Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 120-139)

MAVIS MCDONALD CB, MR ANDREW PINDER AND MR HUGH BARRETT

MONDAY 13 MAY 2002

  120. Do you not have Departments coming to you saying this is the plan in the Health Service or whatever in terms of the broad brush shape of movement towards IT reducing unnecessary admin, redistributing money towards front-line services?
  (Mr Pinder) We have Departments coming forward with proposals about how they might invest in services and they are currently talking to the Treasury about that investment. As part of that conversation, they will be talking about the improvements they will deliver. I do not have in my organisation a collection of the information from Departments.

  121. May I ask about incentives and take-up? There has been some talk that if we are making cost savings, which you seem to be accepting but you do not know what the numbers are, if we are going to make savings, then we should give incentives and we put this to the Inland Revenue recently. Do you think that is a good idea?
  (Mr Pinder) It depends upon the target audience and whether people have properly researched whether the incentives will work. There have been attempts to have incentives in the past where for examples Customs and Excise and Inland Revenue have both given one-off amounts of money, £10, £50, to encourage people to put a return on-line.

  122. If we gave £5 to someone for applying for a service on-line and we saved ten pounds, then we would be saving the taxpayer £5 which we could spend somewhere.
  (Mr Pinder) That is true.

  123. If that were the case, would it be a good idea?
  (Mr Pinder) If that were the case, then I would absolutely be in favour of that.

  124. You do not think it would be a regressive incentive which would just help the 70 per cent of the better off, and people who were poor and not very good at this sort of thing would end up having to pay more for the service.
  (Mr Pinder) We would want to make sure that we provided some help to other people to get their services on-line. I said in an earlier answer that it is not just those people who are directly on-line who benefit from getting a service on-line. The use of intermediaries, for example people have the Citizen's Advice Bureaux, accountants, lots of other organisations, can deliver the benefits of an on-line service to someone even though they personally are not on-line. We are very much in favour of working with third parties who might become intermediaries to enable them to do that.

  125. There is a shortage of teachers in London. Do you think one solution lies in providing virtual teachers? You come in and there is a screen and there is an interactive capability there. There is actually a physical person talking to a class but he is sitting somewhere else, in Newcastle or somewhere. He can see everybody through his modules or whatever and talk to them. Do you think there is a role there? Do you think that would be part of the cost-effective solution to delivering more teachers?
  (Mr Pinder) I certainly think there is a role for the increased use of IT in teaching. There is a large project called Curriculum On-line which is aiming at doing just that. The intention of the Department for Education and Skills is to get the major elements of Curriculum On-line so that they can deliver reduced teaching preparation time, it involves children.

  126. What about GPs as well? You go into a booth and sit there and the GP is on the screen, talking to you—a bit like News Night but not that horrible—and you tell him what is wrong with you and he or she gives you advice and then refers you to the hospital. What about that? Are you looking at that?
  (Mr Pinder) The Health Service are looking at a variety of things at the moment in how they might improve the service. There is a variation on what you just suggested which is NHS Direct, where people do just that.

  127. Yes, they phone up.
  (Mr Pinder) They can phone up, but they can also visit a website and put certain things in.

  128. I am talking about face to face, having an interview with someone, who may as well be there because you do not have to visit them.
  (Mr Pinder) There are some real opportunities in the Health Service and elsewhere, particularly for bringing in a consultant to have a face to face conversation.

  129. I do not mean to be rude in any way, but it seems to me from the answers to my questions, "Yes, it sounds like it might be a good idea. We do not know the costs or benefits. It may be some time before we do this sort of thing", you are relaxed rather than the Czar pushing forward, whipping people forward, saying get some more virtual nurses in or whatever it is.
  (Mr Pinder) I can assure you that I am anything but relaxed. We are working quite hard with Departments to get them to be innovative about these sorts of things. On the question you specifically asked me there, about the Health Service, the Health Service themselves are coming up with those ideas as well as us coming up with those ideas. They have a very large number of pilots working, where they are trying out lots of experiments like that. The specific one you suggested, where a GP is on-line, as far as I know is not one of those pilots. There are many technical issues around why that may or may not be a good idea.

  130. Yes, it is a difficult issue.
  (Mr Pinder) Stepping towards that, there are situations where there is a facility for patients themselves to go to NHS Direct and feed in their symptoms and get some advice back. It is a step towards that.

  131. Yes, NHS Direct is excellent. Mr Barrett mentioned some of the reasons why people are not going forward to compete properly. Is it not because there is a perception in the industry amongst medium-sized players in particular, that it is all just a big stitch-up with the Government and these big operators inside Government just find themselves around and other people do not feel they can get into that? They stitch up the Government and the Government do not have enough skills to break out of that.
  (Mr Barrett) The research we have done says that there are some perceived barriers to doing business with Government. Small- and medium-sized businesses do not know where to look for opportunities. They believe that Government processes are over-bureaucratic; the same as the large firms. They are also concerned that aggregation—the issue you are referring to—does mean that they have less opportunity to contribute. The work we are doing within the OGC is to try to eliminate those barriers. As an example, one of the things we published last year was some revised guidance we give on financial assessment, which previously had insisted that companies needed to provide three years' audited accounts before they were considered for Government business. We have removed that requirement, therefore making it easier for small start-up businesses to do business with Government. There are some perceived barriers out there, but I have not heard and the research we have done has not indicated, that people think it is a stitch-up.

  132. When we looked at it before, we found situations where we have known of big computing companies, who have been kicked out of local authority contracts through ineptitude, continuing to get the lion's share of a lot of Government business whilst small businesses have said they were not getting a look-in. I was just wondering whether it was possible to mark it out in bite-sized chunks to start with in terms of the business and, secondly, to come face to face and try to reduce the cost hurdles to entering the competitions, both in terms of time and complexity, in fact enabling people to compete rather than saying these are the rules and when people do preliminary investigations they think the project slice is too big to take the risk and the administrative barriers are too great and they get on with what they normally do. In particular in a market which is moving very fast, it fragments into entrepreneurs and the like, what the big players are betting on is that the more lean-mean-hungry-machines cannot get access to the great big Government monster because of these big lumps. What do you think about that?
  (Mr Barrett) We are doing work within our framework contracts, S-CAT and GCat, to allow small- and medium-sized businesses more opportunities to compete. You are quite right, the skills and the innovation you get in small- and medium-sized business are quite often not replicated in large firms. Having said that, in a large Government requirement for a major IT project, you have to have a financially stable company providing that and in many cases there are very many good business reasons why you would not want to put that with a small business. The Inland Revenue, as an example, are about to re-compete their IT infrastructure. They want companies with very strong balance sheets to provide them with that service over the next seven to ten years.

  133. Are there opportunities for pint-sized chunks with lower risks? If you do ten and one in ten goes wrong, you lose, but if overall that global piece of business was given to someone else you might gain more than a 10 per cent cost efficiency and overall you would make a profit.
  (Mr Barrett) Yes.

  134. Are there opportunities for breaking it up and taking more risk yourself but getting more value?
  (Mr Barrett) Yes. I would say there is within the Civil Service a risk averse culture and people would not willingly want to take that risk where they might do in the private sector. There is a cultural issue here. We are producing a video on this in the next few months in conjunction with the Small Business Services in the DTI, which is trying to pose some of the questions you have put to me to buyers, saying "Do not automatically think that big is beautiful. There are definite advantages to using small suppliers. Think seriously about your requirement before you automatically decide to parcel it into the biggest possible chunk you can. It might make your life somewhat easier administratively, but you could be losing out on innovation, cost and other reasons".

  135. Are the incentives there for people making those decisions or do they just want a quiet life because they are on a straight salary?
  (Mr Barrett) I do not think there are incentives there, but what they would be looking at is whether the small supplier can give better value for money, whether they can give us more innovation, whether they can deliver better service than the bigger players might be able to. There are several instances where I am sure they would be able to.

Chairman

  136. Sir John, I think that my colleagues Mr Osborne and Mr Davies have opened up a very interesting line of questioning which I am not sure is adequately covered in this report, but perhaps you can advise me whether I have missed something. If we are talking about four million public servants, a huge workforce, if it is indeed true that we are going to have this revolution in how we are delivering public services to the public and that by 2005 people will be able to do any transaction through the internet, it is possible that we will not just stop the process at the two million public servants who do not have any direct interface with the public, we could take this process even further. We are seeing that already with Operation NHS Direct. I suspect that the implications of this on how many people we are employing in the public sector and what we ask them to do and the cost implications are absolutely enormous. I have been rather surprised at the rather woolly answers we have been getting this afternoon. I would have thought that if you are an e-envoy charged with delivering this revolution, then this is the sort of information you might well have at the end of your fingertips. Or am I being unfair?
  (Sir John Bourn) How could the Chairman of the Committee of Public Accounts ever be unfair; of course not. On the question of financial savings, in the case studies in the supplementary volume which accompanies our main report, there are examples of the financial savings which in some cases have already been achieved, in other cases they are in prospect and form part of the business case for going ahead with the proposals. There are examples from the ones which we had picked out as case studies on money savings; some gathered in, others in prospect. On the broader question of the impact on Civil Service employment of the changes, I think myself—and this is a rather generalised judgement—that the kind of thing we are likely to see is the kind of development we saw in NHS Direct, when the Committee discussed that. It is the use of technology which enables people to be used in other ways. We saw there, how a number of nurses had left the National Health Service because the conditions of employment did not fit in with their family life and other commitments, but the coming of NHS Direct enabled them to have jobs which used their nursing skills in ways which were more easily compatible with the rest of their lives. You had here an example of the technology, perhaps eliminating some jobs, but also creating other jobs. Most of the developments we are talking about now, are going to lead to that kind of development. It will be different sorts of jobs; it is fair to say sometimes more skilful jobs. There will be a release of people from less skilled jobs. I do not expect it will be some kind of cliff edge event between one financial year and another, hundreds of thousands of people going. You will find a movement in the kind of jobs and there will be fewer of the less skilled jobs, but that will open up opportunities for other kinds of public sector employment and it will be public sector employment which is closer to the consumer and closer to the customer, as we found with NHS Direct when we looked at it.

  137. Without asking you to make any commitment now, do you think this might be something you might look at more closely in the future? For the present, do you think we should be entitled to ask our witnesses today for more information on this subject?
  (Sir John Bourn) That is quite feasible, although the witnesses have pointed out that they are in a difficult position in many ways because they have some overarching responsibility, yet what people are really interested in is the specific cases. It is out of the specific cases that you get a real feel. It is absolutely right that more information is helpful. One of the things we in the NAO will do is reflect about this session and see in what way it can impact on our work.

  138. Would the Treasury like to comment on this? You have been listening to this debate which we have been having for the last hour and three quarters. Do you have any comment on the implications for Civil Service staffing of these reforms?
  (Mr Molan) Indeed. We recognise that on-line service delivery should reduce the time and resources consumed in manual processing. What it is very difficult to do is to calculate or estimate at an aggregate level what the potential savings are. When cases come to the Treasury we look at them on a case by case basis, look at the organisation, how the current services are configured, what the scope for cost savings are in the longer term, what levels of take-up are needed to achieve those. We look at those individually and challenge Departments to tell us what they are doing to develop take-up strategies, where their cost base is and how they might seek to reduce that cost base over time. We are quite early in that process and it is quite difficult to aggregate the lessons from all those individual discussions to give an aggregate picture. What we are doing is to press Departments, as they come for resources to invest in e-projects, to articulate what the benefit realisation plan is, otherwise Ministers are reluctant to give them money because we are not simply giving them money to create capability, we see this as a way of improving business processes and extracting benefits in the longer term.

  139. This information is being gathered in Whitehall, although at an early stage.
  (Mr Molan) That is correct; through the last spending review, the current spending review. It is at a relatively early stage where we think we are making progress in terms of getting Departments to think more critically about this issue.


 
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