Select Committee on Treasury Minutes of Evidence


Examination of Witness (Questions 66 - 79)

WEDNESDAY 14 NOVEMBER 2001

MR RICHARD BROADBENT

Chairman

  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 legal reasons.

  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 decisions—very important—the 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 sort—and this is perhaps a more personal remark—for 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 million.
  (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.

Mr Plaskitt

  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 activities—and it is quite a difficult entity to get all that information into one channel—into 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.


 
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