MONDAY 28 OCTOBER 2002
Mr Edward Leigh, in the Chair
SIR JOHN BOURN KCB, Comptroller and Auditor General, further examined.
MR ROB MOLAN, Second Treasury Office of Accounts, further examined.
REPORT BY THE COMPTROLLER AND AUDITOR GENERAL:
Office for National Statistics: Outsourcing the 2001 Census
Examination of Witnesses
MR LEN COOK, National Statistician and Registrar General, and MR JOHN PULLINGER, Executive Director, Office for National Statistics, examined.
(Mr Cook) John Pullinger, the executive director of social statistics in the Office for National Statistics, has been in charge of the census since 1999.
(Mr Cook) This Census was conducted at some 25 per cent less than it would have been if we had carried out the methods that were adopted in 1991. We will continue to look for efficiencies and other opportunities. For example, in 2011, we would expect to have more opportunities and use of administrative data, using methods more akin to those used in the Nordic countries. That is one key option that we would look at.
(Mr Cook) All censuses have some degree of inaccuracy. In the case of the 2001 Census in the United Kingdom, we conducted one of the most extensive ever census coverage surveys, with some 320,000 people in it, which has allowed us to estimate the population for each of the local authorities in the UK within five per cent independent of the Census and in most areas much less. We have an alternative check on the Census.
(Mr Cook) They did not provide us with information but we knew they existed.
(Mr Cook) We do not get accurate information from 100 per cent of the population in virtually everything we do. What the Census coverage survey gave us was a sound, statistical means of estimating the characteristics of those who were missing from the knowledge we have about the population that we collect.
(Mr Cook) Firstly, I would draw on the Auditor General's comments when he said that we have a sound strategy for outsourcing census services. The report that was prepared well before the Census suggested that we outsourced some 42 to 44 per cent . The amount that was outsourced was about 33 to 34 per cent of the Census. I think what we outsourced was a reasonable amount for what we knew. Most countries in the 2000 round censuses outsourced in some way or another the scanning of their censuses. That was an activity that was done in most countries and that was the single difference of any real size in what we did.
(Mr Cook) Not with the lightest contract. We had difficulties with two contracts. One was the payroll contract and the second was with the Royal Mail.
(Mr Cook) He resigned for matters that were quite unrelated to the NAO report.
(Mr Cook) No. He resigned because, on another matter long after that had been an issue and cleared up, he took some action that was contrary to the action that I would have taken as registrar general.
(Mr Cook) He resigned when he had charges that were quite unrelated, but they were charges relating to the release of information to another government agency without my authority as part of information that was collected in the 1961 Census.
(Mr Cook) I understand that he had worked before with the gentleman from Vogue but in the review done in 1999 and in the audit report which we are now discussing there was no evidence to suggest that that was improper in any way whatsoever.
(Mr Cook) He did not follow the process ----
(Mr Cook) At the time, that involvement of his as the chairman of those committees continued after this incident. Those committees were concerned with the operation of the contracts that were already let. They were not the committees concerned with the letting of new contracts. We had at that time shifted the involvement of the Office central procurement unit into the oversight of all those contracts.
(Mr Cook) Firstly, we used estimates that were primarily based on the experience of the United States where they have been having mail back censuses for several decades. The mail back rate was approximately 70 per cent and quite a reasonable one to estimate. In our dress rehearsal, we were not able to imitate the conditions at the time of a true Census collection. There was quite an extensive public communications programme, you may recall, in April and May last year. The estimate and the dress rehearsal were not regarded as quite as reliable as the actual operating experience of the United States. Can I draw your attention in the report to the comparison between the different areas of the country, where it refers, for example, to north Bradford and west Birmingham, where by 8 May north Bradford had a response rate of 50 per cent ; the next week, 100 per cent. West Birmingham had a response rate of 78 per cent ; the next week, 83 per cent . The huge variation of response rates across the country to the mail back would have made it very difficult for us to have been certain of any particular estimate.
(Mr Cook) The experience in paying people was a very serious failure on the part of my department. I wrote to all those 23,000 people on 12 to 20 June, recognising the concern, taking responsibility for that. The difficulty of getting a good payroll provider for the Census emerged during 1998/99, when we had only three viable alternative providers. In the end, we had to select one of the two alternatives, neither of whom had particularly flexible systems, and we had to put a lot of effort into working with them to create a payroll system. The payroll for the Census is one of the largest payrolls that one would have. 70,000 people is a very large payroll by most people's standards. Secondly, the huge amount of amendment to it in a short period of time would have made it one of the more dynamic payrolls that would have needed to be managed. The Chessington systems are not, I think, awfully flexible.
(Mr Cook) My Office made a mistake in dealing with the payroll contract in that we did not sufficiently assess at various times whether we were ever going to get the payroll service that we needed. A huge amount of effort went into working with Chessington to make their payroll fit what we needed. Several times in the dress rehearsal we were not able to test the final system. We had to test what Chessington had available, which was unusual for the dress rehearsal testing of all the other systems. Even by December 2000, we had difficulty paying the team leaders in the Census. There were enough problems with mail back and with several other influences on performance that led us to believe that the payroll system would still deliver. However, it is clear that we were working right through to the end to try and get an adequate provider to deliver us a service.
(Mr Cook) I think you can assume from the success of the rest of the outsourcing of the Census and the success of the Census generally that we have learned a lot -- in fact, quite a remarkable amount -- and I would be reluctant to suggest to you that the payroll contract in any way whatsoever typified the work that we actually did in the rest of the Census.
(Mr Cook) The public sector comparator that was used when the scanning project and editing project was outsourced to Lockheed Martin gave a saving of £15 million. We also believe that the Census for 2001 would have cost 25 per cent more if we had done it using the methods that we had used before. Firstly, the mail back was another source of saving of some substance but the savings we saw were, firstly, not an additional cost for the extra ten per cent of households that were surveyed and, secondly, rather than processing only ten of the hard to code questions, particularly industry and occupation, all of those questions were coded for every area, every electorate in the United Kingdom. There was a huge increase in the information available for small areas and that is how the productivity gain mainly came about.
(Mr Cook) We expected that, with the 70 per cent response rate, if we had increased it, we would have saved £300,000 for every one increase.
(Mr Cook) The whole Census operated within the budget of 207 million.
(Mr Cook) By international standards, it is not an unreasonable budget. We only have a Census every ten years and there is such a huge amount of public policy that is dependent on the Census, whether ----
(Mr Cook) The 207 million that the Census cost us we estimate would have been 25 per cent higher if we had not carried out the Census as we did. Some of that was outsourcing. Some of it was carrying out a mail back Census, so I think it is not possible to say that all that 25 per cent was due to outsourcing at all. In terms of the explicit outsourcing contract of Lockheed Martin, the estimate I have given you is that 15 million of that is estimated by using the public sector comparator for comparing what we ended up paying to Lockheed Martin as opposed to the process endorsed by the Treasury for calculating that comparator. When it comes to the additional cost of the field collection, we estimated that with a 70 per cent response rate, for every one that the first mail back increased by -- and we got 88 instead of 70 per cent-- we would reduce our field costs by 300,000. That gives us a figure of over 5.5 million. In fact, we did not achieve those gains and we spent five million in addition.
(Mr Cook) It was £2.5 million in total out of 70-odd million.
(Mr Cook) The 20,000 authority was exceeded by the Census manager and it was not picked up by my Office when we conducted an internal review by the procurement division of how the Census procurement was going. It was not discovered until it had reached a far greater sum of 400,000. When immediately this was discovered, a review was conducted and the assessment was carried out of the cause of these problems. The Census manager was put under a charge of serious misconduct.
(Mr Cook) Yes.
(Mr Cook) In 1997 ----
(Mr Cook) In 1997, the Office agreed that the Census manager during the year 2000/01 would have an eight per cent increase in his pay because of the vast increase in his workload during the two years of the Census. On 1 January 2002, his pay went down again by that eight per cent because that period had concluded. He was given a pay deduction of four per cent and the allowance sat on top of that because it was unrelated to it.
(Mr Cook) I honestly do not know.
(Mr Cook) No, I believe not. I think the newspaper told us that last week.
(Mr Cook) All the payments after the first sum of 400,000 were agreed to by the accounting officer of the department because they were payments made after the arrangement had been reviewed and it had been decided to carry on with it. The reason it was decided to carry on with it was, very simply, it was judged to be in the best interests of the government in terms of the risk of having a significant change in the way in which the contract was organised and negotiated at quite a critical period. It was very much regarded as likely to cost the government more to set up negotiations with companies such as Lockheed Martin with an entirely new team.
(Mr Cook) We have already done it. Firstly, I think it is important to recognise that the ONS itself started up in 1996 as a new department. The procurement side of the Office -- an erroneous decision was made to expand it specifically for the Census; whereas we have centralised through our central procurement unit, which reports through the principal financial officer to me, all decisions relating to procurements of this sort.
(Mr Cook) It was judged that there was no impropriety in the process and ----
(Mr Cook) I do not regard it at all as an acceptable action and that is why the processes of procurement were centralised into the procurement office, why the manager concerned had no role in initiating procurement activity after that. He was carried on very much for the reasons of the best interests of the Census.
(Mr Cook) To use it for more than £20,000 a year would have been inappropriate, yes.
(Mr Molan) Yes.
(Mr Cook) Yes.
(Mr Cook) To the extent that it was done, yes.
(Mr Cook) The Criminal Cases Review Commission has the ability, as I referred to in my annual report to Parliament for the year 2001/02, to obtain information from government departments where it believes it is acting in the interests of the individual who it is obtaining the information for in its review of legislation.
(Mr Cook) I would not have provided information to the Criminal Cases Review Commission without testing it.
(Mr Cook) A case of gross misconduct was being prepared through the processes in my Office for reviewing performance. During the preparation of that, the union that represented the Census manager raised the issue of whether I would accept a resignation without any additional payment, simply a resignation.
(Mr Cook) It did.
(Mr Cook) No. He left. His final pay was for a date in April. When he left, he was on suspension from 27 February to 5 April and his pay ceased at that time. He received no payment, no gratuity, no additional money from the Crown whatsoever.
(Mr Cook) Firstly, part of their bid was that they would work in partnership with my Office. Secondly, when we were carrying out the process of assessing the three organisations, at one stage, we invited our internal auditors to review the process we were adopting and they advised us that MP Systems should be excluded from the next stage for two prime reasons: concerns in terms of their financial instability and, secondly, their complete lack of experience in a management payroll service of this size and complexity.
(Mr Cook) They had provided us with computing services to operate the 1991 payroll, which we operated ourselves.
(Mr Cook) Yes.
(Mr Cook) Very much so. The Chessington systems were quite rigid for the task that we had and a lot of effort was made to adjust for the nature of the task.
(Mr Cook) We have recovered half the advance payments made by Chessington, or 35 .
(Mr Cook) Yes.
(Mr Cook) Yes.
(Mr Cook) Yes.
(Mr Cook) Yes, they did.
(Mr Cook) There were penalty clauses and the department's ability to have those penalty clauses applied was offset by the part of that contract that required us to deliver an accuracy level of 2.5 per cent which was not achieved. In fact, the accuracy level that we delivered was much more like ten or 7.5 per cent overall.
(Mr Cook) The contract had a quality of documentation being provided to Chessington which was not delivered by my Office.
(Mr Cook) No, certainly not a success story for my Office in the particular aspect of having the accuracy level of 2.5 per cent in the contract. That was an error in judgment.
Mr Williams: I cannot commend you on your performance. I can at least commend you on your honesty.
(Mr Cook) We got some things wrong but you have to look at the thing as a very large operation which has delivered on budget overall. That is the ultimate test which we have delivered on. Secondly, the most significant thing that I think we did fail at was we put our contingency money in the wrong year. We should have put our contingency money in the year when the Census uncertainties were at their greatest, but when the Census budget had 20 million removed from it in 1999 we did not realign the budget with where we expected the risks to fall. That was an error.
(Mr Cook) I cannot answer that.
(Mr Cook) The year of expenditure was not seen as an issue in terms of the traditional cash accounting used in government. This is one of the times when the move to accrual accounting bit into the organisation and I think, for any organisation carrying out a very large expenditure such as the Census, it was a learning experience. I would put a large part of it down to the move to cash and accrual accounting.
(Mr Cook) That did not really matter, did it?
(Mr Cook) If we had overestimated, I suspect you may have been asking us why we overestimated. I think we were very successful in that we obtained a contractor who could scale up from 350 lines to 1,300 within 48 hours. If we did underestimate, what we underestimated was the huge goodwill of the British public to fill in Census forms.
(Mr Cook) I disagree. The key concern of people ringing the helpline was, firstly, can I get more forms and, secondly, can you tell me, given that I have a form, whether this person should be in my household or not. There was a huge interest in completing Census questionnaires.
(Mr Cook) I think it reflected a huge interest in a big part of the Census. An 88 per cent response rate in mail back is a confirmation of that.
(Mr Cook) We used the best information that was available. If you look back on April/May last year, we may well have had a fair wind in terms of public goodwill to filling in the Census that, if we had carried it out six months later, we may not have had. I think we had a pretty good estimate. We had to have an estimate that we could meet. If there was a fault -- and clearly in hindsight we did not estimate a figure that was close to what was achieved -- we would in future plan to deliver on a range rather than a point estimate.
(Mr Cook) We had huge difficulties in getting the mail that was provided to post offices back out to the 2,000-odd Census managers. The 69 postal centres of the Royal Mail provided a hugely variable service to us and we found it very difficult to predict or even understand what was actually happening for a four week period.
(Mr Cook) There is an excellent chart in the report on page 13 of when the Office predicted the post back and what happened. Except for the fact that far more forms came in the two weeks before the Census, our predictions were not too bad in terms of the capacity of the Royal Mail to deliver. For an organisation whose peak capacity is 80 million postal items a day, we were collecting 20-odd million over the whole experience.
(Mr Cook) We are reliant more than we would want to be, in the same way that we have always been in a Census, on the judgment of the managers in the field at this very tightly packed time for collecting Census forms, in the three or four weeks straight after the Census. What happened in this Census is that they had considerably fewer forms to collect than the 100 per cent that they normally collect in a Census. They had no less information than they have had in the past. What we did put in place for the Census was a much more comprehensive management information system that did not actually work.
(Mr Cook) In the end, no.
(Mr Pullinger) The Census coverage survey was due to take place primarily during the month of June. The Census enumeration was intended to finish on 21 May. When we discovered there were difficulties with the post back, we gave discretion to local managers to extend the period of enumeration by one week from 21 to 28 May. Where they needed to do that, that is what they did and it was the expenses incurred particularly during that week which added to the cost.
(Mr Pullinger) Yes.
(Mr Cook) Yes, and we did a test of it afterwards.
(Mr Cook) There are two different things we are talking about. One is the difference between the population estimate that we have produced for June 2001 and the final Census figure. We estimate that of the 900,000 difference 300,000 is caused by an adjustment that we made for people missing from the 1991 Census that we now no longer believe we should have made. We believe the 1991 Census was more accurate. We believe that our ability to measure people leaving the United Kingdom is the key vulnerability that we had in the statistical system we had for measuring population change between Censuses. To that extent, there were some 3.4 million people who arrived in the United Kingdom between 1991 and 2001, and where we previously estimated 2.5 million departed we now believe that some three million departed. When we examined the age profiles and sex profiles, we believed that we lost more young men between 20 and 35 than other groups, but there is a shortfall in other groups.
(Mr Cook) We can count them in terms of how many there but of course we would not call them a religion.
(Mr Cook) We will not know until 13 February when the more detailed parts of the Census ----
(Mr Cook) Yes.
(Mr Cook) We had one incident in a rest home where 14 forms ended up being found in a neighbouring letter box. We believe that they were placed in the letter box that may have been overflowing and someone may have placed them somewhere else. We obtained nearly all of those forms back through them being mailed to us, but that was the key incident we had. We also had a second incident in St Hilda's where some forms went missing and we recovered them later.
(Mr Cook) The contract that we had with the Royal Mail was for three days' return to us.
(Mr Cook) They would deliver back locally. Each of the 2,000 managers maintained the forms for their area when they were returned and ordered to work out where we went back, so all that was managed locally.
(Mr Cook) It was 8 May that we were going to start going back and that became delayed in a number of areas, because the Post Office did not provide us with the information that they had sometimes up to two or three weeks later.
(Mr Cook) That would have occurred very much in the period between 8 May and the following two weeks.
(Mr Cook) The 5.4 million.
(Mr Cook) We have prosecuted 39 people successfully and they are the number where we believe we could sustain right through to the point of prosecution with the advice of Crown solicitors.
(Mr Cook) No. We estimate that there are some million people, from the Census coverage survey, that were not included in the Census.
(Mr Cook) 39 gave us reason to prosecute according to the law and the evidence and the processes we had for ensuring that we can prosecute.
(Mr Cook) In general, we would not have been able to identify them to be able to follow through a complaint. Usually, the people that we are successful at being able to prosecute are people who bitterly object and make a point of doing so, who obstruct the Census or are threatening in some way.
(Mr Cook) The odds would certainly be against you. That happens, I think, in many walks of life.
(Mr Cook) You can be fined up to £1,000.
(Mr Cook) It varies.
(Mr Cook) We can give you the whole 39.
(Mr Cook) 115 million in 1991 dollars.
(Mr Cook) It would certainly be value for money then.
(Mr Cook) Roughly 250 million.
(Mr Cook) We believe so. That is recognising that there were ten more households and that we processed the hard to code questions of industry and occupation for the whole population rather than the ten . That has a consequence for all small parts of the country. We have that very detailed information that we did not produce in 1981 or in 1991 for cost reasons.
(Mr Cook) The most significant one was, "Can I get a form?" The next one was very much about: is this person eligible for being in the Census or, "I am in my second house. What do I have to do?" They were very much questions of location versus form.
(Mr Cook) The review we do of issues like that plays a very major part in the way we shape the next Census and I have no doubt that will be critical.
(Mr Cook) Parliament passed a law in 2000.
(Mr Cook) In the case of the UK, it was very much part of providing information as an extension of the social exclusion agenda in terms of the question of ethnicity and is religion another way in which we can find out about the culture of people. You will notice it was not really a question on religion because it lumped a large number of Christian religions together. The Church of England was not separated, for example, so it was very much seen as a complementary culture and ethnicity question.
(Mr Cook) We will know that when we have seen the proportion of responses, but we do not believe so at this stage. I think we should hold our powder on that.
(Mr Cook) They were very closely involved with the Lockheed Martin contract, with the Cable & Wireless contracts and I think the Royal Mail contract.
(Mr Cook) It was not a concern of what they would do with the information. It was a concern that we were dealing with quite a comprehensive contract with Lockheed Martin that has delivered within four weeks of being on time within budget. It must be one of the most successful IT projects that we have in government. If we had changed our horses midstream, we may well have lost the continuity of negotiation that is quite important in the development stages of the contract.
(Mr Cook) The contract was not written according to our organisational standards. There was a contract but it was Vogue's contract, not the contract of the Office, which is our rule.
(Mr Cook) Until the contract was changed by the Office in 2000, yes.
(Mr Cook) The legal advice that was received at the time that this was going on was the procurement of Bird & Bird.
(Mr Cook) They were appointed under an arrangement that the government has for contract procurement as noted on page 18. The contract with Bird & Bird was not regarded as improper because it was started out under the procurement rules.
(Mr Cook) There was no tender. There was a facility for the employment of Bird & Bird in quite a different way ----
(Mr Cook) The CCTA, the predecessor of the Office of Government Commerce, did create a list of consultants who had been approved and Bird & Bird were on that list. That was the basis of the employment.
(Mr Cook) Yes.
(Mr Cook) I do not have the answer that, except that Bird & Bird were on the list. They had considerable experience in this area and they provided an excellent service.
(Mr Cook) Yes.
(Mr Cook) We paid them £22,000 because we kept them in, in order to ensure that we had a competitive lot of bids that were regarded as a viable alternative. When the internal audit that was contracted out to KPMG reviewed that, it was concluded that it was not right for my Office to carry on with the company because of its financial viability and because of its lack of experience in dealing with a payroll of that size, so we immediately dropped them from that list and it was believed that we should pay them compensation for the work that we had required them to do, because we were advised by our auditors that we should not have had them on that list up to the point we did.
(Mr Cook) No, this was a fully competitive ----
(Mr Cook) We did not have a partnership with them. They were one of three people who carried on past the indicative bids, who were short listed to provide services for a payroll for the Office.
(Mr Cook) Their quote was a proposition to have a joint venture. One of the reasons why they were regarded as not acceptable was because it was outside the ----
(Mr Cook) If you come back to the comments in the report by the Comptroller and Auditor General, he placed emphasis on the fact that we did not show special competition to deliver value for money from the services that we obtained in outsourcing. In this particular bid, we sought to ensure that we retained competitive tenders in an area where we were quite disappointed with the people who were putting themselves forward to do the Census payroll. We did not want to exclude, at the early stages, someone who had a significant chance of doing that.
(Mr Cook) I am sorry.
(Mr Cook) If you come back to the report, the report does make the point that we had a sound strategy for outsourcing since the survey services and that we achieved this. We did have a number of challenges in doing that. Perhaps I can refer you to a letter from NCS, National Computer Systems, who were part of the Lockheed Martin tender, who make the point that our entire team has been most impressed with the professionalism, knowledge and integrity of the members of the UK Census team and despite our many years of experience rarely have any of us seen such a well matched procurement opportunity.
(Mr Cook) We have not employed them for anything since.
(Mr Cook) Approximately 250.
(Mr Cook) Yes.
(Mr Cook) Firstly, they had to deliver forms to every household and make contact with every household in a way so that they knew they should be mailing back their forms.
(Mr Cook) We made contact with the overwhelming majority of households to deliver them forms so that they knew their obligations to return. There was a huge effort to make contact with households, particularly in the last two weeks.
(Mr Cook) It was only a mail back census.
(Mr Cook) The judgment was made that we would make the most effective changes and maintain the integrity of the census by continuing to call, but then to mail back.
(Mr Cook) We, in fact, increased considerably the number of people involved in the larger cities in the United Kingdom.
(Mr Cook) By the time you have got 88 per cent back by mail, the remaining forms that come back are coming back from people who are very hard to get hold of, who generally take a large number of visits to make contact with and who are people who will require persuasion to complete census forms.
(Mr Cook) If we leave aside the fact that the last six million would have been the hardest six million whether it was out of 18 million or six million, we also ended up, because of the difficulties with the Post Office, employing people at a time when we did not need them and people made far more visits back to households than we needed to make because we did not have the information that forms were already in our possession because they were at the Post Office. In fact, that created a significant increase in the cost.
(Mr Cook) I would remind you that all of this takes place in a four to five-week period in a very large devolved management. I think that is the key issue there.
(Mr Cook) Can I say, firstly, that the Chessington 46 per cent is a mystery to us, we do not know where it comes from. It reflects, we believe, a sample of their forms. Our figures for the 123,000 pieces of material we had was half that, 9, 400, and seven and a half per cent.
(Mr Cook) What we are saying is the rejection rate that we received in April to July for the period when this test was carried out was seven and a half per cent, 9,400 ---
(Mr Cook) We would accept that the true error rate is somewhere around that, yes, but it is difficult to estimate.
(Mr Cook) I think it is. I think two and a half per cent was an error to include in the contract.
(Mr Cook) I think that it has proven to be a reasonable amount in terms of the risks that exist with major IT contracts and the fact that the contract has been managed within the budget set, and the fact that the overall census is within budget I think bears out the judgment that was made to allocate that amount of time.
(Mr Cook) No.
(Mr Cook) No, the range that we used for assessing the likely response rate was set and the judgment was made as to what the processing costs would be. We did not obtain advice ---
(Mr Cook) Of the census?
(Mr Cook) Yes.
Geraint Davies: Thank you, Chairman.
Chairman: Thank you, Mr Davies. David Rendel?
(Mr Cook) December 1998 was when the payroll contract was actually awarded.
(Mr Cook) The dress rehearsal was April 1999.
(Mr Cook) The expectation would have been that the payroll provider would have been fully tested during the dress rehearsal, but the delays in getting a payroll provider meant that we were not able to use the final payroll system that we used during the census during the dress rehearsal.
(Mr Cook) With the system that we used, which was not the final system to be used during the census, the error rate was approximately ten per cent and we believed that with the changes that we made in the forms that we actually could reduce that error rate quite significantly. We had no estimate of what we would reduce it to because we did not test it again.
(Mr Cook) Yes, it was an error accepting the 2.5 per cent. It was a figure that was put in by Chessington. It was not an evaluation by my office. It was a figure that was put in by Chessington and during the final -
(Mr Cook) Yes, we did.
(Mr Cook) No, it is not but it happened in this case.
(Mr Cook) No, the contracts had independently established errors. This contract was one that involved us dealing initially with three quite inadequate tenderers. We got down to a process where we believed that Chessington would do the work that we wanted. That involved a huge number of changes to their systems to do that.
(Mr Cook) No, they were not.
(Mr Cook) We simply did not have the time to do that. As this evolved, by December 2000 we were in the difficult situation of ---
(Mr Cook) We went out to competitive tender.
(Mr Cook) External contractors. We looked as far as possible.
(Mr Cook) Yes. This is a very large payroll of 70,000 people. It is a one-off job for a three-week period and there was not the interest in doing it.
(Mr Cook) Let's remember that Chessington paid for a significant proportion of the public service their payroll every month. They were our payroll providers. I think the important difference between Chessington and the other outsourced companies that we had is that, for example, with Cable & Wireless and with Lockheed Martin we had essentially an effective partnership which was able to respond to problems as they arose. With Chessington what we received was quite a rigid service which they were quite unwilling to change or adjust to as our circumstances varied. They were generally a relatively unco-operative partner.
(Mr Cook) Outside the ---?
(Mr Cook) In information technology particularly, yes.
(Mr Cook) For example, in the establishment of our new information technology architecture which we are working on, we have people advising us as to the validating of the direction we are doing, much more reviewing what we are doing rather than -
(Mr Cook) By using the processes of the Office of Government Commerce. We would take them as part of the panel that had already been validated in terms of eligibility.
(Mr Cook) The contract clearly started out on a smaller scale which was initially within the authority and then, quite properly, it was expanded beyond their authority with Vogue, yes, and then it was reviewed after that by the office and it was decided deliberately to carry on with it after it had reached 400-odd thousand.
(Mr Cook) Good heavens, no.
(Mr Cook) I said no. There is a quite tightly-defined prescription of the roles, the recruitment processes to be adopted, and the scale of payments for every employee in the census, right down to the 70,000 enumerators.
(Mr Cook) They basically have the authority ultimately to hire and fire.
(Mr Cook) They have a process of doing it, just as I do, so they do not hire and fire willy-nilly, they have to follow the procedures that are laid down.
(Mr Cook) There is a process of interviewing and assessment, yes.
(Mr Cook) Yes, these processes have the capacity to be appealed and argued, as any other process.
(Mr Cook) Yes.
(Mr Cook) The loads have been assessed in the Census Office before the census in each area, so each enumerator has a load which is based on the number of addresses that they are going to go to.
(Mr Cook) That was because once the Post Office problems emerged they had quite different effects in each area of the country. Each of the 69 Post Office districts performed quite differently and so it was very difficult to establish a national pattern of how long forms were being held up in different parts of the country.
(Mr Cook) They had to make the judgments. If they had already trained people, did they put them aside for two weeks or one week before they started using them again? So people may have been trained, their training may have been deferred if they had not already been trained ---
(Mr Cook) They had a review of the regional manager/the area manager above them. Essentially a census is a franchised activity where, in fact, there are checks in terms of the authority that people have to do things, there are review processes, because they are part of a management chain, and finally there is, of course, after the event of the census a very extensive review process where we look at how the census performed. Each census is essentially a prototype for the next one.
Chairman: Thank you very much. Your last questioner is Mr Ian Davidson.
(Mr Cook) That is most probably the case; possibly the case.
(Mr Cook) No, I think conformance to proper process is one of the few ways you have to judge the effectiveness of many government operations. So I would not make that point.
(Mr Cook) Firstly, can I say that advice was taken - as an accounting officer would - both legal advice and of the principal finance officers of two large organisations, once the penalty had been decided by the officer in the department responsible for judging the case, on appeal, whether in fact that penalty was fair. That advice led to the conclusion that in fact the penalty was if anything a little on the high side for the situation which had been described to those people.
(Mr Cook) There is an individual whose case was being dealt with by the Criminal Cases Review Authority, and the Criminal Cases Review Authority legislation enables that authority to have access to any government record about a person who is seeking to have their own case reviewed. The Criminal Cases Review Authority sought information from my office about that person from the 1961 Census.
(Mr Cook) Yes, it was about the person.
(Mr Cook) It was about the person themselves. That is the only basis on which they could obtain the information.
(Mr Cook) Was there another person?
(Mr Pullinger) The information was being sought by the Criminal Cases Review Authority for a case they were investigating. It was about other people.
(Mr Cook) Yes. Yes, because I would not have done that.
(Mr Cook) We understand it was two people.
(Mr Cook) 13 February; 18 February.
(Mr Cook) It is not for me to decide on the religions in the United Kingdom. It is not for me to turn Jedi into a religion.
(Mr Cook) We will prepare an analysis of the number of people who call themselves Jedi but we will not present the results as though they were a genuine religion. There was a wonderful response from people which undoubtedly led to a good many people more enthusiastically completing the census than they might otherwise have done, but one should treat it however as a somewhat frivolous act.
(Mr Cook) We produced an estimate of the number of households in the area and by the time the forms were delivered by the enumerators they in fact delivered more forms and we recovered more forms back. So this is based on the address list which we start the census with and it is the key reference point.
(Mr Cook) No, it is a percentage of the base population which started the census.
(Mr Cook) I think one of the important experiences that you get from doing a mail-back the first time is that you have a huge amount of information about a great variety of experiences that you are going to encounter. Planning to manage a census with such a huge variety of experiences is considerably more difficult than assuming any average performance. I think one of the difficulties we have with the census is that what we do not know is the extent to which regional differences were either exacerbated or muted by the performance of the Royal Mail in delaying the process of census forms, so in some ways we still need more information to understand the variability of different areas.
(Mr Cook) Firstly, if you come back to the Report, the Report does say we did have a sound strategy for outsourcing census services, and I think that is clearly dominated by the success of the most significant outsourcing contract. We did actually have a lot of competition for the bids, we had over 100 bids for example. We did actually have risk management arrangements. We carried out the census during the foot and mouth epidemic; we carried it out through a huge lot of issues in Wales in terms of the public's response to the Welsh question; we carried it out at a time of real difficulty in getting people to want to even work on the census in London. We had staff from about seven government departments and 12 local authorities who were given time by their managers to come and work for us. Finally, as you well know, we had a chance for quite a while there would be a general election in the middle of the census. So we had a whole raft of things where risks were being actively managed. So I think given those risks which were managed, the comment in the Report that we had effective contingency arrangements with our contractors is quite an important point. I think in fact the census overall went very well when you look at it as a job where the key successes are, four to six weeks after a census do you get a good form from people, do you actually get a census carried out where the overwhelming majority of people just want to give you a form rather than question whether they can trust you, and finally, can you actually process the results afterwards.
(Mr Cook) Thank you.
Chairman: Thank you very much. We have a wrap-up question from Angela Eagle.
(Mr Cook) Generally it is less than £10 million. Can I say that the contract negotiations are at a relatively sensitive point at this stage. We have no doubt that we will resolve that contract within the budget of the census and that in fact our ability to carry on negotiations at this stage reflects the fact we have a very effective contract where we have some costs we are claiming off Lockheed Martin, they have some additional costs they believe we should bear which their other contractor caused them to incur, and at this stage I do not think we will see a settlement with Lockheed Martin as being a matter of great significance in the light of the issues in this Report.
(Mr Cook) The percentage of the overall contract cost which is in debate is of the order of £2 to £3 million.
(Mr Cook) The amount we are talking about is £2 to £3 million, which is about 5 per cent of the contract cost.
(Mr Cook) I said it was under £10 million. I was recognising the fact we are still negotiating.
Angela Eagle: Okay.
(Mr Cook) In each of the areas that you work there is generally a very small team and were there to be one-off unusual arrangements they would tend to become obvious because there is a lot of team management.
(Mr Cook) It would come to light in terms of the areas that people were employed in. People have to complete logs, they have to certify their work ---
(Mr Cook) If your nephew were to do that, in order to do it they would have to provide enough evidence for us to actually prosecute them, if they could, in terms of deceit and in terms of false statements of the eligibility for work ---
(Mr Cook) In each of the areas there is a process of reinforcement of the activities of managers by the activities of managers at a higher level. So there are 101 area managers, they have an oversight of 2,000 census area managers who have an oversight of the work of 6,000 team leaders, who can reach in between the census area managers and the team leaders and the combined interests of the 30-odd staff which each census area manager is responsible for, and this would in fact have provided a very, very strong oversight of the employment arrangements. It would have been absolutely impossible this could have occurred ---
(Mr Cook) No. We have a whole process, we have a team leader, a census area manager, and of course payments for expenses went through our area manager regional office, so there is a whole process of validation. Can I say that when you go to a team briefing of our census area managers, as I did, the biggest complaint they have is the excessive bureaucracy that we put in place in order to create validating processes for this.
Mr Williams: I want to impose on the fact that we have an eminent statistician with us today and ask a question which is nothing to do with the inquiry but it is very important to this Committee. We do a lot of investigations into PFI deals and in the PFI deal we are always shown a public sector comparator which eventually always manages to work out at a result which shows the public sector costing marginally or massively more than the PFI alternative. We have treated the public sector comparator as an accounting concept but it is a statistical concept. Has there been any exchange of information between offices such as yours and the NAO to help guide this Committee on how we can assess whether the public sector comparators which are put before us are valid or not? If not, is there any way you can concede that you in consultation with the NAO could devise something which might be of help to this Committee and to Parliament and to parliamentary accountability?
(Mr Cook) I am not sure I am competent to give you ---
Chairman: You can always give us a note.
(Sir John Bourn) I am very glad to work with Mr Cook in responding to that. Of course when our work on public sector comparators includes work of a statistical nature, it is in fact done by statistically qualified people in the Office, so there is proper professional backing to that work. But I should be glad to work with Mr Cook in responding to the points you make, Mr Williams.
Mr Williams: Thank you. That would be helpful.
(Mr Cook) I think that might have been me using a loose term. They have a significant part of the public sector but "half" is not me speaking as a National Statistician!
(Mr Cook) Yes.
(Mr Cook) Insofar as I can confidently give you a response, I would think that would need to be qualified.
(Mr Cook) In terms of the census vote overall?
(Mr Cook) Firstly, we have the contingency. We believe we should have had the contingency in the census year and in fact we had the contingency available in the wrong year for the census, so in fact what was actually in the later years included a higher amount for the contingency for the census than it should have been.
(Mr Cook) The latest contract and the Cable & Wireless contract for the health checks (?) I, as I said before, regard as a success because of their ability to scale up within 48 hours. I think that is a real success. Those contracts were a real success and I think we did follow the practices of the Office of Government Commerce and I think they should be quite pleased with us.
(Mr Cook) Very much so, because it is a census where we have gone and counted the population and, recognising the increased difficulties which exist in all countries for getting the same proportion of people of all characteristics in the census, the one number census this time made an extremely extensive effort to understand not only for the country as a whole but in each of the 376 local authorities what was the likely population in total, and it was the detailed census which gave us the characteristics of all those people. In most areas we did not really need the one number census count because the response rate was sufficiently high but in large parts of London, for example, we would not without the census coverage survey be able to get the same value out of the census as we did.
(Mr Cook) We learnt a lot from overseas. For example, other countries have done scanning before, we learnt a huge amount from the 2000 United States Census and scanning. We have added to general knowledge on the value of sampling. We learnt a lot in terms of the way in which we collect information, form design, the difficulties countries have with different questions, so there is quite an international sharing of advice about the censuses. I myself in my earlier life met with British statisticians in third countries for several years on issues with respect to censuses, for example.
(Mr Cook) There are a variety of ways. I think in this census we did the most relevant thing we could because in fact we have no more administrative data than that which was available to us for validating responses, and we used that quite extensively. You can see in most countries future censuses will move down the path that the Nordic countries and countries like Singapore have moved on to already where there is more administrative data used. The real question for us in the future is, do we still need an actual head count and to visit households.
(Mr Cook) Thank you very much.