Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 93 - 99)

THURSDAY 1 MARCH 2001

MISS MELANIE JOHNSON, DR PAUL MILLS, MR PETER SCHOFIELD AND MR MICHAEL SWAN

Chairman

  93. Good morning.
  (Miss Johnson) Good morning.

  94. Can I start by asking you how important you think it is that the Government should have its own Actuary's Department as opposed to contracting out for actuarial work?
  (Miss Johnson) The aim of GAD is to provide actuarial advice to Government departments and to other clients, as you know, in respect of employer-sponsored pension arrangements, the social security and the demographic analyses that are done and their work underpins ministerial decision-making as well. We need access as Government to that professional, impartial and, indeed, rather cost-effective actuarial advice on a range of issues, including the demographic projections and pension matters. I think it makes good sense that this is provided by a separate professional body and Government Actuary's Department also has a range of statutory responsibilities under existing legislation.

  95. But, Minister, our understanding from the evidence we have taken is that the Actuarial Department does not give policy advice, for instance, on pensions which you have mentioned.
  (Miss Johnson) Well, it gives actuarial advice which obviously, in effect, informs a policy advice which ministers are receiving.

  96. But that could be done by anybody. It is not intimately involved with the policy-making process in any way at all?
  (Miss Johnson) You could say that of many specialists in government I believe. Obviously there are many specialists who are, in effect, providing the underlying advice of a technical kind which informs the policy advice which is then coming on to ministers and the government.

  97. But if it is specialist advice which is being given as it were independently, by actuaries, then surely the cost effective way to do it would be to tender out for it?
  (Miss Johnson) That would be the case if private sector rates were not so high but Government Actuary's Department is a very cost effective supplier of actuarial advice and its rates are normally considerably under the costs that we would be charged in the private sector.

  98. So if it is a cost factor...
  (Miss Johnson) Well, it is an independence factor as well, as I have mentioned, but it is a series of factors.

  99. Yes. You seem to feel that it is independent advice it is giving but, on the cost factor, are you sure that there are no hidden subsidies involved in the lower costs, if they exist?
  (Miss Johnson) They fully charge out their time and they recoup their costs on all the work that they do outside, and all the work they do across government departments.


 
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