UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1679-ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

JUSTICE Committee

THE BUDGET AND STRUCTURE OF THE MINISTRY OF JUSTICE

Tuesday 24 January 2012

Rt Hon Jack Straw MP

Phil WHeatley CB

Evidence heard in Public Questions 70 - 124

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Oral Evidence

Taken before the Justice Committee

on Tuesday 24 January 2012

Members present:

Sir Alan Beith (Chair)

Steve Brine

Mr Robert Buckland

Jeremy Corbyn

Christopher Evans

Ben Gummer

Mr Elfyn Llwyd

Elizabeth Truss

________________

Examination of Witness

Witness: Rt Hon Jack Straw MP, former Lord Chancellor and Secretary of State for Justice, gave evidence.

Chair: Mr Straw, it seems a while since you were in front of us answering questions about the conduct of your work when you were in office. We hope that you will feel able to be totally frank with us today and to look back over your experience to see what we can learn about how the Ministry of Justice works-a Ministry that you helped to create in its present form. We are conducting an inquiry. Last week, for example, we had a full visit to every part of the Ministry of Justice-its central organisation-other than NOMS, which we will be visiting separately. We are trying to get a clear picture of how the Department functions, whether there are ways in which it could function better and whether it has realised some of the hopes and ambitions that surrounded its creation. I am going to ask Jeremy Corbyn to open the questions.

Q70 Jeremy Corbyn: Good morning and thank you for coming. Jack, you were there when the Ministry of Justice was created. Why was it set up?

Mr Straw: Just so that we are clear about the sequence, the Department was created about two months before I took over, which was in very late June 2007, once Gordon Brown had become Prime Minister. The Justice Department was already in place as a Department-Charlie Falconer had been running it for about six weeks-so I had less to do with the creation of the Department than might be anticipated. I have views about it, let me say. It may be recalled that the first the public knew about the creation of a Ministry of Justice was through a television interview that John Reid gave in the January. Do I think that that was the appropriate way for these things to be announced? Absolutely not.

Let me make these observations, if I may, Chair. Once the Constitutional Reform Act had been passed, which formally separated the judiciary from the Lord Chancorial role and established a more, as it were, typical relationship between politician Ministers and the judiciary, it was inevitable that there would be a clear and entirely justifiable demand for that aspect of the work of the justice system to be subject to a Minister in the House of Commons, and for the natural synergies of the courts system and what the courts do, which is to issue sentences and try to ensure that they are effectively followed through, to be brought together. There was a strong rationale for there to be a Ministry of Justice. I also think that the people in the Department-it was not under my direction-Alex Allan, the permanent secretary, and the principal private secretary to the Lord Chancellor, Antonia Romeo, and others did a phenomenal job from a standing start in bringing it together. I was very struck when I got there about how well it was appearing to gel, at least on the surface. Alex, as you know, then moved on-probably about five or six months later-and I appointed Suma Chakrabarti as the permanent secretary. He and I then worked very well and effectively to deepen this sense of a new Department. I am happy to go into that.

A wider issue here, Mr Chairman, is about how machinery of government changes are made. As you know, the NAO published a report on this in the last session of the last Government in 2009-10 and pointed out that there had been an extraordinary number of reorganisations-90, in fact-of central Government Departments and arm’s length bodies between May 2005 and June 2009. I have never approved, and do not approve, of the way in which machinery of government changes are made in our system. It is too capricious, too informal and too much at the whim of whoever is Prime Minister. There are, sometimes, good reasons for making changes but, if there are good reasons, there is no earthly argument why those reasons should not be set out in advance and subjected to proper examination before a decision is made. If there are not any good reasons, that is an even better argument for having those set out.

In my opinion, this particular change has brought benefits and, in any case, was inevitable, but is the system of change a sensible one?

Q71 Jeremy Corbyn: Could you just remind us why it was inevitable?

Mr Straw: I was very attached to the old Home Office and it had many merits, not least the fact that the prime responsibility for order and maintaining the state’s monopoly of the use of force in our society, which is the hard end of the Home Office, was balanced by a very clear responsibility for liberty as well. We were responsible for human rights, race and community relations and all that. It led to interesting debates within the Department and the mind of the Home Secretary. That is a good thing.

Q72 Chair: It did not always work to the benefit of liberty, did it?

Mr Straw: With great respect, it did. We can go down that route, if you like, but there is the Human Rights Act, the Freedom of Information Act, the Data Protection Act, the Lawrence report, and all the changes in respect of people who are gay and so on.

Going back, the Lord Chancellor’s position was fundamentally anomalous-this holy trinity of responsibilities that he had-but it worked as long as the Lord Chancellor was seen above the battle, a very senior and distinguished jurist. James Mackay is the best recent example of someone in that position, and it sort of worked. In our period in government, as the Lord Chancellor got involved in more and more legislation-and, indeed, Derry Irvine decided to sit on the Judicial Committee of the Law Lords-the position was becoming less and less tenable. It had to change, and Charles Falconer changed it in the Constitutional Reform Act. That was fine. Once you had a normal relationship, there was going to be a demand, which was very strong, to bring the running of the courts and the supervision of the judiciary, with the other things which are cognate to those, into the Commons.

That said, what would be pretty unconstitutional would be if you had the same Minister who was responsible for police and the hard end of law enforcement also responsible, ultimately, for judicial appointments and the supervision of the courts. That was why it was inevitable that there should be a split.

Q73 Jeremy Corbyn: Do you think it has worked?

Mr Straw: Overall, it has. The Ministry of Justice has developed a separate identity from the Home Office. It has also been helped by the fact that it has had relative stability in terms of who has been running the Department. If I may say so, because there have been only two Justice Ministers, those two Ministers were very experienced and also happened to have been Home Secretaries as well. It is very important that the appointment should be a senior one, otherwise, for example, they will not command the respect of the judiciary.

Q74 Jeremy Corbyn: This is the last point from me. You said at the beginning of your evidence that you were unhappy about the method of restructuring government. This is not new; Harold Wilson endlessly changed Ministries himself. Would you agree that it would be better if the Prime Minister proposed structural changes in government that were then examined by Select Committees that could make recommendations so that there was a proper process of thinking through the implications of ministerial change?

Mr Straw: Absolutely. My fundamental point here is that the institutions of government-the Departments-should not be seen as being owned by the Prime Minister of the day. These are national institutions and they are very important. The Select Committees would have an input on these things, but they become quite proprietorial about their Departments, so I do not think that they should have a veto. You would have to have supervision, for example by a body such as the Public Administration Select Committee.

You would also have to have arrangements for handling the perfectly legitimate plans of an Opposition party in the run-up to an election. To pick up your point about Harold Wilson, he and his colleagues, George Brown and Callaghan, decided in opposition that there should be a counterbalance to the Treasury with a Department of Economic Affairs. They had made a pretty standard arrangement in some jurisdictions. That led to the establishment of the DEA. There was quite a lot of work done in opposition that was put into the manifesto, and that is fine.

My own view, however, is that there is no particular reason why there should not be provision for a Leader of the Opposition who wants to do that to be able himself or herself to say to the Public Administration Select Committee, "This is our plan. This is what we are proposing to do. What do you think about it?" You could put it forward a year or six months before an election. After all, these plans have to be known. They are not secrets, so there is no reason why not.

Q75 Chair: You made an interesting point that, when you were in the Home Office, a debate took place between the libertarian issues or agenda for which the Department was responsible, and what you called the "hard end"-the authority of the state. Do you think it works at least as well and possibly better that that debate is now external-that it is within the Government and between the two Departments of the Home Office and the Ministry of Justice?

Mr Straw: It is difficult to say. If you do split a responsibility that had previously been in place-in this case, since 1782-you do lose something. Government Departments are very strong institutions within our system. I refer to the observation that Michael Heseltine made-he should know-about a Prime Minister’s difficulty to rein in a strong Secretary of State. It has always struck me that this analogy was a fleet of the line under sail, where the Prime Minister is a kind of admiral trying to run up signal flags, and the Secretaries of State are captains of their own boats, and, if they want to do something a bit different, they can do something a bit different. In terms of a single culture, something has been lost. As I say, it is inevitable. You must have proper systems in government for having those arguments.

One other point I add, Mr Chairman, is in terms of the division of responsibilities. I was very surprised when I got there to discover that the Judicial Co-operation Unit, which is the unit that handles extradition, for example, had not been shifted from the Home Office, and I think it should be. I argued that it should have been because it fits with the other things that the Department is doing on judicial co-operation. It is similar to some of the other decisions that the Justice Secretary has to take and not the Home Secretary.

Q76 Mr Buckland: Let me develop the point that you have just made. The dividing line that was taken was the moment of arrest, was it not? Pre-arrest would be the Home Office and then post-arrest would be the Ministry of Justice.

Mr Straw: Sort of, yes.

Q77 Mr Buckland: That is what I want to explore. First of all, did you think it was an absolute line? No, I think, is what you are suggesting. Do you think it was the right line? Let us take another statement. Could it have been better done if it was "charge" rather than "arrest", for example? I am not saying that that would be the right thing to do, but what is your view about it?

Mr Straw: You have to bear in mind that, in practice, the dividing line between arrest and charge is not that much because, in our system, the prosecuting authorities are under the Attorney-General. In some systems they are under a Ministry of Justice, as they are famously in France, for example, and they are also, although it is a different structure, under the Department of Justice in the United States, which is run by the Attorney-General. It is more or less right. If you are asking me, there are wider issues about the Home Office’s responsibility in terms of the functions that it lost in the 2001 transfer, some of which went to DCMS, which I do not think was sensible. It lost alcohol licensing, public order licensing and control over gambling to DCMS. That never seemed to me to be an appropriate place for those because these are about social control, and the DCMS is too vulnerable to the industries because it is a small Department and it has no tradition of social control. That is going back 11 years now.

Q78 Ben Gummer: Mr Straw, on this issue of balance between liberty and the hard edge of the state, which is fascinating, the examples you cited were largely under your leadership in the Home Office, and that is to be commended. Of course, subsequent Home Secretaries took a different line. The balance actually sat in the person rather than in the nature of the Department. Do you now feel that, having a structural dividing line between the Home Office-it being really only an enforcing Department-and given where all the other parts of the Government that you named are, that creates a balance of itself within the Government, or is it dangerous? Where are we?

Mr Straw: I accept what you say. In fairness to my successors, the big legislation in terms of rights had happened. You could not do the Human Rights Act or the Race Relations (Amendment) Act twice over. It fell to David Blunkett and his successors to implement it.

The other really big change was 9/11. When I was Home Secretary between 1997 and June 2001, there was concern about terrorism, which was why I introduced the 2000 Terrorism Act. The power of threat was still there but diminishing, and the other threats were around but not seen as so acute. Post-9/11, the Home Office became, inevitably, preoccupied with terrorism. I know that John Reid felt there was such demand on his time and that of the Office for Security and Counter-Terrorism-as I said, it is the hard-end stuff-that there was no time to have an opportunity to deal with the other stuff.

This system is in place. I do not think that we are ever going to get a Prime Minister proposing or deciding to go back to a single Home Office. What you then need, Mr Gummer, is effective systems in government so that there can be sparky debates about these issues. That may depend on the personality of the Ministers involved and how strong and experienced they are.

Q79 Steve Brine: Good morning, Mr Straw. The Public Accounts Committee reported in January 2011 that the accountability of the arm’s length bodies was a matter of concern for the MoJ. When you were in the job, did you have enough information about, and influence on, the performance of the arm’s length bodies?

Mr Straw: It varied very much from arm’s length body to arm’s length body. Overall, I would say no rather than yes. Just running through the major ones, in relation to the Youth Justice Board-I took a very close interest in that as I set it up initially-I shared some policy responsibility with Ed Balls for youth justice during that period, although I maintained sole responsibility for things like running the secure estate. We both took a lot of interest in it. I did not really feel that I was lacking on information about that. We appointed a new chair, Frances Done, which is always a helpful process.

The Criminal Cases Review Commission tended to be handled by one of the Ministers, but it had a good reputation as a well administered body. I did not receive any complaints upon that score.

The Criminal Injuries Compensation Authority had a very difficult task. Changes were made, but I was reasonably satisfied on that front. I was not satisfied with the Legal Services Commission-I was extremely unhappy with it.

Q80 Steve Brine: Why?

Mr Straw: Because I had a sense that I did not know what was going on. I also had a sense that they did not know what was going on.

Steve Brine: That is a bad combination.

Mr Straw: After I developed this sense, I wondered what they were keeping from me, and I realised what they were keeping from me was what they did not know. There had to be changes. There were immediate changes at the top of the organisation, as you may know, and then I decided that we needed to finish the role of the Legal Services Commission and turn it into an Executive agency.

Mr Brine, I remember going to a meeting of the Legal Services Commission. There must have been 12 board members around the table, which was top heavy. There were far too many. One of these people started talking about the policy that they were pursuing. I thought, "Hang on a second. Call me naive, but I thought policy was a matter for Ministers to propose to the Commons and the Commons to agree. What gives this chap and this body the right to decide on policy in terms of expending quite large sums of public money?" I also, frankly, thought that it was quite strongly infused with the original system for running legal aid, which was that legal aid was run for the lawyers by the lawyers. The Law Society used to do it on behalf of Parliament. Where the Labour Government at the end of the 1940s had to get to meant it had to get their compliance, and the situation was not satisfactory.

There were also emerging issues. I was trying to reform legal aid, to get the costs down particularly of VHCCCs-very high-cost criminal cases-which were taking up an extraordinary proportion of the total budget, and I did not believe that they had effective control over those. They were also duplicating the policy function of the Ministry of Justice. We discovered that they had about 60 people working on policy. Policy is the responsibility of the Ministry of Justice. They were there to implement the policy, not to create it.

I have always been leery about arm’s length bodies. You have to have some, of course, if they have a quasi-judicial function, and some do a perfectly good job. There was the Next Steps programme, which started in the early 1990s, about setting up Executive agencies. I certainly felt that the Conservative Administration had gone too far, for example, with what they had done with the Prison Service. There was constitutional outrage where, even on the Prison Service, it was its chief executive who was answering parliamentary questions and not Ministers, which was just preposterous. The first decision I made when I became Home Secretary was to tell the officials that Ministers are answering parliamentary questions, not chief executives.

The decision to turn the LSC into an Executive agency was mine, obviously with Cabinet approval, but I did ensure that it was going to be received sympathetically by Conservative colleagues, and I know it has been.

Q81 Chair: Of course it is now thought necessary to take it a further step to bring it closer under the Ministry of Justice.

Mr Straw: You can do that if it is an agency. You do not have the superstructure of a formal statutory body above it that is seeking to be autonomous and developing its own corporate structure, having its own press officers and lord knows what.

Q82 Mr Buckland: And costing £128 million a year.

Mr Straw: It is not cheap.

Chair: Mr Brine?

Steve Brine: We have limited time and lots to get through, so I suggest we move on.

Q83 Mr Llwyd: Not being an unquestioning observer of Government policy myself, when the Justice Department was formed I thought it was a very good idea, both from the constitutional point of view, and also, to be honest, because having observed the Home Office over some years, it had become so big that it was almost unwieldy. I believe that some Government Ministers said that it was not fit for purpose, but we will not go there just now.

Mr Straw: They were wrong about that, weren’t they?

Q84 Mr Llwyd: Yes, but at the time, the then Lord Chief Justice, Lord Phillips, said that the announcement raised "important issues of principle". He stated that "structures are required which will prevent the additional responsibilities taken over by the new ministry [of Justice] interfering with or damaging the independent administration and proper funding of the court service." He went on to say that there could be strains on the prisons’ budget and there could be a situation where judges might feel under pressure to impose sentences that they did not believe to be appropriate. That was his view at that stage. Do you believe that the MoJ has had any negative impact, particularly on the independence of the judiciary?

Mr Straw: No, I do not, in answer to that question. There was a history to Lord Phillips’s anxieties, which is that the senior judiciary, as is widely known now, were extremely discombobulated by the way they found out about the proposals for change-and I do not blame them because they were, effectively, blindsided about them. You will have to ask them. They are the witnesses, not me.

I do not think that they now have these anxieties. When I took over in late June 2007, I was extremely anxious to ensure that the judiciary at every level had confidence that whoever was Secretary of State-in this case me-was going to seek to protect their independence. I sought to do so. Among other things, I asked the Prime Minister, Gordon Brown, to which he readily agreed without a flicker, to make it clear to all ministerial colleagues that on no account were they to start gratuitously criticising the judiciary because I think it is completely wrong. I also offered some of my colleagues, who I thought might have a propensity to do that, certain career advice in private in a more robust way. They have got their job and we have got ours. I do not think that that has happened.

From a standing start in 1997-98 with the sentencing council, there is now acceptance by the judiciary that Parliament and Ministers have a proper role, for example in helping to determine the guidelines for sentence. That did not exist before. I got it going in 1997, but it was very tentative then. That is accepted. This morning on the radio we heard a judicial member of the Sentencing Council talking about their guidelines. There is a more formal process for resolving that.

On sentences, it is interesting that since the senior judiciary took on the responsibility for setting tariffs for mandatory lifers-for murderers-sentence lengths have got longer, not shorter, than when the Home Secretary set them.

Q85 Mr Llwyd: I take it from your response that the judiciary did not have very much input into the creation of a new Department.

Mr Straw: Let me be clear. I was not there at the time. If you ask them, they will say that they found out about the plans while on a residential conference. That was not an appropriate way for them to find it out. It goes back to this issue of the way in which the machinery of government changes have been handled. Because it is in the hands of the Prime Minister, what happens is that you get a very small unit in the Cabinet Office and often some earnest young Turks in No. 10 who have a bright idea about how the Government’s problems will be solved if they change this Department or that Department, but there is no proper check on it.

Q86 Chair: This Committee in its predecessor form reported adversely about that process.

Mr Straw: It was completely unsatisfactory.

Q87 Mr Llwyd: Since then-and you came in after that particular point-I take it that the judges have been receptive to the change.

Mr Straw: I think so. The relationship with the old Lord Chancellors was a close one; it worked. Although constitutional theorists will say it was preposterous to have a guy who was the Speaker of the House of Lords, a senior member of the Cabinet and, at the same time, the head of the judiciary and at times sitting in our senior court, it worked. The judicial appointment decisions, in practice, were not taken capriciously by the Lord Chancellor but collaboratively with the senior judiciary but, for reasons I have given, it was bound to change. There remains an important issue that the Constitutional Committee and the Lords have been looking at about a system for senior judicial appointments. I am on record, as plenty of others are, as saying that the system that was established in the Constitutional Reform Act is, in my judgment, not satisfactory because it gives insufficient input to the Lord Chancellor-I am talking about the very senior posts-and also puts far too much power in the hands of whoever is the President of the Supreme Court, including power over who should be their successor. That is not an appropriate way to run organisations.

Chair: Important though that is, it goes beyond what we are looking at today, which is how the Department itself functions.

Ben Gummer: Sir Alan, I hope you do not mind but I think it is relevant as to how the Department functions. Could I just ask a supplementary on that about the relationship between the JAC and the Secretary of State?

Chair: I will see how it goes.

Q88 Ben Gummer: Without going into individual cases, how would you recommend, therefore, that that relationship between the Secretary of State and the MoJ operates?

Mr Straw: And the JAC?

Ben Gummer: And the JAC, which clearly was not satisfactory, in your experience, in cases. How could that be improved?

Mr Straw: Both sides were trying to get used to the system. Inevitably, if you set up an arm’s length body, it will seek to assert its autonomy-cum-independence. It was quite a complicated relationship to begin with.

Q89 Ben Gummer: Why not just subsume the JAC as an advisory panel within the MoJ?

Mr Straw: You could do. That was what happened before, but then there was a big demand-in many ways not very well-founded-to get away from the idea that it was a politician who was making these appointments, which in practice was not true.

What is my opinion? Indeed, a very senior member of the judiciary said that the irony about the JAC is that you have simply exchanged one lot of people sitting around a table to make decisions on who is going to be appointed for another lot of people sitting around a table. On the whole, the appointments have worked out more or less the same, but if it had been the old less formal system, you would have seen more women coming through more quickly and more talented people from the black and Asian community. That is one of the ironies of this. What would I do? There is no particular reason why you should not have a far less formal basis. It would have to be done jointly with the judiciary.

One of the things that I did was to end the role of the Lord Chancellor in respect of appointments at Crown court level and below. I did not know the people; I might, by chance, but there were a large number of these appointments coming through and I saw no great merit in my formally having to endorse the recommendations. For the more senior ones-the High Court, Court of Appeal, the heads of divisions and the people on the Supreme Court-the system needs to be changed.

Chair: Can we now return to the question on the paper?

Q90 Ben Gummer: I apologise, Chairman. On Transforming Justice-I am not seeking to take a party political angle here-

Mr Straw: Feel free.

Ben Gummer: I really am not. You are one of the most experienced Ministers. You come into the same Department twice in different guises, much as the current Minister of Justice has. There is a radical transformation programme instituted by Sir Suma Chakrabarti, and, when you study it, you wonder why a lot of it has not been done before. My first question relates to why that did not happen and the ease with which you found the process of instituting that change. Secondly, on a broader point, stage one of Harvard Business School is about successful organisations that can continuously bring about efficiencies within themselves. Are the Government immune to that state of being, or is it something that can be engendered?

Mr Straw: I think it can be engendered. In terms of why it did not happen before, the Lord Chancellor’s Department was a very different animal from any other Government Department. It was a small Department and it had a strong sense of itself. It was pretty immune to ministerial direction in the classical sense as well. The Lord Chancellor operated from his suite of rooms at the far end of this Palace, and the rest of the Department was almost by Victoria in Selborne House. They grew their own. Also, the overall budget was not all that big, so there was no great propensity for change and no particular culture, although quite important changes had been made. When I got there I had opinions. One of the reasons I appointed Suma Chakrabarti was that he was experienced as a permanent secretary. He had come to view the role of the Department in a fresh way. I gave him every encouragement on the Transforming Justice programme and endorsed it.

Picking up your point, one of the things I did as a Minister was to have town hall meetings in the central atrium in the Ministry of Justice, which is ideal for those meetings, because, as you will know, not in June 2007 but by October 2007 it became perfectly obvious that we were going to be in for a restriction on budgets and then for cuts. I wanted to ensure that we were well placed for those and were thinking about it. Anyway, I held them every six months.

Q91 Chair: When you say "town hall meetings", do you mean of the Department’s staff?

Mr Straw: Yes. I do these in Blackburn between the town hall and Marks and Spencer, as it happens, but they are outside. This was an indoor version of those. All the staff were invited. Hundreds used to turn up. I would make a presentation and then take questions. One of the points-Mr Gummer, they must have got bored with this-I used to make was to tell a parable about successful manufacturing firms in my constituency and what had enabled the ones that had survived to survive. I made the point that they were having to undergo a constant process of change and that they were always examining their processes to see how they could take costs out and do things more imaginatively, which was what we had to do. I also got them to think about the fact that, in many areas of the Department’s work, the money and the effort was going on process, not outcome. Shed loads of money was going on process. If they just thought a bit more about how they could streamline the process, the public would be better served, the Exchequer would save money and they would be happier in their jobs. I was trying to do all that stuff. I know that the programme has been continued since.

Q92 Ben Gummer: In regard to the current cost savings that have been driven through the Department, is it possible in your opinion to achieve those internally without compromising the ability of the Department to develop policy drivers?

Mr Straw: I do not know about that. I was surprised when Mr Clarke was so ready to offer up savings, as he did, and by most accounts he offered up more than he needed to have done. There is a risk there. For example, quite a lot of their plans are predicated on getting the prison population down. It was 85,000-odd when I left; it is now 87,000. It is a wise Secretary of State who plans for the population to increase. I took various steps to stabilise it. We had a terrible crisis when I got there, and I did stabilise it, but you get things like riots.

Q93 Chair: But does not that underline the point that other witnesses have made to us that the Department has great difficulty in making decisions of radical effect so long as such a large part of its expenditure is fixed in the prison system-and rising?

Mr Straw: My view-you and I may disagree about this, Sir Alan-is that the responsibility of the Ministry of Justice is to ensure that there are sufficient prison places available for the courts to use within the guidelines as they think appropriate. That is why I am unapologetic about the fact that when I got to the Home Office there were 60,000 prisoners or so and there are now 87,000.

Q94 Chair: My question is much more about what effect that has.

Mr Straw: The effect is that you have to have a very spirited debate with the Treasury about the fact that this is a demand-led service and that they will have to pay up, which was what I did. In December 2007, I got a lot of money out of the Treasury for a building programme in order to improve places. You will have to ask Mr Clarke whether he regrets it because he abandoned part of this, although the money was available. None the less, can you take out costs from the Prison Service? Yes, you can. We were doing a lot of work and the Department now is doing a lot of work on what is called "benchmarking and specifications" or something like that. We were trying to look at the costs of providing a standard level of service for a given type of prison and prisoner and comparing them across services. You can do a lot there. You can concentrate the mind of the Prison Officers Association, which is not usually thoughtful, even in its own interests, about what needs to be done. I started the programme that led to the transfer of Birmingham prison to the private sector. I said to the POA a dozen years before that, when I agreed to make this a two-way street, that it was a two-way street. Just as I brought back Blakenhurst into the public sector because the numbers were better, Birmingham and one or two other prisons may have to go the other way. You can take costs out, but you still have to make provision for a rising prison population.

Q95 Chris Evans: I know that time is running out, so I will ask you a quick question. What was your interpretation of the culture of the MoJ during your time there?

Mr Straw: It was a good one. We conducted fairly regular staff surveys, which showed a fairly positive attitude among the staff. We were able to get the identity of the Department established fairly quickly. The officials worked loyally and efficiently. Like with any other group of people, some of the officials are better than others, but that would be true in a perfect world. On the whole, I thought it was pretty positive. You need to ask the staff that to get a better fix on it.

Q96 Chris Evans: Two criticisms of the MoJ when it was set up were about poor financial management and the fact that a lot of the information systems did not connect across the Department. Do you think that this was an example of a lack of being prepared, or do you think there were other factors there as well?

Mr Straw: There is a continuing problem about information systems that do not join up. It is a wholly separate subject about Government procurement and implementation of big IT projects. When I got to the Home Office in 1997, I was told that there were going to be all-singing, all-dancing IT systems in the next couple of years-on the immigration and asylum side, and on the criminal justice side. When I got back 10 years later, they were not around.

Q97 Mr Llwyd: Still no singing.

Mr Straw: Yes. I did not have a sense of poor financial management, except in specific cases, such as, for example, the Legal Services Commission. There was an issue about the running of NOMS. It was an Executive agency with good people running it, but it was a matter of trying to get that more under central control. There were certainly problems with IT systems joining up.

Chair: Mr Straw, thank you very much, indeed. We are grateful for your help this morning.

Examination of Witness

Witness: Phil Wheatley CB, former Director General, National Offender Management Service, gave evidence.

Q98 Chair: Mr Wheatley, welcome. You take over from your former ministerial boss. Incidentally, I will not go over again what I said at the beginning about the nature of the inquiry that we are doing. I know you appreciate what it is that we are trying to do. Is the Ministry of Justice an integrated Department or is it just individual bodies, like NOMS, who happen to share a Secretary of State?

Phil Wheatley: It became more integrated. As it was thrown together-it was a bit of a shotgun marriage-there was not a lot of notice. I read about what was likely to happen in The Sunday Times or some other newspaper, and I knew that this was possibly a runner. That was all done very quickly-certainly far too quickly to sort out IT systems and things like that. It often takes years to co-ordinate great big IT systems. I finished in June 2010, so I more or less match when Jack Straw left-I think I have a month extra on him. Over the time I was there, it was more integrated and moving towards greater integration. It was not perfectly integrated and there was a lot more to do to make sure that the different parts worked co-operatively and leveraged shared services so that they got a lower cost, because there were lots of transactions going through a single big shared service centre and a single provision of estates, and that work was under way. There was further work to do but it was moving in the right direction.

It is quite difficult work and it requires, interestingly, senior civil servants who take charge of the enterprise to have a real understanding of management issues as opposed to developing clever policy and serving Ministers, which they are very good at indeed, but they often do not come with a track record of managing big operational outfits and they would slightly look down on us, I used to feel over the years. They saw us as a bit below the salt.

Q99 Chair: As far as NOMS itself is concerned, has it justified the effort of creating it and achieved any purpose other than getting two organisations to co-operate a little?

Phil Wheatley: Bear in mind that I went right through the NOMS period, and for much of that time I was simply running the public sector Prison Service as a stand-alone agency in competition with other providers. That was the Home Office model that we came with. It was often irritating because it did not produce join-up. It produced a degree of conflict. It was not very good at integrating systems and thinking, and it was quite expensive. The relaunch, which occurred as Jack Straw arrived and took place the following April in the revised NOMS, which I headed up, was much more about how we make savings out of the centre, how we avoid duplication and how we unite the systems. We did reasonably well at making it work better and making management work better, because the system works well only if the money is being used wisely. Because the Probation Service, in particular, has not been exposed to any sort of competition, it probably was not the sharpest of managers. It was very good at knowing about what it was doing, thinking about what it was doing and speaking about it, but in terms of where the Probation Service is sharply managed with all the money working hard, I was less impressed. We used a trust programme to try to drive improvements and we got improvements.

NOMS has achieved things, but there is probably more to do. I do not like the title; I would have loved to have relaunched with a different name. It was not the same beast that we had before. Politically, it probably would have been seen as unsatisfactory to change the name because it might suggest that what we did first was wrong.

Q100 Chair: Governments never like to admit that.

Phil Wheatley: They do not. It is a bit like the Post Office; they did not like being Consignia and became the Post Office again. If we had been relaunching, I would much have preferred to say that we were the "Prison and Probation Services", which would have been better for uniting staff, and also would have prevented that constant carping about NOMS being awful. Actually, whoever sits at the centre with limited resources at a time of great stringency is not going to be popular with many people because there will be cuts to make and efficiencies to be achieved, and they will be uncomfortable. They may be needed, but making them will be uncomfortable.

Q101 Chair: You mentioned the Home Office culture in which NOMS was initially created. Did the move into the Ministry of Justice have an effect on what NOMS could do, how it could develop and how you could achieve the sort of things that you have just been talking about?

Phil Wheatley: It did, and the work was already under way. It was easier in a new Ministry to say that we had not got it right before and we could restructure. You have to bear in mind that before I left we had taken out £45 million of headquarters’ costs that came from putting old NOMS and new NOMS together. That is non-trivial; it’s worth having.

Q102 Chair: Was that just because it was a new Ministry-a different Ministry-or was it because there was something different about the culture?

Phil Wheatley: It was because new Ministers were prepared to look afresh at something they did not own, because Lord Carter was already relooking at his original report. I am trying to remember the time lags. I do not have my papers to refer to, but that started before, or more or less at the same time as, the Ministry came together. It was not related to that. It was easier in government with a new Minister to say, "Let’s look at what we have been doing and relaunch it so that it is different." It is not easy for them to admit that by changing its name.

Q103 Mr Llwyd: On the issue of changing names, it did bring in a host of fascinating acronyms. There is a certain individual called a "DOM", I believe, which is what, in Welsh, cows leave on fields. Anyway, we will leave it there.

Moving on to a more serious point, there is genuine concern that there are so few from the Probation Service in senior positions in NOMS. As you say, it was a shotgun marriage-your words-and nearly all the senior posts are from the prison element. I am not saying that there is anything wrong with the prison element, but one would have thought that there would have been a clearer balance because of the nature and duties imposed upon the new organisation. The fear is that the prison element has far too much power within NOMS and also the Ministry of Justice.

Phil Wheatley: I will pick my way through that. First of all, the shotgun marriage that I referred to was of Ministries, not NOMS. That was more carefully thought through as we coalesced old NOMS and the Prison Service, and relaunched what I could probably call the "new NOMS", if I wanted to. That was more carefully thought through.

In terms of who could become senior managers, the crucial thing was to get the best people able to lead that degree of change. If you look at most probation services, with exceptions-London is an exception; nowadays, in its new form west Midlands is very much an exception; and Wales, in its new form, is an exception-they were small organisations, not feeling politically accountable to the centre. They tended to be led by people who were used to running small organisations without direct political accountability. They also had no competitive pressure on them and probably with the committee feeling quite loyal towards "their" probation service, which is how committees used to feel. That was not a very challenging environment and did not help grow the sharpest managers.

On the Probation Service’s experience of managers coming into the centre, Eithne Wallis, was the first and probably one of the most influential probation leaders at the centre. However, it had never worked satisfactorily. Many of the people who had come to the centre had either failed or not been selected for jobs. It was nothing to do with me and the Prison Service; I was doing something entirely different at that time.

The big IT programme that I inherited, together with what other people in the new NOMS structure managed to retrieve from what had been the brink of disaster, had been run by somebody from a probation background who had absolutely no experience in running very big projects. The answer to how you get a probation balance, which is important from my point of view as I had left, was to try to plough management development, training opportunities and some career help into probation services. There are good people there who are quite capable of becoming very senior managers, but if you just pick them out and say, "We want a probation person. We know you haven’t quite got the background, but we are going to hope for the best because it looks better," and prevent questions like this, you would have done them a great disservice and put them in a position where they probably would not have managed what were pretty enormous jobs in, basically, what was a £4 billion operating cost enterprise. It is a very big and complex organisation for which they were not prepared.

Q104 Mr Llwyd: You will appreciate that there is a feeling among the probation community that they are very much a junior partner in this and that the important work that they do is not being highlighted within NOMS.

Phil Wheatley: There may well be that feeling, and I cannot say what is currently happening. I went to some trouble, as the person leading the organisation, to recognise the complexity of probation work and the degree to which, if it goes wrong, it produces disaster. The Sonnex case in London is a good example. You could not say, "That is easy work, whereas us people doing prison work are doing difficult work," because they are on the leading edge of protecting the public. I also tried to do the other thing that I found difficult, because, politically, it was difficult to get clearance for it in the run-up to an election, which was simplifying the work they were doing so that they were not just doing process. They had very much been pushed into a box-ticking approach to probation, which was not of their creation. It was created at the centre, which I did not think was adding value. I am very pleased that, as a new Government arrived, they felt able to endorse the approaches we were developing and take some of the specification out, and let probation staff have more discretion. With that discretion comes praise for using it well. It is very important that you do not just complain when things go wrong, because that never, ever persuades people to work well, but that you also praise them for taking on this new work and doing it really well. That was the strategy I was using.

The probation services did not like the idea that they were accountable centrally. It is a much more comfortable position to be a locally accountable group, with very little direct political involvement. Having politicians watch you carefully and hold you to account like this is not easy. I understand why they rather yearn for the old position that they had been in.

Q105 Mr Llwyd: You say that, but I have had meetings with the Welsh Trust and they are very much up for the current challenges. They are preparing in-house bids for various things and they are really up to speed.

Phil Wheatley: I am not surprised. I think the Welsh Trust is an interesting creation. I am very pleased that it was created. It took small probation services of the sort I am talking about and turned them into a large probation service. It has recruited somebody to lead it with an interesting background, which includes some prison experience and some voluntary sector experience. That is just the sort of person I want to see-I know that she is very capable-and it is the sort of step change we were looking for. It is just what I was hoping to achieve.

Q106 Mr Llwyd: I do not want to take up too much time, but I will just put one further point to you. You were here when Mr Straw gave his evidence and I mentioned that the Lord Chief Justice at the time of the creation of the Ministry of Justice felt that there could be a real conflict of demand in terms of budgets. In 2010-11, nearly half the Ministry of Justice’s expenditure-and 74% of the staff-belonged to NOMS. That is a pretty huge percentage. How were competing demands on the MoJ budget settled within the board?

Phil Wheatley: They were settled by Ministers following advice, in those days, from a board that Ministers did not chair. We had a separate meeting with Ministers as a board. There was an attempt to understand what it was possible to save in the various bits of the Department, which is demand-led. Legal aid was a big spend and difficult to control without changing the criteria for it. The Legal Services Commission is now acknowledged to be in a degree of difficulty and not on top of its own data in an understanding of what it was doing. The Courts Service is a relatively new creation. It was a new-ish agency. If you went and scratched lots of people in the Courts Service, they felt that they were working for x magistrates court rather than the Courts Service. Also, the IT systems did not join up. The magistrates courts’ IT system did not speak to the Crown court IT system. It wanted to be freshly entered. There were lots of things that meant the organisation was not working perfectly.

Taking money out of prisons or probation in a rush is difficult. In prisons, it was difficult as we could not contemplate redundancy because, under the old scheme, they were so expensive that, in year, they cost you much more than you could save. Therefore, you had to do it by natural wastage, and natural wastage was very slow, particularly in a recession when age-related retirement was going off the agenda as people were not leaving because they could not get other jobs.

Q107 Mr Llwyd: And the prison population was rising.

Phil Wheatley: And the population was going up. It was difficult to sort out. Politically-and I do not mean you personally-Parliament was very concerned that the Probation Service was not to take cuts. Squaring that circle was difficult. It was squared as best it could be. We managed and survived with a balanced budget, and we were making substantial savings in prisons. More savings have been made since. There is the shared services programme and the sharpening up of the procurement of building new accommodation projects, which was making big savings on what had been expected and continues to do so. The specs and benchmarking programme, which I initiated, has ground fairly slow. It is complex detailed work that is grinding and produces another way of making savings along with what is now more possible than it once was, which is a reduction in the real value of staff wages and staff pensions. They were very expensive. All those things have allowed savings to be made, but it was difficult in the short run to take all those at once. You could not just wave a magic wand and make them all happen.

Q108 Chair: You heard Mr Straw argue his well-established view that prisons are a demand-led service and you address them on a predict and provide basis. That was his view. That must, surely, have a pretty profound effect on the decision-making process in the Department and the allocation of resources as between prisons and alternatives to custody, if those are seen as discretionary things that you provide if you can, and prison is predict and provide.

Phil Wheatley: Our strategy was to try to increase the take-up of probation/community punishment at the bottom end of the custody range. That was what we were trying to do. We certainly did not underfund any of that. We were working hard to make sure that, by mistake, the Probation Service did not hoover people into probation who might otherwise have got a fine or a caution, where there is no evidence that getting a fairly minimal probation intervention-unpaid work or something like that-is going to make any difference to their ability to reduce reoffending. You have to be careful that you don’t just hoover up a relatively cheap series of disposals because you say, "We have got this wonderful new programme and the magistrates courts"-it tends to be the magistrates courts-"think, ‘Oh, we’ll give it a go. We’ll try that’", with somebody they would otherwise just have fined and it would have worked reasonably well.

I do not think that we were constrained in doing that. It was part of our strategy. It certainly does constrain your ability to make savings if the prison population is rising. There is always a danger in the budget planning process that people believe it is going to get better or it won’t be as bad as it really is. You will have looked at the prison projections. They normally do a fan of three: they do a middle, a low and a high. You would find that people were planning on the low and saying, "We’ll do all of these things and that will get us on the low." In practice, the reality would be nearer to the medium or high over time. It is currently running just under the high projection, which nobody has plans for managing within.

Jack Straw described that game of dare with the Treasury that I have seen Home Office and Ministry of Justice Ministers do over the years. They say, "I’m going to be overwhelmed." The Treasury say, "You’ve got to live within your money", and then at the last possible minute, usually with some intervention from the Prime Minister, we start building like stink to accommodate the rise in population. Usually, it is grossly unsatisfactory accommodation in the wrong place, because when you are building like stink you can’t build in the right places. That is bad news, but that is how we have managed it. That is because politically, not just for Ministers but I suspect for you, it is very difficult to take the action that would be necessary to reduce the population, which means, because it is so heavily made up of long termers now, you have to do something about imprisonment for serious and violent offenders.

As to the 10% or so who are on short-term sentences-I have not checked the figures recently but it would be something like 10%-you cannot just reduce the population by putting pressure on that 10%. It is like Marks and Spencer trying to increase their profits just out of selling tights and forgetting everything else that they sell. You have to look at the bulk of the accommodation, which is being used for long-sentence prisoners. At the moment we have something like 14,000 lifers or at least indeterminate sentence prisoners, which will continue to drive the population and is doing so. We have a public climate, to which you all contribute, and to which certainly Ministers and newspapers contribute, of feeling that crime needs squashing fairly hard. That usually produces longer sentences as the courts have a choice of whereabouts on the recommendations of what is possible they settle for.

Chair: In this Committee we try to promote evidence-based policy directed toward reducing reoffending.

Q109 Ben Gummer: Mr Wheatley, let me return to the traditional criticism of NOMS. It was invented to manage offenders but still settled into the old structural hierarchies that had existed beforehand. Do you accept that as an analysis? Do you think that it is possible for an organisation that, by its nature, has to manage an enormous estate of buildings to think in terms of an offender and its process through a system or a journey of rehabilitation?

Phil Wheatley: The answer to that is yes, and most organisations have to do that sort of complicated work. If I was working for a big retail outfit, I would be thinking about where I sited my superstores, and how I built and maintained them. I would also be thinking about how my IT worked and how my staff were interacting with customers. If I was Tesco, I might begin to wonder whether I had got that right. There is nothing strange about having to do all those things. If you do not do them, you end up with something that is not integrated.

With regard to the state of our prisons, are they falling down? Are they grossly overcrowded? Do staff get a chance to interact with prisoners or are they behind their doors all the time? Are the prisoners safe because they are being protected from each other? Are they being helped when they are feeling suicidal and when they have mental problems? Are the right provisions in place? These are all things that you have to bother about as well as "just doing offender management". They blur together. It is integrated. If you don’t integrate it, it is a mistake. There is a run of data on reoffending that has been collected in the same form since 2000, and the interesting thing is that, over at least a 10-year period when we have been watching this data, it shows that we have made about a 10% improvement, allowing for the differences in population. It is rather more if you do not allow for it. That means that, if you just arrest and deal with people who have lots of convictions, they are more likely to reoffend than if you deal only with people who have done something that is a one-off and will never get a chance to do it again. Looking at that, we have made a 10% improvement.

If you look at the heavier end of the population, the same data shows that there is about a 25% improvement for the four-year-and-over group. We have done that because we have offender-managed. We have better provision of offending behaviour programmes. We have better access to health care and we have improved education. That integrated package, which has not always felt integrated but we have been working hard to integrate, has given a bigger pay-off than any other service can show. Similarly, the Probation Service has made about a 9.7% improvement. It is a similar improvement measured in the same way and, again, with the same introduction of offending behaviour programmes and better offender management, a sharper management of people and holding people to account. The query is whether that has gone too far, so that probation officers are just policing things rather than helping people. Trying to get the balance right is always difficult. That shows that it has paid off and more is to be gained. I do not think that we have reached a beautiful point. I am not saying that as I left it was perfect by any manner of means.

Q110 Ben Gummer: Of course. In the early stage of the PBR contracts, which were initiated under your direction, they were formed around the structures still. There was a contract around a prison and a probation trust rather than looking at the through-life management of an offender, if I can put it that way.

Phil Wheatley: You have got to deal with somebody. If you are going to pay by results, you have to say who you are dealing with. How do you measure that you have got results? You must have a pilot that is somewhere. You cannot have a pilot in nothingness, as it were. The Peterborough pilot, which is the one I know most about, certainly involves the voluntary sector working with the statutory sector and working with the prison where the programme is hosted, trying to make sure that that combination of people working together integrates to give better support to people who come out often with good intentions, because lots of prisoners leave with good intentions, that fail in the face of the world not going right and too much temptation.

Q111 Ben Gummer: That is not a problem unique to prisoners.

Phil Wheatley: Probably not. It is like most bad habits, I am afraid. Crime is a very unpleasant bad habit-I am not being flippant about it. That is a sensible approach.

My worry about the payment-by-results approach, which I have some concerns about, is that it assumes you can graft something on to the system. The best criminological thinking at the moment suggests that if you try and work on the whole experience-and that is both in prison and probation; it is not just a prison-specific thing-the system will work better. When you go to a probation service you are treated sensibly by the receptionist and consistently by probation staff, and they are working with partners who work in a co-operative way that ties in with the whole. It is much the same in prison. When the security staff search you they do it efficiently, professionally and not abrasively, and when your visitors arrive they are treated with respect, because they are not criminals. You are given proper attention and are praised when you do things well and do not get away with things when you don’t do them well.

If you integrate all that, it will work better than just saying, "Here is a programme that we graft on to something." That is the danger of payment by results if we think we can buy bits of treatment. To me, that is the equivalent of saying that a hospital could have a brilliant surgeon, but the nurses have dirty hands, the surgery was not properly equipped and the follow-up consisted of wheeling round to a general ward and not paying attention.

Q112 Chair: But the patients would die and you would not get your payments by results.

Phil Wheatley: You would not. That is the risk about it. We do not yet know whether these payment-by-results pilots are going to pay off. I expect they will. I am not pessimistic but we do not yet have the results; they are pilots. The Peterborough project, which is the one I know most about, has a quite proper and elaborate method of checking whether they are achieving results. That is important because you do not want a payment-by-results approach that allows those who are doing it to game it. I can select the ideal population of people so that it looks as though I am achieving results, when all I am doing is shuffling the worst cases on to somebody else. It has to be carefully measured.

Q113 Ben Gummer: Was NOMS set up in the way that the management thought every day to try and discover data, to drill down into the information which you received, to commission new research and to understand the statistics behind the prison and probation population?

Phil Wheatley: The answer to that is partly yes, but not as much as it should be. You are speaking a language that I understand. I, as the person in charge, would have been saying that we need to do just that. We need to use our data, much of which was held in a very non-user friendly form in old computer systems. The research, of course, did not belong to NOMS. The research budget belongs to the Ministry as a whole. At a time of substantial pressure on budgets, there is not a lot of incentive on the Ministry to invest in more research. I would argue that in this area we do not really know what works. People have ideas. They often have panaceas. They are sure that x is the answer, but we have no real evidence to prove it. We need to invest more in research. That is not an easy thing to say at the moment. The better IT systems did begin to allow us to dig into it. The OASys system, for example, did give us a lot of data, which we were using to try to work out what the needs were of offenders and what looked as though they were the right things to work on.

As to the reoffending results, the run of data we had was very good, national data to national standard, but I think that run of data has come to an end, which means you cannot compare like with like in a way. That may have improved, but I have yet to see what they are going to produce this year. I am worried that that will not be as user-friendly. We were beginning to use that on an establishment-by-establishment basis, using actual results versus predictive results, which starts to show whether you are adding value. More could have been done with it. Better IT enables you to do more. I would have liked to have seen greater investment in research to work out whether we were really succeeding. There is always a risk in this area that people want to prove that their ideas are right rather than that they want to know the truth. That affects all of us. It is certainly a problem for politicians. If you said that the answer is whatever, you do not want to find that, when looked at, you have got the wrong answer.

Q114 Mr Buckland: To clarify something you have just said, in terms of calculating the reoffending rates, the current system is coming to an end. What is going to replace it?

Phil Wheatley: I do not know. All I know is what is in the public domain because this happened after my time. If you look, there has been a run of exactly the same data showing reoffending. It has been changed slightly because it is now on a one-year follow-up, which means it can be done faster, but they have then reworked all the figures. You can look at data from 2000 to 2009-10. When I say there is a 25% improvement for the four-year-and-over groups-it is slightly over 25%-that comes from that run of data. It is sound national stats, quality data. It is on the "Yes/No. Did they offend or didn’t they offend?" It also does frequency. There are even better results if you look at frequency. I do not know what they are going to replace it with. There was some sort of consultation. I do not know what the result is. I always worry when you take a data set and change it because it makes it much more difficult to see what is going on. They may have solved that problem; you should ask somebody else, not me.

Q115 Steve Brine: Mr Wheatley, good morning. Consistency is pretty important to any organisation, and that is certainly true in Her Majesty’s prisons, as you know. Prison governors are very important people in running their estates and especially their offender management. As nine more English jails are put out for private tender, there was a great quote in last week’s Monday The Times that said, "They steal my best governors", which was speaking about the private prisons stealing governors from the public sector. What incentives are there for the best prison governors to remain in the public sector prisons?

Phil Wheatley: I must declare an interest there. I do some day work with G4S and am paid on a daily basis. I am not a member of its board and do not hold any shares, but I use my prison expertise. I have the right approvals for doing that. Yes, as you introduce the private sector into providing prisons, they will need to use the existing prison governors. You have learned to be a prison governor through some training and quite a lot of experience, and the only supply of experienced governors was from the public sector. Inevitably, the private sector had to entice, attract and retain good governors to lead new establishments.

Q116 Steve Brine: But so does the public sector have to entice.

Phil Wheatley: Yes, but because the public sector had 100% of the market up until 1993, if I remember rightly, when the first private sector prison opened, the supply for the initial private sector establishment inevitably had to come from the public sector. It is not so now. I do some work for G4S, and the governor of one of its biggest prisons-arguably one of its most successful prisons-which is Altcourse near Liverpool, is a private sector-grown governor because there has now been enough experience to grow governors. There is a market in prison governors. The reality of having lots of providers is that there is a market in a scarce resource, and really good governors are a scarce resource, because, at the same time, the size of the service has increased; so there are a lot more opportunities. There has been something like a 29% rise between 2000 and the time I left, and that continues. New prisons mean a greater demand for prison governors.

Q117 Steve Brine: Is there enough incentive to be innovative as a governor in the public sector when the rewards in the private sector for being innovative- payment by results-are there and plain to see? Are there enough incentives for that if you remain in the public sector?

Phil Wheatley: It is difficult for me to say with certainty. At the time I left, the best governors were staying in the public sector. There is no doubt that we were not having difficulty in retaining some good people. Some good people left, but it certainly was not a major problem. I do not know what the situation is now. I suspect, as pay restraint in the public sector bites very hard and there being a no pay increase-and, by the way, we don’t approve of bonuses-it will not make it easy to retain staff when the private sector does not have the same constraints. The private sector always pays its directors on average more than the public sector. That is there in the Pay Review Body evidence, so it is not a great secret. I cannot say where they are at the moment. There are likely to be more private sector-run establishments, and the present competition increases the likelihood that there will be more. It will depend on who is able to produce a good product at a price that is affordable and better than others are offering. Nobody knows the answer to that yet.

Q118 Jeremy Corbyn: Do you have any concerns about accountability of the privatised prisons and the amount of money that is being made by various companies through contracts in the Prison Service that could be spent on more direct public service?

Phil Wheatley: No, I do not. When I was running the public sector I did not have any concerns about that. Because the competition was straightforward and done carefully, and there was a judgment about who produces what at what price, with a live-in comptroller in most establishments who watched exactly what happens in the private sector-run establishments, I am confident that we were getting good prices and that people delivered against them. They were not perfect, but there were good remedial measures that brought poor performing prisons in both the public and private sectors back into line very rapidly. There is no doubt that the ability to fine the private sector concentrated the minds of private sector senior managers to make sure that, if somebody was not hacking it and was not producing good results, they either got support or they were changed pretty quickly in order to make sure that poorly performing private sector places were sorted out. That is acceptable.

I do not personally have a problem with the profit mechanism. Most people who work in prisons, me included, work because they are paid. We work for money. We don’t go to work for nothing. Most prison officers similarly go to work to make money. It is not that we do not make money out of it. Most of the profits, I guess, will be going back to pension funds because many of the people who hold the shares are pension funds. It is not a system I dislike. With anybody running a prison, you have to keep a close eye on what they are doing-public or private-because prisons can behave badly, mistreat people and not use public money well. Some of the biggest pressures against using public money well came from some of the pressure put on by the POA, in particular, which often worked, in my experience, to prevent desirable change happening quickly. The private sector has enabled us to make rather more changes more rapidly and, overall, we have better use of public money.

Q119 Mr Buckland: Just developing some of the points that you have already touched upon in your evidence, we know that the regional structure of NOMS was, in effect, stripped out to make a leaner management structure. What sort of impact do you think that is going to have on how NOMS delivers services?

Phil Wheatley: I don’t know. In my time I had to have a regional structure. That was politically mandated. I had to have a director of offender management. It was not my choice. We had to have a regional structure. That has been stripped out. I was not a wild fan of the regional structure. It was difficult to operate. There was a risk that it put another step in the chain that made it more difficult at the top to know what was happening at the bottom in the outfit for both prisons and probation services. It was not something that I felt we had got right.

If it is being taken out, it must be replaced with a clear connection between what happens in services and prisons and the top, to deal with the answer I have just given. You have to make sure that you spot when things are not right. If the London probation service is not managed well and is not operating well on a range of things, it may produce another Sonnex. If a prison is not being operated safely and properly, it could produce riots, escapes or suicides. Very real risks are being managed. Management has to be on top of it and able to make proper interventions to make things better, and not just say, "You must be better," but make sure that it actually happens.

Q120 Mr Buckland: One of the concerns that some of us have is with the new commissioning structure. How much is going to be genuinely localised as opposed to national schemes? You will remember-it has now been suspended-the rather odd structures or groupings that were used for the potential commissioning of community-

Phil Wheatley: Yes, I do remember it. It is after my time but I know about it.

Q121 Mr Buckland: There were bizarre regions. The west midlands was being put in with the north-west, for example, which was ridiculous. That is not localised commissioning. How do you think the system will work? How are we going to achieve localised commissioning when you have a Probation Service that can be related to local needs, but a Prison Service that is seen very much as a national service because of the need to move prisoners around the system rather than having genuine local accountability?

Phil Wheatley: I see no sign that the prison system is going to have to run at anything other than absolutely full capacity. It is ramping up there. There are a couple of thousand spare places at the moment but it is a quiet time of year. The population builds towards June and July. I expect it to be well over 89,000, which is the way it is heading. It will mean that they are very tight. You have to run that nationally. If you have spare places in a far distant part of the world, such as Haverigg, Acklington and Dartmoor, you have to use them, and they will not be for people who come from the area because they are not near areas where lots of people commit crime. I do not think you can avoid that. You can do local commissioning in the Probation Service.

I was very keen on getting the Probation Service to regard its operating model, where it did its business, to line up with the crime and disorder partnerships or the crime reduction partnerships, as they are called nowadays, where police and local authorities are working together. It is important that the Probation Service works with the police and local authorities to develop those links so that those three services all work together to produce safer communities, because although local authorities do not have as big budgets as they would like, they still command many other things that will make a difference in offending. Instead of me saying everything that happens at county level, probation chiefs had to say that whoever is in charge of West Yorkshire or the Leeds Metropolitan area-to use them as examples-works with the police in Leeds, meaning that they are organised at that level and with the local authority, rather than trying centrally to fly it from Wakefield. It is possible but difficult to do. We need to make sure that that message goes out because that cohesion at a local level will make a real difference in reducing crime.

Q122 Mr Buckland: The basic point is that big organisations tend to look for other big organisations to obtain services from. It seems to me that a lot of the success will come from very small organisations, small charities and small bodies that, perhaps, are not used to processes involving large arms of Government. How are we going to fit them into a system that in the past has not favoured that type of enterprise?

Phil Wheatley: The answer is with difficulty, because it is difficult. Another one of my jobs is that I am a trustee of the St Giles Trust, which is a relatively small charity with a national profile, basically operating in London and the south-east. I know that working in an environment where local authorities and central Government are trying to make money go further and trying to take money out means that it is very difficult to win contracts, to develop new ideas and to get the space to do that. It is not an issue for NOMS, as such; it is an issue for you. Politically, it needs direction to say that we do not want to have everything commissioned on the basis of, "Is it cheap?" and "Can it be produced at scale?", otherwise we will not get that local buy-in from some really good local charities that have local knowledge.

St Giles Trust is a good example in London. I can think of ones in the north-east that match that very well, where people who understand the area understand the problems, really care and are endlessly committed. If they get the chance to have a go at it, they make a difference. The one thing that I am sure makes a difference is having committed and good staff who are capable of persuading offenders that they could be different. Just throwing programmes at people will not do. You have to persuade them that they really could hack it, it is worth trying it, and that is best done by having believable, straight-talking people who know the problems and are able to persuade them that it is worth it this time and then trying to plan some genuine support when they are trying to have a go at it.

Q123 Chair: Some of those people are working for small organisations. The answer we get when we ask people currently involved is that it will have to be done by sub-contracting and that large organisations will want to engage St Giles Trust and other small organisations because they have those skills. Do you think that is the case?

Phil Wheatley: There is some truth in that. You can see that happening and that is built into the current contracting round. What that does not deal with is probably the very small organisations that you are speaking about at local level. St Giles Trust is probably at the level and with a national profile that it will be able to do that. I do not know how that will play out because you have to make a partnership with a private sector provider, usually, who then wins. It is all a bit of a lottery.

Q124 Chair: You can back the wrong horse.

Phil Wheatley: For small charities without a lot of resources, the risk of spending everything they have got is quite something. I am not complacent about it. It is a real issue and I do not think we have solved the issue. I would like to grow more local involvement with people who know what is happening locally and getting the right sort of people. You also do get them in the big outfits. The Probation Service and the Prison Service has them. You need to recruit more people who match that. People are genuinely interested in offenders but can set boundaries. You do not want somebody who always says, "Yes"-they are dangerous. You want somebody who can say what is right and what is wrong. You want the sort of person who commands respect. So, if you speak to an offender and they say, "Miss so-and-so or Mr somebody else are really good," they make a difference. The more of them we can get the better, wherever they come from.

Chair: Mr Wheatley, thank you very much indeed for your help this morning.

Prepared 28th January 2012