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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 271-iv
House of commons
TAKEN BEFORE THE
Money Advice Service
Wednesday 28 November 2012
Sajid Javid MP and Alison Cottrell
Evidence heard in Public Questions 424 - 471
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Taken before the Treasury Sub-Committee
on Wednesday 28 November 2012
Mr George Mudie (Chair)
Mr Pat McFadden
Mr Brooks Newmark
Mr David Ruffley
Mr Andrew Tyrie
Examination of Witnesses
Witnesses: Sajid Javid MP, Economic Secretary to the Treasury, and Alison Cottrell, Director of Financial Services, HM Treasury, gave evidence.
Q424 Chair: Welcome, Minister. Is this your first Select Committee appearance since you took office?
Sajid Javid: Yes, it is.
Chair: Welcome to the Transport-that’s a good start, isn’t it?
Sajid Javid: Transport? I think I’m in the wrong Committee. Let’s go!
Chair: To really put you at home, Andrew Tyrie is going to start the questioning.
Sajid Javid: Do I have any say in that?
Q425 Mr Tyrie: Welcome to the Treasury Committee, in this case a Sub-Committee, for your very first appearance. Can I begin by asking you if you have had a chance to look at whether you think the Money Advice Service is the right platform to co-ordinate debt advice or whether a more efficient model can be found that, for example, could come from the voluntary sector?
Sajid Javid: Yes, I have. First, I thank you for the warm welcome and also for the scrutiny the Committee is providing of the Money Advice Service and this area in general. I think it is very important. I have had a chance to look at that. In the couple of months, or just a bit more now, I have been in this role I have spent some time looking at what the Money Advice Service does, its original objectives and how it was set up. As Committee members will know, the debt advice portion was a change that this Government made. I have looked at the numbers and how it splits its total income between its two main functions, that being one of them.
I do think it is the appropriate place, where Government is involved, to have funding that is raised through this levy. I think it complements what the third sector or the not-for-profit sector is doing-institutions such as Citizens Advice, which gets approximately just under £20 million in this financial year of funding from MAS. The reason I think the MAS role is important in this area is because what it brings to it is, first, its focus on the availability of debt advice generally in the marketplace and making sure that there is enough availability and who is providing that. It also has a function of looking at the quality of service that is being provided to people who need that type of advice. In doing that, it looks at consistency. For example, one of its major roles that I see in this area is to come up with maybe some standard operating rules or procedure for debt advice to make sure there is some kind of consistency in standards. It has commissioned, for example, the Money Advice Trust to develop some standards and to talk to stakeholders in the industry because there are people out there who are very well-intentioned and want to provide debt advice themselves, because many people engaged in this area are often volunteers, but it does not mean that that advice is necessarily the right advice or good advice, however well-intentioned it is.
I think MAS has an important role in this area and, from what I have seen so far, it is carrying that out effectively, although it is early days with this new mandate.
Q426 Mr Tyrie: When you talk about effectively or effectiveness, you have to take into account cost-effectiveness and they have quite a high overhead, higher than the voluntary sector. It is alleged they have a relatively poor case management system in place. They pay, I think, £3 million in staff overheads. Are we sure they are the best platform?
Sajid Javid: Yes, from what I have seen and the scrutiny I have done. I have met the Chairman of MAS and discussed this with the FSA-only initial discussions at this point. I have looked at their business plan. I do think it is effective. It is important to bear in mind, of the total budget they have, which is approximately about £80 million this financial year, they are spending about £35 million or thereabouts on debt advice and, of that £35 million, my understanding is that well over 90% is money being given to third organisations to provide debt advice, often face-to-face. I think that is probably one of the most effective ways, but not only face-to-face. I think that it is effective.
There are other organisations involved in this space that do not get money from MAS at the moment. I met one such organisation just a couple of weeks ago called StepChange. They have just changed their name to StepChange. What MAS is doing in this space and what they are doing, I think they see it is complementary and they are helping each other. Also it is important to point out that I have heard or read about some people saying, "Could MAS potentially crowd out other sources of finance for the charities in particular that provide debt management advice?" I think that is a legitimate concern, but there is no evidence of that at the moment. In fact, at this event I went to with StepChange, one of the speakers other than myself was Barclaycard, which, I think, is one of the main sources of funds. I understand that it has no desire to change its role in helping to provide finance, despite the role that MAS is playing in this area.
Q427 Mr Tyrie: What about the balance between money advice marketing and straightforward debt advice, given the current climate?
Sajid Javid: If you are picking up on the issue of the marketing budget in general, which I think is about £20 million this financial year for MAS, it is a significant amount. Clearly £20 million is a big chunk of money and so there is a big responsibility on MAS and the FSA in overseeing its budget to make sure it is spent properly and there is good value for money. But we cannot get away from the fact that, given that MAS was only recently recreated, it needs to market itself appropriately because if people do not know that it exists, they are not going to know where to go for free, impartial, independent advice. Given that is one of its key objectives, it is clearly going to cost some reasonable amount of money to advertise itself.
Q428 Mr Tyrie: One last point. I take the point that one can argue that they have a higher level of independence than anybody in the third sector-in the voluntary sector-could ever have. On the other hand, everyone knows what the Citizens Advice Bureau is. Everyone has heard of the CAB and we do not need to spend any money on marketing them. I am just putting to you that that is money that perhaps could be put to use in other ways. What is your response to that?
Sajid Javid: First, I agree with you. I think most people would know what the Citizens Advice Bureau is. Not necessarily everyone would know all the great services that it provides and, just from my own constituency-I am sure it is true for all colleagues-having visited them and seen what they can do and what services they provide, I know that what they do is vital. But it is also fair to say that Citizens Advice has been around for-if I say decades I might even be underestimating it if I include its predecessor organisations, and they are on the ground locally in so many parts of the UK. That means that they are well known. When you set up an organisation from scratch like this, clearly you are going to have challenges in making sure people are aware of what you do. I do not think it is necessarily a fair comparison between the visibility of Citizens Advice versus MAS.
Chair: Thank you, Minister. Do not take this as rudeness or anything but, if I just go through a potted history of these hearings, all the outside organisations were bemused, bewildered and devastated by how they had been treated by MAS in the first year. We brought MAS in. We were bothered, bewildered and whatever by their performance. We had Lord Turner in, and we will ask you whether you have caught up with that. Lord Turner had a hard time and I think, unfortunately-I hope it did not affect his chances of the Bank of England job because I would be very-
Mr Ruffley: It had been decided by then, I think.
Chair: Oh, thank God. But we subsequently discovered correspondence between him and the Treasury, and Pat is going over it. Lord Turner was rather worried about their business plan and their activities but could not find any power to intervene. You are a new Minister, who has had a Committee and has a lot to catch up with. I would not dig myself in too much about what a wonderful organisation it is. I will leave it to your judgment over time, but I just put that scene to you. That is what we are asking questions about.
Q429 Mr Ruffley: Good afternoon, Economic Secretary. Could I just refresh your memory of the letter from Lord Turner to Mark Hoban on 14 February 2012? He says, "Existing legislation requires the FSA to take necessary steps to ensure MAS is capable of exercising the financial education function but powers to support this duty are limited. We are required to approve the MAS business plan but are not empowered to question operational issues such as outsourcing proposals, provided those proposals appear reasonable, and the Financial Services Bill did not increase those powers." Lord Turner is saying that he is unhappy with the position the FSA has been put in. Do you think the current alternatives are under consideration-that is to say, should MAS be a freestanding body, or are you considering meeting Lord Turner’s request that they be given greater powers? Are you looking again at this at all?
Sajid Javid: I have looked at it. Since I have been in this role, I have looked at it and I am satisfied that the powers that already exist for the FSA to oversee MAS and its functions are adequate. Just to summarise, FSA has always had the powers since MAS was created. It has to sign off on its budget. It has to sign off on its business plan. It has the power to appoint and dismiss directors. I think that in itself is sufficient power.
Q430 Mr Ruffley: Yes, okay. Your position is essentially Mark Hoban’s position, but have you discussed with Lord Turner why he seems to be so agitated about not being empowered, for instance, to question operational issues? He comes back to this time and again. We have had evidence that there was an FSA board paper over the summer. It has been discussed at FSA board meetings, and it is clearly a big sticking point for them. What is your understanding of why Lord Turner is so persistent on this point that he feels he needs more powers to be able to question operational matters?
Sajid Javid: I have discussed it, not with Lord Turner, but with John Griffith-Jones, who, as you know, is on the FSA and the Chair Designate of the FCA, which will eventually take over responsibilities for the FSA in this area. Even after that discussion, I am satisfied that the powers are adequate. Also, I think it is important to point out what the FSA has done since some of those initial problems with MAS, especially over the former chief executive and his salary-that was clearly, it is fair to say, an important issue that needed to be dealt with and looked at and perhaps led to some of the scrutiny.
The FSA since then has set up, as I understand it, a sub-committee, which they did not have before, that will look at MAS; so a particularly MAS-focused sub-committee. They have put more staff in the FSA working on the MAS mandate. They have increased scrutiny of the information they get from MAS and they have conducted their own internal risk review. I am pleased that they have done this, but they could have done it before. I did not need to give them more powers to do this. I think, with the powers that they have, there is a lot that they can do.
Q431 Mr Ruffley: But under the legislation a power to question MAS on operational issues was excluded. Why was that?
Sajid Javid: I believe the powers that the FSA has over MAS are not too different from the powers it has through other independent organisations that fall under the FSA.
Mr Ruffley: Perhaps Ms Cottrell could enlighten us.
Alison Cottrell: As the Minister has said, it is a question of the FSA using the powers that it had. Obviously, we would be reluctant to give powers when we do not think they are absolutely needed. In this case, we will be looking at how this works over the coming period where the FSA is focusing more on this and is using this new sub-committee. I would stress there is a dialogue ongoing clearly between the FSA, MAS and also us, with the different parties continually talking to each other around this. It is not as if it is a black and white situation all the time. It is a case of the FSA using what it has, which it is now doing.
Q432 Mr Ruffley: But the problem has not gone away because the FSA seems to be quite aggrieved, and one assumes the FCA will be concerned that they cannot probe and scrutinise operational matters.
Alison Cottrell: I think they will be taking a keen interest. We also have to bear in mind what is happening as the FSA moves into the FCA, let that get into a steady state and then see what we have at the end of that.
Q433 Mr Ruffley: Just as a matter of interest, are all the officials who are currently in the FSA being sent as a job lot to do this work at the FCA, overseeing MAS, to your knowledge?
Alison Cottrell: There is certainly continuity. I am not sure I would use the phrasing, but there is certainly continuity across the process.
Q434 Mr Ruffley: Minister, back to you. When do you propose to review the current arrangements? We have established that you are satisfied with the arrangements as at today’s date, but clearly we will have to see how it operates and how the MOU is utilised in due course. When would you normally look to review the arrangements and their adequacy?
Sajid Javid: I will answer directly the question you just asked in a moment. First, just on your last question, the FSA does not have control, but it has the sign off on the budget. It has the sign off on the business plan and it has to appoint directors. I think that is considerable power. If, therefore, there was something in a future business plan that the FSA did not like, wanted to change, or it did not like how money was being spent, it did not think it was value for money, there is a huge scope there for it to intervene. I do not see at this point the need to change that. There is adequate power there for the FSA to carry out its functions in relation to MAS.
The issue of review is important because it is still an organisation that has only been around for a couple of years. It is entering a new space, especially by taking on debt management responsibilities as well. Any new organisation-new space-will have some teething problems or issues and I think it is important for the Government to make sure it is meeting its objectives. What I intend to do is have a review before the end of this Parliament. I would intend to have a thorough review of MAS, making sure that it is meeting its objectives as set out by Government and by Parliament.
Q435 Mr Ruffley: In evidence to this Sub-Committee on 20 June this year, Lord Turner was clearly dissatisfied with MAS’s last business plan. Could you tell us what has transpired since Lord Turner made his dissatisfaction known about MAS’s last business plan?
Sajid Javid: Do you mean in relation to that particular business plan? I think one thing that has come back is that FSA have already said publicly that they intend to carry out a full value-for-money analysis of MAS early next year, making sure that all its budget is being spent properly. Also, you may know-and it is linked to this and I think the FSA has taken comfort from this as well-currently MAS is not under the National Audit Office, but it will be under the plans of this Government. That is important because the NAO has the power, therefore, to carry out a value-for-money analysis. What I hope is maybe the FSA and the NAO can work together on this and, rather than doing the same thing, work together, reach a joint terms of reference and look at value for money.
Q436 Mr Ruffley: MAS, under legislation, has a duty to consult HM Treasury, BIS and also the Office of Fair Trading when preparing its budget and its business plans. Could I just ask you, Ms Cottrell, what discussions you have had with these bodies about MAS? Is there anything we need to know? Perhaps you could tell us what locus BIS has and what locus the Office of Fair Trading has in interacting with MAS.
Alison Cottrell: Certainly MAS shares its business plans and discusses with us. It also shares them bilaterally with other parties, as you have listed, and also, I think, in its statute, with anyone else it feels should be brought into the loop on those. We then have conversations with MAS, we then have conversations in particular sharing back with the FSA, and I would assume that BIS and OFT do likewise.
Q437 Mr Ruffley: What input do BIS and the Office of Fair Trading have?
Alison Cottrell: I think you would have to ask BIS and OFT, sorry.
Mr Ruffley: But you are the lead Whitehall department on this.
Alison Cottrell: We are the sponsoring department for MAS and, yes, we clearly have conversations with MAS, and as I say, at all times with the FSA. Yes.
Q438 Mr Ruffley: Minister, do you know where BIS and the OFT fit in, because they clearly are statutory consultees on the preparation of the budget of MAS?
Sajid Javid: First, I have not discussed it with my colleagues at BIS, nor have I discussed this yet with the OFT; so my information is quite limited on that. As you know, BIS, for example, does have responsibility, as far as Government responsibilities go, on consumer credit. With that in mind, I would expect the responsible Minister, who is Jo Swinson, to look at the business plan-not necessarily herself but at least her officials-and if they have any comments on it or any suggestions, I would expect them to pass those directly to MAS or to the FSA.
As far as my officials are concerned, I would expect them to look at the business plan and future business plans and to keep an eye on that. If there is anything that they think is not necessarily meeting objectives or anything that I as a Minister should know about, I would expect them to bring it to my attention. Also, you may know that-and this is all related-MAS’s accounts are now being consolidated into Government accounts. It was not the case before and that will mean that, for the first time, the Treasury will be able to see exactly what MAS’s income and expenditure is and look at its accuracy and have a line of sight to something that it did not have before, which I think is an extra element of oversight.
Q439 Chair: From MAS’s own accounts, under the Financial Services Act 2010, the FSA approves a budget but does not have influence over the operations of the Money Advice Service. We had worries about the role. They changed the role whenever they took over. They made staff redundant. They went to web-base and are spending a lot of money on it. We asked about bonuses and salaries. We asked them about policy. They would not give us assurances that they were not going to put the Citizens Advice Bureau work out to tender. We raised this with Lord Turner and he has followed up with specific letters to Mark Hoban saying, "We cannot do this. We cannot be responsible for this organisation unless there are things we can hold them to account over", if those are the proper words but, "We do not have the power to raise any of these questions with them". The letters have gone back and forth. MAS feel they are independent of the FSA. Who has the responsibility for MAS? Who can say to them, "You should not be spending £20 million on marketing when there are growing debt numbers out there and we can’t even deal with a tenth of them"?
Sajid Javid: First, Mr Mudie, you said that MAS feels it is independent of the FSA.
Chair: They have written it in their-
Sajid Javid: No, clearly MAS is deliberately set up as an independent, impartial organisation with its own budget that, overall, on a day-to-day basis, it will decide how to spend. For example, as you know, a new CEO has just been appointed. I did meet her before her appointment and had to sign off on the appointment. I think it is absolutely clear to MAS and certainly to the new CEO-the current chair-that the FSA has a real responsibility in overseeing what they do and the FSA has to be made comfortable with MAS’s business plan, with its budget and with appointment of any directors. First, I do think that is understood by MAS and, secondly, those powers taken together are sufficient powers for FSA to intervene if it felt that things were not going the way they should do to meet MAS’s objectives.
Q440 Chair: So Lord Turner had this needless correspondence with Mark Hoban, and we did right to push Lord Turner over the issues we felt he should be intervening to ask hard questions of MAS?
Sajid Javid: Maybe this happened after you had asked those questions or around the same time. Given that FSA has itself made changes to the way it scrutinises MAS-and we talked to you earlier about having a sub-committee set up that it did not have before and so forth-it is fair to say FSA has recognised that there are other ways for us to scrutinise MAS and so this is the kind of thing I would certainly keep an eye on. Certainly, when we have a review sometime during the life of this Parliament, I would want to satisfy myself that it is working the way that I think it is supposed to work.
Q441 Chair: One question to you on that, though. When you read the correspondence, it is moving to the FCA, and the FCA have made it clear that they will not touch it for two years because they are too busy with other stuff. Do you think, as a Minister, you might speak to it? The basis for asking you this is that £20 million a year is £20 million for four years, not £20 million over four years. There is £20 million in the budget for four years, which is £80 million. The web-based strategy that deserves discussion will be well advanced and so, in two or three years’ time, there will not be any opportunity to say, "You are doing the wrong thing". If the FSA has given up the ghost and FCA say, "We will not touch this in the first two years of us being in power", do you think you, as a Minister, could get them to take it a bit more seriously and act more expeditiously?
Sajid Javid: It is fair to say that FCA clearly does have a lot on its hands. It will be a new organisation, so it will clearly face challenges and I accept that FCA is going to be extremely busy, but I think, with my commitment, that we will have a thorough review of MAS’s objectives by 2015. That will add to the scrutiny and help-
Q442 Chair: That is exactly what I am saying to you, Minister. This is a new organisation that has arbitrarily changed their total way of operation within a year.
Sajid Javid: Yes.
Chair: When questioned by the authorities, when questioned by us, we have been given the impression, "No, you cannot tell us to do anything". I hear that the FCA will come in, and you have given us assurances that they may have more power, may feel they have more power, are being encouraged to think they have more power, but I would be unhappy to leave for three years the sort of things that are happening in this organisation now. Besides, it is not only a question of internal. It is the effect they are having on the existing organisations that are carrying out this very valuable work out there. That is the greatest problem.
Sajid Javid: Yes. I think that it would be wrong for me and the Committee members to think that there will not be strong scrutiny of MAS until the FCA is properly set up and running.
Chair: By whom?
Sajid Javid: For example, the FSA. As I understand it, Lord Turner has already said, as we mentioned earlier, that a value-for-money analysis will be done later next year. I have already mentioned the role of the National Audit Office, which is new to this. I think that is an extra layer of scrutiny in a way. Also, the FSA sub-committee has said, "I would expect and hope that when the FCA is constituted, there will still be a sub-committee that is looking at the day to day functions of MAS". If you are implying that MAS will not be number one or two on the FCA’s priority list, I think you are right, but there will still be, I am sure, people in the FCA who will be dedicated to looking at MAS on a day-to-day basis to make sure it is meeting its objectives and giving it proper scrutiny.
Chair: That is not what they put in their letter, but anyway.
Q443 Mr Newmark: Can we get to the thorny issue of executive pay? The former chief executive of the Money Advice Service, Tony Hobman, was initially paid, I believe, £300,000 per year, which was, as I am sure you are well aware, more than the Prime Minister, Chief of Defence staff and Lord Chief Justice, and, I am sure, many others. According to Lord Turner in his evidence on 20 June of this year, this pay was set on appointment in February 2010. Minister, can you confirm that this is correct, that this was set under the last Government and this was indeed the main cause of the trouble that the chief executive had before he even started?
Sajid Javid: Yes. First, it is correct that the former chief executive was recruited and offered his salary package. What you have referred to there is probably his total package. I think his base was still high at £250,000, but the total took it over £300,000 a year. He was appointed under the previous Government, but also MAS was still set up in the way that it is set up today in that the FSA was responsible overall for its budget and for signing off on senior appointments. I believe I am correct in saying that the Treasury at the time would have had to sign off on the appointment of the CEO, just as I have had to sign off on the appointment of the new CEO, Caroline Rookes. Your point is correct about the timing of when that decision was made.
Q444 Mr Newmark: Clearly, looking at the new chief executive’s salary-which I believe is set at about £140,000 per annum, which is less than half what the former one was-do you feel that is an appropriate figure? Can you tell me how that figure was arrived at?
Sajid Javid: Yes, I do believe it is appropriate. It was arrived at, first, by looking at what other individuals in comparable non-Governmental public bodies would get for a CEO-type function; looking at the number of employees, the size of the budget and so forth. I met Caroline Rookes myself and, in my previous career, which was in the financial sector for 20 years, I recruited a lot of people and so I have quite a bit of experience myself in recruitment, let us say. It is clear to me from what I saw that this was someone with extensive experience of leading large organisations and important projects, particularly in the public sector. She has relevant experience and an impressive track record of delivery, and MAS has shown this time that it is possible to recruit someone at a lot less than what the previous chief executive was earning but not to have to compromise on skills, experience and suitability.
Q445 Mr Newmark: In 2011-2012, four executives received total packages, I believe, of between £117,000 and £314,000. MAS has a staff of approximately 80 people. Are you satisfied that these amounts are appropriate for such a relatively small number of staff?
Sajid Javid: My understanding is that the total remuneration for all directors and non-executive directors, so that is all of them put together, this financial year-more than the number you said; you referred to four-is £963,000. Because of the way MAS is deliberately set up, as an independent organisation, there to give impartial advice, it is fair to say it is not for the Treasury to scrutinise in detail what it is paying each of its key staff or any of its staff.
Q446 Mr Newmark: Is having executive pay totalling almost £1 million to manage effectively 80 people, which is a relatively small number, an appropriate use of taxpayers’ money at the end of the day? That is what I asked you.
Sajid Javid: The FSA, for the reasons we have discussed earlier, needs to be satisfied that, when MAS is setting its budget and its objectives, it is paying the right salaries to attract the right type of talent. MAS, for example, when it comes to marketing or other capabilities, has very ambitious plans-and it needs to because it needs to reach out to millions of people with the advice that it is offering, and if that means that you need to pay a given salary to get that type of talent, I think it would be wrong for the Treasury to set some kind of arbitrary cap on what it can pay individuals, but it needs to be convinced, and so does the FSA, that value for money is being obtained.
Also, as we know, in the public sector in a more general sense, in the Government there is public sector pay restraint. MAS is exempt from the public sector pay caps because it is a non-Governmental body, but I would still expect the organisation, even though it is funded by a levy and not directly through taxation-how it is funded is an important point-to show proper sensitivity to pay and to take into account that many people who are paid either directly or indirectly through taxes are subject to public sector pay restraint.
Q447 Mr Newmark: MAS is currently advertising for two senior management positions, one is the Head of Marketing and one is the Head of Digital-two key roles, I am sure you would agree. Does it concern you that two such key positions for a business whose strategy is focused on reaching consumers primarily through the internet and a business that is yet to achieve its desired level of consumer awareness still need to be filled?
Sajid Javid: It would do if I thought that no one was doing those roles in the organisation at the moment, but I have no reason to think that based on what you have just said, Mr Newmark, because, although it is recruiting for those roles, it does not mean to say there is no one doing those roles. I would expect, for example, that they would have, even if it is on an interim basis, a suitably-qualified person to do that role. The Committee will know, that recently the Government recruited for the Governor of the Bank of England, but it did not mean to say we did not have someone doing that role.
Mr Newmark: Right, but it is still a big hole in a management structure whose key objective is to reach consumers and a business that has still failed to achieve an appropriate level of consumer awareness.
Sajid Javid: Where I agree with you, I think it would be a hole if no one was doing that role at the moment.
Mr Newmark: Right. Do we need to fill both holes? Can we save some money here?
Sajid Javid: I think you said Head of Marketing and Head of Digital.
Mr Newmark: Marketing and digital, yes, which both have to do with reaching consumers on a variety of platforms.
Sajid Javid: Yes. I hope you appreciate I do not know the exact details of each role, but I would think they are probably sufficiently different that you would need different skill sets to carry them out effectively.
Q448 Mr McFadden: What is MAS for?
Sajid Javid: It stands for Money Advice Service. Its genesis-
Mr McFadden: I know what it stands for. What is it for?
Sajid Javid: Good. Its genesis was work that was done by the previous Government and it started by looking at financial capability. I understand that the FSA, from 2006 onwards, had done a considerable amount of work looking at financial capability in a more general sense. Mr Otto Thoresen was charged with carrying out what was known as the Thoresen Inquiry eventually and that identified a gap, let us say, in financial capability and the idea was to set up an independent, impartial organisation-I think those two aspects of it are important-that would provide financial advice and information on financial products for people in a more general sense and a source they could rely on. They know it is independent, it is impartial, it is not owned by any commercial organisation, and I think that is important. The major change the new incoming Government made to it was to accept all that, but to add to it the debt management function that we talked about earlier.
Q449 Mr McFadden: What is the difference between what MAS does on debt and what the CAB is doing on debt?
Sajid Javid: On debt management?
Mr McFadden: Yes.
Sajid Javid: I think the main difference would be that CAB is an organisation that provides debt management advice directly itself, often face-to-face, to individuals who need it, particularly financially vulnerable individuals. Whereas I see MAS’s role as more of what you could call a co-ordinating role. It receives, as you know, its overall funding from the levy. It will use a big chunk of that for its debt management function. I think over 90% of what is dedicated to debt management, maybe even closer to 93% or 94%, goes out to organisations such as CAB. I understand that probably about £27 million of the total goes to about six organisations. CAB gets close to £20 million, but these six and other organisations provide direct debt management advice, whereas MAS plays an overall co-ordinating role doing things like, as I mentioned earlier, looking at having a good set of practices, having a code of conduct and trying to see if there are other ways to help these organisations that raise funding, for example, the industry in general.
Q450 Mr McFadden: Have you had a chance to look at what some of the people who provided evidence to us have said about the organisation?
Sajid Javid: Yes, I have.
Q451 Mr McFadden: I will just read, for example, what Advice UK said: "We are extremely concerned at the amount of money that MAS is spending on branding, marketing and consumer communications, money which we think could be better spent on expanding frontline debt advice delivery. We do not think there are adequate accountability mechanisms for MAS or that it has properly consulted with the advice sector on its plans for debt advice delivery." I asked Martin Lewis what he thought of it and I will just read some of the stuff he said: "The product is abominable and I would be embarrassed to put most of their tools on my website." I took that down. I did not read the first part because I wanted to be polite. He said he had put a message up on Facebook to tell people that he was coming before us and asking what they thought of the products. This is specifically about the financial health check. The comments that he received were, "It is useless if you have already got a bit saved up", "Looked at it several times, not finding it very helpful as it seems very basic", "Looks very basic". He then goes on to advertise his own website. Have you had a chance to look at this financial health check?
Sajid Javid: Yes, I have done it. Have you done it?
Q452 Mr McFadden: What did you think of it?
Sajid Javid: I do not know if members of the Committee have tried it but I thought it was very good.
Mr McFadden: You disagree with Mr Lewis?
Sajid Javid: I would disagree with probably most of that; pretty much all of it actually.
Q453 Mr McFadden: Do you think they are doing better than the people who gave us these opinions?
Sajid Javid: I cannot speak for all the people giving the opinions.
Mr McFadden: Just the ones I read out.
Sajid Javid: Yes. I think that, at least certainly the last one you read out, especially on the point on the web-based service, the financial health check, I do think it is very good. I did not even know about the health check until I became Minister and I thought, given that this is a big part of the offering of MAS, I should certainly check it out. I did the health check and I think the advice it kicks out at the end, although I would say, to be fair, I did not feel that I needed financial advice myself, for those who do, is a very useful tool. May I ask if you have you done it?
Mr McFadden: I have not.
Sajid Javid: You may want to try it and then let me know what you think.
Q454 Mr McFadden: I will definitely let you know what I think. Do you think, in the balance of face-to-face and online, that they have that right in terms of where they put their resources?
Sajid Javid: Yes. When I used the website something popped up saying, "Do you want an online conversation". I did have a quick one without revealing who I was, just to do a mystery shopper test and I thought when I asked the difference between APR and AER it was quite a good answer. The online tool seems to work well, at least from what I have experienced, and however limited that experience is. In terms of the overall balance, I think that clearly that is something that MAS is going to have to decide over time. It will learn better over time depending on how many responses it gets.
Q455 Mr McFadden: You are financially literate. A lot of people who need debt advice may be less financially literate. This is quite an important thing for them to get right because, by definition, a lot of the people who need debt advice might not be as financially literate as Treasury Ministers.
Sajid Javid: Yes, I think that is why there have to be different ways or different platforms for people to interact with MAS. Online is part of it. Obviously the online chat function is part of it, the web-based function is important, but the face-to-face contact is very important as well, especially for the debt management services where, for the reasons you say, people are either already in trouble and they just need that extra bit of help through debt management, or you might have someone who clearly just is not up to speed on so many different products. If they want face-to-face advice, it is important that that can be offered. I think you would appreciate that face-to-face advice is probably generally more expensive to offer or more resource-intensive. So it is correct for MAS to try to think of other forms it can to provide help. For example, a number of people have telephone conversations, something in between online chat and face-to-face I guess, and in many cases that can be helpful too.
Q456 Mr McFadden: We have had some issues in the evidence sessions on this about transparency and where the budget is being spent and all of that and you have heard some of that in the questions today. Am I right in saying at the moment it is not subject to the Freedom of Information Act? It is not within scope, is it?
Sajid Javid: It is not, no.
Q457 Mr McFadden: Are there any plans to change that? Is that something you would think about, bringing it within scope?
Sajid Javid: I will let Alison come in if there is anything different, but my understanding is, in general and not just relating to MAS, the Government is looking at reviewing whether independent bodies like MAS should become subject to the Freedom of Information Act or not, in the interests of transparency. I think the Government is right to look at that and, as part of that review, MAS is being looked at.
Mr McFadden: Do you want to add anything to that?
Alison Cottrell: Yes, absolutely-if it is appropriate we would then consider it in any future extensions of the Act. So it is certainly on the radar.
Q458 Chair: I hear your answers to Pat, but I think it is interesting that our different views-there will be different opinions, but we are in the middle of a recession. MAS calculate that 4.2 million people require debt advice, and about 2.1 million are latent or something, not seeking help. There are 2.1 million people seeking help and I think Citizens Advice get about 150,000, simply because of the time it takes to deal with these cases. We are dealing with 150,000 and there is that backlog of 1.8 million. The core cost before they do anything is £10 million. They spend £20 million on marketing. That is £30 million. That is almost all the budget on money advice, and the debt advice is run separately. But £2 million of the debt advice is in that figure. Does it not raise any questions?
That is exactly the point I was making with timescale and about surveillance, that here is this organisation coming in and spending that amount of money at this sensitive time. Well, we could take your view, "Yes, it is good. Yes. The professionals did not think so but we think it is good". But is it the priority at this time of the economic recession? That is the point we are putting and nobody seems to be able to discuss that, so they are ploughing ahead. They are on the second design of their financial health check, which they said was so great when they launched it eight months ago. They have now discovered there is all sorts of-and they have now agreed to make it better and they glibly say it is Mark II. All that money has been spent and people are desperately being locked out of CABs because they can deal just with so many people in a day. It seems to me this organisation needs to have some hard questions asked about it. Do you want to answer that or shall I go straight to Mark?
Sajid Javid: No, I would like to answer that if I can. In a general sense, you are raising very important value-for-money questions. It has a budget. Is it producing value for money? I think that is the general, very important point that you raise. If you look at its two major functions, money advice and debt management, we would all agree that, clearly, for people who need debt management services because they have found themselves in trouble, that help should be there. But where it is possible, it would be far better to make sure people did not get into that position in the first place and that is where I think the money advice function is vital, because if you can increase that financial capability, their understanding of the products, then they might not have made the mistake either of taking on too many loans, or loans where they did not really understand how they worked or other related financial products.
If you accept that it is better to stop people getting into trouble in the first place, then if you are then going to provide this money advice service with one of its most powerful points being it is impartial and independent-there are lots of people out there who claim to provide money advice and in some ways they do, and sometimes I guess it can be valuable, but it is important that this is impartial and independent-you have to make sure people know that it exists. I did not hear about the Money Advice Service until probably about six months ago. That is the first time I have ever heard about it.
Chair: Despite £20 million in marketing?
Sajid Javid: Despite all the years I have spent in the financial industry, despite becoming an MP in 2010, and I do not know if there is a way to do it, but if we polled most MPs, asking whether they have heard of the Money Advice Service, I would not be shocked if the majority of them had not, and we as MPs are dealing with people who have financial problems all the time in our surgeries. I think there is a good reason as to why it needs to market itself but also, equally, and I think that is implied in your question, we have to make sure it is value for money. I think to have no marketing budget at all, for example, at one extreme and then perhaps to take that money and put it all into debt advice, yes, you would certainly be able to help more people with debt advice because there are more resources. However, will you eventually see a bigger problem down the road a few years hence, when you find there are lots of people who did not get advice who could have?
Chair: Minister, I accept that, except you would accept that these are particularly special times. We have not had a recession like this for some considerable time. The Governor was here yesterday and he is projecting it to 2018 or 2020. Now, there are over, what, 2 million people desperate for advice. I understand the point about the coming generation-Mark is going to deal with that. There might be people out there who might get in trouble in the future. There will always be people like that, I guess, but at the moment people are drowning in their financial problems. They are losing their homes and this organisation has come in and thrown money about in such a haphazard way, and nobody has told us how we actually get into a meaningful dialogue with them to determine their priorities.
Q459 Mark Garnier: In a number of speeches in the past, and, indeed, a bit earlier, you have been talking about financial capability. The Thoresen report was about financial capability. Your predecessor, in a speech last year, talked about taking consumer capability first and, in another speech, consumer capability. Sue Lewis of PFEG mentioned the benefits of greater financial capability. People are talking about financial capability. We are hearing a lot about this. What do you understand by the term "financial capability"?
Sajid Javid: Okay, I will answer that in a moment. Mr Mudie, one thing just so you are aware, when it comes to-
Chair: You will only provoke me.
Sajid Javid: I do not mind. When you are provoked, you provide even better scrutiny, so that is very welcome. But on debt advice, just to point out in the figures that MAS published for the first six months of this year-so when I looked at performance figures-it was encouraging to know, in a way, to point to your issue about increasing demand in many quarters for debt advice, that the entities that were funded through MAS provided advice for 34,000 more people than they did the previous six months.
Q460 Chair: You should not go there because, if you read our papers and you had listened to the Citizens Advice Bureau-it was one of the matters that Pat did not raise with you-one of the comments was, and we will probably come to it, about the lack of consultation over their role. That is what Mark was getting at, their role. They went into Citizens Advice and they instructed them, not backed up with resources, to see more people in return for the same grant, presumably under the threat, "If you do not we will take the grant". But as Citizens Advice say, when you are dealing with an individual deep in debt problems it is not a two-minute job. Citizens advice bureaux lock their doors when they are full because they know they cannot see any more people. To simply say, "Save 50% more", as was the claim, you are simply forcing people to get less good advice because they are trying to see more people in the same time. That is why those figures are better. They are better in quantity but not in quality and that is the worry.
Sajid Javid: Yes, I completely agree with you-it is as much about quality as anything. It is the most important thing. I have, and maybe you have as well, Mr Mudie, been in a citizens advice bureau when they provide advice and have seen the high quality of work that they provide. Quality is absolutely important. In terms of getting the right balance between the budget it has, between debt advice and your more general money advice, what I hope and what I would expect to see is, in its business plans over coming years, as it sees changes in demand and the need to react to that, that that is reflected in the balance of funds. That is something I will certainly be keeping an eye out for, and I would expect the FSA to do that as well.
Going back to the question from Mr Garnier about financial capability, I think you asked me what I think financial capability is, or for some kind of definition of it. I would say probably knowledge and understanding of financial products. In a general sense, what is financial capability? Having a knowledge and understanding of financial products; having the skills to then choose between different financial products; to be able to have some basic level of analysis between the different products, for example, being able to compare different types of interest rates on a loan if they are quoted in different ways; and I would also add a third element, which might be more about making people feel more confident about financial products and changing their attitude towards them.
I think there are people who probably have knowledge and the right skills. They might be very good at mathematics, for example, but maybe they do not have the confidence in themselves that they can make decisions because it is such a big financial decision. For example, when you take out a mortgage, probably one of the biggest financial decisions most of us would make, people sometimes feel they do not have the confidence to deal with that. In terms of overall financial capability I think those are probably the three main areas that help define it.
Q461 Mark Garnier: That is a very interesting and very informative answer. While I would not disagree with any of that, what slightly surprised me was that left off that list was a simple definition of how to balance a budget, some of the most basic sort of fundamental stuff. It is quite interesting; you asked Mr McFadden if he had done the financial health check. I did do it-I did not finish it funnily enough, as it took rather a long time-but what struck me about it was that, in order to do the financial health check, you needed to have a certain element of financial knowledge already to understand what was going on. You mentioned a very important point, which is when you ask the online question about the difference between APR and AER-a very important question. But that is not the sort of question that somebody who is not financially capable could ask, and they certainly would not understand the answer. We talked about debt. We have a colossal elephant in the room, which nobody has really seemed to confront too much, which is that level of household debt, £1.46 trillion across the country, at a time when we have super-low interest rates-and it is not a low interest rate environment, it is a super-low interest rate environment. Yet we have, what we accept, broadly speaking, is a financially illiterate population. Would you agree with that?
Sajid Javid: I think we need to find better ways to educate people about financial matters, yes. I would not necessarily use the same phrase you have used, Mr Garnier- "financially illiterate"-because there are different levels of knowledge clearly in the population, but I think we, certainly as a country, would do well to focus on raising financial capability.
Q462 Mark Garnier: Several people have come before this committee who have talked about financial education, and a great many of them agree that financial education on the curriculum is something we should be looking seriously at. Do you agree with that?
Sajid Javid: First, I do not think it would surprise you if I said that whether we put it in the curriculum is a decision for the Department for Education. I think there is a legitimate debate to be had because there are so many other things we want to put in the curriculum and the Government is making changes to that, focusing on core subjects. Some of them clearly add to and would enhance one’s financial capabilities, some of the basic core subjects: mathematics and English, and there is already a number of things that go on in schools, some supported by charities, some supported by financial institutions. They are trying to bring financial capability and financial ideas to young people.
There is a role for MAS in all this. I think it is looking at financial capability in schools and beyond, especially among young people, and looking at ways it can bring people together to play a role. Can it co-ordinate, for example, between the numerous financial institutions? I think there are over 20 that would go into schools, banks and other companies. Can it provide a voluntary code of best practice so the organisations that want to help are doing it in ways in which they can get through to young people more easily and make a positive impression?
Also, I would expect it to have its own discussions with Ministers in the Department for Education and see other ways that they can work with officials to try and see if elements of financial capability can put into other core subjects like mathematics so that examples can be used with children. For example, when discussing interest rates, maybe a sort of real example could be used of taking out a mortgage or something, which will help teach both mathematics but also a bit about financial capability.
Q463 Mark Garnier: Do you not agree that the fact that we have a relatively challenged level of financial capability in our population has direct effects on the economy? Certainly, we have the level of household debt that I have described, but we are also looking for entrepreneurs to come forward and set up businesses and give them a modicum of financial capability at school. We have a ready-made bunch of capable entrepreneurs coming forward. In terms of building the economy, it would be extraordinarily useful.
Sajid Javid: If your question is, "Is more financial capability a good thing for the economy?" I think yes, all other things being equal, it clearly is. I am not saying it does, but if it came at the expense-there are only so many hours in a school day-of someone not being able to do other core subjects like sciences and languages, which the economy also needs, there could be a negative impact somewhere as well. That is why I deliberately use the phrase, "All other things being equal, it is a good thing", but often there are choices and trade-offs to be made. It is not for me as the Treasury Minister to decide what should be the priorities in a school curriculum, but I think it is a legitimate debate to have.
Q464 Mark Garnier: No, I agree it is not your decision, but have you had a conversation or do you plan to have a conversation?
Sajid Javid: I have not yet had a conversation with my colleagues in the Department for Education, but it is something that I would like to discuss with them.
Q465 Mark Garnier: You do plan to. That is fantastic. Have you had a chance to meet with the Personal Finance Education Group, PFEG, who are promoting this?
Sajid Javid: Not yet.
Mark Garnier: Would you be prepared to meet them and have a conversation?
Sajid Javid: Yes, I would.
Mark Garnier: That is fantastic. Thank you very much.
Q466 Andrea Leadsom: Good afternoon, sorry for being late. I had to meet Baroness Kramer about bank account portability. I have to say, I have a great deal of sympathy with what Mr Mudie was saying earlier, which is that through this inquiry, which has rambled on a bit, when we had Citizens Advice in and they made very clear how much more they could achieve with a budget similar to that of MAS, it was quite shocking. Of course, one of the reasons why they can achieve so much is because of the extent of volunteers that they use; that they manage to get in to sort of soup up the number of people they can see, the quality of advice and so on. I just wonder, Mr Javid, whether you have considered calling on MAS to do something similar, to get better value for money, perhaps by engaging with the banks, which, as I am sure you found, as I and as colleagues here have, are always telling us that they are keen to deliver financial education and any school that wants to receive it need only ask and they have all these programmes that they put together. MAS does not appear to engage with that at all. Could that not be a means of improving their offering and getting better value for money out of it?
Sajid Javid: Yes. In terms of financial education, first, it is important for me again to emphasise that Treasury is not involved in day-to-day decisions that MAS might make and that the FSA is more involved, but even then, the FSA has an oversight role. MAS has been deliberately set up as an independent organisation that has to make its own decision about the best way to carry out its objectives.
But the very issue that you mention touches on what Mr Garnier was asking about, financial capability and what kind of role MAS can play. I have discussed this with the current chairman of MAS because it is something I am certainly interested in and that the Government in a more general sense is interested in. It is something that they have been involved in. What they told me is that, first, there was a lot of work done by the previous Government on financial capability, starting I think in 2006 to about 2010. The FSA published maybe even more than one report and MAS has told me it is their intention to work with stakeholders to, what they describe as, "refresh this report." I think it does need refreshing because we have had the financial crisis and we need to take that into account because that has made a change. Mr Garnier has referred to record levels, or almost record levels, of household debt. They are going through this process at the moment.
I have discussed this with the Chair and I would like to see what they come back with in terms of how they can work with organisations. They pointed out to me, if I remember correctly, that there were about 25 financial organisations that are involved with schools on a voluntary basis and providing help with financial capability to school children. MAS sees their role as being one where they can co-ordinate that and make sure it is being done more effectively and also to have some basic standards, code of conduct, so there are some basic principles that everyone can meet. I think all that is a good thing.
Q467 Andrea Leadsom: You say it is not the Treasury’s role to tell MAS what to do or how to expand or how to arrange their affairs, and nor is it the FSA’s role to do that. I think you said that the FSA just overviews as a whole, but it is for MAS itself to determine what it does. If this committee wanted to put forward the proposal that the MAS’s activities should expand, for example, to include financial education or indeed to try to use voluntary support from the banking sector to try to improve the number of people they were giving debt advice to, how would that instruction go to MAS? Who would put that direction to them?
Sajid Javid: I think it is important to remember that MAS has been deliberately set up as an independent, impartial organisation, so to a large extent they need to decide the best way to carry out the objectives. The financial capability and trying to promote that is clearly one of them. I appreciate, as you said, that you missed the beginning of this session and one of the things we talked about was the FSA’s responsibilities vis-à-vis MAS. On the FSA’s role, the FSA has to sign off on its budget and its business plan each year and also sign off on the appointment of all its directors. That gives it quite a big degree of involvement and oversight. Also the FSA has already set up a sub-committee of individuals in the FSA that focus only on MAS and look more closely at its day-to-day functions. Clearly the FSA have a role to play in this, but it would be looking to MAS and influencing MAS about how it carries out this financial capability role.
If members of the Committee or Members of Parliament generally want to influence this, I would say two things. First, clearly the Committee can call the FSA anytime and discuss it either formally or informally. You can speak to MAS, its management team, particularly its new CEO, who maybe at some point the Committee might be speaking to directly. That is one avenue, but something else that I said at the start of this session that you may have missed, Ms Leadsom, is that I as the Minister will be carrying out a thorough review of MAS and looking at how it is meeting objectives, how it has been running after it has had some time, especially with all the recent changes, and I will expect to do that most certainly before the end of this Parliament. I think that, when I carry out that review, there will be an opportunity for other stakeholders and people with scrutiny to provide input into that review as well.
Q468 Andrea Leadsom: Thank you very much. Just then changing subjects slightly to the way in which MAS is funded. We have had some written evidence from the IFA Centre who said they are concerned that IFAs are effectively being forced to pay for a service that people use as an alternative to seeking proper advice. They are saying when businesses are faced with financial challenges of their own, some economic, some commercial, some regulatory, firms tend to feel aggrieved that they also pay levies to fund the work of the Money Advice Service. Then the Financial Services Practitioners Panel has said that there are concerns around the sustainability of constant cost increases for firms in a very challenging economic environment, and that same Financial Services Practitioners Panel has said that utility providers should contribute to the Money Advice Service’s budget particularly because a lot of the stress for customers and the short-term risks for customers is in rising energy, fuel and utility prices and not necessarily other forms of debt. I think the general evidence that we received from financial services practitioners is they should not be the only ones funding the MAS and certainly there is a case for utility companies and Government to contribute to the costs of running this. What is your thought on that?
Sajid Javid: First, I think you referred to IFAs. You used the phrase, "not proper advice".
Andrea Leadsom: Yes. In effect, what they are arguing is that IFAs would give sound advice and instead they are paying for a service for people to go to, which is not as good advice as they would get from an IFA. I think that is how I read their evidence.
Sajid Javid: First, I would not suggest for a second that this is not proper advice. I mean MAS is a thoroughly professional organisation. It is very different to IFAs in that it is independent, it is impartial, and it is free as well. That does mean it might give different advice, but I think it is most certainly proper advice.
Also, in regard to IFAs, with the RDR and the changes that we have made there that the Committee has discussed in the past, I think the good thing there is that, once the qualification levels are increased for all IFAs and with the extra transparency the RDR will bring, that will possibly make that advice even better if you just look at the fact that all IFAs in future will have to meet a higher bar for qualification.
You mentioned utilities and maybe, say it is an electricity, phone bill and so forth, people fall into arrears. That is an important point and I did look into this. What I found was that, first of all, MAS had already done research to look at, when it is providing through others but you are co-ordinating debt management advice, what it is that people are mostly getting advice on. The number was even lower than I thought it would be. I thought it would be a low number, but they said that research they did showed that people that are getting advice for debt in arrears, other than borrowing from financial companies-so for utilities, phone companies, household associations, local authorities, and other similar things-was less than 1% of the total number of people. Given that 99% is not utilities and similar things, I think it is reasonable to fund through a levy on the financial services in general.
Q469 Andrea Leadsom: My final question is, bearing in mind the situation that we find ourselves in this year, do you think that it is reasonable that MAS is increasing the levy by 5.7% this year to fund their increased enhanced activities? Does that seem reasonable to you?
Sajid Javid: You refer to the economic times we are in. Whenever costs are increased on any industry I think it needs that extra level of scrutiny, but also this links into what we discussed earlier. There is a case that maybe more people, given the size of the household debt, given the recent recession and other challenging issues, need debt management advice. In that context, it is not unreasonable that there should have been an increase in the levy.
Q470 Chair: You have not put any caveat on that, because that is a fair answer, but if they are going to get this 5.7%, which is an amazing increase in this time of recession, they should pass it on to the frontline services. They are spending something like £10 million on core centre administration and that is quite wrong if frontline services are not able to do the job with troubled people. Is there any prospect of giving that instruction to them, "You cannot spend it in head office; you should be spending it on the street"?
Sajid Javid: It would not be for the Treasury to give that instruction specifically for the way the MAS is set up as an independent organisation funded by the levy. It could be something that, when the FSA is going through its business plan and its budget in detail, they could choose to do, but I think it would be inappropriate for the Treasury to put caps and caveats on how MAS should spend its money. What I will add, and I think hopefully you would agree that this is a good thing, is that, as referred to earlier, FSA has already said that it will carry out a value-for-money analysis of MAS in the New Year.
Chair: Which year?
Sajid Javid: This coming year, the start of 2013. Also, as I have mentioned, MAS will now for the first time fall under the NAO, and they can also carry out their value-for-money analysis. I would not be surprised if they do and, if they do, I would fully support it.
Q471 Chair: The last question to you is one that was raised initially and it has raised its head again this year. One of the constant complaints from the services on the street, the deliverers, was that there were no consultations, firstly, on whether they were going to be used and, secondly, on their budgets, until very late in the financial year. This letter just came in on 23 November to me. Advice Leeds has nine people giving advice. It is a Government scheme. Last year they were told on 31 March, the last day of the financial year, that they were going to have continued funding. By that time, they had had to give the staff notice of redundancies. The staff had to break off seeing their clients to prepare for closing down. Do you know what is happening this year? I have heard a whisper that there was better consultation than last year, but that would not be hard. Will we be told by the providers that there have been adequate, timely consultations? If so, Alison, while you are passing the Minister that note, why does Advice Leeds send me this letter worrying that they do not know whether they are going to continue next year and they do not know whether they are going to have to wait until 31 March? That is a bad way to treat people who are doing this key job.
Sajid Javid: We will answer that question in two parts, if we may. First, on the general point, I clearly would agree with what is the main point in your question. Institutions like Citizens Advice and others that MAS is working with need to be provided with adequate notice, because we discuss Citizens Advice as the example. They are not the only one. They do excellent work in this area and many of the people they have are volunteers, not all, but they have expenses to pay and so forth; so they need to know with adequate notice. I have not particularly looked at this myself yet, but I know officials have. I would let Alison be a bit more specific about that.
Alison Cottrell: You are right; it is not the way you would want to run a business. It does cause tremendous problems for charities and for businesses. It is in part a function of the fact that obviously MAS has to take its business plan on an annual basis to the FSA, so it is on this yearly cycle itself. I think one of the issues that the FSA and in future the FCA will be discussing with MAS is, firstly, can this happen a little bit earlier so that it does not come so late to CAB and to others when it happens. At the moment, as I understand it, with the discussions with the FSA, this new sub-committee and with MAS, they are trying to give some comfort so that the situation that CAB is setting out there should be hopefully resolved very quickly, if it has not been already, just to tide over the fact that it is relatively late in the year at the moment. But it is something that we are very aware of as a problem.
Chair: All right. Minister, I am much impressed by your performance when you have a bad case. I would hate to meet you when you had a good case. We are very grateful for your giving evidence. Thank you very much.