UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 97 - i i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

JUSTICE Committee

THE BUDGET AND STRUCTURE OF THE MINISTRY OF JUSTICE

wednesday 23 MAY 2012

rt hon kenneth clarke qc mp, sir suma chakrabarti kcb and antonia romeo

Evidence heard in Public Questions 436 - 492

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Oral Evidence

Taken before the Justice Committee

on Wednesday 23 May 2012

Members present:

Sir Alan Beith (Chair)

Steve Brine

Jeremy Corbyn

Ben Gummer

Mr Elfyn Llwyd

Seema Malhotra

Karl Turner

________________

Examination of Witnesses

Witnesses: Rt Hon Kenneth Clarke QC MP, Lord Chancellor and Secretary of State for Justice, Sir Suma Chakrabarti KCB, Permanent Secretary, Ministry of Justice, and Antonia Romeo, Director General, Transforming Justice, Ministry of Justice, gave evidence.

Chair: Lord Chancellor, Sir Suma and Ms Romeo, welcome to all of you. In particular, welcome to Sir Suma and congratulations on being appointed or designated as the head of the European Bank for Reconstruction and Development. We wish you well in that role. We are delighted for you.

Sir Suma Chakrabarti: Thank you very much. I shall miss this-bitterly.

Chair: I am sure you will feel your life is-

Steve Brine: Perhaps your new role could be described as "from the frying pan into the fire".

Sir Suma Chakrabarti: Not yet, but I will use that as a standby.

Mr Clarke: He is going to enjoy all those marble palaces that Jacques Attali got us to build for their headquarters.

Chair: I shall have a word with my colleague the Chairman of the International Development Committee who I am sure will be very glad to see you back in front of him.

Sir Suma Chakrabarti: There are rules as to that, fortunately.

Mr Clarke: May I join in with what you said? I have not properly thanked Suma. I am very sorry to be losing him from the Department. I am delighted he is going to the EBRD, but as to our subjectmatter today-the Transforming Justice agenda, the management and budgeting of the Department-I have never had a better Permanent Secretary on whom I could rely to deal with all that side of the Department. It is very rare for these international appointments to be made on merit and I hope it is a habit that is going to continue. All political deals fell apart, and they appointed Suma. That should happen more often.

Q436 Chair: We are confident that this appointment has been made on merit. It was very good news, apart from not being quite such good news for the Ministry of Justice. Talking of which, your predecessor Jack Straw told the Committee that one of the merits of the old Home Office was that the state’s monopoly of the use of force was balanced by a very clear responsibility for liberty within the one Department. What is the situation now? Do you think we have lost something?

Mr Clarke: Yes. I have some sympathy with what Jack said but I would not leap to the defence of everything about the old Home Office. It has been divided up very oddly, I think. The old Home Office has been divided and the old Lord Chancellor’s Department put in. There is obviously a slight danger for people like Jack and myself to say, "It is not quite what it used to be, so it is wrong." It is a slightly odd division, but it does not create any great problems in practice. Personally, I would leave it alone, certainly for the foreseeable future. My experience of reorganising the size, shape and name of Departments is that it is usually a disruptive and rather disappointing procedure. It means that for about six months nobody does anything. You busily reorganise everything and, at the end of it, do not seem quite to have achieved what you thought you were going to achieve when you changed. It is working all right at the moment.

The old Home Office was a very good Department but it was a bit big and amorphous. There is a slight tendency for what is left of the Home Office to be all authority and security and for the Justice Department to be all liberty, courts and human rights, but most of the time that is a bit of an exaggeration of the way the culture goes in the two.

Q437 Chair: You are concentrating on Transforming Justice. What will it look like if you succeed?

Mr Clarke: I hope it will be more public-service oriented. Most public services are the same. They used to be run for the benefit of the people who worked in them and were very dominated by the processes to which they were accustomed. That, 40 years ago, was where most public service was in this country. I am not sure that the justice system has moved quite as quickly as some others. I think Theresa is finding the police, perhaps, are in urgent need of reform as well.

The idea is that the whole thing is at the service of the public, be it the public you are protecting in the criminal law, the public whose disputes you are helping to resolve in an expeditious and reasonably affordable way or the public whose family disputes you are sorting out as quickly, properly and sensitively as you can. If you applied that first principle, "Let us look at the public interest and the consumer, first of all, and then decide how we run it," there is a lot more reform to be done. It is inevitable, but courts tend to be run for lawyers, or they used to be; prisons tend to be run for prison officers, or they used to be; and the local government services and so on rather similarly. Reform, therefore, can do all kinds of things: save a lot of money, speed things up and get more tidy in management accountability and political accountability. Also, it ought to be asked, all the time, "What is it we are trying to deliver for the public and the public good?" That is the principal reason why we are reforming practically everything in the Department at the same time as we are reducing the cost and saving public money, but that is the general direction I would like us to go in.

Sir Suma Chakrabarti: I agree with all of that. First of all, Antonia has now been appointed to develop the programme through to 2020. The end point was 2015 before but, clearly, we have to go further.

In my mind, I always had three things that we wanted to do under the "Better for less" umbrella. One was to reduce demand on the system. Elsewhere you have heard in your evidence words of "the end of the assembly line", receiving demand from all sources. How can we get upstream in the process and try and reduce demand, whether it is through mediation or through reducing reoffending-actually and fundamentally-and flattening the prison population? All of these things we are trying do through policy changes, but fundamentally-and Antonia may want to say something about this-it is about working better with other Government Departments. The first phase of Transforming Justice was very much trying to sort our own house out, working better within what we control within the MoJ-courts, prisons and so on. The next phase has to be about working better with other Departments.

The second one was reducing cost. Obviously reducing demand helps that, but, as you know, we have been on this crusade to understand our costs far better through specification, benchmarking, costing, the ABC programming in the courts and so on, and better targeting. The new legal aid approach should give us better targeting with legal aid than we have had previously.

The third one was efficiency. We have pushed the efficiency agenda very hard, particularly in the first two years of this spending review, with restructuring-taking out tiers, reorganising ourselves and doing a lot of change management-and through shared services and better prioritisation, including on policy as well. Shared services are a big part of the agenda. That is also a very important part of it.

Fundamentally, at the end of it, we also want the "better" bit; that people who do have to come into our system, for whatever reason, have a better service than they currently get in some of the ways that the Secretary of State mentioned.

Q438 Chair: When you first set up the board structure you did not put the director of the National Offender Management Service on the board. This seemed to be partly trying to get a smaller board but also not allowing the continuing dominance of all thinking in the Department-or particularly in offender management-by the Prison Service. Then we understand, from evidence we took earlier this week, that you changed that-

Sir Suma Chakrabarti: That is right.

Q439 Chair: And brought NOMS back on to the board. What was behind all that?

Mr Clarke: The board predated us, I think, but we had given some thought, in opposition, to what boards would be like. Where we rapidly arrived at, in my time, was to have a board on which the executives were there. The number of directors has dramatically reduced. Suma did that. I think we reduced 15 directors to three, or something. The board works best where it is roughly balanced but the executives and the nonexecutives are there and it is a manageable size. It is a little unreal if key executives are not there. As the whole idea is to interact with each other, to spark off ideas, to challenge and all the rest of it, it is much better to be there than for the executives just to be the Permanent Secretary and perhaps one or two other people. There are not that many of us. The board works very well.

Sir Suma Chakrabarti: What we had before the election of 2010 was a board chaired by me that had all the delivery agency heads on it. Then we took a different approach to the board after the election, as you know. The guidance we had from the centre at that time was to have about three executives on it. We had to make a choice. The Permanent Secretary had to be one, the finance DG had to be one and we had room for one other. That had to be the Transforming Justice person because Antonia related, obviously, into the delivery bodies. We then took a view with the Secretary of State, after about a year in, that this was a bit of a problem for us. Without the heads of delivery bodies there, we could not discuss some of the strategic issues, the change management issues and the delivery issues we needed to discuss properly. We were having to have, if you like, second order debates with them as well, out of the room. It did not make a lot of sense. Although, because of that, it is a larger board, the discussions have improved as well.

Q440 Ben Gummer: Sir Suma, how is the process of integrating the arm’s length bodies into the Department going and are there any hurdles remaining?

Sir Suma Chakrabarti: There are always hurdles. If you will forgive me a bit of a story, the story of 200708, when the Ministry of Justice was put together, was one where there was no consistent approach to the arm’s length bodies whatsoever. The sponsor relationships existed, but there was not a central division that looked across the piece and you were pretty much at the mercy of individual relationships between the sponsor person in the Ministry and the chief executive, or the chair, of the arm’s length body. So we created an arm’s length body governance division to give us some sort of consistency, and to look across. Then we asked that division to take a riskbased approach, to look across all the arm’s length bodies and try and work out-basically on the size of budget and the risks contained in the work they are doing-how much oversight the Ministry should have and what the relationship should be. That was a major development.

The second thing we did was that I started having meetings, every quarter, with the accounting officers of the most serious arm’s length bodies-of course, the sponsors now see them more frequently-and we can compare across much better than we used to be able to.

Finally, in the last, I would say, nine months to a year we have tried to get them to embrace Transforming Justice as well. Again, the first phase was very much within the Ministry and the executive agencies only, but the NDPBs are also much more involved. It is a much more systematic approach to it. We obviously fed into the Public Bodies Bill as well and, now, into the triennial reviews too. It is one of the areas in which the NAO and the PAC have actually commended us for our work.

Q441 Ben Gummer: You are still on track to bring the LSC in next year, are you?

Sir Suma Chakrabarti: We are still on track to bring the LSC in next year, yes.

Q442 Ben Gummer: As a rider to that, Mr Spurr, who appeared yesterday, was very interesting on his relationship with the probation trusts and the nature of the NOMS board. He said that, with the nature of the many probation trusts being arm’s length themselves to NOMS, it was difficult to create the integration that NOMS had originally envisaged. That was the implication. Are you doing any work on trying to get firmer central control on probation so that there is an equality in NOMS between prisons and probation?

Sir Suma Chakrabarti: There is a difference between parity of esteem, which there is, and, "Are they represented on the top in the senior structures?", which they are not. There is no point denying that. They are not. I think this is going to be more the case.

NOMS is, for me, more and more almost like a holding company. It has three elements to it, which Michael Spurr manages. One is the public sector prisons, where he has a direct labour force of 43,000 people that he has to manage; then there are the private sector prisons, with which he has contractual agreements, that he is managing in a contractual way; and he has these trusts as well, which are, again, at arm’s length. These are three very different types of relationship that he is trying to manage. I would say-and I will not be here in 2015-that Michael’s job will be much more the commissioner of offender management services, I suspect, because even the public sector prison side, of course, is being more competed for, as is probation. It will evolve and the structure of NOMS will have to evolve to take account of that.

Q443 Ben Gummer: That is very interesting. Lord Chancellor, there were two arm’s length bodies that escaped the cull, the Judicial Appointments Commission and the Youth Justice Board. There are some members of this Committee who were rather surprised by the decision on the Youth Justice Board. They claimed the credit for a reduction in youth crime that is comparable to reductions in youth crime across the European Union-something their lordships did not recognise. On the Judicial Appointments Commission your predecessor pointed out that in fact it may even have retarded the progress of equality and diversity in judicial appointments and suggested that an advisory committee might be a rather more flexible and better way of furthering judicial appointments. Could you comment on both those bodies?

Mr Clarke: The Judicial Appointments Committee was not working wholly satisfactorily when we came in. I received a lot of complaints about it. But we have tackled that quite vigorously.

The two main aims we had-and I put these across strongly to the new chairman when I appointed him-was to try to reduce the extraordinary cost, to get quicker decisions when it was taking anything up to 18 months or more to get people appointed to comparatively minor and junior posts in tribunals, and to try to get the whole thing less obsessed with process and to concentrate more on what it was really for, which was to get the highest possible quality of judicial appointments. I never contemplated taking back into political hands the appointment of judges and tribunal heads. Once given up, that is not going to be taken back. With the pressures of modern political life, it is probably as well that it is put at arm’s length and there is an independent trusted appointments commission of the sort we have. Indeed, I am sure it is a very good thing. It seems to me to be improving in relation to the time.

Q444 Ben Gummer: Do they not make appointments more risk averse, though? If you are doing it by committee, there cannot be a brave Minister who says, "I am going to promote that person more quickly through the ranks," in order to achieve another end but also because they are willing to take a risk on an individual.

Mr Clarke: I hope so. The person I have appointed is an extremely experienced highranking person from human resources, from the outside world, to use the awful modern jargon of "human resources". He is a selector of personnel. As I have said, I was anxious that he should consider how far he could stop it being process-oriented and more outcome-oriented and then that would lead to exactly what you describe. It is very difficult, otherwise, to avoid purely riskaverse appointments. All I can say is that I personally have no grounds for discontent at all. Indeed, I am now totally relaxed and have total confidence in the way it is working. I get far fewer complaints. Indeed, I have not had any complaints for quite a long time. We are taking steps in this legislation, which we are about to introduce in this Session that has just started-the court reform part of the relevant Bill. We will probably alter the powers we have visàvis the JAC to make it a bit more flexible. One thing we inherited was a statute that had prescribed, very closely and tightly, exactly how it is organised and so on. We can adjust over time and in the light of experience of the people on the Commission and ourselves, perhaps, a little more.

Q445 Ben Gummer: What about the Youth Justice Board?

Mr Clarke: As to the Youth Justice Board, I could not see any case for its continued existence, as I argued to Parliament, but we were unable to satisfy particularly the House of Lords of that. We are proceeding quite sensibly. There is no point in being churlish. I allowed myself to be persuaded by the debate. All right, people wanted a Youth Justice Board and we can carry on having a Youth Justice Board.

We are reexamining the things that cause disquiet. I think Ministers are going to have a much closer relationship with the work of the Youth Justice Board and the Department is going to have a better relationship with them. We do not want this totally autonomous competitor body out there and it is actually, physically, going to come into the Department. It is still going to have its own headquarters but it will be part of our present headquarters. We are getting rid of huge numbers of buildings in the Department, one way or another, and we are not going to have so many different office buildings. Other than that, I am determined not to get on bad terms with them. Our main interest is in youth justice. Parliament has decided and we will, therefore, work constructively with the Youth Justice Board. I do not think there is any real difference between Ministers and the Youth Justice Board about the direction in which we want to go. I remember the arguments I used to use were that it has slightly outlived its original purpose and there was no longer any great need for it. But if that is how Parliament wants us to run the youth justice system, we will make the best of it and not sulk, as it were.

Chair: I think Ms Romeo wants to add something.

Antonia Romeo: May I add that joining up with the Youth Justice Board is part of a broader thing we are trying to do to join up across the justice system as a whole, working more closely with them to understand how flows into the system at the youth end have effects later on in the justice system, and to get more to grips with the evidence? You have mentioned some evidence already that has been cited. So it is to understand the flows through the system and what could be done upstream to try and help control volumes further downstream. We have, critically, got to work closely with the YJB to do that.

Q446 Seema Malhotra: Sir Suma, my first question is to you. I am really interested in crossdepartmental working as a factor in Transforming Justice. There has been some suggestion that engaging staff internally within the MoJ has been stronger than perhaps being able to work with other Departments. I am very interested in whether that is an area where you see more needs to be done, and, secondly, whether having a joint Minister for the Home Office has helped improve collaboration.

Sir Suma Chakrabarti: As I said earlier, there is no doubt that, if we are to make the justice system even more effective, we are going to have to work across boundaries much better than we have previously. There are some interesting, and in some ways appalling, data, which are now about four or five years old, that always stick in my mind. If you ask the various bits of the justice system who they think is responsible for some of the problems in the system, they all blame each other. There is quite a high percentage of that within the system, whether it is police officers blaming the courts or prison officers blaming police officers. Culturally, it is a big issue. It is a very siloed sort of system.

That requires us, obviously-because we are at the end of the system with the sorts of services we control, as I said earlier-to get much more upstream and work better. On the Troubled Families agenda, for example, we are working better with local authorities on family justice. There are all those sorts of thing, which we are now beginning to do. But we are in the foothills of that and it requires, in my view, incentives for people to feel that if they do this then we, as leaders-this is the point Mr Gummer made-will push and promote those people who want to do that rather than those who are blocking change. It is very important for the Permanent Secretary, as the chief executive to these organisations, and the agencies to give that signal out, which I think we are beginning to do.

Secondly, you need a strategy, and we are working very closely with the partners in trying to devise a criminal justice strategy that stands up. At the moment, the best examples I have where this is working well-and Nick Herbert has led this-has been with video technology and secure email. I would not have predicted, a year ago, that we would have persuaded nearly all police authorities bar three, I think-which cannot do it, for technical reasons, quickly enough-to sign up to this approach with the CPS and the courts. That is enormous progress but that is, again, the start of something we need to take much further.

On the crossdepartmental side-and I am sure the Secretary of State will have views-these things work in specific circumstances. I was once Private Secretary to Lynda Chalker, who was Minister for Africa and Minister for Aid at the same time. That worked because, frankly, our aid policy in those days was just about Africa and our foreign policy in Africa was just about aid. So the objectives were pretty much the same. Having objectives that are mutually consistent is, fundamentally, a part of this. That is why you have to have a strategy, in a way, to make the Minister work within the strategy that will give him or her a chance to make it happen. The strategy is very important.

The other thing is making sure that the Minister has enough time. As I said when I appeared before this Committee previously, I think Nick had issues up front. He had the police reforms to deal with, which made it very difficult for him, in the first couple of years, to focus on the crossdepartmental agenda. He has been able to do that more in recent months. I think that is another issue we had not really cracked initially and that we have now begun to sort out.

Mr Clarke: I will comment very briefly. It is not a happy position to be a Minister of State in two Departments. I am very glad to say that it never happened to me. Nick has done very well and I get on very well with him. Nick is Minister for Police and has been for most of the last two years. But, as Suma said, there is one very relevant area to crossborder working where Nick’s position has turned out to be extremely advantageous and he is going to be producing, in this Session of Parliament, the results of all that.

If you ask why criminal courts are so slow, why is it so inconvenient for everybody and why does it take so long to get anyone up for trial and so on, the police blame the Crown Prosecution Service, who blame the Courts Service, who blame the judges, who blame the police and then the defence solicitors are all blamed by everybody. They are all in little silos. People have been tackling it for years and nothing happens. We have already tackled it by getting people together from all those areas-who are responsible to the Home Office, to the Law Officers’ Departments and to the Justice Department-around a table, the senior keen people who do want change, with one Minister. We are hoping, by getting far more use of video services in prisons and courts and by getting the preparation of the case coordinated between the different people, to speed up the whole process for everybody’s advantage-including the courts.

The other area where crossdepartmental working is very important-a policy area-is family policy, particularly adoption and all the issues that surround private family law, including contact and access to children and so on.

Chair: Which we will be debating tomorrow.

Mr Clarke: If you ask what goes wrong there, the courts all blame Cafcass and Cafcass blames the judges. Then they both agree that it is all the local authorities’ social workers who are causing the dreadful delays, as we know them to be. We are having to work with the relevant Minister, the Minister for Children in the Department for Education, and we are trying to break these silos, as Suma calls them, which stand in the way of making the whole thing perform better.

Antonia Romeo: There are two other areas where we are making progress in joining up. We have a number of pilots on payment by results with other Departments, two of which will be kicking off in the summer with DWP, which builds Reducing Reoffending outcomes into the Work Programme, and eight drug recovery pilots that we have recently started with the Department of Health. So we are making progress, although there is certainly a long way to go. As Sir Suma said, we are keen that in the next phase of Transforming Justice we will be joining up across Whitehall, not only bilaterally but Whitehall getting together and also, critically, locally, to work out how we can jointly work to achieve outcomes better.

Q447 Seema Malhotra: May I ask a followup question? That has been incredibly helpful and it is right to say that this has been tackled for a long time. A lot of the issues that you have outlined are very much process and change issues. Are there any structural issues that you think need to be addressed? For example, are there any Departments or teams within the Ministry of Justice or the Home Office that should not be there that could be better located?

Mr Clarke: You could draw up an alternative blueprint, and I will not repeat everything I said to Sir Alan earlier on. Governments can take constantly altering the furniture too far. We keep inventing new Departments with new silly names and you are never quite sure that you have got anywhere when you have finished. We not only had Ministers changing Departments once every nine months but we had some Departments that only lasted about two years before they were all reorganised again.

There is no obvious part of my Department, in my opinion, that ought to be moved somewhere else or vice versa. There is a slight query-and you really get a departmental turf battle between some of the people involved-on the division of responsibility for children in litigation between the Department for Education and ourselves, which is a bit odd. I think it was a bit odd to turn the Department for Education into a Department for Children. That has been partially dismantled, though not entirely, but it is not for me to be concerned with these things anyway. I should always move cautiously before you start moving things about.

Sir Suma Chakrabarti: I agree with that. I would be very cautious about moving things around. There are two areas where, after four and a half years, I would want us to explore. One would be the area the Secretary of State mentioned-that Cafcass, it could be argued, should be in the MoJ, as it was previously. However, it is a big issue to take on at a time when we have a lot of change going on as well, so sequencing would be in my mind there. The other is international work. Increasingly, as the two of us talk a lot about JHA with the Home Office, that sort of thing, and also beyond Europe, with the international work we do, quite often, when either of us goes abroad, we are reading out a brief across the Home Office and ourselves, and Theresa May and Helen Ghosh will be doing the same. I do wonder whether an international directorate that covered both Departments would not be a sensible thing to have, but that is probably a personal opinion.

Mr Clarke: At the moment, for European Councils of Ministers, a Home Office team, including a Minister, go out on a Thursday and a Justice team and a Minister go out on a Friday. We usually say hello to each other at the airport. Unfortunately, the agenda of the Council does not always 100% match that. So usually Thursday is Interior Ministers and Home Office and usually Friday is ours, but, as all the countries are divided up slightly differently, I think Suma’s idea is quite interesting. Why we are having these two separate teams, like an American football team, running off and running on, I am not quite sure.

Sir Suma Chakrabarti: When we do things in front of Committees here, we present joint evidence now on the JHA to you. We do not produce a Home Office dossier and an MoJ dossier-at least, the last time I looked we were not-so I do not understand, if we can do that, why we cannot have one team. I should say, at the same time, on shared services that the Home Office are buying shared services from us, so that is a good sign of cooperation.

Mr Clarke: We do try to work with the Home Office. Contrary to popular belief, Theresa and I agreed from the word go that we would try and stop turf battles breaking out between our two Departments. We have had an uneven level of success over the years, but, by and large, I think it is better. The Departments are working together better. They did have-how could I guess?-a slight history of rivalry when the thing was first divided. There is the tendency that Jack Straw talked about-that one of them is security and the other is liberty and they are slightly infused about it. I hope my colleagues would agree that there is a lot less of that about. Nobody would believe me if I assured you, but Theresa and I do try to work at making sure that that is where we go.

Q448 Chair: Why is there a Judicial CoOperation Unit in the Home Office? What does it do?

Mr Clarke: I do not know.

Sir Suma Chakrabarti: I presume that it is to do with extradition and mutual legal assistance, which links the police usually. You are right to ask the question, though, because in some continental countries that is in the Justice Ministry rather than the Interior Ministry. It seems to vary according to country, but I think here it is because of the link to the police. That was the initial issue.

Q449 Chair: If you have any later thoughts on that-

Mr Clarke: It probably does mainly include extradition and things like all the European agreements for exchanging and accessing criminal records, enforcing arrest warrants and so on. Quite a lot of the judicial exchanges, which are linking up systems and judges-liaising with their opposite numbers in other countries, human rights and so on-come out of budgets or areas that we cover. But there are quite a few areas where the border between the two Departments is not absolutely certain. There is a slight tendency, with no trouble at all, for everybody to carry on doing what they have been doing before without worrying too much about which side of the fence it strictly falls.

Q450 Steve Brine: If I may, I would touch on the spending review a little. Spending reviews tend to show Government Departments at their best and worst. You talked a bit about this, Sir Suma, in evidence to the Public Accounts Committee-that changes in sentencing policy, extra costs and the capping of public sector pay added up to you having to find roughly an extra £140 million to £150 million worth of extra savings. I wondered how that was going. How are you going to do that and still meet your CSR commitments?

Sir Suma Chakrabarti: It is going pretty well. What we did was increase the amount of savings with outcome efficiency. Efficiency, if my memory is right, was about 55% before and it is now 60% of the total savings plan. So it is taking up a bigger share. In terms of actual progress in year 1, which has recently completed, we saved £700 million. We are on track. We are going to have to save about £500 million this year. As of today-and I have just come back-it is about £75 million off track at the moment, but I am pretty sure we will find those savings. We are only just into the financial year, so it is a pretty good position.

Q451 Steve Brine: The response to the riots last summer does not affect your CSR plans. Is that correct?

Sir Suma Chakrabarti: No. We managed within the existing budget and we will continue to do so. It was a bit of a shock to the system at the time in terms of having to manage it, but we dealt with that. The courts managed it within their existing budgets simply by changing their opening hours, as you know, and, on the prison side, we managed it essentially by delaying some maintenance, having some temporary extra crowding and by bringing on some accommodation slightly earlier than we planned. So it did not really disturb the planning as such. The issue is: do we, going forward, have enough margin if there were more, a series of riots like that?

Q452 Steve Brine: What is the answer?

Sir Suma Chakrabarti: That is quite difficult for us to manage without thinking of things that none of us would like to do, like more crowding, for example.

Mr Clarke: We pay quite a lot of attention to that. Of all the risks that one does tend to consider, if I have one big risk at the back of my mind that would really have alarmed me it would be that we had miscalculated the prison population and started facing overcrowding most of the time. I can remember one stage while I was at the Home Office when we had them in police cells and we got dangerously near to having too many people. The last Government-and I will not make it a political point-had to let a lot of people out eventually. That was a disaster. It is also notoriously difficult to forecast and you are never quite sure.

Chair: That is something we will come back to.

Mr Clarke: The riots were a blip-or turned out, at the moment, to be a blip-but we do keep a close an eye on it and having an adequate margin is given a very high priority in our planning.

Q453 Steve Brine: Our Chairman is suggesting we are going to come back to that, so that is my warning. I wanted to ask, before we move on, about the judiciary. How receptive, Lord Chancellor, are the judiciary, in your experience thus far in this latest incarnation in Government, to efficiency savings. Do tightened budgets threaten their independence? We had the discussion of the judiciary’s pension pots come up today at Prime Minister’s Question Time. Can we have your experience of the judiciary and Transforming Justice, please?

Mr Clarke: I was once a lawyer and most of the people I can remember engaging with in practice are now judges, so I am quite used to the judiciary. It has changed, but the top of the judiciary are pretty well up for efficiency and change. They are very conscious of their own independence and they like to get involved with policy issues. In my personal opinion, they are okay. They are receptive to sensible suggestions and I do not think the Courts Service has too much trouble. There are areas like speed and the delays in the family justice system, which we are going to have to tackle with more seriousness, but, at the top, they are up for it. Of course, it is very difficult out there in "Barsetshire", as it were, because people do get appointed for life, they have run their court in the same way before, and it will require quite a bit of judicial leadership from those inside the judiciary to get a spirit of change and reform going throughout the system where there is a good case for change and reform.

It is also improving in that they were very suspicious when the Department was set up. If I was one of them, I would have shared it. They thought they were being put in a Department responsible for prisons. They thought the whole Government was on a law and order kick so that thousands more people were going to come into prisons and soak up all the money. I have to go through an elaborate process, which has been designed, called a concordat where they all, in theory, have to agree exactly what is being allocated to the Courts Service and I have a legal duty to ensure they can carry out their obligations. That always goes back to the deep suspicion that they were going to be starved of money to pay for more and more tabloid newspaper prisoners who were being put into the prisons, but that is fading. So, of course, we have had tussles with them.

On pensions, I do not know a group in the public service that is not capable of lobbying, so they are not very happy. My reaction to the question today would have been that, previously, they have paid no contribution at all. To move them into having a contributory public sector pension scheme is regarded by some of the judiciary as a fundamental change, but it is much overdue. I think it is unfair to characterise them as Victorian and antireform. Most of the leadership-the senior ones now-are very much up for modernising the whole system in sensible ways when we can persuade them. They are quite right to be ultra cautious about their independence and they do, therefore, tend to see threats to their independence where no such thing is remotely involved and they are slightly stretching a point on something to do with money, as though it is going to threaten their independence. Certainly changing their pension contributions, in my opinion, is not the slightest threat to their independence.

Steve Brine: I am conscious of the time, Sir Alan, and we are only on question 4, so back to you.

Q454 Chair: Looking at the Department as a whole, what do you say to Jack Straw’s comment that you were too eager to offer too large a reduction in your budget?

Mr Clarke: That is to do with my views on economic policy. I have done lots and lots of public spending rounds from both sides of the table. On this one I set out, because of my own personal opinion, which as a Cabinet Minister I am entitled to have, on cutting deficit and debt-our No. 1 priority-to work out what was the maximum reduction in this Department’s budget that we could deliver without doing any harm. I did not set out as a bidding Minister trying to get the most I could get for my Department. The result was, I would concede to both my colleagues, that I no doubt imposed a considerable burden on the Justice Department of delivering reducing a £9 billion a year budget to £7 billion a year in an area of policy where no previous Government had even set out to cut a penny. But, if I may say so, I think they are delivering it. We are on track. It does require the kind of management we have heard described.

Q455 Ben Gummer: Sir Suma, I know you have been harried by the PAC on the issue of the accounts, and I hope you do not mind a final shot across your bow. You have written to the Chairman of the PAC, in detail, explaining. On this Committee, we are also quite disappointed that, again, it seems, despite the fact this has now gone on for nearly three years, you will have qualified accounts for the LSC in all likelihood and there will be a delay again. Why is it still not possible to be able to get to grips with this within the Department?

Sir Suma Chakrabarti: There are two parts to that question: first of all, the timetable issue and then the LSC issue. They are related, obviously.

If you look at the performance of the Department, it has got better every year in terms of timetable. It has brought things forward. I think this Committee and the PAC do need to understand the issue about how difficult it is to consolidate 35 NDPBs-probation trusts-whose pension scheme is linked to the local authority pension scheme and, therefore, they do not really have to produce their accounts until September if they do not want to. They are independent of us. As to persuading them to try and produce accounts at a time when NOMS can consolidate-and then NOMS accounting can be consolidated into the MoJ accounts in time for June-we persuaded them to do it by the recess but not by the end of June. It is not feasible or practically possible to do that. We are not alone in this, and I will come to that as well.

Secondly, the LSC issue. LSC in previous years, if my memory is right, used to produce their accounts in November. Then they got better. Last year they got to October. Now we are asking them-for the first time they were going to be consolidated with the MoJ accounts-to produce them in time for us to be able to produce consolidated accounts with MoJ by the recess. They are going to do that, which means they are going to produce them by early June. That is a huge improvement for them, from October to early June, frankly, given the constraints on spending and resources to do so. They are on track at the moment to do that. But as to the idea that all these bodies could produce their accounts-essentially they would have to be done by late May-in order for us to consolidate everything, and for the NAO to do their twoweek check for us, then to produce them by the Clear Line of Sight date of end June, I think is just not deliverable. But there has been progress every year. I hope within a couple more years the MoJ would be able to do it by the end of June, but I think it is quite a stretch to do so.

In terms of qualification-on that issue as well-there are two types of qualification, are there not, on the LSC? One is the issue about a regularitytype qualification as to, "Are the payments accurate and made to the right people?" and, "Were people eligible for legal aid?" That was a big issue in the past. The error rate was £78 million two years ago. I think it is going to be about £37 million for last year. That is a huge improvement, but it is still not good enough. Whether they can get it down further again, without spending a lot of money on systems to do so, is an issue. On the debt qualification, this is not unusual. DWP have the same issue on the debt qualification on their books as well. Again, they have cleansed their portfolio and it will be better than it was, but I think a new accounting system is due in this October, and you may have talked about it with Matthew Coates. That is likely to bring much better control over the debt book. So, again, I do not think it is going to be resolved for about another year and a half, because that will then have an impact. We are moving in the right direction, but we are not there yet.

In terms of deadline-again, because I am leaving I can say this-one of the issues is to look across the piece here. We are not alone in this. The Departments that are having the most difficulty in meeting this Clear Line of Sight deadline of end June are the ones with large numbers of external bodies. The DfE are not going to meet it and the Department of Health are not going to meet it. I have a whole list here of those who are not going to meet it-FCO, MOD, DECC, BIS-

Q456 Chair: I wonder why you thought to bring that list along.

Sir Suma Chakrabarti: I thought it would be quite amusing. DEFRA and so on. DCMS, the smallest Department of all, are not even going to meet their prerecess. That brings me to a point that I think does need debate between Parliament and the Executive: what is this deadline about? The statutory deadline, which is the one that I have to meet in terms of legal responsibility, is still end of January. Meanwhile, this deadline that the Treasury and we have all agreed to is now end of June. If we cared so much, why not move the statutory deadline forward? I do not understand why this target has been set, quite honestly. I am sure it is a good thing to do because we should get our accounts done as soon as possible, and I do not disagree with that, but the revealed preference of Parliament is with end of January.

Q457 Ben Gummer: Could I push back on two things that you have said. It is absolutely clear that there has been phenomenal progress in the last few years. On the issue of timeliness, is it not the case-and I know this is a boring refrain from Conservative Members of Select Committees-that in the private sector if you had a large multinational with many associated companies it would be possible? This is a small operation compared with, let us say, Vodafone, which is able to consolidate its accounts very quickly. The reason for that is because they have much closer control of their management accounts. The real purpose of the tight deadline is that it acts as a proxy for the control that a Department might have over its management accounts. I am fully aware that it might be a problem across the public sector but, unfortunately, we do not scrutinise every other Department and we are trying to concentrate now on yours.

Sir Suma Chakrabarti: There is no doubt-and we can talk about the history of the MoJ’s financial management-that your basic point is accurate, that MoJ was not strong enough on its financial management or management accounts control going back several years. It has got better. It is still not where it should be, of course, but it is now regarded in the top quartile in Whitehall. The difference between Vodafone and the MoJ is that Vodafone controls all its subsidiary bodies. We do not control corporation trusts’ timetables. That is the issue. We did not control the LSC’s timetable. We will, of course, in the future, when it becomes an agency. So there is a sort of control issue, an outside boundary issue, that Vodafone does not have. DFID would be a better analogy for Vodafone than MoJ. DFID is worldwide but it controls the whole worldwide operation. That is why they are going to meet the Clear Line of Sight deadline. They will not have a problem doing it because they have control.

Q458 Ben Gummer: I have one final small issue. In the case of the LSC, the qualification on assets is basically a problem with accounting for work in progress, as I seem to remember.

Sir Suma Chakrabarti: Yes.

Q459 Ben Gummer: Again, that is something which is easily solved now in most accounting packages-and I am glad there is the new accounting system coming in-but will it mean that we can guarantee that qualification will disappear next year?

Sir Suma Chakrabarti: I am not sure we can guarantee next year, but the year after I would have thought so. You are seeing Matthew Coates, I think, on 13 June. I have asked him to look at this issue because I was sure you were going to ask that question. I do not know, for sure, it would for next year because when it comes in, in October, that is halfway through the financial year. Whether it is really going to solve the problem in this financial year or whether it will solve it for the year after, you had better ask him.

Q460 Karl Turner: Lord Chancellor, when you took up your post-I think it was 12 May 2010-you made it very clear that the direction of travel for the Department was competing services to external providers. Two years on, are you satisfied that the Department has the necessary skills to handle an increased number of outsourcing competitions?

Mr Clarke: That is a very good question. It is a very relevant question and I think we are going to be able to answer yes as, obviously, it is essential we do. Outsourcing-purchaserprovider divides, internally or externally, or whatever you like to call it-is a good way of getting value for money and challenging efficiency, but it is also a way of getting you a much greater handle over what regime you want in prisons, what priorities you want in rehabilitation and actually challenging your resources to what works if you use payment by results in your contracting. We are steadily extending it across the field. The tendering process we have run for prisons is going remarkably smoothly. It has not been done like this before. It is a little controversial, but it is going well. With the Probation Service, of course-and again it is not an exact analogy-we are going much more to what could be described as outsourcing, certainly with some of the ingredients of probation community sentences but also the actual delivery of the service.

Q461 Karl Turner: It is fair to say, Lord Chancellor-

Mr Clarke: Developing the capacity of people to commission things is quite important. It is a problem we are aware of and we are focusing on a bit. Antonia may want to add something. We are conscious of the dangers of trying to take people into this area when they have not done it before and all kinds of things can go wrong, including entering into contracts that are extremely profitable for your contractors or producing perverse incentives in how they deliver things. We are going to have to work at how we develop the capacity.

Q462 Karl Turner: Are there any specifics where you think it has gone wrong? I am thinking of the language services framework, for example-Applied Language Solutions. In my own experience, that has been a disaster.

Mr Clarke: Yes, that is a bit of an industrial dispute. We are saving money. We thought the expenditure on the interpretation service was completely out of control. That is why we went out to contract, to try and systemise it and get our costs under control. Actually, it is people who interpret in particular languages who seem to have got upset about the impact on their potential income. I am not closely involved, but at the moment I am looking at that and thinking that this is largely an industrial relations dispute-a pay and conditions dispute-which I hope will be soon resolved, and it is getting better. Antonia may have some other views on the capacity of the system, how we can strengthen it, with this general commissioning role and relationships with outside providers and so on.

Antonia Romeo: What we are trying to do in the next phase of Transforming Justice is to look at the skills and capabilities we will need to get to where we will need to be in 10 years’ time. We are already in a major programme of competition. We have had four prison competitions already. We are now running another eight, with another phase to come. What we want to do now-and this is the work we are doing over the summer-is to look at the whole business of the Department, including on the courts side, and look at what the state needs to do and must do and what could be done better by another provider, so could be competed and commissioned. Understanding that, over time, we are going to need to get even better at this, we have kicked off a capability steering group to look at the sort of capabilities, in particular focusing on commissioning capabilities-so contract management as well as contract writing and negotiation and so on, financial management and procurement-in order to make sure that as we move even further into this we have the capability in the Department to do it.

Karl Turner: I am satisfied with that, Sir Alan.

Q463 Chair: Earlier this week-or maybe it was last week-we have been taking evidence from voluntary organisations about the extent to which they can take part in this process. It seemed clear that there were quite significant problems of getting small voluntary organisations, who might have real expertise locally based, into the system without them either becoming part of a consortium with a bidder, and the bidder might not get the contract in which case we lose the services of that provider, or without getting a situation in which the bidder rather implies that good local organisations will be used but it does not happen afterwards. Have you given thought to how this problem could be addressed?

Mr Clarke: I will leave Antonia to deal with it, but we are wanting voluntary notforprofit local organisations to take part in some areas like cutting the reoffending rate of criminal offenders. It is very important that we use them and it is quite difficult to fit them in. There is a bit of a tension between cost saving, which tends to argue in favour of great block contracts covering large parts of the country, and the local focus that we want. Prisons is the area where we are furthest developed prominently-it is not the only one-but it tends to be large companies that come in with leading consortia. They subcontract the actual delivery to charities and notforprofit organisations and so on. That is where we are at the moment.

I have been worried, as I told you, first of all, about, "Will the Department get ripped off by these extremely good companies?" They are good commercial people so they can drive a good bargain when they are doing the contract. My other fear was, "Will they get the best they can out of the MoJ and then take it for themselves and not drive a very hard bargain with the voluntary bodies and charities below?" I have expressed those fears. As far as I can see at the moment, from the very limited pilots we have, our contractors are not even passing on the risk to the voluntary bodies. I have not had a voluntary body come and complain to me that they are being, as it were, exploited. But we are going to do more and more of this and there are many other dangers, on which I am sure Antonia could add more authority, that we have to keep an eye on.

Q464 Karl Turner: I am aware there is a requirement for a code of conduct in fact to regulate the prime and subcontractor relationships and I think the Committee wonders how, for example, an SME or voluntary sector organisation would make representations to the Department, to the Minister. Is there a facility for that?

Mr Clarke: At the moment they could ask to come and see me, but I will agree that that is because we have so few of these. I do know the people in the St Giles Trust who have subcontracted with whoever it is at Peterborough and so on, but I think-

Q465 Karl Turner: But it is rather ad hoc-

Mr Clarke: Antonia has done that bit about, when this becomes more normal, how we might handle disputes or concerns we might have that we are not encouraging voluntary and smaller bodies at the rate we wish.

Q466 Karl Turner: How likely is it for a small provider or voluntary sector organisation to get an appointment with the Secretary of State on a particular issue?

Mr Clarke: On an individual contract, it will eventually not be very likely. At the moment we are developing a policy, so it is quite easy for them to see me because I am anxious to hear views on the policy. It is a perfectly good point. There will come a day when Secretaries of State will not be accessible to people who want to come in and complain about their contract.

Sir Suma Chakrabarti: I have engaged with a couple of them myself directly on this issue. I would say that the worry, the concern that was certainly there-there is no doubt about it-has slightly abated. One of the reasons for that is, first of all-and this is an interesting fact that the two of us were musing over yesterday, and we did not realise we had made quite so much progress-33% of MoJ’s departmental spend, which went to private contractors, now goes to SMEs. We are No. 1 in the Government now on that, so that is a big shift.

Where the voluntary sector have had difficulties around the cost and duration of competitions-particularly when they have to prequalify, which takes even more resource and they do not have that-there are a couple of things we have done. One is that we have now removed prequalification for transactions under £100,000-the sort of thing, obviously, that they should be going for, and that has made it much easier for them to engage. The second thing we have done is this. In the past we used to go through a whole competitive dialogue process, which is an allsinging, alldancing process. We have tried to strip all that out and gone to a much less onerous, open and negotiated procedure, which helps smaller companies much more. That is one of the reasons we have reached the 33% that both of us were quite amazed by when we looked at the figures.

Mr Clarke: I am still trying to find out how it has happened. My latest suspicion, which I shall try out, is that it turns out we have started counting the individual solicitors getting legal aid. It is a very good record and I am delighted. I do not want to qualify our claim to triumph. We can both congratulate each other that we have somehow got there, but I am trying to make sure that it is genuine. At the moment, we have suddenly gone miles ahead of the field across Whitehall. But if there is anything wrong with the figures, we will carry on striving to get more SME contractors.

Sir Suma Chakrabarti: The other thing is that we need to pay quickly to the smallest subcontractors because of the cash-flow issues they face. We are trying to pilot what are called project bank accounts so that we can bang the money out as fast as possible and not hold on to it for very long.

Antonia Romeo: Although we do not have a standalone code of conduct, we have clear policies for suppliers working with the Department. We will have some arrangements in place for SMEs who feel that those policies are not being met, which we can write to the Committee on. We are developing it. It may not be easy to get immediately into the Secretary of State’s diary, but there is a whole Department that seeks to respond to that.

One other thing to add to what the Secretary of State said is that, in particular, Peterborough is a great example of where the paymentbyresults pilot, although it does involve a big final contractor, is working very closely with a lot of small local organisations to deliver the results. So as we increasingly move into paymentbyresults territory, we will be working with a whole range of organisations in the private and the voluntary and community sectors.

Mr Clarke: A good contractor-the sort of companies they are-will need to subcontract to someone to deliver aspects of their service. So they will be as keen as we are to identify the service providers who can do what they want in the locality of the prison, or wherever it is they are entering into a contract. That is the experience at Doncaster as well. But we are alert to the danger and we will have to keep an eye on it to make sure that there is a genuine incentive through the payment by results for the small subcontractor as there is to the main contractor.

Chair: We are turning to payment by results. Mr Gummer.

Q467 Ben Gummer: I am sorry you have to hear me again. It is the third and last time, I promise. On the issue of payment by results-and we have looked at this from several angles on a number of occasions-the Department still seems to be heading down the route of letting a whole series of contracts according to the structure that preexists within the Department, be it a prison, a probation trust or Community Payback rather than centring the payment on the offender. The consequence-and it has been repeated by many of the people who have come and sat before us-is that it will be fiendishly difficult to determine, for an offender that passes through any number of these different structures, how to apportion the result so that a body can get the correct payment. We identified this in our report and it was one of the few areas where you disagreed with us. What we do not understand still is why the Department cannot copy what the DWP has done, which is to let very large prime contracts and it is then up to the prime contractor to determine where they wish to apportion their own internal relationship with subcontractors. Then you only have one organisation with which you can have a simple paymentbyresults model. We are a bit concerned that you might end up at the end of these pilots not really determining anything, with a whole series of incomparable data from which you cannot decide whether it has made any difference or whether we are any further forward, and we have lost four years. I am sorry to ask that question at length but I will not ask any more.

Mr Clarke: Our prison contracts are essentially with one prime contractor. I do not think we specify the arrangements. It is just my knowledge, or what I think my knowledge is. My feedback is that they are not just passing the risk on to their subcontractors. But I do not think we are party to the arrangements between the prime contractor and the subcontractor directly.

Antonia Romeo: Is it not an issue of defining the cohort? What you are talking about is that an offender passes through a whole range of organisations, so how can we make sure we properly understand what has had the most impact on the outcome, be it reducing the offending or whatever?

Ben Gummer: Precisely.

Antonia Romeo: This is part of a problem that we face in the system. As you say, we are starting from where we are in the structure we have at the moment. What we have tried to do in those pilots we are running is to try different models for ways of looking at the cohort. With Doncaster it is easier to define a cohort geographically than perhaps in some other places, which is why we have a particular Through the Gates pilot happening there. We want to increasingly look at different ways of doing it. In terms of going forward, all options would be on the table. If we could come up with a way of mapping the offender journey-joining up all the different bits of the system and properly knowing which bit of the system had led to that outcome-then we would be delighted to do so and payment by results would be according to that.

Mr Clarke: I do not see how you are ever going to break it down. Doncaster is a good one to choose because it is a local prison, and so is Peterborough. That is why they are up front and we got them going. The population is nice and handy and they can deal with all the local rehabilitative services. You can also compare them with previous cohorts. You have a good measurement of whether you are improving the reoffending rate because, really, you have the same sort of people coming out all the time. You can put a contract together which starts in the cell, as it were, with the prison people themselves preparing for release, and then goes through to some outside partner with mentoring and help with getting a job and perhaps goes into a Work Programme and gets work training and so on. It is true that, at the end, assuming that person ceases to be a criminal and stops reoffending, you probably will not be sure who should take the major praise for improvement in that case. It is not possible to say if it was the mentoring they got at this or that stage. What you need is a consortium where they will count up the total success one way or another at the end. They are all contributing to the picture and we pay them. That is, off the cuff, how I see it. It does get more complicated with quite lot of other prisons because the population is not so convenient. As to probation and prison, you know whether somebody is on a community sentence or whether they are in prison so they are quite an identifiable group. One can have a separate contract.

Q468 Ben Gummer: That is true, but offenders might pass through both systems in the course of one sentence.

Mr Clarke: Of course, they may well in the course of their career.

Q469 Ben Gummer: I return to what the DWP have done with the Work Programme, which is to divide the country up by regions. You would have one prime contractor, in the Work Programme instance, who will deal with confidence-building, literacy and whatever is needed to try and help that person get back into work. It is a similar problem you face with offenders. The only difference is that you have this large prison estate where the prisons are in the wrong place for the prisoners and you are carting them all over the place. NOMS seem to think this is an insuperable problem, but we, on this Committee, do not understand why you cannot effectively buy and sell prisoners across regional borders and spaces can be managed in that way. There seems to be an obsession within NOMS with moving prisoners around like on a Battle of Britain chart where they are shoved from one end of the country to the other individually. We saw the desk where it happened.

Mr Clarke: They do quite a lot of moving prisoners about, which must make a difference in measuring performance on contracts. I can see that.

Q470 Ben Gummer: I suppose that was not a question. The Department, I hope, is open to looking at-

Mr Clarke: Yes. We would like to tackle the problem if we could because we are going to find it more difficult in some parts. At the moment, we are starting with the simple ones, not surprisingly, in prisonbased pilots. We have other nonprison based pilots. With prison pilots, there is no doubt that Peterborough and Doncaster are at the simple end. The configuration of the estate, and also the makeup of the population in some other places, is going to get us to start challenging the things you are talking about. People do get moved from prison to prison as they go through different categories.

Q471 Chair: Our view has been-and still is-that until you link the commissioning of prison places with the commissioning of other ways of dealing with offenders, you will perpetuate this problem. Therefore, you should move towards a more regional commissioning, in which commissioning of both types, over the whole range of disposals, are managed together.

Mr Clarke: I disapprove of compartmentalising too much, I agree, and in NOMS I do not think the Probation Service suffers, which is why we have not bothered to take NOMS apart again. But probation is undoubtedly the junior partner. It is bound to be the prisons that take up most of the time, but they are quite distinct communities. Although in the course of a criminal career they may find themselves first in one and then in the other, at any given moment, when you are trying to rehabilitate them, they are either on a community sentence at liberty-at large-or they are in prison. Inevitably, you design slightly different programmes, depending on whether they are in the community or in prison.

Q472 Ben Gummer: Bear in mind, if you do not mind me saying so, Lord Chancellor, the problem with our system. We have just seen evidence from a Norwegian prison dealing with repeat offenders where they are achieving a 20% recidivism rate-remarkable-precisely because the probation officer is also the prison officer and moves with the offender from the prison out into the community and manages that cohort at the same time. So there is that lookthrough. We are not even at the stage of thinking about that.

Antonia Romeo: We are in some of the pilots. In the Through the Gates pilots, that is exactly what the contractors are trying do because they own the problem through the gate. I think, to come back to your earlier point, Mr Gummer, we are very focused on all possible options. What the DWP pilots themselves are trying do is to take a part of this commissioning model, where it exists, and say, "Since it is the case that 49% of prisoners have not had a job in the year before the offence, let us look at what the role of having a job would be on the offending." If the commissioning structure exists, why would we duplicate another commissioning structure on top of that? We want to look at what is already happening out there and what works.

Perhaps, if I may, I can make one final point. We are also doing some interesting data linking and data matching work with DWP and HMRC and other Departments, which is to look into specifically what works in reducing the offending so that we can make sure we have an acrossthepiece picture and understand more about which interventions will make a difference. We would want to then get everybody using that, not just in one particular local area.

Chair: Thank you. On payment by results, Mr Llwyd.

Q473 Mr Llwyd: As to the two pilot projects, the Doncaster and Peterborough experience, I would lay odds that they will come out fairly favourably because of the compact nature of the population and the easy tracking of the individual when he or she leaves prison. But here in London, for example, a vast number of people who are convicted are outside prisons in London. I can tell you that in north Wales there is no prison. Therefore, it bears no relation to the outside big picture. You may well trumpet some good success in Doncaster-and I wish you well on it and the other place-but I do not see how that is going to translate throughout the UK at the present time.

Mr Clarke: It is going to have to be modified. That is why we are piloting it. I would agree that in some other prisons you will not be able to have the local providers quite so easily tied in for the very practical reason that they are not all local prisoners and they are not going to stay local once you release them. That is one of the things we are steadily going to have to confront. The bigger picture about Norway and probation hostels goes to the whole heart of sentencing. It sounds extremely interesting. I shall look forward to the report and seek to decide whether British public opinion is ready for that yet. I am not sure.

Q474 Chair: We think the British public is ready to have less crime and what we are looking at are ways to achieve that.

Mr Clarke: That is how I sell all these things, otherwise there is a tremendous reaction. It is believed that the British public does not wish to demand that more people should be sent to more prisons for ever longer sentences. They have discovered, even in America, that that is a fairly nonproductive avenue to go down, although we have gone quite a long way down it. But you do have to make it clear to people that what we are trying do is stop criminals continuing to be criminals. We are punishing them first and then making them stop reoffending so that they can go back to a sensible way of life. But it is going to be difficult to organise in some places. It is easier in Doncaster and Peterborough, and I began by conceding that.

Q475 Mr Llwyd: I am sure we all share the intention, and hopefully it will come forward okay, but are you aware, for example, of what the Howard League told us in their views on payment by results? They said that it is not based on any meaningful outcomes. The reduction in raw reconviction rates, before statistical modelling, is just one outcome-one outcome. Interim outcomes such as a reduction in severity or frequency of offending are just as valid, but do not constitute "a result".

Sir Suma Chakrabarti: It is the frequency finding.

Mr Clarke: I am responsible for that. I have been resisting that. Of course it is true that all kinds of desirable outcome can come out of attempting to intervene. But I think the contracting model we are using works best if you focus on your primary objective. The object we are driving at-the object we wish to reward particularly-is a reduction in reoffending where someone ceases to offend. Of course, it is desirable if the next time they come in they have not committed as many offences as the time before, or if the nature of the offences has become slightly less severe, or even if there has been some improvement in their behaviour. They are more responsible people but they are still committing crime. The only way to sell this to the public-but not necessarily to the public, it is my own conviction-is that we will get more value for money, more bang for our buck, if we concentrate on what really matters, which is getting up the proportion who stop committing more crimes. I personally have been somewhat resistant to the quite attractive arguments of the kind you are putting to me, but you lose the point after a bit, I think, if you start taking too much of that in.

Q476 Jeremy Corbyn: Is one of the perverse effects of a much higher rate of crime over the past 20 or 30 years that more people have more experience of the prison system and more people know people who have had experience of it so they begin to question the sense of keeping two or three prisoners to a cell, the lack of education, the lack of association time and all the rest of it? There is, surely, a knockon effect there.

The reason I raise that is that when we had this delegation to Denmark and Norway-there were five of us who went on it-it was extremely interesting. We asked a question of one of the Norwegian prison governors. We said, "What do you do about prison overcrowding?" His English was perfect and he absolutely understood the question, but he asked why we were asking the question because it made no sense to him. He said that they do not have prison overcrowding. They do not put more than one prisoner to a cell ever and they have a much lower rate of reoffending. There are lots of reasons for reoffending, but we have this very unfortunate situation with grossly overcrowded Victorian prisons. Is it surprising that people reoffend?

Mr Clarke: Personally, I agree with most of the things you have said.

Jeremy Corbyn: Good.

Mr Clarke: It is just that we have to get from where we are to where we need to be. The prison population is much higher now, which does have this effect-as you say, must have-that more people have experience of prison than used to. There are not enough of them yet to bend public opinion significantly, but most Members of Parliament who go to prison seem to come out as very committed prison reformers. I think that happens to quite a lot of them.

Jeremy Corbyn: Or religious converts or something, yes.

Mr Clarke: Being more serious, the figures are very bad-the apparent growth in crime and so on. We do know more people are going to prison, and that is undoubtedly the case, but it is very difficult to measure. Overcrowding is one of the curses of our system. It is extraordinary. I hope that in a hundred years’ time people will look back and think it was quite absurd that in the 21st century it was taken for granted that the entire prison system was overcrowded. We open new prisons and we open them overcrowded. Everybody seems to think this is fine, and it is not. It is a real problem when it comes to what we have been talking about as to how to stop so many of them reoffending so quickly when they leave and coming back again. It inhibits your ability to do anything about it.

Q477 Jeremy Corbyn: Is it not a question of sentencing policy as well as the intensity of support given to an individual prisoner? We have a sentencing policy. Many young offenders at last year’s riots, for example, got long custodial sentences-goodness knows what the longterm effect on their lives is going to be, but probably not good-and when they are in prison we do not invest enough in education, psychological support, family support, jobs, training and all the other things that go with it. It is a good investment to spend more on prisons and prisoners in order to have a lower prison population in the future and a more harmonious society. I am sure you agree with all this, but-

Mr Clarke: Roughly. You are leaving me behind a little bit in the way you are expressing it.

Jeremy Corbyn: You will catch up.

Mr Clarke: But I agree with your general drift. If we are going to get the best value for money out of what we spend on punishing criminal offenders, it is best to spend it on the way that produces the best results for the public. The first result is public satisfaction that justice has been done and that someone has made retribution for whatever, sometimes quite serious, offence they have committed. They are prisoners. But then you do your best to make sure that the majority of them are not criminals when they leave so that nobody has to put up with their criminal behaviour again. The more prisoners you put into overcrowded conditions, the more difficult it is to organise all the things we are talking about, to deal with drug rehabilitation and alcohol problems and to provide work and training. We have seen such a surge in the prison population in the last 15 years and such a surge in sentencing length that it would be very helpful if we could have a bit of a pause in order to address what we can do with the people we have. I put it cautiously because any suggestion that you might have as a main policy objective of reducing the number of prisoners in prison sets off great excitement in parts of the political world.

In America, I always cite Newt Gingrich with approval on this particular subject. He is one of the leading rightwing American politicians in the last campaign who has been campaigning on a reduction in the prison population because it is such appalling value for money to the American taxpayer. The Supreme Court in America has passed a judgment ordering the state of California to reduce its prison population, though I am not quite sure how they are going to comply with it. So the right in America, with whom you and I are not usually instinctively in agreement, does contain quite a lot of people urging reductions in the prison population. I am not urging that, but it would be nice if we could resist some of the pressures we get from the popular press to keep increasing the number at the rate we have in recent years. The popular press, I think, are themselves responsible for tens of thousands of people being in prison, not all of whom need to be there.

Q478 Jeremy Corbyn: It is always the case that if the moral argument does not work, you can try the money argument.

Mr Clarke: In the end, when all else fails, I point out that we cannot afford it, at £45,000 a time. I say let us spend £45,000 on serious nasty people who need to be punished in that way, but let us try and find a slightly more sensible way of dealing with the ones that are just a damn nuisance.

Q479 Jeremy Corbyn: The point Mr Gummer was making, though, about the link of people-prison staff with probation and so on-where there is a followthrough on the individual prisoner, is surely a good thing. A lot of particularly young prisoners come from very dysfunctional backgrounds and very difficult lives. If there is somebody, or a group of people, they know that they can build a relationship and trust with they are more likely to develop rather than being shifted from institution to institution, probation officer to probation officer. That personal link is quite important in their lives.

Mr Clarke: I agree with that. Let us do that.

Chair: We have one final topic, which Mr Llwyd is going to address.

Q480 Mr Llwyd: Thank you, Mr Chairman. In your recent consultation paper you proposed to devolve commissioning of victim support to the Police and Crime Commissioners. Would funding for these services be ringfenced or would they have to compete with the other local priorities, of which I am sure there will be a few?

Mr Clarke: First, we contemplated doing it, but not immediately. We are minded to do it, I think, in 2015. A lot will happen between now and 2015 when we see how the Police and Crime Commissioners get along, when they come into existence. It is attractive and our present intention is to devolve it to Police and Crime Commissioners, we think, in 2015. We have not decided, is the straightforward answer, on whether we would ringfence it when we transferred money. I am not too keen on ringfencing, actually. You either go for localism or you do not. You have a central provision or not. At the moment, we have gone through a process of undoing all the ringfencing we have been imposing on local government in recent years. If the idea of having Police and Crime Commissioners is to have people who are locally accountable to the local population for responding to local priorities, my personal instinct would be to say, "What on earth are we ringfencing it all for? Why is a Minister sitting in the Ministry of Justice telling Cumbria and Cornwall, and so on, what they should spend?" But that is my personal instinct at the moment. There is no need for a clear Government policy at this stage.

Q481 Mr Llwyd: I can understand what you have said, Secretary of State, but if you were to have a Police and Crime Commissioner who would give a very low priority to this, you would end up with an absolute disaster.

Mr Clarke: The argument would be that he would answer to his local population for that quite rapidly.

Q482 Mr Llwyd: But there would be five years of-

Mr Clarke: At the moment the lobbying in favour of victim services, I am very glad to say, is very much stronger than any lobbying I have ever come across against it. We are putting a lot more money into victim services and we are very keen to do so. But we have to be careful that all this is going to be sensibly spent. It is one of the reasons we have been looking at it again. We do not want victim counsellors chasing victims trying to persuade them to have the service, which, anecdotally, does occasionally happen at the moment. For some victims who are totally traumatised by the crime, there is a great need to strengthen the victim services we have now, and there are all kinds of specialist groups where I think we should improve what is done. Again, that could be said to argue for a bit more localism, for the individual Police and Crime Commissioner who wants to develop a service in his area to make a virtue of it. But somebody else may think that he has some other great priority on his hands in his area. I know I am giving long answers, but I hope I am making it clear that this is all speculative. As we are minded to do it in 2015, we have plenty of time to debate this and decide what to do.

Q483 Mr Llwyd: Is it possible, do you think, to achieve a more consistent approach to victim support services and greater local discretion at the same time as is advocated in the consultation paper?

Mr Clarke: I am inclined to approve of the local discretion and then you have to stop people imposing any unnecessary constraints on that. Obviously, you specify the kind of things for which you are making money available, but it is always a mistake to be too prescriptive in what you do in such an area as victim support. We are about to produce a response to our consultation document which will deal with this more fully and more directly. The trouble is with the circumstances of individual victims. No two victims are quite the same. It is very difficult to predict sometimes what kind of victim will need an awful lot of support and what kind of victim will be able to handle it with a little support and so on. Different things work with different people. So I am reluctant to be very prescriptive.

Q484 Mr Llwyd: You will know, for example, that Victim Support are very concerned about what may happen to them in the coming months. They have questioned whether the Victims’ Code will retain its statutory footing and the current level of rights it affords to victims. The Government suggest that the current 99 standards imposed on criminal justice agencies can "stifle innovation and, due to limited resources, lead to some victims not getting the information and support they need while others are needlessly contacted by agencies simply because the Code requires it."

Mr Clarke: That is, in good formal language, repeating what I just said. If you start setting out too much, you impose a sort of rigidity on the thing. I do have anecdotes of people who tell me they have been pursued by people offering them counselling in order to increase the number of people they can say they have offered counselling to. Then we do know that there are people who take years to recover from a crime and they need far more attention. Victim Support is an extremely good organisation, but if they are suggesting more central description of the nature of the service, I am very hesitant to agree with that.

Q485 Mr Llwyd: Can I rush in on that point and say that in 2010 and 2011 Victim Support had more than 1 million referrals. With a figure of 94% user satisfaction, it begs the question, "If it ain’t broke, why fix it?"

Mr Clarke: Yes. I am very much a supporter of Victim Support. It has transformed things compared with 10 years ago. It is a very good organisation but sometimes when you have a consultation document you do not always agree even with the good organisations. So I am not being rude about Victim Support when I say of their reaction to Police and Crime Commissioners, "They would, wouldn’t they?" I would have known that when we went out to consultation because they have such a high proportion of the national service at the moment. If I were active in Victim Support I would not be very keen on seeing that, in future, we might have to deal with a whole lot of different Police and Crime Commissioners. I have no doubt that, with the quality of service they provide at the moment in most places, they would actually get over that problem quite easily if we do transfer it to Police and Crime Commissioners. But when it comes to stipulating minimum standards and all that kind of thing, I am very cautious. Of course, we will try to get the services more and more concentrated on those that are vulnerable, but they are difficult to define because so much depends on personal reactions.

Q486 Mr Llwyd: Clearly, Victim Support do have a vested interest, in reality, but they are-

Mr Clarke: Yes, and I am not saying that to be hostile to them.

Q487 Mr Llwyd: No, neither am I, but, in reality, that is the description. But other concerns, for example, NSPCC, Mind, Liberty and another 23 organisations are concerned along the very same lines as they are, and they are not-

Mr Clarke: They sound like big national ones, most of them.

Q488 Mr Llwyd: They are, but they are not competing with Victim Support. They are saying, "Here is a beacon of excellence. Why break it up?" That is what they are saying. For people who are in the know, have no axe to grind, are not competing and are not interested in terms of taking over any of the business, then that surely is something that should be looked at, is it not?

Mr Clarke: Yes, we are in the process of consulting. We are considering it. But plainly the intention of policy was never to be hostile to Victim Support. It was not designed with that in mind. Victim Support has made a huge contribution in this field. But a big national organisation is going to be tempted to keep a big national way of distributing the money. Going back to where we were a few moments ago, to all these voluntary notforprofit groups working with offenders, locally there might be people who could make a contribution to the service who never will, if we stay as we are, but might if some accountable local responsibility for the quality of the service was introduced to it. We are going very slowly. We have not even responded to the consultation document yet. We are not threatening Victim Support with any reduction in provision at the moment. We will continue to move cautiously towards a possible move to PCCs in 2015, and I think that is likely to remain our intention.

Q489 Steve Brine: As we are talking on this point, is it not the case that in a grownup democracy where we back localism-this Government have made a decision to do so in lots of areas, and PCCs are just one example of that-and Victim Support mention that wellused term "postcode lottery", and presumably, from what you are saying, localism can mean a postcode lottery, surely the challenge is to raise the standard across the game instead of to drop the standard across the piece?

Mr Clarke: My instincts are the same as yours, Mr Brine, as long as we do not get too purist about it. If you see daft things being done locally you eventually have to step in and stop them, but, yes, most people espouse localism and then want the Government to import all kinds of severe constraints on what can actually be done locally once it has been transferred. The words "postcode lottery" should never be used by any politician because if you believe that that is a criticism-

Q490 Steve Brine: If you put the public in charge, the public are in the driving seat in electing PCCs and they will be able to un-elect them as well.

Chair: I have to allow a final word to Sir Suma.

Mr Clarke: Going back to Jack Straw and my Department, it would be rather nice if the Police and Crime Commissioners were responsible for things like victim support and not just law enforcement and crime as part of the whole picture, if they are also to be responsible for victims and so on. There are other services you can tie in. I think the Police and Crime Commissioners should walk before they start to run. So let us see how they get on with the police.

Q491 Chair: I really will get the final word in from Sir Suma.

Sir Suma Chakrabarti: I will only add one sentence. If we go down this route of devolving the victim support budget, it will be important for the centre to do one thing, which is the lesson learning across various PCCs in the way we have done with youth justice. We know which YATs have done well and why they have done well. Then it is not to say that we impose a consistent standard and everyone must do the same thing but, rather, "Here are some lessons. Apply them if you wish locally." I think the centre does have that duty. It cannot just step completely off the field of play.

Q492 Chair: Thank you very much, Lord Chancellor, Sir Suma and Ms Romeo. Again, Sir Suma, very best wishes for the future.

Sir Suma Chakrabarti: Thank you very much. I hope to see you all at my retirement party on 25 June at the MoJ.

Chair: We look forward to that.

Prepared 1st June 2012