UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 964-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Justice Committee

Transforming Rehabilitation

Wednesday 27 February 2013

Rt Hon Chris Grayling MP

Evidence heard in Public Questions 1 - 59

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Oral Evidence

Taken before the Justice Committee

on Wednesday 27 February 2013

Members present:

Sir Alan Beith (Chair)

Steve Brine

Jeremy Corbyn

Nick de Bois

Gareth Johnson

Mr Elfyn Llwyd

Seema Malhotra

Andy McDonald

Yasmin Qureshi

Graham Stringer

Mike Weatherley

________________

Examination of Witness

Witness: Rt Hon Chris Grayling MP, Lord Chancellor and Secretary of State for Justice, gave evidence.

Q1 Chair: Welcome, Lord Chancellor and Secretary of State. Will you start by telling us what evidence you have that the reforms that you are proposing can deliver more effective probation services and drive further reductions in reoffending?

Chris Grayling: First, Sir Alan, I thank you for inviting me to address the Committee and to take questions. If I may, I shall answer your question in a slightly longer way than you might wish, as I would like to explain a little of the background to what I am trying to achieve so as to give a context to the answer that you have asked for.

I agree with-and what we are trying to do is quite consistent with it-a lot of what the Committee recommended in its report of 2011. Ultimately, what I am trying to do is to create a situation where the front line, the professionals involved in this area, have much greater freedom to get on with the job and where there is not a tick-box culture telling them how to do it. One of the things that I inherited was a plan whereby, each year, we provide a fat contractual arrangement with the trusts that tells them in fine detail how to do the job.

I am a great believer that you give the professionals the freedom to do what works, and often to individualise the support that is provided. In return for giving that greater freedom, it is not unreasonable to expect some performance element to what they do. I shall give you the freedom to do the job in the way that you think best, in so far as I can in an area where there are requirements of the court to be met, but in return I want an element of what we pay you to be linked to the outcomes that you achieve for us.

When you talk about the evidence for the approach that we are taking, essentially what payment by results does is that it slots into one of what I see as three contracting options for the Government. We can do it all ourselves, and you end up with a public sector tick-box driven system that often, as your report highlighted, does not deliver the focus on front-line activity that we might all wish. You can just contract the whole lot out and pay for it, which is something that has happened on many occasions in many areas of Government over the years, but all too often the Government are then criticised by the various bodies that audit and assess contracts for having paid too much, not got a good enough deal for the taxpayer, and so on and so forth.

The third approach, payment by results, is to say, "Right, okay, we will give you that operational freedom but we want you to put some of your own resource on the line and take some risk yourself; have the freedom to innovate, but actually carry the risk of failure yourself rather than the taxpayer." That is the approach that I am trying to take.

I am also trying to create a much more joined-up system. I do not think that we have an effective long-distance, through-the-gate system in our offender management world today. We have people being moved around the country from prison to prison, without any real co-ordination on where they are going to be released. The through-the-gate services are patchy. If you have a short sentence, you get virtually no support post-prison-literally, sometimes, £46 in your pocket, and you are let out on the streets. At the end, we have a very high level of reoffending.

What I am trying to do is to create a much more joined-up system, so what we are going to be doing in our contracting is integrating resettlement services within prisons; trying to align more closely where people are detained, at least in the latter part of their sentences and where they are going to be released; and a situation where the support that they provide flows through the gate, with the people starting to work with them in their latter days in prison being the people who are going to be working with them after they have left prison, and where there is more a focus on mentoring and support.

I talked to a group of addicts going through rehab in a centre in Stoke-on-Trent recently, and one of them particularly struck a chord when he said, "When I came out of prison, I had no idea of how to get my life back together again." What I am trying to do is to put in place an element of support to get the life of that person and others like him back together, because, as we know and as you will know from your experience in the work that the Committee has done, an awful lot of the people in our prisons are not evil Mr Bigs; they are people from pretty chronically bad backgrounds who have gone off the rails in their younger years and who need, I think, more proactive help to turn their lives around. That is the context of what we are doing.

On the evidence, there has been a debate. The Opposition has said, "Why don’t you do all the pilots first?" I think that the process that they set up, initially in Peterborough and now in Doncaster as well, will take us much of the rest of this decade to see through to a conclusion, evaluating the data and coming up with an analysis. We are talking about the core principle of trusting the professionals and making them take a bit of the risk themselves, putting together a system that catches the best of public, private and voluntary: in the public sector, real skills in protecting the public against harm; in the voluntary sector, real skills in mentoring; and in the private sector, real skills in driving up value for the taxpayer so that we can reinvest money in the other 12-month group.

I am not proposing some great new rocket-science methodology. I am proposing a very simple principle, which is to trust the professionals and give them the freedom to get on with the job. All the evidence across Government over the years is that you are much better placed to get much better results if you trust the professionals and do not impose huge layers of bureaucracy, but I just want them to carry some risk as well.

Q2 Chair: There are two areas of evidence that have a relevance here. One is the Department’s previous experience of contracting out work, which did not reveal the level of skill that we thought necessary. In our report on the court interpreters service, for example, we highlighted that the Department had not been well enough geared up to doing the job. Then, of course, there is your own experience in Work and Pensions, which, perhaps because it was pioneering, has not been an unqualified success in terms of the contractual process.

Chris Grayling: It is quite important that I deal with the issue of the Work programme. There have been a few negatives around the programme in recent weeks that, in my view, are clearly misplaced.

Having been out of the DWP for about five months, I can give you clear information only up to September, but I believe that not much has changed. First, in terms of the Work programme, the number of people leaving benefits was exactly on track. The issue around the Work programme was, and has been, that it has taken longer for the providers to get to the point where they receive a payment, and that is what has kept the overall level of attainment on the provider side lower than was originally expected.

We have put in some stretching targets for providers, as everyone would wish. The aim is to get them to sweat on our behalf to do the right job for the long-term unemployed and for the taxpayer. The Work programme started in a less favourable job market than had been expected. Two years ago, the OBR was forecasting a growing economy in the first autumn, but we actually went back into recession, so in those first few months things started slower than expected. Even so, the number of people moving off benefits was in line with expectations.

Q3 Chair: We are not trying to explore the Work programme itself, but whether the contracting process has been tested and proved to be one that can be made to work in another area.

Chris Grayling: There are some lessons to learn about the contracting process. The noise that has emerged around the contracting process has tended to come from smaller voluntary sector groups. In fact, the Work programme is the biggest voluntary sector welfare-to-work programme that the country has ever seen. When I was at the DWP, there were 150,000-plus people being looked after by the voluntary sector under the Work programme. It is a big voluntary sector programme, and we have some big, serious organisations-the Salvation Army, the Papworth Trust, Tomorrow’s People-delivering really good support to people through the Work programme.

One of the things that I sought to do very early in this exercise was to say to the voluntary sector across the piece, "Look, some of the reasons you found your participation in that contracting process frustrating were that you needed to be more commercial, and that we needed to do more to help you form partnerships and access financial support." One of the very early things that I have done is to bring in the social investment sector. I have had a number of meetings with people in that sector, people for whom this is a major opportunity, to try to begin to put together voluntary sector groups and social investors and to encourage the private and voluntary sectors to form partnerships of equals.

I do not automatically want to see a prime contractor, subcontractor model. It may emerge in part, but I want to see partnerships of equals as well, because there are skills to be brought to bear from both the private and voluntary sectors. It is also about trying to work with representative groups to make sure that the voluntary sector is quite commercial. I do not think that the voluntary sector was commercial enough in its approach to the contracting of the Work programme, and I want to work with the representative groups to make sure that they are so this time.

At the end of the day, I am after a good deal for the taxpayer and the country, in terms of fewer people reoffending and a value-for-money project. I absolutely want the voluntary sector to be part of that, and I am going to work very hard to make sure that it is, but it has to be on the basis of delivering for us in the same way that any provider would have to.

Q4 Chair: We will come back to that relationship with the voluntary sector, but first I have a couple of supplementary questions. What about the timetable from here on?

Chris Grayling: This is a more complicated process than the establishment of the Work programme, because we also have to do some reorganisation within probation trusts and the probation sector.

One of the things that I considered at the start was whether we should simply hive off the trusts as they currently are. I do not think that the state can contract out to any organisation of any status the management of the most serious offenders. It is important to keep a public protection element in the world where we operate. That public protection operation should be closely aligned with the police and local authorities in dealing with the most serious offenders. As you will see, our initial approach proposes that we have a smaller, more specialist, high expertise, harm and protection of the public focused service, one that deals with the MAPPA types of offender, the most serious offenders, while we focus more on mentoring the lower risk offenders.

We need to evolve the current structure so that we are ready to move what we have into the outside world. We cannot simply contract out the whole lot. It is not about saying that one day we will have a bunch of probation officers, and the next day they will all have been sacked and somebody else will be doing their job. We have a duty to supervise offenders in a consistent way, whatever the contracting structure may be. We are building something that will evolve from where we are now to where we are going to be, with continuity of supervision and support as we get towards the new world. That requires us to make some organisational change before we start contracting and bringing in third parties to be partners with the operations that we have.

Q5 Steve Brine: Good morning, Mr Grayling; it is nice to see you here. I absolutely hear what you say. You and I visited the Hampshire probation trust, which was one of the first that you visited after launching the document. I want to home in on managing risk, and managing escalating risk, and de-escalating risk as well.

Quite a lot of the evidence that has been put before us, or that I have heard from people who have contacted me since the document came out, shows that the concern point seems to be around who manages risk, and the movement between low, medium and high risk. As someone said to me, a risk is a dynamic not a static entry; but the Government seem to presuppose that once an offender has been designated low, high or medium risk, he then stays in that category for the duration of the supervision. I have also heard people say that moving offenders between probation officers or probation trusts is a moment of particular risk. There is concern in the probation sector as to who is responsible when there are multiple requirements. Who is responsible for managing that risk up and down the scale?

Chris Grayling: Ultimately, the decision making about whether you refer someone back to court, or whether you bring somebody into multi-agency supervision, has to, and will, remain with the public sector. However, the idea that people cannot be moved around is simply not right. The truth is that a current probation trust might well have a more junior probation officer looking after an offender, but if something begins to happen somebody more senior will step in and say, "Right, I’ll take over that case." That happens today in probation trusts up and down the country.

Q6 Steve Brine: The key point is that that happens under one roof, under one umbrella. The concern is that "lifestyle movement providers", for want of a better term, have come into the public probation service. Is it a case that they are sitting around that table and are part of that team and under the same umbrella, and that they can be part of moving that risk, or is there a concern that there is a disconnect between them?

Chris Grayling: Let us look at this in practical terms. What I expect to happen-what I intend to happen-is that you will have a centre of the kind already run by many voluntary sector organisations, like the St Giles Trust centre that I have visited and which I hope some members of the Committee will have seen. There, you have the kind of supportive, thoughtful environment that can make a genuine difference to help turn the lives of offenders around.

Equally, it is important in the world that we are building that, in that centre, there sit a couple of public protection officers, trained probation officers, whose job it is to keep in touch with all those who are mentoring offenders, with a clear requirement on the contracting organisation to highlight breaches and serious developments that might cause a decision to be taken to bring someone back into multi-agency supervision-and for the public protection person sitting there to say, "Right, okay, there is clearly an issue; we will take them back into public control."

I have been through a number of case studies with probation trusts to understand how this works. The thing that triggers the alert is often a very material change; it might be that they have been arrested, or that there is a significant relationship break-up. At that point, we would of course want a trained probation officer to do a further risk assessment. With somebody coming out of prison, I would expect a probation officer to have already carried out a risk assessment and said that this is a low risk person. If there is any material change in circumstances that requires a new risk assessment, I expect it to be done by the public probation person and, if necessary, if the risk is sufficiently serious, for them to be brought back under multi-agency supervision.

An assumption that I sometimes hear is that the organisation doing the mentoring is not going to have any interest in trying to spot material changes and head them off at the pass. Of course, they are going to, because in a system of payment by results, it is their job to prevent people from reoffending and to work very hard to do so. Yes, of course risks change, and of course circumstances change, but at the moment we have a situation where around half of those who go to prison reoffend. There are people in prison who have typically been through several community punishments, and already been through probation, yet they are going on to reoffend. Over the past five to seven years-look at the data for the last Parliament, for example-reoffending rates actually rose.

What we have at the moment is not doing the job. There is good work being done in the probation world-I fully accept that-but we are not leveraging all skills that we can bring to bear on this. There are new elements of support that can make a difference. I do not believe that adding in organisations with that expertise, who have a vested interest in keeping reoffending down, means that we are somehow going to get a collapse in case management. As long as we maintain a clear position saying that it is ultimately the job of the individual probation officer sitting in that centre to say, "Right, I am going to take that case over because there is clearly a major problem," that will be case.

Q7 Steve Brine: Here is the point; it is as long as they feel that they have the authority to do so.

Chris Grayling: Yes.

Q8 Steve Brine: Instead of bringing new providers under the existing roof, you are effectively talking about extending the size of the roof, because you will then have public protection officers out there in the new providers who are able to spot that escalating risk and pull it back.

Chris Grayling: What I have is a smaller and more specialist service. One of the things that we should come back and talk about is how we can continue to develop the profession. We have a specialist service in our public protection teams, whose job it is to work with the courts, whose job it is to do risk assessments of individuals as they leave custody, whose job it is to do recalls to court and to deal with breaches when they happen. Alongside that, we are putting in a more supportive, more life-management focused element of support, which says, "Where are these people living? Have we booked them into rehab? Have we got them booked into the college if there are skills needs? Are they really turning up to participate in the Work programme?" There is an element of befriending and support.

Of those people coming out of prison, 25% were in care as children. These are people who do not know how to get their lives back together again. The support that is more focused on mentoring is more likely to add an extra dimension to what we do, as long as we do not lose the ultimate requirement, which we will not, that there will be a trained professional who can spot indications of harm, who will talk regularly to the mentor teams looking after offenders and say, "The kind of thing you need to watch out for is x." They will take a look over their shoulder when something happens and say, "Be wary. Let me know if something else happens." If things escalate, they can say, "This is somebody I need to bring back into public multi-agency supervision."

Q9 Andy McDonald: Good morning, Secretary of State. In the context of risk assessment, and broadening it out rather than focusing on offender management, is there going to be a risk assessment of the entire proposal in terms of managing this change? It is a huge shift. Is it going to be done? Can you give me an indication on that? How will it be carried out? If it is going to be published, are we going to see it?

Chris Grayling: In terms of a risk assessment for the entire proposal, we will publish a detailed response to the consultation in May, setting out plans. We will address issues that have been raised. We will adapt and develop.

I have set a very clear direction of travel, but one of the reasons for doing an early consultation rather than simply moving to a plan on which we consult later was that we could have a debate, and I welcome the contributions and thoughts of this Committee. We all have the same goals. Having read the report that you produced 18 months ago, we are actually trying to achieve the same thing. Suggestions and contributions from all involved will help me to refine the detail so that we get it right.

Q10 Mr Llwyd: Secretary of State, I take you back to something that you said earlier. You said four or five times that you want to trust the professionals. When I hear Ministers repeating things like that so often, I have to question whether they believe it themselves. Having said that, the probation service met all its targets for 2012 and was given the British Quality Foundation medal for excellence. Why not trust the professionals?

Chris Grayling: The hard evidence in this country is that over the past decade-through the last Parliament and up to the latest figures-reoffending has been rising. We provide no support at all for people who get sentences of less than 12 months, who have a reoffending rate of nearly 60%. I do not find that acceptable.

Q11 Mr Llwyd: Could you not do that within the present system? Could you not ensure that the probation service dealt with that cadre of offenders?

Chris Grayling: It depends, Mr Llwyd, on whether you believe that there are additional skills to bring to bear. I see two pools of skills which I don’t believe we are making adequate use of. There are good mentoring and support skills within the voluntary sector, which I want to bring much more closely to bear on this challenge. There are good management skills in the private sector that would enable me to create a more efficient system, freeing up the resource to provide supervision for those who get sentences of less than 12 months.

The evidence for that-this goes back to your original question, Sir Alan-is that in London, where the one piece of contracting-out is taking place, the major contracting-out of community payback, we have savings of nearly 40%. One of the things that you highlighted in your report of 2011 is that almost three quarters of the time spent by the probation service is not spent working with offenders. With the best will in the world, what is the point of the probation service if it is not spending most of its time working with offenders?

I am not trying in any way to suggest that what the probation service is doing is fundamentally wrong, and that we should chuck them all out, sack them all and replace them with someone else. That is not my intention. I am saying that I want to bring into the probation world those two pools of expertise. I want to make the probation world more independent of the Government and the big bureaucratic documents that tell them how to do the job. I could have taken the decision simply to hive off the probation trusts altogether, but I do not think that the public sector can release the high-end multi-agency risk assessment work that it does. We need to retain that within the public sector, as a public protection service, but give the rest of the organisation that freedom and add to it the skills that those two other sectors bring.

Q12 Yasmin Qureshi: Good morning, Lord Chancellor. I want to explore some questions regarding reoffending and, in particular, what practical things are being done or can be done to deal with reoffending. Does the Ministry have some mechanism, or has it put in place a system, for knowing which interventions will lead to a reduction in reoffending, bearing in mind that there are so many different providers?

Chris Grayling: One of the things that we are now doing very early on is some intense work on the data that we have available, to create a bank of information that can be used on a long-term basis going forward. We want to help individual providers get a clearer sense of what they currently do.

Some of the voluntary sector organisations have been doing good work for years but do not have accurate data about its impact, so we are going to help the whole sector understand more clearly what it has achieved, what can be achieved, and what works. All the stuff that we’ve got on the table, I want to dice and slice in a way that is helpful to both the probation trusts and their potential partners. It is really important to do that. We will be as open and transparent as we possibly can be.

Q13 Yasmin Qureshi: Continuing on that line, do you foresee reoffending being reduced due to the changing method of delivery?

Chris Grayling: First of all, the changing method is an evolution not a revolution. We cannot have one system one day and something totally different the next. That is not the intention.

The way that I envisage it working is that, over the next couple of years, we will evolve into a situation where we have the public protection capability that I have described, but also a team of people working in the probation service today who will have moved into a new world and who may have set up their own social enterprise in partnership with social investors, or may have formed a partnership with a charity or a private sector organisation. However, it will be the same team the day before and the day after. They will evolve and their ways of working will evolve, and the payment-by-results mechanisms and the professional freedoms will allow them to test new approaches to spending the money in different ways to reduce reoffending.

My goal is to get an incremental change, year by year. This is not going to start on day one and, by day three, reoffending will suddenly be down by half. What we want is a consistent drop of a few percentage points at a time in the level of reoffending, particularly for those groups where there is a high level of reoffending. We will still have people under supervision who reoffend, as we do today. There are people today currently on probation who will be out this morning committing crimes. That will not change, but I want the number to come down step by step.

This is about reinvigorating, bringing in new ideas, accelerating change, bringing in the under-12-month group and beginning to get that graph coming down again, because at the moment reoffending is going up.

Q14 Yasmin Qureshi: In trying to resolve the reoffending issue, we all accept that there have been long-standing problems with the availability of social housing and with alcohol, drug and mental health issues, which often lead to a lot of reoffending. Will the new providers be expected to finance these very costly interventions, as well as administering the sentences of the courts, particularly bearing in mind that the MOJ has said that one third of sentences should have a punitive element?

Chris Grayling: On the punitive element, in my view we pay far too much for community payback. I have spent some time at the DWP working out costs for full-time activity. I am not in any way equating full-time activity for the DWP with what we do for offenders, but I know roughly how much it costs to create an environment where you supervise full-time activity. The evidence in London is that we pay too much.

You are right-there are a lot of requirements. This cannot and will not be a Work programme-style payment-by-results system, where we move to 100% payment by results. It can’t happen, because the providers also have to fulfil the orders of the court. I do not know where the line will be drawn, but my expectation is that part of this will be paid as a fee and another part will be outcome-based.

Q15 Chair: What are the inputs, which are so important?

Chris Grayling: I am coming to that point. There are two parts to it. First, services and support are already there. In part, it is about somebody sitting alongside the offender and organising and making sure that they are booked into the rehab a month before they leave prison, so that when they come out they can start on that day rather than getting out and then saying, "What happens next?" That is why the through-the-gate service is so important.

In part, it is about simply organising resources that are already there locally from other public bodies. We are also having active discussions with other Government Departments on how we can leverage, in areas like drug treatment for example, to make sure that there is a close link between what the Department of Health is doing for drug treatment and what we are trying to do. That is very important, as well.

In some cases, I would not be surprised, if I were personally running a provider organisation-you mentioned housing, which is extremely important because having somewhere stable to live is a factor in determining whether somebody reoffends. Indeed, in one of the probation trusts I talked to, I was quite alarmed about the number of people that it was supervising who were sofa-surfing. Frankly, given the fact these people are on housing benefit when they come out of prison, I would personally be doing deals with landlords or even investing in hostels, so that when I was supervising offenders I actually had somewhere for them to live. That is one of the things that I would be doing if I were running a business like that. Of course, they have the freedom to do it.

The kind of benefit that you create by saying, "Okay, you do what works," would enable a provider organisation to say, "Right, we are going to set up a mini-housing association. We are going to make sure that we have properties available so that people coming out of prison have somewhere to live. We will do it on the basis of housing benefit coming in, and we will then try to get them into employment." That is the kind of thinking that I would be going through. I hope that creating independent organisations to deliver this would enable that kind of freedom to be used effectively.

Q16 Yasmin Qureshi: The question was really in relation to things like alcohol treatment and health issues, and the payment for those things. For example, putting somebody in a rehabilitation centre costs a lot of money. Is that money going to have to be found by the new providers, or will it be a separate pot of money for the specific treatments that will need to be carried out?

Chris Grayling: The discussions that we are having with other Government Departments are precisely around how we do that. The fact is that we spend hundreds of millions of pounds a year on drug treatment. We want to make sure that there is a joined-up system, so that when somebody comes out of prison after a short sentence, needing further drug rehab, there is a simple mechanism to get them there. We could do it by creating separate pots of money or by creating separate contracting structures-or simply by having wise management of the offender’s life that says, right, the rehab centre’s here, the PCT or its successor body has the budget to do this, and have the systems in place so that somebody coming through goes straight into rehab.

What we also need is some conditionality to make sure that they do. When I went to Holloway, one of the frustrations that I heard from the staff there was that they have people in for short sentences with a drug problem, and they might start working with them on the problem, but when such people come out of prison after a short sentence there is absolutely no requirement to continue that rehab. One of the things that we absolutely clearly need is tougher conditionality for releasing prisoners, so that if you need to continue in rehab you can. The question then is whether that is simply organised locally by the provider in partnership with the local primary care commissioning group, or is it something where we have a separate arrangement with the Department of Health. These are things that we are discussing at the moment, but it has to happen.

Q17 Chair: What have you learned from the consultation process about getting a market that is not dominated by a very small number of providers doing most of the privatised public services?

Chris Grayling: This is a crucial point. A lot of it comes down to the geography of what we do. There is no right or wrong answer to this. If we look at the different factors that I am trying to take into account, I want to make sure that the Prison Service is closely aligned with what we are doing in the probation arena, so that at least in the last few months of your sentence you are in a prison in the geographic area where you are going to be released. I also want to put in place some tougher conditionality around moving house and moving around the country. I do not want people to be released into the care of a local organisation only for them to travel 200 miles up the road for no particular reason, so that we lose the continuity of support post-prison. You will understand that if I create geographic areas that are too small, it will become much more difficult to do that. I think that we have 120 prisons outside the high-secure sector, so I have to create an environment where it is possible to have that flow-through.

Q18 Chair: They need to make some geographic sense, do they not, rather than being arbitrarily put together to create a particular size?

Chris Grayling: Absolutely. They also need to have some degree of alignment with police force areas. I want a sensible alignment with Work programme areas, because one of the key parts of getting offenders back into normal law-abiding life is getting them into a job. One of the early developments that we made to the Work programme was to have day one entry to it for those leaving prison.

We have all these bits of jigsaw around, and we have to find the best, optimum geographic spread. The numbers of offenders being supported in particular block areas also have to be sufficient for us to do statistical work around reoffending for payment by results, and also to give provider groups enough people to work with to create some economies of scale without creating giant factories.

One purpose of the consultation is to start getting thoughts on how we do all that, and we are getting some interesting thoughts from consultees. One option that we are looking at is whether we can have co-ordinating boards, where we go across more than one police force area. One of the challenges of aligning police force areas is that they are quite disparate in size. You have Thames Valley, which covers three counties, but Norfolk covers only the one county. It is obviously important that we align as closely as possible with police forces so that there is good co-ordination.

There is not a right or a wrong answer to this yet, as I am acutely aware. We are working on it, but I do not want to create areas so big that nobody in the voluntary sector has a chance of bidding for anything.

Q19 Chair: That is an interesting answer, particularly in respect of the area structure in the voluntary sector, but it does not really tell me how you are going to get more entrants into this market.

Chris Grayling: First, I am very confident that we will get quite a lot of entrants into the market because there is a lot of enthusiasm and interest.

One of the things that I am trying to do is to get voluntary sector groups to team up. It may be, if you have a geographic area that covers two counties, that there is a charity that can do one but not the other, so we could get a partnership between two voluntary sector organisations in each county to form a team, possibly backed by social investors. We are trying a process of bringing organisations together so that we get the right mix of locally- focused specialist expertise, with critical mass in terms of doing some of the things that we need to do.

As I said on the housing front, you are not going to have a little local charity setting up its own mini-housing association. You are going to want some more beef behind it for that, but I do want the expertise of the little local charities to be there. I do not want it to be purely the classic private sector contractor, with lots of little guys underneath. I want as much variety as possible.

Q20 Yasmin Qureshi: From what you say, it all seems very idealistic and attractive. The reality, however, is that you may initially get new sets of providers or different groups of providers coming in, but what inevitably happens in these circumstances is that, once they come in and get their individual contracts, the bigger companies will come in and buy up the small providers. In reality, the real provider is one of these big companies.

What will you do to ensure that that does not happen, and that these small companies or small groups of people will retain control over what they are doing and are not brought up by bigger groups?

Chris Grayling: The first thing to say is that we will have a system similar to the Merlin standard of the DWP. The best way to describe the Merlin standard is that, if the big guys duff up the little guys, we will duff up the big guys.

It is important that we provide commercial protection to the smaller organisations involved in this. I make it very clear that I am not interested in giving contracts to big private companies that have no experience in this area just because they are big private companies. If the big organisations in the private sector want to be part of this, they need to come with a team to demonstrate that they have relevant expertise. This is not something that we can get wrong. We must have expertise that adds value rather than something that detracts from what we are doing at the moment. Just because you are a big company does not necessarily mean that you are good at helping to add value to mentoring and supporting offenders.

We are looking for quality bids, and a demonstration that you have a pool of expertise in your organisation or group of organisations and that you can make a real difference. We will be quite hard about it; it is not simply an exercise in seeing who comes up with the lowest bid. That would be irresponsible.

Q21 Yasmin Qureshi: I have one final question. Will the people coming in as providers be from the voluntary sector, the third sector or the charities, or are you going to be entertaining applications from purely profit-making companies?

Chris Grayling: Anyone who wants to apply can apply, but we will judge whether they have the capability and the quality to do it. I think that we will see teams.

I do not know whether the Committee has been to Peterborough, but I invite you to go and see the work being done there. You have a partnership of private sector and voluntary sector organisations, which captures the kind of thing that I want us to do around the country. It is so obviously the right thing to do. It is doing a good job of engaging offenders. They are actually using former offenders to mentor some of the younger newer offenders, in the way I want to see it done, both within and outside prison. In Peterborough prison, they are using some of the older, longer-sentenced people who have started getting their brains back in gear to provide support to the younger, shorter-sentenced guys who are in for the first or second time and who need help to get their lives back together. It is impressive, and a really good approach. It is bringing together the best of the private and voluntary sectors, and it is a good indicator of the way forward.

Q22 Nick de Bois: I am familiar with the Peterborough model, which is very good.

One of the barriers for the smaller organisations getting into this work is something that I would be grateful if you would comment on and make a commitment to look into. It is that the terms and conditions that they are required to meet as part of their submissions to do this work are fundamentally driven with the heavy hand of bureaucracy requirements that suit the larger organisations. They are put off either by the cost of the submission or by some of the default requirements, which almost rules out the smaller provider. I would be grateful if you undertook to look at these closely, to make sure that they are not heavily weighted, by design or by accident, against the smaller voluntary organisations.

Chris Grayling: This is a very important point. There are two lessons I would certainly learn from the Work programme contracting. The first is that, with smaller organisations, we are talking to a lot of potential bidders, and filling up form after form for all of them ends up being quite bureaucratic and time-consuming. We are looking at whether we can put in place some kind of quality assessment, one that we will do, to enable providers to say that it is a good organisation but without having to get them to fill out a form for every organisation. We are looking at mechanisms for simplifying all that.

I have also said to the charitable sector-I will keep on doing everything that I can to encourage this-not to do deals that do not work for them. It is quite clear that some of the voluntary sector organisations that signed up to the Work programme did so on terms that they were just mad to sign up to. I have had people say to me, "Oh, but I signed up to a deal that has me losing money." Why would they do that?

When I was contracted to the Work programme, I said that I would not give a contract to a big private organisation that did not turn up with a team of skilled people that demonstrated to me that they could provide support for people across the spectrum. I was saying that, if you did not turn up with a team of small specialist organisations, you would not get the contract. If you then go ahead, using that small specialist organisation as big candy and then dump them straight afterwards, I will dump the big guy as well. By the time that I left the DWP, I had not dealt with one single formal complaint about the conduct of a private contractor towards a subcontractor, but I had lots of complaints from the smaller subcontractors, saying, "Maybe we should not have agreed that deal, but we did."

The message that I have been trying to give the voluntary sector representative groups is that you need to get more savvy commercial expertise into the sector, and do the right deals either between yourselves or with the bigger organisations that you are going to work with. We will do everything that we can in the next few months-we have time to do it because we are doing internal stuff as well-to make sure that we encourage and support the voluntary sector in being savvy and commercial and reaching decent deals for themselves. We will do everything that we can to reduce the bureaucracy level for them, so that we do not have small organisations having to fill in a million and five complicated forms for different providers.

Q23 Andy McDonald: The consultation paper does not see large-scale national commissioning arrangements as being at odds with the existing local partnership approach to commissioning, and the broader direction of travel relating to the appointment of police and crime commissioners. Why is it that you decided to take a national approach to commissioning when the direction of travel across Government is in favour of localism?

Chris Grayling: It is the one area on which I probably diverged. Having read a summary of your report, almost everything that you say is what I am trying to achieve. The one bit that I am doing differently is the commissioning. The reason for that is that I simply do not believe that expertise exists on a localised basis to commission a big change of this kind. It is not about creating a centrally managed structure, where we have huge bureaucracies in the centre telling people how to do it. We have that in NOMS at the moment and the annual contracts for the probation trusts, and I am trying to get away from that.

Where is the expertise in contracting major payment-by-results contracts? It is not to be found in small pockets around the country. The probation trusts do not have the expertise to do it and the police and crime commissioners are very new to their work. I am trying to create something that is localised. The end product is a local contract in a local part of the country, with the ability to individualise and localise the nature of support, and with little central interference in what that model looks like, but I do not believe that it would be realistic to contract what I am trying to achieve in a fragmented way around the country.

As a Committee, you should not just look at it as me just making changes to the probation service. I am also putting stuff that happens within prisons, particularly around resettlement, into the mix so that we get a really joined-up through-the-gate process. If I am doing that in 140 prisons around the country to create a joined-up process, then trying to get it commissioned by police and crime commissioners who have been in their jobs for three months is not realistic. I do not rule out a change to contracting arrangements in the future, but, to get it started, it has to be done by one team.

Q24 Chair: Why do you not treat it as an in-house service, like a property division, where the locality is doing the commissioning but draws on commissioning expertise from a central body, rather than the national health service model, which is that all specialist services are to be commissioned by a national body?

Chris Grayling: It is a question of practicality. I do not believe that it would happen. We would end up with a process that was long, expensive and chaotic, and we do not have the people to do it. I want to get this done.

The current situation is that we have reoffending rising, we have this big block of people who get no support at all, and we have people who turn up in prison having already had 15 criminal justice interventions, including community sentences. This is something that we need to get to grips with. I am trying to create a structure. I am not terribly worried about what the contracting process is, but I am worried whether we have a system that will leave the local teams on the ground that are actually doing the job with the ability to adapt what they do to meet local circumstances. The needs of what we do in Toxteth are very different from the needs of what we do in north Wales or Somerset.

We have to have the freedom to innovate and localise. That is the key. There is a tendency to think that localism is just about doing something for the local council or another local body. To me, localism is equally about getting rid of the paraphernalia of the centre-the fat document from NOMS, saying how you should do your job for the next 12 months-and saying that you have the freedom to do what works in Somerset.

Q25 Mr Llwyd: What is emerging from the consultation in relation to the best configuration of public sector probation services to compete in the new market? On that point, why is it that the probation trusts are not allowed to take part in the bidding process for their own work?

Chris Grayling: They are. I am actively encouraging them to do this. What I am saying to the probation trusts is that I want them to be part of the new world if they want to be so, and some of them are looking to do so. I want them to form partnerships. If probation trust A turns up with a social investment partner to create a new vehicle and become independent of Government to deliver the service, I am fine with that. They are completely free to do that.

Q26 Andy McDonald: How do you respond to concerns about the potential impact of splitting responsibility for the management of offenders at different levels of risk? How will a public sector probation service retain responsibility for public protection under such a model?

Chris Grayling: To some extent, that is what we did with the Work programme. The policing role within the Work programme sits very clearly with the public sector. It is for Jobcentre Plus to sanction and to take decisions that are more about the policing of the system. We clearly decided not to give providers that responsibility but to keep it within the public sector.

This is clearly different. I am not saying that the models are exactly the same, as clearly they are not, but it is really important that the public sector retains responsibility for decisions about, for example, whether to refer someone back to prison, whether to bring someone back to court or whether to move somebody into multi-agency supervision.

My question is what does this look like, practically, on the ground? What I see us having in particular geographic areas are public protection services in two places. One might be based alongside the police, doing team supervision of the multi-agency problem offenders, where there is a high risk. I also see them having the outreach work, with people operating in the courts and the small teams operating alongside the mentoring organisations where there needs to be reassessment of risk or a recall to court. Clearly, there has to be a contractual requirement on any provider to notify the public protection teams of a breach, for example, so that the risk assessment can be redone.

You want risk assessment to be done if there is a situation where you think that somebody’s circumstances have changed in a way that means that they are likely to go out and attack their partner or commit a violent act. Fundamentally, we are concerned about protecting the public against somebody going off the rails and acting in a serious and violent way. In that situation, you would want multi-agency supervision to prevent it from happening.

That is a world away from the mentoring support that we are talking about, although that support may help prevent it from happening. I hope that it does, and certainly it will be in the providers’ best interests to make sure that it does. I want to make sure that there are mechanisms in place, so that you are effectively bringing somebody who is a major problem or who has turned into a major problem back into multi-agency supervision. That is what we are looking at.

One of the reasons why Jeremy Wright and I have been to probation trusts and have talked through case studies-Mr Brine and I did that in Winchester-is to understand exactly where we should seek to draw the line between the two, and the mechanisms that we should put in place to make sure that you can cross over between the two.

Q27 Andy McDonald: We have seen that sentencing places a great deal of faith and trust in our probation services, and that is reflected in the levels of custody, especially with magistrates. How are we to ensure that that confidence is retained if private sector organisations are starting to take over these functions? How do we retain that confidence?

Chris Grayling: I do not think that it will disappear. In London, we are already delivering community payback through the private sector, but I want to see some smarter mentoring of people who are given community sentences. The plans provide for some element of that, but perhaps not to the same intensity as for those who have been in prison.

At the moment, although there is quite a good record for reoffending rates for community sentences, if you look at those who are going to prison, most of them have already been through community penalties on more than one occasion. The question for sentencers is whether I am confident, if I am sentencing somebody to 120 hours of community work, that there is a decent project for them to do. If we are contracting, as we are in London, we expect there to be a proper project, appropriately supervised, to deliver that punishment.

From what I have seen so far, and I have visited a project, it is working pretty well and it is doing so at a lower cost. That saving is one of the ways in which I can get the under-12-month people into the system. This is a really important point. The failure of our system to provide supervision for people with short sentences in prison when they leave is inexplicable, and it must change. I want to change it, and I want to change it quickly.

I am also operating at a time when budgets are immensely tight. The only way that I can change that quickly is by changing the paradigm. Part of the purpose of the reform is to create a system that is more efficient and more front-line focused, but also one that releases enough resource from that greater efficiency to bring those people into the net. It is really important that we do that. They have the highest propensity to reoffend, and it is inexplicable that we do not support them at the moment.

Q28 Chair: You might also want to achieve a transfer of money by avoiding short sentences, which could be avoided if there was confidence that the community sentence and its punitive and rehabilitative elements actually made a difference.

Chris Grayling: That is a very fair point. I clearly intend that we should add a mentoring element to the delivery of community sentences, so that we prevent some of those who are going off the rails from carrying on doing so and ending up in our prisons.

In modelling this, we have not assumed that there is some great saving that will pay for it. This is not budgeted on the basis that if we needed 10,000 fewer prison places it would therefore pay the bill. I am trying to effectively work the budgets that we have at the moment. This is a classic case of more for less. However, I hope and believe that, as we bring in the extra element of mentoring, as we bring the under-12-month people into the system, and as we provide more of a focus to rehabilitate people going through the community, so that it is not simply just doing your 120 hours and on you go, we should start to see additional savings and additional reduced pressure on the system in the second half of the decade. It would not be responsible to budget for that now, but it is definitely our intention and a goal.

Q29 Nick de Bois: I return briefly to the question of managing risk between different providers, which Mr Brine touched upon earlier.

I have a specific question. Do you think that there is potential almost for a conflict of interest with the idea that another provider who is managing the risk of an offender may be reluctant to pass them back to the public sector probation service? Presumably, they would lose money. I am curious as to whether there is a potential conflict of interest, and how it may be managed.

Chris Grayling: It is more likely to be the other way around. We are asking questions in the consultation about exactly what the pricing mechanism should be, how we avoid creaming and parking, and so forth. We are definitely open-minded about some of the detail around that, but the one thing that we have to do is to adopt a cohort-based approach to the payment system, as we have done in Peterborough. The way that the Peterborough system is working is that, for every thousand people who are referred to the provider organisations, after a period of time, we work out what the reoffending rates are in that group after they have been through the process compared with what they were before. The payment is based on the performance of that cohort. It will not be done on the basis of individuals. That would be impossible.

There are two issues here. One is the incentive to move somebody one way or the other. The truth is that, if you think that they are going to reoffend and you try to keep them to yourself, that does not help your figures. In many ways, I would be more worried if there was an attempt, if somebody was a problem, to move them off the books back into the public sector. We have to be clear.

We already have protocols for risk management. Risk management is not done just with a finger in the air; there are systems in place that probation officers use to assess risk when deciding whether to categorise somebody as high, medium or low. We clearly have to continue to have that. Decisions about recategorising people have to be done in a properly structured way. However, the provider will not have an incentive to keep back somebody they think might reoffend. It is just the opposite, actually.

Q30 Gareth Johnson: Secretary of State, may I build on what you have been saying about the pricing mechanism, and how it needs to work in a robust marketplace? Although it is sensible to have a system of payment by results, in many ways the devil will be in the detail, will it not? For example, if you take a prolific burglar, and the organisation that controls that person’s rehabilitation is able to stop that person burgling but he goes out and starts shoplifting, what category is he? Is he categorised with road traffic offences or breaches of court orders? All these minute details will have to be worked out with the organisations in advance, to make sure that they are content with bidding for these contracts.

Do you agree that it is a real challenge for your Department to get it right, to make it worth while for organisations to bid for these contracts, and that you reward those who are genuinely successful?

Chris Grayling: What we must not do is make it too complicated. That is one of the questions that we are asking, and we will see what people have to say, but I start from the view that there has to be some kind of structured system.

With the Work programme, we had three or four categories of measuring "harder to help", and the payment rose for that group. We are not doing this by individuals, but we may want to categorise a particular group of offenders as a subset, saying that if you reduce reoffending among this lot we will pay more. That is certainly one of the options.

There is a debate about binary or non-binary measures. In many ways, it is quite similar to the discussions I had with providers in the run-up to the launch of the Work programme. They all said, "Well, okay, if we move people further down the road towards work, but don’t actually get them a job, will you pay us, because that is progress?" My answer was, "Well, no. We want them to get a job, and that is what I am paying you for." If a prolific burglar used to burgle 10 houses a week but is down to burgling only five houses a week, is that progress that we want to pay for? My answer is still no; I want them back on the straight and narrow and not burgling at all.

The issue is how we provide a financial incentive to make sure that the providers are working with the more prolific offenders, but I do not want the creaming and parking of more problematic people. We have that very much in mind as we consider the pricing structure, and I do not intend to have a situation where there is an obvious incentive to cream and park.

Q31 Gareth Johnson: How do you assess the progress of the pilots that are going on at the moment? Have they been successful, generally speaking, or have issues been identified?

Chris Grayling: I shall give you the non-statistical answer because I do not have the statistics that give a final picture.

The teams delivering at Peterborough and the investors backing them seem to be pretty happy with progress. What I see happening, and talking to the people participating in the programmes, is giving me a sense that it is positive. My expectation is that we will see positive outcomes in Peterborough. However, we are not going to see a sudden, dramatic falling off the cliff of reoffending levels. There will be ups and downs in what we do. No trend line ever goes straight; they always go up and down. You will have bad months and good months, and so forth, but my expectation is that over time, with a greater focus on mentoring and supporting offenders, with bringing in the under-12-month people and with a greater focus on rehabilitation at the community sentence level, we will see step-by-step drops in reoffending levels. That is what we are trying to achieve. That is what we all want, and it is what the Committee suggested could be achieved in its previous report.

Q32 Gareth Johnson: Finally, Secretary of State, may I ask how you envisage payment by results fitting in with the rest of the criminal justice system? For example, will it have any impact on the sentencing by magistrates? Is there any experience of that in the pilot projects that have begun? Will it have an impact on probation reports in court? In turn, will that have any impact on the sentences ultimately given to offenders?

Chris Grayling: That is a good question. We are not aware of any impact from the pilots, but they are relatively small; the Peterborough one is 3,000 people, so it could have a localised impact, but we have not seen any evidence of that.

It is our intention to require all offenders, regardless of the length of their sentence, to participate in a programme of rehabilitation post-release. If the sentencer knows that somebody is going to jail for three months but that they will be put into a rehabilitation programme for a period after that, will it impact on their sentencing intentions? It is not impossible, but we do not want that to happen and we are going to work closely with magistrates and judges to ensure that it does not happen. In many respects, people sentencing will see this as a positive benefit that will help turn lives around, but I do not want people to believe that it is a vehicle to create shorter sentences. We have to be careful to address that issue.

Q33 Mr Llwyd: Much of the ground that I wanted to cover has already been touched upon, so I shall try not to repeat what we discussed earlier.You referred, Minister, to the binary system and the binary metric of reducing reconviction. Are you happy, in the light of what you have heard from the consultation, that this is the proper way forward?

Chris Grayling: As I said, I am open on the detail of the pricing structure. We are now going through the responses to the consultation, so I cannot give you a definitive final answer. However, I can tell you what my instincts are.

One of the obvious questions is that, if we reduce the propensity of a prolific offender to reoffend, that is clearly a step in the right direction but is it something that we want to pay for? My view is that, because we are trying to contain both detention and support into a geographic area, the provider who turns a prolific offender into a less prolific offender will reap the benefits in any case, because if that person goes back to prison he will be released to the same provider subsequently; and if you have reduced the level of reoffending and got the offender closer to a point where they stop altogether, the provider will benefit from doing that. However, do we, as taxpayers and as Government Departments operating on behalf of the taxpayer, want to pay a provider for, say, getting somebody to burgle half the number of houses that they burgled previously? That is a much more difficult argument to sustain, so my natural instinct is for a pricing structure that encourages providers to work with the more prolific offenders and not just to park them in the corner because they are prolific offenders.

One of the purposes of doing the consultation this early is to look for good ideas, and we are going through that now. If somebody has a smart idea about how to do it better, I am very open to it.

Q34 Mr Llwyd: To be fair, you have recognised that there is a risk of providers-playing the system is a rather crude way of putting it; I think that gaming is the polite term for it-not providing the same levels of service to all offenders. Have you thought yet about what strategies you might employ to avoid that? It also encompasses what Mr de Bois said about what he called conflicts of interest. It is the same issue, is it not?

Chris Grayling: There are two parts to this. First, there is an obligation to meet the orders of the court, and that will be non-negotiable for any provider. That is why we do not go for 100% payment by results. That is why there has to be part-payment for service delivered, in terms of meeting the orders of the court.

What we did with the Work programme was to set a minimum performance level-a minimum support level for each individual. We did not specify what that should be, but we said to bidders, "In your bids, you need to tell us the minimum level of support that you are going to provide for everyone, so that there is an absolute bottom line that prevents you doing nothing for people. If you do nothing for people and breach that provision, we will sack you." In looking at bids, we will clearly understand the quality element, what the approach is, and understand the degree of holistic thinking that has gone into preventing and reducing reoffending, but we will also want to see evidence that there is a baseline to prevent creaming and parking. It will certainly be a factor that we will consider when judging the quality of bids.

We may use the same mechanism again of a minimum support level set by the bidders themselves, with us judging one versus the other and saying which is going to be better and what will be acceptable to us. I do not see us being in a position where we can give the providers contractual freedom to do nothing for a group of people.

Q35 Mr Llwyd: I understand the contractual relationship that you have. What monitoring arrangements do you foresee? There will need to be close monitoring of the whole area, won’t there?

Chris Grayling: We are clearly still going to have an inspectorate. We have inspectors of probation today, and we will continue to have them. The providers will continue to deliver orders of court.

The inspectorate can play a really powerful role in disseminating best practice. Payment by results unleashes best practice. You have the freedom and, if you have a smart idea about how to do something completely different, you can do it next week. You do not have to apply for the permission of the Department, and wait six months for it to be considered by committees. You can just do it. If it works, fine; if it does not work, you can stop doing it and try something else. We will see good practice and innovative approaches emerge, and one of the things that the inspectorate can do is highlight really effectively what works and what does not.

We want the whole sector to be chasing that best practice. First, we will have an inspectorate doing the work of highlighting good and bad practice. Secondly, we will need good account management. How we balance that nationally and locally is to be discussed; I certainly want local input into what is being done. We will look carefully at the responses to the consultation, particularly to involve police and crime commissioners, for example, to make sure that they have a role in dealing with co-ordinating what happens locally.

Q36 Mr Llwyd: Has there been an assessment of the impact on the inspectorate? In other words, will the organisation have to grow? How much will that cost?

Chris Grayling: It should not have to grow. Fundamentally, we are going to be delivering support in the same number of places that we do today. We do not expect there to be a significant additional burden on the inspectorate in delivering that support. They are one of the bodies that have submitted evidence to us, and we will be looking at that and having discussions. Indeed, I have already met the current Chief Inspector-the acting Chief Inspector-of Probation to discuss the issue, and she had one or two very useful thoughts.

Q37 Mr Llwyd: Is there not an irony in the fact that several senior probation officers whom I know have been approached by potential private providers, and are being offered high salaries in order to join them? It is a rather ghastly merry-go-round, is it not?

Chris Grayling: I would not for a moment say that we do not have good professionals in the probation service doing a good job. However, the fact that you have good individuals doing a good job and people who can have good ideas does not necessarily mean that the system always releases them to do it. The Committee rightly highlighted in its report that only a quarter of probation officers’ time is spent on work that involves direct engagement with offenders. The systems don’t necessarily work.

Q38 Mr Llwyd: With respect, Minister, that is because of the work loads. They were asked to pump stuff into a computer rather than spending time face to face with their clients. That is the reason. It is not their fault.

Chris Grayling: Absolutely not, so we give them the freedom not to do that. If I am not sitting at the centre saying that I need you to tick these 138 boxes, they might be able to get on with the job. There is really good expertise in the probation service and in the voluntary and private sectors, and if we can leverage the best of all of them, we can bring down reoffending rates.

Q39 Mr Llwyd: In my early years of practice in criminal law, I went to many prisons, and every time I found that there was a probation officer to ensure that the prisoner had a seamless voyage out of the front gate. You are suggesting that now, which is laudable, but it happened then. What happened in between?

Chris Grayling: I have yet to meet an offender that described a really seamless voyage through the prison gate.

Q40 Mr Llwyd: With respect, it used to happen years ago.

Chris Grayling: Perhaps we should get back to those fundamentals. Perhaps we have ended up with a system that is too centralised and too bureaucratic. I am trying to get back to a system that is decentralised and less bureaucratic, where there is much greater independence in the front line, but part of what we do is performance-related. I do not want to say, "You are completely free. Here’s some money. Get on with the job, but it doesn’t matter if it works or not." I want people to be sweating a bit to make it work.

Q41 Chair: On the matter of the Chief Inspector of Probation, you corrected yourself to say that is an acting role, which is indeed the case following this Committee’s report on the earlier attempt to make the appointment. I assume that it is still your position, in the light of the changes to the probation service, that you will review what will be required of the inspectorate and will proceed to make an appointment at some stage, in discussion with this Committee about the terms of the appointment.

Chris Grayling: Absolutely. I want this Committee to be involved. We will move to that as soon as is sensible, given the process that we are going through.

Q42 Seema Malhotra: Secretary of State, there has been concern about the definition of results as they relate to this measure. Will you clarify what you would include in results for which there would be a payment? Would that exclude out-of-court disposals?

Chris Grayling: I am not intending this to include restorative justice. What we do about cautions, and whether or not we include them, will have to be considered carefully, but we have not yet reached a definitive view on that. It is something that I hope will follow through from the discussions that come out of the consultation.

Most fundamentally, my objective is that people don’t commit further crimes. My view is very clear: that cautions are used excessively in many parts of our criminal justice system. They are a valuable tool for the police in some circumstances, and the police need to have the discretion to apply common sense, but sometimes, and in some areas, cautions are used too readily. In some cases, I would like to see people who are getting cautions at least come before the magistrates courts. In terms of the final decision on whether we include cautions in our measurements, I could not give a definitive answer today.

Q43 Seema Malhotra: Would you be able to say when you might include them? The reason I ask is because cautions have been used increasingly for a range of offences. In the year to June 2012, we had 31% of violent offences dealt with by caution, and 15% of sexual offences. It is not just first-time offenders, because the number of offenders who have had seven to 10 previous offences or even more than 10 previous offences dealt with by caution has been rising.

You mention the great disparity across the country. Is this a concern to you? If you do not include cautions-in north Yorkshire you have 19% of offences dealt with by caution and 38% in Warwickshire-you are going to see great implications for how providers might be doing investment planning on whether they participate.

Chris Grayling: We are looking very hard right now at the issue of cautions. I met senior police officers and the Home Secretary a couple of weeks ago to talk about the matter. I have said very clearly that I am profoundly uneasy about the use of cautions on the present scale-for example, for carrying a knife.

We have to be careful to make sure that we do not remove discretion from police officers, but the use of cautions is a genuine issue. I would like to go through that work before reaching a final decision on this. If you have a serial burglar who has stopped burgling but gets into a bit of a brawl in the pub, he can get cautioned for it. The question is whether we want that to be a tick or a cross in the box for what we are talking about here. My inclination is that I want people to be not committing any offences at all, but I do not want to commit absolutely to saying that we would or would not include cautions until I have done a bit more work.

Chair: Do you want to go on to NOMS?

Q44 Seema Malhotra: Yes, but I want to make one more comment before I go on.

Clearly, there is almost a conflict in that you want to have disposals that are effective and appropriate, but at the same time you do not want to affect the running of the new arrangements. There is clearly a paradox in terms of the interest of the providers versus the potential interest of the offender.

Chris Grayling: My natural instinct is that a crime is a crime whatever the disposal. All I am saying is that, at this stage, I do not want to give you a definitive final answer. My inclination is that, if you get a caution, it is an offence. That is a further offence. That is a cross in the box, which I do not like. I am therefore not terribly inclined to pay for somebody who goes out and just gets a few cautions.

I do not want to give an absolutely definitive answer at this stage, when we have only just finished the consultation. We have a lot of considering to do about the modelling of this, and we have to look at whether there is any kind of dividing line that needs to be drawn. I do not want you to draw a conclusion one way or the other, that I am saying that we will not include cautions, or that, yes, we will include them. My natural instinct is that a caution is a crime, and therefore that it should count as reoffending, but I do not want to give you the absolute certainty that that is exactly where I would draw the line. It is too early in the process, and we are genuinely trying work through the issues and get it right.

Seema Malhotra: That is very helpful.

Q45 Chair: It would be good if we had a more consistent understanding of what were the appropriate circumstances for a caution.

Chris Grayling: We are looking at the whole question of cautions. My natural instinct, certainly with some offences like carrying a knife, is that if it merits a criminal justice intervention then the court should be given the opportunity to review what has happened. If it is a question of using discretion and it does not merit going to court, perhaps it should not merit a criminal justice intervention at all. However, you have to be careful, because there are some serious offences where there is a non-obvious reason for using a caution.

Sometimes, the headlines are deceptive. There was one that said a burglar had had 133 cautions, and you would think that he had burgled 133 houses all in sequence and had received a caution each time. That was not the case; he had been done for burglary and gone to prison, and while there he asked for 133 other offences to be taken into account. The easiest way of dealing with them, as he was already in prison, was to give a caution for each of them, so it was a one-off intervention. When you see some of the headlines, it is worth double-checking; we always do, and sometimes think, "This is mad. Why are we doing it?" Sometimes, however, we think that it makes sense.

Q46 Seema Malhotra: I move on to a slightly different topic, which is about ICT within the system, and how it will be needed to support your programme. It is welcome that the MOJ recognises the need for good performance data and the sharing of timely data, both in the interests of good justice disposal decisions as well as feedback on the performance of providers. The MOJ has not had a good history in developing ICT systems and rolling them out on time and to budget. What progress has NOMS made in developing the national case management and risk assessment systems, and will existing case management systems be tied in to the Justice data system?

Chris Grayling: You are absolutely right. This was a very early request from me when we started the process three or four months ago. I said that I want to make sure that we have a proper IT project plan in place, because the ability of our systems to underpin a payment-by-results system is fundamental to making it happen.

The situation is that the national Delius case management system is already operational in one or two trusts, and it will be nationwide by the autumn. I am comfortable that that will give us a sufficient period beyond that, into 2014, before getting towards a transition to the new arrangements, and we have the ability to develop any IT add-ons that we need to make sure that that system is well bedded in. We clearly have to have a single case management system that is available across the public and private sectors, and I want to make sure that we have that joined-up system of IT.

We obviously need to make sure that there are proper safeguards in place for data, but that is no different from what happens at the DWP at the moment, where we are contracting around the Work programme. Indeed, previous employment programmes had very tight contractual requirements for providers, and the DWP does careful audits of the security around provider systems to make sure that they are capable of protecting the kind of data that we have. I am well aware of the issue, but we have a reasonable amount of time to do this. The national Delius system is already on its way. It is not something that is just starting; the new system will be in place later this year.

Q47 Seema Malhotra: Do you foresee the need for changes to training arrangements and further training for probation officers or other providers? Secondly, will any of the data on what has worked or what has not worked be available for magistrates? It could be useful in making decisions about disposals.

Chris Grayling: On the second point, I see no reason why they should not; it is designed genuinely to be open, and for the Magistrates Association and for us when working with magistrates it might help us to understand. That makes perfect sense. I am sorry, what was your first point?

Q48 Seema Malhotra: Do you think that there will be a need for training arrangements?

Chris Grayling: On the training regime, there are two parts to this. One of the questions that we asked in the consultation was about whether we should seek to further professionalise the public probation role, possibly encouraging the creation of a chartered institute. I want to see really good high risk assessment skills. We will also ask organisations beginning to get involved what their strategy is for people development.

I am a great believer that the best mentor for the young offender is an old lag gone straight, or a former gang member who has left the gang, who could encourage the young gang member to do the same. What I do not want is to have a situation where, in order to deliver mentoring or offender management support in the lower-risk groups, you have to have a three-year degree course. That rather removes the ability to use the old lag to do the job.

At the same time, we need to make sure that those people get training in how to spot problems, so we will be looking in the contracting process for an understanding of how to ensure that you equip your people to spot the problems-for instance, when you need to call up the corridor to the public protection guy and say, "This is one that you need to take a look at for me." We also need to continue to develop a very high quality specialist profession in the public protection roles. We will be looking for ideas about the development of people, and how that will happen in the bidding process.

Q49 Mike Weatherley: I would like to focus on some costs and savings, if I may. How do you deliver the savings that you need to meet the spending review settlement and afford this new approach with the large-scale structure that the changes require?

Chris Grayling: I would pray in aid the contracting-out of community payback in London, which saved 40%. As you say, we have a system where there is too much bureaucracy, too much paraphernalia. I want a system that is geared towards what it is there for, which is supporting and mentoring offenders and helping to make sure that they do not reoffend. I want the money spent on that and not on other things. I am very confident from what I have seen so far that it is possible to create a system that is more efficient, and that can bring in the under-12-months group and at the same time enable us to meet spending review targets. It is a classic case of more for less.

Q50 Mike Weatherley: Those are good ideals, but have you identified any specific up-front costs that are required to do this, and are any additional ongoing costs required?

Chris Grayling: There are some initial investment costs to be faced when building new structures, but if you are building a payment-by-results system you will also be reducing your bills in the first few months, because the providers who come in to work with you carry some of the initial costs of delivering the service. That is their exposure to what we are doing. We think that, financially, this is an affordable package. We are very confident, based on practical experience of contracting-out, that we can deliver significant savings, and at the same time enhance what we do.

Q51 Mike Weatherley: Those are great ideals, but are there any specific costs identified already in terms of numbers? You have a specific number on the spending review, and I wonder whether there are any specific numbers on savings.

Chris Grayling: As an example, there will be some additional IT costs, and there will be some reorganisation costs. We have done some initial work on outline figures at this stage, but we are not talking about hundreds of millions of pounds to get this up and running. There is a cost of a few million pounds to get the new systems up and running, but I am very confident in terms of the overall package that we can generate significant savings and a more efficient system.

This is fundamentally all about: yes, I have some spending review targets and, yes, I have to bring budgets down by a few percentage points, but I am also very confident that I have a system that has the scope to operate more efficiently, in order to pay for the under-12-month people. That, to me, is the big win.

Q52 Mike Weatherley: Clearly, if this works then it will save money. Has any timetable been identified to say when that will kick in? Is there any sort of payback period?

Chris Grayling: The aim is to get all this up and running for 2015-and, as far as I am concerned, as soon as possible-but it has to be practical. We have to do some reorganisation works within the existing system, and we then have to bring in new partners. When getting the Work programme up and running, from the day I walked into the Department for Work and Pensions to the day that the first person walked into the Work programme office was one year and 18 days. This is going to take longer, because we have work to do that will carefully evolve. It is not that what is there one day is gone and what is there another day is something totally new; it has to be a process of evolution. It has to be carefully managed, because fundamentally we have the core responsibility of the supervision of offenders and the delivery of a part of the order of courts, which cannot have a hiatus. This is going to be a process of evolution over a couple of years rather than simply, old world one day, new world the next.

Q53 Chair: There are some other areas, apart from probation itself, in which you are expected to make savings-for example, competing non-custodial services within prisons and benchmarking the review of costs. Do you have a timetable for when you expect to achieve savings by these means? Are they going to feed into the transforming justice programme by enabling other things to be done, or are they the means by which you are going to meet your budget requirements?

Chris Grayling: They are really one of the means by which we will meet budget requirements. I have effectively set five priority areas for the Department in relation to the spending review and change. One part is what we have been talking about this morning, the rehabilitation revolution, which delivers small savings but which also, I hope, paves the way for more significant savings in the second half of the decade by taking pressure off the system through reducing offending.

We are looking at the youth estate, where we are spending £245 million a year detaining 1,600 young people. You will have seen the consultation recently put out asking how we can do this better and more cost-effectively. We are looking at legal aid, and we intend to publish consultation on that matter shortly. We are looking at whether we can improve the efficiency of the courts, particularly the interaction between the courts, the police and the Crown Prosecution Service. We have a range of work going on in meeting our financial targets.

On the prisons front, and the decision that we took last year, the Department had started a process of privatising entire prisons. I have intentionally refocused what we are doing, so we are effectively changing things on a horizontal basis rather than vertically. My goal is to have a prison system that is cheaper rather than smaller, unless and until we deliver much better reoffending outcomes, when the pressures on the system ease. In that case, we can shrink it, but I do not ever want us to be in a position where the courts cannot send someone to prison because there is no place available. We have to reduce the costs of our prison system and meet prison targets, rather than close lots of prisons.

I looked at the process that I inherited, and some good work had been done, but my judgment was that, if we went for the public sector benchmarking approach, which you will be aware we have taken, we would be able to deliver savings more rapidly across the whole prison estate, and the work to do that is already under way. You will see savings in the 2013-14 tax year, and further savings in 2014-15, as we drive change across the prison system. That work is happening and the savings are literally starting now.

Q54 Chair: On the youth custody issue, this Committee will be publishing a report next week about young offenders. That report was virtually complete by the time you published your document, but one question that will strike any reader of it immediately is that you are talking about people who are in custody for a relatively short period-a matter of weeks rather than years. Trying to turn what you do with those young people over such a short period into some kind of college operation does not really fit with the amount of time that you have at your disposal with them, unless what you are really talking about is something that affects people outside custody, who either have not been given custody or who have come from custody into a community element of their sentence.

Chris Grayling: This is why we are really offering a blank sheet of paper saying, "What do you think?" I could imagine a situation where somebody comes forward with an idea for a facility that is secure for a period and then non-secure when your sentence is finished, which would provide a longer period of training. I could imagine a situation where a secure facility shared facilities with a non-secure facility. It might be a pupil referral unit or an academy; I genuinely do not know. Basically, I am saying, "Here is a conundrum. We are spending £245 million a year on 1,600 young people, and 70% of them are reoffending. That clearly is not working in the way that we might hope. Particularly focusing on the education world, can you come up with a better way of doing this?" There may be a means of providing a secure environment that is different to what we have at the moment.

Before we start to take operational decisions ourselves, internally, about how we might do it differently and more cheaply-I have asked some questions internally about what we might do-I would much rather say to the outside world, "Okay, have you got an idea that will enable us to make a step change in what we do that is more focused on education?" Most of the kids that end up in custody dropped out of school years ago and can’t read or write properly. Perhaps we need an approach that is modular, which can lead into some form of college education afterwards that is tied into basic skills programmes and colleges. How do we make sure that they participate in those? I do not know. Let us offer literally a blank sheet of paper and say, "Bring to bear your expertise in highlighting ways in which we can improve the situation."

So far, we have been very encouraged by the ideas and engagement, and I think that we will get some good responses. My hope is that we will get enough responses that show a clear direction toward something different that will enable us to do a proper tender exercise to come up with some detailed proposals. I have to renew or change over the next couple of years quite a lot of the existing contracts for secure training centres, for example, and I do not want to do that without having challenged everyone to innovate.

Chair: We shall have more to say about young offenders in our report next week, and we will probably have more to say about the Department’s savings programme in the debate next Tuesday, which is Estimates day.

Mr Brine, you have another point to make?

Q55 Steve Brine: Yes, very briefly. We are running an inquiry at the moment, as you will know, on women offenders, and we have taken quite a lot of interesting evidence. I have a missing number to my set; I have "Transforming Rehabilitation" and "Transforming Youth Custody". The one that I am looking for is "Transforming Women Offending". You clearly said on the record that there are very different challenges in how we deal with adult males and young people and how we deal with women in prisons. I know that that was mentioned to you when you unveiled the "Transforming Rehabilitation" document in the Commons.

The reason I ask is that that strategy is still in the to-be-delivered box. I am concerned, as evidence given to us has expressed, that some of the community-based options that are an alternative to custody for women offenders are coming to the end of their life, and that they may fall between the cracks. What we do not want to happen when the women’s offender strategy comes out is for those services to have disappeared, with somebody then saying, "I know, wouldn’t it be a great idea if we reinvented those services?" Better to save them before they fall.

Helen Grant, your Parliamentary Under-Secretary, is coming to see us just before the Easter recess. I gently suggest that it would be helpful if that strategy was with us before she comes to see us.

Chris Grayling: Let me be absolutely frank about where we have got to on this. We cannot do everything at once, tempting though it may be to try. I am well aware of this issue. I have consciously separated ministerial responsibility for men and for women in prisons, and I have started Helen looking at the kind of institutions that you are talking about.

I did not want to produce a banal, bland document that did not add up to very much, just to be able to respond to the Committee. We are genuinely looking at the women’s issue in the way that we are looking at the youth issue. We are just in an earlier stage of doing so.

Q56 Steve Brine: Do you have any idea of the timeline on that? Will it be in some way respectful of the Corston report recommendations? There was a lot to be said for Jean Corston’s report. Does it recognise that?

Chris Grayling: We are very mindful of that. I am quite inclined to invite proposals in the same way that we have done with the youth estate. For example, there is quite an attractive possibility of, for example, secure hostels rather than bigger institutions. I specifically asked Helen to look at the kind of institutions that are out there, and to look at the reoffending rates-to look at this with a blank sheet of paper.

I am not saying that there is not a role for women’s prisons, but in a sense I am trying to play devil’s advocate in saying, "What works and what doesn’t work?", and let’s take a hard look at whether there is a different model. I just do not want to rush into doing that. We have to do it sooner or later, and certainly in the near few months rather than the far few months. However, we are not quite as far advanced on that work as we were with the youth justice approach, where we have been having a series of meetings with stakeholders and possible partners in the last few weeks of last year. We are a bit behind that. I have every intention of bringing to this Committee some serious thoughts, but I do not want to give you a document just to fob you off and to say that we had done something. I wanted to do it properly.

Q57 Chair: Equally, we do not want to come out with a report on women offenders the day after you publish your new strategy. It would be very helpful for us to know whether you are going to make some early announcement on the subject, or whether it is likely to follow the opportunity to consider what we have said on the subject.

Chris Grayling: It is probably the latter. I would not expect us to produce a major strategy document before the early summer. If you wanted to come up with recommendations now, we could look at them and say that they are very helpful. You have done a lot of work on this but we are an earlier stage as a ministerial team. I would welcome your thoughts, frankly.

Chair: We can discuss in more detail how to fix the time.

Q58 Steve Brine: May I make a plea that some consideration is given to the transition between now, with us producing that report, and you producing your strategy, so that what is happening-we have good evidence that some of it is working-is not lost?

Chris Grayling: Okay. I will certainly do that.

Q59 Steve Brine: We can provide you with some information on that.

Chris Grayling: Please do.

Chair: Lord Chancellor, thank you very much indeed for your help this morning.

Chris Grayling: You are very welcome.

Prepared 6th March 2013