UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

SPEAKER’S COMMITTEE FOR THE INDEPENDENT PARLIAMENTARY STANDARDS AUTHORITY

MAIN ESTIMATE 2014-15

SIR IAN KENNEDY, MARCIAL BOO and PHILIP LLOYD

Evidence heard in Public

Questions 1 - 33

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Oral Evidence

Taken before the Speaker’s Committee for the Independent Parliamentary Standards Authority

on Tuesday 10 June 2014

Members present:

John Bercow, Speaker of the House of Commons (Chair)

Mr Andrew Lansley

Mr Charles Walker

Lay members present:

Professor Monojit Chatterji

Dame Janet Gaymer

Examination of Witnesses

Witnesses: Sir Ian Kennedy, Chair, Marcial Boo, Chief Executive, and Philip Lloyd, Finance Director, Independent Parliamentary Standards Authority, gave evidence.

Q1 Chair: Sir Ian, Mr Boo and Mr Lloyd, thank you very much for coming; much appreciated. I should apologise, really, Sir Ian, on behalf of my colleagues and me, to you. I think you probably know from previous experience that the attendance at these meetings is usually good. I am taken aback and surprised; I am sure there are very good reasons, but we have six people who are normally here, none of whom is able to be here. I am sorry about that, but I hope we will do better in the future. We have a quorum, obviously; the Leader of the House, Charles Walker, Dame Janet and Professor Monojit Chatterji. If it is all right with you, I think we should crack on.

I welcome you to the evidence session. It is particularly good, if I may say so, to see you, Mr Boo, as the new chief executive, in place. We wish you Godspeed in your work. I welcome of course, again, Ian and Philip.

Sir Ian, I think I am right in saying that you wish to make a brief opening statement.

Sir Ian Kennedy: Mr Speaker, thank you. I have not imposed on your time in previous meetings, but I thought that I would do this time, and make some short opening comments.

First, as you say, on my right is Marcial Boo, our new chief executive, who joined us just a week ago. On my left is Philip Lloyd, our director of finance and operations.

This, as you know, Mr Speaker, is our last estimate to be submitted this Parliament, so it is, in my view, an obvious point to reflect briefly on how far we have come and what the future looks like.

We have come a long way since that first, rather fraught, meeting of the SCIPSA in 2010. Lots has happened. I said at that session that we needed to work together, and that if we did, we should see where we had got to in three years, rather than the rather premature views being offered after a few weeks.

It is four years on. We have worked together and made excellent progress. We have done so on a core budget that has fallen by 20% over the past four years-that is £1 million-which is an impressive achievement in a small organisation, and a trend that I am determined we will continue.

In that first session, I remember hearing that the staffing budget that we inherited based upon the work of the Senior Salaries Review Body was causing difficulties, so we conducted a thorough analysis of MPs’ staffing needs, and as a consequence, increased budgets by up to 25%. We heard that there was a problem because we did not give MPs credit cards; you all have one now. We were told that the absence of a system of direct payments was causing difficulties, so we set up such arrangements with a number of suppliers, and we were told of the value of paying costs on the presentation of an invoice-something else that is now in place. In those and a large number of other ways, we have listened and we will continue to do so in a spirit of collaboration.

I also talked in the first session of the importance of a continuing dialogue with MPs. We have one. We have formal groups, such as the Liaison Group, and a number of more informal mechanisms for exchanging views and experiences. To us, they are incredibly useful. They have helped to improve understanding in both directions.

Operationally, we have consistently improved our performance. In summer 2010, we sought to pay claims in 12 days; we now pay them in seven days. We had an error rate in processing claims of 4.5%; it is now down to 0.7%. At times, you had to wait too long on the phone to get through to us; now we answer the overwhelming majority of calls in less than 1 minute and two thirds in less than 20 seconds, and we will be introducing extended phone hours next month through the careful redeployment of our staff. Building on those performance indicators, I am keen that we now measure not just the time taken, but the quality of the service being provided. That is where we are headed now that the architecture of costs, pensions and pay is in place.

Beyond those details, independent regulation is both established and working. It took effort, understanding and co-operation. Crucially, it needed the support of you, Mr Speaker, and of the SCIPSA. Together we have established a hugely important change, and Parliament, in my view, is the stronger for it. As a result of our combined efforts, the system is working. MPs are being supported and the taxpayer is getting value for money. It is as well to remind those who are still drawn to the events of the past that over the past four years, there has not been a single call for an MP to face any investigation before the Standards Committee, nor for a case to be passed to outside authorities. The cultural change has taken hold and it is clear to all who want to see that the system is working. In saying that, I pay tribute to the considerable achievements of the previous chief executive, Andrew McDonald.

But that is not to say "job done". Improvements are still needed and that is the task of the new chief executive, Marcial Boo, to my right here. We need to continue to make our systems slicker, more efficient and even more cost-effective. We have now embarked on that-what I have called phase 2 of IPSA-shifting the balance somewhat from regulation to administration. I am keen, for example-and I stress this here-for us to consider with MPs how we publish details of costs, so that we can give greater meaning and context to the data and avoid the trivialisation of expenditure. I am also keen to continue the task of promoting confidence in the systems both of reimbursing costs and of remunerating MPs. That will contribute, in my view, to the wider goal of improving confidence in Parliament and parliamentarians. It will depend on strengthening our communication and our engagement with MPs and the public, and I and the board are committed to working collaboratively. Echoing what I said at the outset, let’s see where we have got to in another three years, Mr Speaker.

Q2 Chair: Sir Ian, thank you very much indeed for that synopsis of what has been done and of how you see the way forward. Perhaps I could start by asking you about the main ways in which you are achieving the 5% reduction in core costs this year.

Philip Lloyd: I will take some of that. This year, we continued from last year a reduction in staff. Some staff left and some contracts finished, which saved a considerable amount of money and that has rolled forward. We have leased out part of Portland House and moved to Millbank, saving more money. We have also looked generally at office costs, cutting them and reprocuring where necessary. That will deliver a 5% saving.

Marcial Boo: I can add that, although I have been here only a week, I have come from the National Audit Office and am apprised of the need to deliver value for money. I will absolutely ensure that the 5% savings is delivered through the mechanisms that Philip has just outlined.

Q3 Chair: Thank you. How do the costs of your new offices compare with those of the previous offices, which I think you are now subletting?

Philip Lloyd: Yes, the actual rent at Millbank is around £100,000 a year cheaper than Portland House. We have done an extremely good deal on the rent per square foot at Millbank. On top of that, the service charges, business rates and business insurance are broadly the same in both places as they are both in Westminster. The main saving is through the rent and taking out space ready for the 2015 general election. If we had stayed in Portland House, we would have run out of space and had to look for somewhere for people to work from, so that has also generated a saving.

Sir Ian Kennedy: I think the team, if I may say so, has done very well. We also have a holiday for the first 12 months of the rent in the new place and furthermore we have the capacity to sublet part of it if over time we no longer need that space.

Philip Lloyd: It is an extremely good commercial deal with a normal five-year lease and the possibility of subletting if we wish.

Q4 Chair: Right. Presumably, the space required for the temporary staff whom you need for the general election will not be needed for them, by definition, when they leave. I am not entirely clear in my mind how that will then be used.

Philip Lloyd: In 2015, after the general election, we have the option of subletting some of the space. That is a possible option.

Q5 Chair: And the alternative would be to keep it and use it for some other purpose.

Philip Lloyd: If there is another purpose.

Marcial Boo: Clearly, we need to use the assets as effectively as we can so, when the general election is over, we are planning to recruit temporary staff to deal with all the issues around the general election, which we can talk about in a moment. We expect all those to go by July/August 2015, at which point we will take a view on how to maximise the space we have, including the option of subletting.

Sir Ian Kennedy: It is fair to say that one has to keep in the back of one’s mind that if we lose the legal dispute about the Freedom of Information Act we will need space, and that is part of the consideration, but we will know that. The work on the election does not end in May. As Marcial said, it will go on for a little while, by which time we will know about the other and can make an appropriate judgment.

Chair: Okay. We come on to a series of election-related questions on which Charles will take the lead.

Q6 Mr Walker: Sir Ian, as you know, we have met on a couple of occasions to discuss supporting Members into, through and after the general election-those who are standing again, those who are standing down and obviously those who are elected to this place for the first time or are returning. There are three models: minimum delivery, core delivery and enhanced delivery. What criteria were applied to each of those three models before the second model-core delivery-was selected? What sort of scrutiny did they come under?

Sir Ian Kennedy: I can’t hear very well here. Could you say that again?

Mr Walker: There are three models: minimum delivery, core delivery and enhanced delivery. What criteria were applied to the three in advance of selecting the middle one, which is core delivery?

Marcial Boo: I cannot answer in respect of what process was gone through, but I have obviously scrutinised the options that have been agreed. They tried to strike a balance between cost on the one hand-to keep costs down-and the effective delivery of what we need to do for all the different categories of MPs that you have just outlined. We are establishing a rigorous programme, and I look forward to overseeing it with a view to making sure that it is run as effectively as possible. As I say, I cannot answer in respect of the process that was gone through.

Q7 Mr Walker: When will the temporary staff be in place? I see that for enhanced delivery that they were due to be in place by January 2015. Is it the same for core delivery?

Marcial Boo: The very first person will be appointed in August or September this year to begin to lead the teams that will oversee the process. They will build up so that by January or February next year we will have the teams in place and trained so that they can deal with issues arising from the election.

Q8 Mr Walker: How are you going to train them within your existing budget?

Marcial Boo: That is all accounted for within the budget that we have put before this Committee. We are currently, with existing staff, setting out the guidance that will be used to train the staff when they come on stream after the summer.

Q9 Mr Walker: Do you have an idea of what type of staff you are looking to recruit to fill these temporary roles and what characteristics and traits you are looking for?

Marcial Boo: Yes, we have job descriptions for all the different members of staff whom we are looking to appoint. Some will be dealing with payroll, some will be on the telephones and some will be a kind of account manager for individual MPs, so that they can provide a named contact for people when they are either leaving or joining the House.

Q10 Mr Walker: Just out of interest, what sort of pay scales have you looked at?

Marcial Boo: From memory, they are looking in the £20,000 to £30,000 region on the whole. This is obviously all pro rata because they are not all annual appointments but short-term contracts.

Q11 Mr Walker: I think, Ian, that you have covered this. One question is: what were the main areas that you wanted to improve upon from the 2010 general election experience? As you have said in previous evidence, at the 2010 election, you had only been around for a matter of weeks and IPSA was literally finding its feet.

Sir Ian Kennedy: We made mistakes.

Mr Walker: And now we have had five years and systems are up and running and robust and ready to go.

Sir Ian Kennedy: If I could say one thing that is the feature as I see it of what I am calling IPSA phase 2, it is that the architecture of all the schemes, of costs and of pay and pensions has been set. The legislation distinguishes between regulation and administration, and we have created a system of administration that is something to be proud of but can certainly be improved. The one thing that we want to and are determined to improve on is this notion of service and of delivery of the administrative element of what IPSA does.

Taking the general election, we want to have staff, as Marcial said, who are well trained and who have some experience of what it is to deal with people who are finding their way through complex systems. We also want to ensure that the service can be personalised, which means that they have to consume quite a lot of knowledge. We had something only the other day where we brought together all the staff and held a competition to see who knew what the London staffing allowance was and so on, with a prize consisting of a bag of sweets paid for by the director of the programme. That was one way in which you can get over the meta-point, which is that we all have to know this system now, because we all have to deal with MPs, and to ensure that people do know it.

The last thing that I would say in this rather long-winded reply is that it is important that you and this Committee and we do not see the general election programme as a one-off. It is in fact intended to be and will be a catalyst for change for ensuring that the staff understand what delivery is and what service is as we go forward, having laid the proper foundations.

Q12 Mr Walker: Just one last question in this group. On the main uncertainties and risks, if you were to be kept awake at night about the general election-I don’t imagine that you are-what worries you most? Where do the risks lie?

Marcial Boo: At the moment I would say there are two things on my mind. The first is that we make sure that we recruit the right people who have got the understanding of the process, and have the personal skills to be able to deal with Members of the House. That is the first thing, because that is the first thing that is coming down the track.

Second is clearly we are making some assumptions about the numbers of MPs who are going to be in each of the categories. We have analysed previous elections, but as you know better than we do they are not necessarily a guide to the number of MPs who are going to be leaving and joining the House; so our assumptions may be out, so we need to make sure that we have got the flexibility and robustness within the systems to cope on the day with changes. Sir Ian Kennedy: Charles, there is a third thing that keeps me awake, although I can’t speak for what keeps Marcial awake, and that is if there were an early election, but let’s not worry about that, which-the Leader of the House looks at me-we have to plan for.

Q13 Dame Janet Gaymer: Mr Speaker, if I may follow up the last question; obviously your financial forecasting is based on, to a certain extent, almost exclusively, historical data. Is one of the assumptions that you have made about the profile of the MPs coming into Parliament after the general election that they will be claiming in the same pattern and the same way as the current Parliament?

Marcial Boo: That is clearly our starting assumption, yes. We now have four years of data of claims from Members of the House. A new MP from the same constituency will inevitably have a different pattern of claims, but we will of course start from the basis of their predecessor’s claims.

Q14 Dame Janet Gaymer: And if, for example, the pattern of claiming was radically different, how would you handle that? I am thinking about people who currently don’t claim, who might claim in future, for example.

Marcial Boo: As I understand it, the process that we would go through would be the same in that circumstance as it would be for any change in claiming pattern currently, which is that we have systems in place that examine the claims as they come in and spot any anomalies or things that just need to be examined a little bit further; and then we spend a bit of time in-house, checking to see what the cause might be. Sometimes we check with the Member, etc. I suspect that we would go through exactly the same kind of process in the scenario that you just outlined.

Sir Ian Kennedy: But, Dame Janet, it is also the case that new MPs will be new MPs and therefore, first of all, we have to reach out in terms of the use of IT, and so on, in dealings-and we have already had a conversation about how to do that. Then, if they want to claim in a slightly different way, we have to be able to accommodate that within the context of an overall assurance mechanism that makes sure that we can keep track of where the money goes. You are absolutely right that we should not, in a sense, cause people to jump through only one hoop, if we can manage to be flexible-if MPs want to be flexible-within a context of risk assurance, which you are right to reflect upon.

Philip Lloyd: The question is more about the next estimate, for next year, because following the election, the change in MPs-if there are 100 or so new MPs-we will be looking at those MPs and the likely claiming patterns of those 100 MPs. So it will be next year when we are presenting the estimate and saying, for subhead A, "We are making some sort of projection here about the likely change of MPs in the House of Commons."

Sir Ian Kennedy: We will learn from that, but we won’t have a closed mind as to how it should be.

Q15 Mr Lansley: On that point, clearly, of course, for next year the number of new MPs can give rise to changes-particularly in terms of the capital requirement, from loans and the like, can’t it?

I just wondered, picking up the point Janet was making: to what extent have you been able to identify, as it were, demographic characteristics among MPs and the demands that they make on the system, and perhaps looked at how far the system should be capable of adapting to that? Particularly, of course, I hope and believe we will be looking at an increasingly large number of women Members of Parliament, whose family circumstances, or the way in which they claim, might be different. I don’t know; you may have looked at it and concluded that they don’t claim in any substantive way differently from men. Have you looked at all that?

Sir Ian Kennedy: In a sense, the way they claim is a function also of the system we have created. I would say the same to you as I said to Dame Janet. It is important to bear in mind that we need to be flexible and responsive, and that is what we intend to do. If new patterns emerge we will try to respond to that. If new requests are made of us, that is what this idea of collaboration means.

Q16 Mr Lansley: Have you, over the past couple of years, had an opportunity specifically to discuss with women MPs what your rules mean for them and the implications? From the point of view of prospective candidates, they want to know how the system might work for them.

Sir Ian Kennedy: We have created a group of MPs called the 2010 Group, which reflects the entry of 2010, who had nothing to do with the previous system at all. We have discussed what they make of it. By and large there has been an understanding of what we are trying to do, with a suggestion at the edge such as, "You might think of this or that," which we have taken back. We have begun that dialogue even with regard to the current membership, to seek to be flexible, and we will continue that.

Marcial Boo: To build on what Sir Ian has said, over the past week I have been exploring the data we have. I am hoping to exploit that, in the true sense of the word, over the coming period to identify exactly those kinds of patterns, so that we can become a much more intelligent regulator than we were able to be when we were set up, when clearly we were starting from scratch to implement a system.

Sir Ian Kennedy: We did not have data initially, which now we do, on patterns of behaviour, so as to enable a model to emerge that is set up to identify deviations from an expected norm. That is where we would wish to be. It is far more cost-effective and far less intrusive and probably far more efficient. That is virtually where we are because we now have enough data.

Q17 Mr Lansley: Yes. This is very much on the basis that we are not looking for the system of expenses to be any kind of inducement to be a MP. We have to ensure that it does not operate in a discriminatory fashion to be a constraint upon those who want to become MPs.

Philip Lloyd: Quite so.

Mr Lansley: May I move on now? Is that all right?

Chair: Please do.

Q18 Mr Lansley: I’m afraid this has become a bit of a hobby-horse of mine. We do now have transparency in the estimate of the core costs as distinct from the project costs. The project costs are now quite modest, with the exception of the identified general election costs in the estimate in front of us. When you look forward a bit more now, what kind of projects do you anticipate are likely to be under that heading in the medium term?

Sir Ian Kennedy: I think there are two projects that have to do with what we do by way of regulation. I have said that the intention is to shift towards administration. That involves refining how we do it. We think there is a project that is important to carry out, which is about residential accommodation and how we look after MPs in that regard.

Then there is something we have talked about in the past; namely, what is the proper role of regulation as we and MPs mature into an understanding of what the system is all about? To what extent should it back off from being overly prescriptive? What is the role of discretion and judgment over time? I have always described the system as evolutionary.

Neither of those projects is massively demanding. The residential accommodation will require one of the features of a project, namely external advice and evidence. The other will involve our own reflection. Apart from that, at this point I do not see any major project-of course, I will be advised by my colleagues tomorrow that I have overlooked three or four, but I can’t think of any right now.

Q19 Mr Lansley: How do you see that interacting with us in terms of the estimate? It is important from our point of view to be able to say that we have looked critically at project costs. If we do not look at them critically there is a risk that the constraint on overall costs is simply circumvented. We do have to look quite critically at whether projects and the costs involved are genuinely additional. At what stage might you define projects so that SCIPSA can look at them?

Marcial Boo: We are happy to write, setting out how we define "project" in more detail, but I completely agree with the thrust of your comment, which is that we need, on one hand, to make sure that our core costs are declining and we are becoming more efficient over time-and that is very visible-and then, on the other hand, that we are able to discuss with you, in the way that we do about the general election now, one-off projects that clearly have a start and a finish, so that those can be clearly defined and clearly costed so that you have scrutiny of those things.

As Sir Ian says, it is quite possible that the number of projects declines over time, as the general election goes and issues such as accommodation become resolved and we move into a much more steady-state operation.

Sir Ian Kennedy: If I may say one other thing, it was you who said last year-and, if I may say so, quite rightly-"Hang on a sec, let’s identify what this project means and set out the costs", and that is what we have sought to do. Just off the top of my head-we will come to you and, as it were, put a piece of paper before you-projects are, as we said last year, a discrete piece of work with a start date and a finish date, and are typically in addition to our routine work. It is therefore not routine; it traditionally or usually involves expert advice, whether from lawyers, estate agents, or whatever, and is outwith the core administrative activity and even the core regulatory activity. For that reason it ought to be identified, so as not to get in the way of what is allowing you to judge how we are doing in terms of our core costs.

That is how we define it generally. We can certainly come back in detail and also, in response to your question, advise you in due course, although it is in the corporate plan, to a degree, what we envisage as being projects in the next-I was going about to say "going forward", but since I have banned those words in every context, I will not say them.

Marcial Boo: I should just add, by way of addendum, that the National Audit Office has been through the way that IPSA has set out the project costs and is in complete agreement that this is an appropriate and fair representation of what we are spending.

Philip Lloyd: And that we are charging on a consistent basis as well.

Q20 Professor Chatterji: I was going to ask you what a project is, Sir Ian, but you have answered most of my question already. I am looking forward to reading this paper. Clearly, some elements are obvious: a project is a discrete one-off, with a fixed timetable and usually with expert advice from outside the organisation, but not necessarily.

Sir Ian Kennedy: Yes.

Professor Chatterji: You mentioned an important phrase that is not in this document at all-"core regulatory activity"-which I presume is covered under your core costs. What might that cover-reviews of MPs’ salaries and that sort of thing? Is that what you call core regulatory activity?

Sir Ian Kennedy: No, no. Thank you for that question. It is important that any regulatory body, after a period of time, looks at itself and says, "What are you doing? What have you created, and where is it going?" That requires, as it were, internal reflection. It would cover the whole-it would ask questions of the scheme of costs and expenses and ask, as I have said already, "Is this overly prescriptive? Is it effectively evolving? Should it evolve?" and so on. That is a conversation we need to have with MPs, not least to pick up what Mr Speaker says about where the pinch points are and whether it is our job to iron those out-if you can iron out pinch points-and get rid of them. That is what I meant by a re-evaluation of the regulatory model.

Q21 Professor Chatterji: You also mentioned that the architecture for a lot of what you have done, regulatory-wise, is already in place. Again, as the new person on this, I am trying to get a sense of what that involves. Are you telling us that, for example, things like the whole process of reviewing salaries and so on are not something you envisage happening in the next few years, given that you had a recent determination?

Sir Ian Kennedy: That is a very important question, because, of course, much of the 18 months we spent talking about the package of remuneration-largely pay and pensions-was with a view to saying, "We want to settle this once and for all, particularly as it applies to pay, set out what our recommendations are and then our decision, and then build a mechanism whereby, over time, it can move with the state of the economy but does not have to be revisited, by us and even less by MPs, because we know where we stand."

Q22 Professor Chatterji: So there is already a kind of indexation of some kind built into that process so you don’t have to keep doing this.

Sir Ian Kennedy: Yes, precisely.

Q23 Professor Chatterji: You simply have to get the data required for the indexation, whatever the indexation is.

Sir Ian Kennedy: Professor Chatterji, you will know that historically, and much to the chagrin of many MPs, it became simply a political football that no one wanted to have anything to do with, and which landed on the pitch. What we are trying to do is take it off the pitch and say, "It’s solved."

Q24 Mr Lansley: Somewhere in the corporate plan you make clear the way in which you looked at how Members and staff view the quality of service. Ian, you said earlier that you want to look particularly at service quality. Can I open up an area on which others might wish to join in and ask questions? What do you see as the areas where the service most needs to improve, and what kind of quality of service improvement do you anticipate putting in place?

Sir Ian Kennedy: The easy answer is that there needs to be improvement across the patch. That is not to criticise-we do pretty well, but we could do better. Let me give an example that is intended to challenge us. Yes, we reply to e-mails very speedily and promptly, within five days on average. That is very good. But I am concerned now for us to be able to develop mechanisms whereby we test the quality of the response that we sent. That is far more difficult to measure. It would be far easier to say, "Well, we did it in five days. That is pretty good." If the MP, or more likely the member of staff, on the receiving end of that e-mail is not particularly impressed by our response then we have got something wrong. We need to work in our staff groups and with MPs to find out what makes your life a lot easier across the patch, whether it is the telephone response you get, the e-mail, the letter or the initial contact. If you look at any regulator across the whole of the public sector you will find that it is those points of contact where the abrasion occurs. That is what we have to resolve.

Q25 Mr Lansley: I am not an expert on these things, and you are not a big organisation, but what is increasingly clear to me is that quite small customer service organisations can tap into increasingly sophisticated customer relationship management systems. We are still having, to some extent, the same debate that you would have had four or five years ago about how long it takes to answer an e-mail or how long it takes to reply to a telephone call or what hours the telephone system is available. That all suggests that the model of customer relationship management is the same as it was.

In many of the systems that one deals with nowadays, one has automated systems, and one has websites where the explicit intention is to absorb an increasingly large proportion of any inquiries without having to have person-to-person conversations. With things like e-mail, with all due respect, I know from constituency work that if you take five days to respond to an e-mail people think you are not responding at all. On the second day they think you are not going to respond. They are expecting the conversation on e-mail to take place, and that can be more efficient because it saves time on the telephone.

Sir Ian Kennedy: You are absolutely right. First, there is a philosophical point here. I do not see it as a matter of customer service, because you are not customers; you are the regulated. But that does not mean that we are not obliged to give you proper service in the administration of the scheme that Parliament has asked us to do. Secondly, we are about perhaps a year behind where we should be in terms of responding to the point that you make. That is what I am talking about in phase 2. I say that because you know the circumstances that we have had over the past year; we have had a new board, our chief executive has been very poorly and has had to leave and there has been another series of circumstances. But we are now anxious to accelerate that pace.

Marcial Boo: I want to endorse what you have just said. In the week I have been there I have sat with the team that deals with e-mails and have listened into phone calls, and I agree with what you are saying, really: there is some ground to make up. I suspect that the back office systems at the moment are appropriate, but the interface between the organisation and your staff and Members themselves could be improved. I will certainly want to make that change visible to Members and their officers over the coming year, particularly in preparation for the general election. I want and intend that any new Members coming into the House next year will, from the off, have a very good quality experience with IPSA.

Sir Ian Kennedy: This may be something that Dame Janet was actually referring to earlier that I failed to pick up, but the forms of engagement will also have to mature and develop. As you say, for my generation and for many people younger than I am, e-mails are perhaps not regarded as a very appropriate way to communicate. There are also interactive website points, and so on and so forth. One of the particular concerns that Marcial is going to pick up is how to address that in a modern and effective way. We should bear in mind, if I may say so, that some of your colleagues still treasure the manuscript letter, so we haven’t all moved at the same pace. We have to accommodate that while at the same time accommodating the fact that we need to move and be more efficient.

Q26 Dame Janet Gaymer: Following up this conversation, your IT contract was due to expire but you have extended it to 2016. Your corporate plan indicates that you are going to be starting work well in advance on No. 2-the second or successor IT contract. My question is, how soon are you focusing on that, and, to the extent that it presents an opportunity for you to deal with the sort of issues you have been describing, are you factoring in similar programmes? I am thinking about the move to digital democracy, which is certainly very much on the agenda going forward. How is all that going to fit together?

Marcial Boo: We are definitely looking at IT issues now. To pick up a point made earlier on, I have been briefed already that CRM is on the go, and we are going to be looking at it over the summer with a view to implementing it in the early autumn-again, in preparation for the general election. I want to explore with the IT team at IPSA how we can make sure that the systems are upgraded and ready for the new contract tendering process and contracting process that will operate after the general election. I cannot answer you chapter and verse on the detail but I agree absolutely with the point.

Q27 Dame Janet Gaymer: Dare I ask whether you envisage that the replacement IT infrastructure will deliver savings?

Marcial Boo: I should hope that it does.

Dame Janet Gaymer: "Hope".

Marcial Boo: Well, clearly it’s early days, isn’t it? It’s not going to be for two years.

Philip Lloyd: As someone who knows what the original costs of the IT were back in 2010, I think that we certainly will deliver savings. They will materialise after the new contract. Most of the IT system is capital within the estimates. Our policy is to depreciate it over five years, so you get a fifth of it charged each year-you can see that from 2016 onwards.

Sir Ian Kennedy: While it was absolutely right that we were caused to get off the shelf three systems that we put in place, from day one they did not really ever talk to each other effectively, so there was manual work around it and all the human risk that came with that. It is about finding the possibility of taking breath so as to address that. It has been on my agenda for at least 18 months or two years. We have got to get that right, and it is a key to everything else that the Leader and others have mentioned, so it is very much on the board’s agenda over this next three months.

Q28 Professor Chatterji: Following up on Andrew’s question about the issue of the management systems, they work better when people on the other side understand what you are doing. Do you see the general election as an opportunity in this respect?

Sir Ian Kennedy: Yes.

Professor Chatterji: You may well get 100 new MPs. That is not just 100 new people to work with, because it is also all their staff. Add those on and it’s 500 people.

Sir Ian Kennedy: Or 400 more.

Professor Chatterji: Seemingly, but with part-timers and so on it is more. Do you have somewhere in your plan a way of actually giving them the training that allows them to function through your website? Websites are very challenging for people who are not used to it, no matter how good you are at IT. I have been working with computers for 40 years, which is a lot longer than most people I know, and I still find them challenging because they are not always designed by people who understand what the consumer is going to have to deal with. They are typically designed by computer geeks who don’t understand how ordinary people think. How are you going to use your budget for the general election to help you through this process?

Sir Ian Kennedy: Marcial will descend to detail, but from the position of the board, what you have said is crucial. The training should extend to MPs and beyond to staff, and we should go out to them. There need to be some personalised exchanges, and that is where one-to-one becomes quite important. It needs to be on a regional basis, not only here.

Marcial Boo: The point is well made. We intend to first work with Members and a named point in their offices so that we can help them to understand the system, so that the Members of Parliament are supported in the claims process first. Secondly, we intend to make sure that all the investment that we are making in respect of the general election becomes a permanent way of working for the organisation. This is not just for now, for one election, it is for subsequent elections, because that investment has been made, but also for the way of working that IPSA is going to be taking forward as a matter of routine.

Q29 Professor Chatterji: So do you see that as a way of seeking to improve services while still keeping the costs under control?

Marcial Boo: Exactly. In effective regulatory systems there is a degree of understanding by all parties of what the rules are and how to play by them.

Professor Chatterji: Regulated and regulator. Indeed.

Sir Ian Kennedy: Regulation with the understanding, if not the consent, of the regulated.

Q30 Mr Charles Walker: We could get very granular in this. I am coming from the perspective of a user of your services. You know that my concern is that you are the only organisation that is both a regulator and a service provider, and I just don’t think that, in the long term, it is sustainable.

I am coming from the perspective of a Back Bencher. My colleagues want to be paid on time, their staff to be paid on time, their invoices processed quickly and paid with the minimum fuss and a system that they can understand. I know we have got to talk about budgets and get into the detail and the granular stuff, but ultimately, that is what the 650 elected Members of Parliament want from your organisation. We constantly talk about you reducing cost-it is sort of a machismo thing of this Committee-but actually, I am much more interested in you providing a service to the greatest Parliament in the world. I really hope you can keep sight of that, please. The talk of reducing this cost or that cost, important as it is, is not as important as making sure the 650 people in this place who represent 65 million people in their constituencies can get their job done.

Marcial Boo: I can say that I absolutely intend to deliver on that and, at the same time, to have a very efficient cost-effective organisation.

Sir Ian Kennedy: We’re on the same page.

Chair: Do colleagues wish to pursue further lines of questioning on this? No? Andrew, I know you were interested in some of the later questions.

Q31 Mr Lansley: I think there is only one that I particularly wanted to ask, and it is partly because we have other colleagues who I know would have asked it if they were here. You will have heard some of our colleagues say from time to time that they know of a significant number of Members who do not claim expenses to which they would properly be entitled. That may in some cases be because they would prefer not to do so; that is a choice they make, and that’s one thing. But what information do you now have about the extent to which that is happening and the extent to which it is for reasons of bias against risk-a risk-aversion in relation to the system-or a lack of confidence in the certainty of the system giving the right result, and what do you think you can do about it?

Sir Ian Kennedy: The last of those questions is perhaps the easiest to address. This is a system that uses taxpayers’ money, which we administer. It is not our money, and MPs should feel that they can claim for everything that they are entitled to. We have had this conversation for the last four years, when it has been said that MPs are reluctant for this, that and the other reason. To the extent that those reasons have to do with our operations, we have to work to correct them, but my sense is that by and large that is not the case. To the extent that the reasons are because of what will happen in their locality in terms of the press going over the details, because we are obliged by statute to be transparent and we think it is right to be transparent, we can do something about that, but not everything.

The something we can do-the board is considering this next month-is to look at the way in which we publish material so as to ensure that, as I said at the outset, we make relevant information and the context of that information clear without inviting or facilitating trivialisation. One way would be, for example, to include narrative underneath particular forms of expenditure, so that people understand why someone’s travel expenditure is so much more than someone else’s-it is because their constituency is in the Orkneys and so on. We can do a little bit as regards the reception in the media. We can do whatever you persuade us is appropriate as regards people’s reluctance because of the system we operate.

Q32 Professor Chatterji: May I roll together both the comments recently made by my parliamentarian colleagues? I think the point made by Charles, and the one that you agreed with, was that what we are really trying to say is that it is not cost per se that matters; it is efficiency per unit pound that matters. It is cost-effectiveness that matters, within a framework of a budget. I think that was Charles’s concern. We are talking about not just parliamentarians but their support staff, who I imagine might be even more intimidated by the system than an MP might be.

The last point that you dealt with was that it is possible for you to do something even in a case in which people are reluctant to apply for expenses that they are properly entitled to. This conversation reminds me of the one about the take-up rate for benefits. A lot of people do not do it, because they just feel intimidated by the system. If that is happening, that’s-

Sir Ian Kennedy: That is indeed what I was saying-

Professor Chatterji: But it seems to me that we do not know the answers. You have an impression that on the whole that is not happening, but an impression can be tested, and it seems to me that there’s your project to be done-to find out what the take-up rate was, how much was not taken up and why. If it turns out that the answer is that it is for all these extraneous reasons that have nothing to do with the performance of IPSA, you have a very clean sheet to proceed on.

Sir Ian Kennedy: Professor Chatterji, you are absolutely right in your analysis, and we do have those conservations with the group of staff whom we meet relatively regularly. What I understand to be the case is that the time spent on the system by MPs, which we measure as a proxy for the intimidatory or complicated nature of the system, is now half an hour a week, on our last-

Q33 Professor Chatterji: And do you keep a record of the time spent on it by their staff?

Sir Ian Kennedy: Yes. As regards members of staff, I think it’s about one and a half hours a week, so you can add that up. We have driven that down significantly. It is still there to be driven down further, perhaps. But your wider point that there are other matters of evidence that we could get and survey so as to guide us is well taken, and we will certainly look into that.

Chair: Colleagues, thank you. If there are no further questions, we can say thank you very much indeed. We very much appreciate your coming and you will hear from us shortly, so to speak.

Sir Ian Kennedy: Thank you, Mr Speaker.

Prepared 12th June 2014