Examination of Witness (Questions 66 -
WEDNESDAY 14 NOVEMBER 2001
66. Mr Broadbent, welcome. For the sake of the
shorthand writer could you please identify yourself and your title?
(Mr Broadbent) I am Richard Broadbent and I am the
Chairman of Customs and Excise.
67. We have been interviewing Mr Roques, as
you know. He completed his report last year on 30 November but
it was not published until July 2001. Why did that take so long?
Can you help us with that?
(Mr Broadbent) It was actually handed in on 15 December,
but that is a detail. That was the date it arrived on my desk
and the Paymaster General's desk.
68. He has just told us it was 7 December. Perhaps
it was the post.
(Mr Broadbent) I will accept 7 December, that is not
material. It certainly arrived in the early part of December.
69. What I am pressing you on is the difference
between 15 December and July the following year.
(Mr Broadbent) There were two reasons. One is that
the report is a large and quite complex document and covers quite
a lot of ground and it is not unreasonable for the Government
to take a certain amount of time to consider the issues it raises
before it simply publishes this. The other issue was that the
NAO was conducting a simultaneous inquiry which took into account
the Roques report. After some discussion with them what Ministers
decided to do was to publish the report with the NAO report so
that there was a single publication of the report, the Government's
response and the NAO inquiry, so there was not a fragmented series
of announcements by Government's and other bodies.
70. That was your advice to Ministers.
(Mr Broadbent) That was Ministers' decision. My advice
to Ministers, as I understand it, is a separate matter.
71. It was a Ministerial decision to publish
these two together.
(Mr Broadbent) Yes; absolutely. I do not want to suggest
that there was any problem or disagreement about this. From our
point of view we simply got on with implementing as many of the
recommendations as we could.
72. We shall come to that. Was the report modified
or altered before publication?
(Mr Broadbent) No, only in the redactions made for
73. Do you, in your position, accept the report?
(Mr Broadbent) Yes, I accept the thrust of the report.
It is long and complex, though I was not as an Accounting Officer
asked to agree every word of it. There are several areas where
one could debate the judgements, there are some facts which might
be presented differently, but if I am to answer your question
directly on whether I accept the thrust of the report, yes, I
believe the thrust of the report is acceptable and the Government
has accepted the vast majority of the recommendations.
74. "Thrust" was not the word I used,
that was your word. Do you accept the findings of the report?
(Mr Broadbent) The Government has accepted substantially
all the recommendations.
75. It is a critical report and a lot of the
problems uncovered by Mr Roques do seem to have started at the
top of the organisation and he has reinforced that with us today.
He does criticise the Board itself for appearing to take its eye
off the ball, he uses phrases like "lulled into complacency
by its focus on targets it had agreed with the Treasury".
Do you accept that?
(Mr Broadbent) Many of my answers may be of the yes,
but, sort. There were clearly several areas in relation to Excise
diversion of fraud where the Department could have done better
and it is absolutely sensible we say that and seek to learn the
lessons from that. Those areas both in the Roques report and the
other independent inquiry, the NAO inquiry, have identified areas
such as the lack of a strategy to guide operational decisionsvery
importantthe lack of a high quality case management system
to guide judgements in individual cases, the potential for action
to take place more quickly when the fraud first became apparent
to the point when it was satisfactorily dealt with and these are
lessons we are learning. I do not want to prolong my answers by
then saying but, but I also think that both John Roques and the
NAO made it clear that those failings should be seen in context,
that the problem should be seen in perspective. It was actually
a small percentage of the total revenues. The context was one
in which the Department was working in an environment which does
not always make it easy to recognise particular problems and for
any organisation to deal with a problem of this sortand
this is perhaps a more personal remarkfor any organisation
to deal with an external change in environment, is always the
most challenging sort of problem for any organisation.
76. You are not making light of losing £670
(Mr Broadbent) No, I was trying to give a balanced
and short response to your question.
77. The specific criticism made which I quoted
to you was that the Board was "lulled into complacency by
its focus on the targets". He says in fact that the targets
were in general being met. If you were meeting the targets while
losing £670 million, it does not say an awful lot about the
targets, does it?
(Mr Broadbent) The targets were and to some extent
still are too focused on outputs. If I had to summarise the challenge
facing this organisation and indeed perhaps other Civil Service
organisations it is to move from a focus on outputs to outcomes.
An output is to seize so many cigarettes: an outcome is to reduce
the level of tobacco smuggling. Over the next few years we are
going to move more in this direction, but it is not a small undertaking.
78. Chapter 8 of the Roques report on management
and governance makes some pretty severe criticisms about accountability,
management structures, absence of collective decision making by
the Board and in particular it says in respect of the Chairman
that the structure made that role too large for one person. Do
you accept those criticisms in particular?
(Mr Broadbent) I do not accept every point made as
stated. I do not disagree with the general conclusion that there
was a systemic failure within the corporation which led to there
being knowledge in different bits of the organisation about different
bits of the problem, but the corporate machinery did not draw
that together so that the organisation's brain could say it was
a problem and they had better act and sort it out.
79. What are you doing to address the criticisms
in the report with regard to the management structure.
(Mr Broadbent) At the beginning of this year we implemented
quite a substantial reorganisation of Customs and Excise, which
had the benefit of a lot of Roques' thinking behind it. The most
important part of that reorganisation was effectively to move
the organisation from being 13 or 14 different regions plus two
or three central activitiesand it is quite a difficult
entity to get all that information into one channelinto
one which is actually two functions. It is operated and run by
a single small Management Committee on which sit the heads of
those functions, which meets frequently and runs the organisation.