly referred—finding ways of improving services while delivering even more value for money is, of course, of paramount importance.
There has been a renewed focus on improving financial management throughout the Department, which means that it is set to reduce spending by about £2.5 billion each year over the spending review period. It will achieve that by means of a range of measures to drive down the costs to the taxpayer. On the efficiency side, that has included rationalisation of the Ministry of Justice head office, streamlining our structures and processes, and rationalisation of the court estate. We have also delivered savings through policy reforms, including the reforms of legal aid funding—which have been mentioned—and the criminal injuries compensation scheme. As the Select Committee has acknowledged, the Department has protected front-line services by making the bulk of its savings—some 60%—through ways of working more efficiently. The Department also laid its 2011-12 accounts unqualified, before the summer recess and ahead of the timetable it had originally planned. That demonstrates a significant improvement on previous performance, but there is room for further improvement and the Department is looking to provide that this year.
My right hon. Friend the Member for Berwick-upon-Tweed raised two specific points about the estimates, the first of which related to the explanation for the £159 million extra for the National Offender Management Service. As he will appreciate, a number of pressures that arise during the year were not part of the MOJ baseline used in the spending review negotiations. Such additional cost pressures will include not only inflationary impacts, but funding for voluntary staff exits—he will understand that there has been considerable change on that front in the past 12 months.
My right hon. Friend’s other point related to the impairments to the court and prison estate. As he knows, the Valuation Office Agency carries out regular reviews of that estate, and the recent downturns in the property market mean that that re-evaluation has obviously had an impact on the Department’s budget. The figure of £520 million or so is substantially explained by that change.
Let me talk a little about the justice system we are trying to design. Creating a transformed justice system requires the Department to go beyond improving its financial management. If we are to construct a justice system that punishes the guilty, protects liberties and rehabilitates offenders, the MOJ needs to continue to work at pace to drive an ambitious reform agenda. Despite the determination of those working within the justice system, there is too much litigation, too many people are reoffending and too much money is spent on systems. So by 2015 the Department will provide services in a completely different way. We are committed to transforming rehabilitation to reduce reoffending—I will discuss that in some detail later— to driving down costs across the prison estate to ensure that it delivers maximum value for taxpayers; making sure that the youth justice estate is appropriate and cost-effective; rationalising the court estate and identifying further efficiencies across the criminal justice system; and continuing to drive down the cost of legal aid and ensure it is focused on those cases that require it. That is what transforming justice looks like.
One of my top priorities within that is the transformation of rehabilitation. That has had a good deal of attention in this debate, so let me deal with the points that have been made. As the House knows, we have consulted on proposals that could open up approximately £1 billion of services to a diverse market; give greater scope for providers to innovate, with payment by results acting as an incentive to focus on rehabilitating offenders, as my hon. Friend the Member for Dartford (Gareth Johnson) was explaining; and change how the commissioning of services is managed.
The hon. Lady knows that we are carefully considering the design of the system, so we will need to determine the appropriate percentage. She will also recognise that it is not going to be 100%, because anyone taking on this work will need to implement the orders of the court and to fulfil licence requirements. The fact that it will not be 100% may have some bearing on the discussion we have been having about the accessibility of this new landscape to smaller organisations, particularly those in the voluntary sector. We will settle on the precise figure having listened to those who may be involved in this landscape, and others, to make sure that we get it right.
Let me deal with some of the points made by the Chairman of the Select Committee. He raised the concern that he and his Committee have about having national as opposed to local commissioning, and I appreciate that that represents a change. It is explained simply by the need to ensure that the necessary expertise and abilities to commission on a payment-by-results basis are held by those doing the commissioning. We think it is difficult to see how that can be done on a local basis, but we think it is important, just as he does, that there are local elements in the commissioning process and that local intelligence is included in deciding what needs to be commissioned. We want to design a system—I hope he will see this coming through the process—that enables us to include that local understanding as well as greater expertise on payment by results. He is also right to say that we must design a system that allows voluntary sector organisations to participate actively.
I am grateful to the Minister for seeking to clarify this point. Let us analyse it a bit further. If the local partnerships that know the local situation best can design what the contract should be about, it is perfectly proper that they should turn to a national body that has expertise in how to include the measurements of results and so on. I would be worried, however, if the national commissioning body was also the body that said, “What you need in Blackburn is this.” That decision should be taken locally, even if the expertise must be drawn on from a central body.
Yes, I understand that entirely. I am saying that it will be important under the system that we are trying to design for local requirements to find their way through the system so that they can be clearly understood. We will try very hard to ensure that that can be done.
Let me return to the voluntary sector organisations, on which we have rightly spent a bit of time in the debate. There are probably two areas in which we need to be careful to ensure that the design of the system is right. The first is in the assessment of the bids that are made for the rehabilitative work that we are discussing. When we consider the bids, we will want to be satisfied not just about their quality and price but about the sustainability of the relationships brought forward as part of the bids. We anticipate that a large number of bids will include more than one organisation and will often include smaller voluntary and community sector organisations. We will want to be persuaded when assessing those bids that the smaller voluntary and community sector organisations will have a sustainable future in the course of the contract. We will want to ensure that the design is right and that we keep our eyes on what is happening in contract management. It is partly about assessing the bids when they come in and partly about assessing how they are implemented over the lifetime of the contract.
I think the phrase the Minister is looking for is “bid candy”. I think he is trying to say that he would like there to be more involvement from not-for-profit, third sector and voluntary organisations, but is it not the truth that he has no idea at all of the number of organisations working with offenders in the criminal justice system? He does not know how many there are or what exactly they are doing, so how will he know whether there is more involvement after his reforms?
The House will note the hon. Lady’s traditional fondness for central control, but we are not a fan of that. She is right that there is an issue about what is likely to be called “bid candy” in this context, but what she is missing is that that is precisely why it is important for us to consider not just the initial cost and attractiveness of the bid but the sustainability of what might be called the supply chain. We want to design that into the system for precisely the reasons she has given.
Let me move on to the issue raised by my right hon. Friend the Member for Berwick-upon-Tweed about prisoners who receive sentences of 12 months or less. There is broad agreement when the subject is raised that it is a good idea to bring within the ambit of rehabilitative services those offenders who receive such sentences, as at the moment very little provision is made for them. He is right to say that it will come at a cost, but it is difficult to be precise about the cost of that provision, which was another point raised by the hon. Member for Darlington (Jenny Chapman). Until we have finished designing a provision, we will not know precisely what it will cost.
Another aspect that needs to be clarified by the design process is the sanctions regime. Part of the cost will be incurred by deciding what to do if someone who is under such a sentence and who will be expected to participate in rehabilitation after that sentence does not comply. We must go through a number of processes in the design of the scheme before we can be more precise about the costs, but we confidently expect the cost of incorporating those 46,000 extra offenders will be covered by the savings we can make by competing rehabilitative services for medium and lower-risk offenders. That is one of the central advantages of taking that course.
My right hon. Friend also made the point that it is important to have in the management of the Department the right people with the rights skills to carry out the work we are asking them to. He is right, of course. He will almost certainly know from his review of the work of the Department that we have set up a capability steering group to consider those issues. One of the major issues for us to address is skills in programme and project management. We are very conscious of the need to make sure not just that we bring in new people with those skills where we need to do that, but that we give those skills to existing staff who will come into contact with programmes of various sizes and shapes.
From the Select Committee’s report I thought the emphasis on delivery and implementation was strong. However, I looked at the Government’s response to the Select Committee’s criticisms and, on the issue of project management, it felt very thin. How many of the Department’s senior managers have project management qualifications so that they can introduce this new culture of delivery?
As I said, we recognise the need to make sure not just that we bring in new people who have these skills, but that existing staff gain those skills, so taking a snapshot of how many have a particular qualification at this point may not be the most helpful way of looking at the issue. We are trying to make sure that civil servants who want and need these skills are given them, and that where there are gaps in the Department and particular skills are required, we plug those gaps.
Let me move on to talk about prison costs. We are keen to push down those costs. Across the custodial estate our strategy is to ensure that we have sufficient places to meet the demand of the courts, while securing best value for money for the taxpayer. We are committed to driving down the cost of imprisonment and to closing old and inefficient accommodation, which will contribute significantly to that. I am surprised that the hon. Lady expressed doubts that such an approach would save money. It seems clear that it would do so. The reason—
If the hon. Lady will forgive me, I will explain and then I will give way.
It is a straightforward point that older accommodation is more expensive to run and to maintain. Newer accommodation is much cheaper in both respects. That is one reason why we want to transfer from an older estate to a newer estate. It is not the only reason, but if the hon. Lady wants to intervene, I will give way.
My doubt was based on assertions from the Secretary of State that there is going to be some “supermax” prison, yet there is a lack of information about how much that would cost, when it would be built and where it would be. I would be interested to hear the Minister’s response to those questions. If they cannot be answered, I will keep my doubts.
The hon. Lady is entitled to her doubts but she needs to be fair. We have said that we will look at the feasibility of providing just that sort of prison, although I would not use the language that she used. We are looking for a system of imprisoning offenders that is most efficient for the taxpayer, but not just in financial terms. Also—this is what I was going on to say—newer estate is much more susceptible to providing work in prisons, as my hon. Friend the Member for Dartford (Gareth Johnson) described, and the rehabilitative agenda that we all want to see outside as well as inside the prison gates. I can reassure the hon. Lady that once we have had the chance to have a look at the sites that we might want to pursue for a larger prison and at the economics of doing it, we will give her all the detail she could possibly want, but we are not going to rush into it because, perhaps unlike our predecessors, we do not believe in spending money hand over fist until we get it right. We will make sure that we have got it right first; then we will bring forward our proposals.
Let me move on briefly to youth justice, which was mentioned by the Chairman of the Select Committee. As he said, in February we published our plans for the future of youth custody. Young people who commit serious and persistent offences need to be properly punished and it is right that they are sentenced to custody, but custody is not delivering good enough results. The costs of youth custody are very high, yet 73% of young people leaving custody go on to reoffend within a year. It is not acceptable to spend so much yet get such poor outcomes. That is why we launched our vision for secure colleges that refocus a young person’s time in custody so that it is education with detention, rather than detention with education as an afterthought.
My hon. Friend the Member for Dartford and the Chair of the Select Committee mentioned the court estate, reform of which is key to a transformed justice system. In identifying ways in which it could operate more efficiently, the Ministry has closed 132 courts—84 magistrates courts and 46 county courts. However, we recognise that there is a need to carry on looking at how our estate is most effectively utilised, and we will want to keep in mind the points that were raised on that. Spending money to keep underused and unsuitable courts and tribunals open is not a good use of taxpayers’ money, so we continue to keep the use of our estate under review to ensure that it meets operational requirements.
The Select Committee is also right to emphasise how important co-operation across the criminal justice is for improving outcomes. In July last year, we set out important reforms now under way across the criminal justice system in the “Swift and Sure Justice” White Paper. We are building on those reforms to ensure that victims have a louder voice and that the criminal justice system commands public confidence.
I do not believe that it is the number of hours spent on the job that matters, but what one does in them. The effectiveness of this particular victims commissioner will become apparent. We think we have an excellent candidate for the job and that she will do a first-class job for victims. I am sure that the hon. Lady will support her in that work as she does it.
We want to make optimum use of the available resources so that the criminal justice system is quicker, less bureaucratic and more efficient. Therefore we are working closely with the Home Secretary and the Attorney-General to ensure that we all look at the whole system to tackle its weaknesses. My right hon. Friend the Member for Berwick-upon-Tweed was right to say that the Ministry of Justice cannot solve all these problems on its own. We are, as he knows, often described as a downstream Department, and we need to work with other Departments, not just those that I have mentioned, to ensure that we all do the right things to bring down offending and reoffending. He will know that we will shortly publish a criminal justice strategy and action plan to set out how we will deliver further change.
Legal aid is a fundamental part of our legal system but, as the Chair of the Select Committee rightly said, resources are not limitless and publicly funded legal support should be reserved for cases where there is genuine need. The Legal Aid Sentencing and Punishment of Offenders Act 2012 contains reforms that focus help on those cases where there is a genuine need of assistance from the state, and those proposals will be implemented in April. We are determined to protect fundamental rights of access to justice, but we must tackle an over-reliance on the courts and legal system at taxpayers’ expense. That involves directing people towards less stressful and less adversarial means of resolving their disputes wherever possible. I was taken with my right hon. Friend’s point, with which I entirely agree, that if we necessitate the use of lawyers in some of these tribunals, and those tribunals are not operating as they should, that was not the intention and it should not be the way in which we proceed in the future.
We are keen that in addition to transforming the services delivered by the Department, it transforms itself so that it has the right skills structures and agility to operate optimally. As my right hon. Friend and the rest of the Select Committee know well, in 2010, the Department reviewed its operating model, which resulted in more streamlined structures and a reduced work force. However, further reform is required if we are to live within our means in future and operate in the most effective and efficient way possible. We have therefore commissioned a review of the business structures and functions across the Ministry of Justice. That includes our agencies and arm’s length bodies. The review will look closely and critically at the ways in which services are commissioned and provided. In doing so, we want the digital-by-default agenda to be put at the heart of the Ministry’s operations, and for creative ways to embody and implement the principles of civil service reform to be found.
I know that the Select Committee has previously recommended that the different parts of the Department be further integrated. My right hon. Friend referred specifically to the European teams today, and I entirely understand his reasons for doing so. A range of different expertise is represented by different people in different departments, so although we will look closely at any opportunities for rationalisation, in this context, as it happens, the opportunities for rationalisation are not as great as they may at first appear. However, the question of greater integration more generally, as well as the delaying of grade and management structures that the JSC has also sought, is firmly within the scope of the review that we are carrying out.
I thank my hon. Friend the Member for Dartford for his remarks. He is entirely right that work in prisons is a fundamental part of improving the services we offer in custody and beyond. He is right that working in a prison context allows offenders to develop not only the hard skills but the soft skills that might make them more employable. The idea of working a standard day or more hours in the week are hugely attractive from that point of view. I can tell the hon. Member for Darlington, who I know was concerned about this, that we are delivering more worked hours by prisoners in the prison estate than we were previously. Of course there is more work to be done, but we are heading in the right direction.
I am grateful to the hon. Gentleman for giving way, because it is important that we understand what is really happening. There is an idea that our prisons are somehow becoming little hives of industry in which prisoners are beavering away, but they are not. In about half the categories of prison in this country prisoners are actually spending more time banged up in their cells and less time doing purposeful activity. Perhaps most worryingly, that includes prisons for young offenders. Officials need to be a little more upfront with the Minister on that issue.
I have made it clear that we do not believe that we have done all we need to do on that front. I think that it is important to link a number of things. We need to ensure that the prison regime is conducive to work and that prisoners are incentivised to work, rather than to be idle. We are looking at both things, but the prison system needs to deliver more hours and a more regularised working day, for reasons the hon. Lady will entirely appreciate. We want to ensure that we get prisoners as close to the normality of the outside world as we can while they serve their sentence so that they have a better chance of being employed after they leave.
Does my hon. Friend agree that it is a bit rich for the Opposition to talk about investment in the Prison Service? Throughout the Labour Government’s 13 years in office there was minimal investment and deep overcrowding, so we are having to rectify a lot of the damage done by that failure to invest.
I was going to move on a little later to the damage that we are trying to undo, but my hon. Friend is right that we have not inherited a beneficial legacy. I am afraid that there is considerable work to be done with the prison estate, as in so many areas of Government, because of the mess left behind. I will return to that in a moment, because the hon. Member for Darlington made a few comments that I think need to be addressed.
My hon. Friend the Member for Dartford was right to describe the potential of payment by results, which is at the heart of our proposals. We believe that payment by results has a place in the reforms we are making because we think that it is important to pay for outcomes, not simply for processes. He rightly described why we want to ensure that people are rewarded for getting the outcomes we need them to get, and in this context that is a simple outcome to describe, although perhaps not quite so simple to design in the system: a reduction in reoffending. That means fewer victims, less misery for communities and less cost to taxpayers, which are eminently desirable outcomes.
My hon. Friend was right to focus on the challenges we face in designing the system. We need to avoid cherry-picking and “creaming and parking”, which effectively means looking after only those whom it is easiest to turn away from offending. We are conscious of the need to design our system to avoid those perverse incentives and will do so. He is right that payment by results is the way to deliver those better outcomes.
It is good that payment by results will be introduced into the Prison Service, but surely the Minister must accept that it would have been better if the Secretary of State had piloted the ideas he proposes to introduce to ensure that they and that the principles he talks about work. Payment by results might be effective, but surely pilots would have let us know what works.
It is a myth that no learning is available about payment by results, even from pilots. It is not always necessary to complete a pilot in order to get something from it. A good deal of learning is available to us from the pilots that have been in operation and, indeed, from the operation of payment by results elsewhere in government. We will take that learning with us in designing the scheme that we are attempting to put in place. The truth is that we could pilot for ever. Piloting in this context is an excuse to do nothing, and we do not intend to adopt that approach because we want to take action to drive down high rates of reoffending. We want to see innovation; we want people to come forward with new ideas within this system. If we expected to have to pilot every single one of those new ideas, we could pilot for ever and never make progress. We do not accept that that is the right way to deal with reoffending rates that are far too high.
Let me return to the point raised by the hon. Member for Darlington and my hon. Friend the Member for Northampton North (Michael Ellis). When we listen to the hon. Lady and her colleagues say that there are difficult budgetary pressures, that the Department is having to cut costs, and how regrettable all that is, we should not allow her to forget the reasons we are having to make these difficult decisions. One would think that we had inherited a benign economic legacy involving piles of cash that we stubbornly refuse to spend, but that is simply not the case. We inherited a note on a Treasury letterhead saying, “I’m sorry there’s no more money”, and a pile of debt. We are doing our very best to deal with the mess that her party left.
As I have acknowledged, the Department has a very difficult financial task ahead because of the decisions of the previous Secretary of State. The Minister admits that some of the commitments he has made are uncosted and that he has no idea whether their outcomes will be good value for money. I am trying to help him by pointing that out and steering him in what might be a more sound financial direction.
I am extremely grateful for the hon. Lady’s help, but she is missing the point. The problems that we face with the finances of this Department and the Government more broadly have nothing to do with the previous Conservative Secretary of State for Justice; they are to do with the behaviour of the previous Labour Government. That is why we are in the mess we are in, and we are doing our best to get ourselves and the country out of it.
The hon. Lady mentioned the size of the contract package areas and asked about the proposal for 16 of them. We asked respondents to the consultation that has recently concluded whether they believe that that is the appropriate number, and we will consider what they said. It is a starting point, and we will see whether people believe that it is a sensible one. I am sure that there will be arguments about whether we have drawn the map in the right way, and we will consider all those in deciding whether we have reached the right conclusions. We will need contract package areas that are large enough to enable payment by results to operate effectively while not losing the local partnerships and connections that my right hon. Friend the Member for Berwick-upon-Tweed mentioned.
Proving what works is clearly crucial in the context of payment by results, and the hon. Lady is right to raise that. She will have seen in our proposals that we are interested in the idea of a justice data lab that will enable those providing rehabilitative services to understand exactly the effects and benefits of what they are doing. In the end, the test of what works will be whether the desired outcomes are achieved. As my hon. Friend the Member for Dartford rightly said, if they are not achieved, the full contract value will not be paid. That is at the heart of payment by results, and that is why we believe that it is a productive way to go forward.
The Ministry of Justice has made great strides in delivering a justice system that is more effective, less costly, and more responsive to the public. The ministerial team has a clear vision for continuing to transform the justice system over the remainder of this Parliament and beyond. I believe that we can deliver better rehabilitation of offenders, a smarter system of detaining and educating teenage offenders, a cheaper and better prison system, and a legal aid and criminal justice system that commands public confidence—and that, at the same time, we can bring costs down.
I hope that the many Members who take an interest in the Ministry of Justice’s activities—they have not all participated in this debate—recognise the improvements that have been made to how the Department organises itself and delivers its services. I know that the Department remains committed to building on these improvements and working with Ministers to deliver our vision for a transformed justice system.
Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).