Budget and Structure of the Ministry of Justice

Jeremy Wright Excerpts

Tuesday 5th March 2013 Commons Chamber

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

Let me start by thanking my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), the Chairman of the Select Committee, for introducing this short but very high-quality and wide-ranging debate. I am also grateful to him for the way in which his Committee drew up the report, and for the scrutiny that it provides of the Department more broadly.

As the House knows, parliamentary scrutiny of Government Departments is crucial to ensuring that they deliver Government policy properly and offer value for money. We have talked about both those things this afternoon. A large number of subjects have been covered, and I shall try to deal with as many as possible. I shall also say a little about the Department’s priorities, which have also been mentioned today.

Last year’s comprehensive report by the Justice Committee on the budget and structure of the Department focused on many of the changes that it has made to bring it closer to the goal of delivering a justice system that is more effective, less costly and more responsive to the public. At a time of continued financial pressure—to which my right hon. Friend rightly referred—finding ways of improving services while delivering even more value for money is, of course, of paramount importance.

There has been a renewed focus on improving financial management throughout the Department, which means that it is set to reduce spending by about £2.5 billion each year over the spending review period. It will achieve that by means of a range of measures to drive down the costs to the taxpayer. On the efficiency side, that has included rationalisation of the Ministry of Justice head office, streamlining our structures and processes, and rationalisation of the court estate. We have also delivered savings through policy reforms, including the reforms of legal aid funding—which have been mentioned—and the criminal injuries compensation scheme. As the Select Committee has acknowledged, the Department has protected front-line services by making the bulk of its savings—some 60%—through ways of working more efficiently. The Department also laid its 2011-12 accounts unqualified, before the summer recess and ahead of the timetable it had originally planned. That demonstrates a significant improvement on previous performance, but there is room for further improvement and the Department is looking to provide that this year.

My right hon. Friend the Member for Berwick-upon-Tweed raised two specific points about the estimates, the first of which related to the explanation for the £159 million extra for the National Offender Management Service. As he will appreciate, a number of pressures that arise during the year were not part of the MOJ baseline used in the spending review negotiations. Such additional cost pressures will include not only inflationary impacts, but funding for voluntary staff exits—he will understand that there has been considerable change on that front in the past 12 months.

My right hon. Friend’s other point related to the impairments to the court and prison estate. As he knows, the Valuation Office Agency carries out regular reviews of that estate, and the recent downturns in the property market mean that that re-evaluation has obviously had an impact on the Department’s budget. The figure of £520 million or so is substantially explained by that change.

Let me talk a little about the justice system we are trying to design. Creating a transformed justice system requires the Department to go beyond improving its financial management. If we are to construct a justice system that punishes the guilty, protects liberties and rehabilitates offenders, the MOJ needs to continue to work at pace to drive an ambitious reform agenda. Despite the determination of those working within the justice system, there is too much litigation, too many people are reoffending and too much money is spent on systems. So by 2015 the Department will provide services in a completely different way. We are committed to transforming rehabilitation to reduce reoffending—I will discuss that in some detail later— to driving down costs across the prison estate to ensure that it delivers maximum value for taxpayers; making sure that the youth justice estate is appropriate and cost-effective; rationalising the court estate and identifying further efficiencies across the criminal justice system; and continuing to drive down the cost of legal aid and ensure it is focused on those cases that require it. That is what transforming justice looks like.

One of my top priorities within that is the transformation of rehabilitation. That has had a good deal of attention in this debate, so let me deal with the points that have been made. As the House knows, we have consulted on proposals that could open up approximately £1 billion of services to a diverse market; give greater scope for providers to innovate, with payment by results acting as an incentive to focus on rehabilitating offenders, as my hon. Friend the Member for Dartford (Gareth Johnson) was explaining; and change how the commissioning of services is managed.

[Jenny Chapman]

Will the Minister clarify a point for us, because hon. Members who are listening to this debate will not be clear about it? What percentage of the value of the contract will be paid upon the achievement of the targets?

[Jeremy Wright]

The hon. Lady knows that we are carefully considering the design of the system, so we will need to determine the appropriate percentage. She will also recognise that it is not going to be 100%, because anyone taking on this work will need to implement the orders of the court and to fulfil licence requirements. The fact that it will not be 100% may have some bearing on the discussion we have been having about the accessibility of this new landscape to smaller organisations, particularly those in the voluntary sector. We will settle on the precise figure having listened to those who may be involved in this landscape, and others, to make sure that we get it right.

Let me deal with some of the points made by the Chairman of the Select Committee. He raised the concern that he and his Committee have about having national as opposed to local commissioning, and I appreciate that that represents a change. It is explained simply by the need to ensure that the necessary expertise and abilities to commission on a payment-by-results basis are held by those doing the commissioning. We think it is difficult to see how that can be done on a local basis, but we think it is important, just as he does, that there are local elements in the commissioning process and that local intelligence is included in deciding what needs to be commissioned. We want to design a system—I hope he will see this coming through the process—that enables us to include that local understanding as well as greater expertise on payment by results. He is also right to say that we must design a system that allows voluntary sector organisations to participate actively.

[Sir Alan Beith]

I am grateful to the Minister for seeking to clarify this point. Let us analyse it a bit further. If the local partnerships that know the local situation best can design what the contract should be about, it is perfectly proper that they should turn to a national body that has expertise in how to include the measurements of results and so on. I would be worried, however, if the national commissioning body was also the body that said, “What you need in Blackburn is this.” That decision should be taken locally, even if the expertise must be drawn on from a central body.

[Jeremy Wright]

Yes, I understand that entirely. I am saying that it will be important under the system that we are trying to design for local requirements to find their way through the system so that they can be clearly understood. We will try very hard to ensure that that can be done.

Let me return to the voluntary sector organisations, on which we have rightly spent a bit of time in the debate. There are probably two areas in which we need to be careful to ensure that the design of the system is right. The first is in the assessment of the bids that are made for the rehabilitative work that we are discussing. When we consider the bids, we will want to be satisfied not just about their quality and price but about the sustainability of the relationships brought forward as part of the bids. We anticipate that a large number of bids will include more than one organisation and will often include smaller voluntary and community sector organisations. We will want to be persuaded when assessing those bids that the smaller voluntary and community sector organisations will have a sustainable future in the course of the contract. We will want to ensure that the design is right and that we keep our eyes on what is happening in contract management. It is partly about assessing the bids when they come in and partly about assessing how they are implemented over the lifetime of the contract.

[Jenny Chapman]

I think the phrase the Minister is looking for is “bid candy”. I think he is trying to say that he would like there to be more involvement from not-for-profit, third sector and voluntary organisations, but is it not the truth that he has no idea at all of the number of organisations working with offenders in the criminal justice system? He does not know how many there are or what exactly they are doing, so how will he know whether there is more involvement after his reforms?

[Jeremy Wright]

The House will note the hon. Lady’s traditional fondness for central control, but we are not a fan of that. She is right that there is an issue about what is likely to be called “bid candy” in this context, but what she is missing is that that is precisely why it is important for us to consider not just the initial cost and attractiveness of the bid but the sustainability of what might be called the supply chain. We want to design that into the system for precisely the reasons she has given.

Let me move on to the issue raised by my right hon. Friend the Member for Berwick-upon-Tweed about prisoners who receive sentences of 12 months or less. There is broad agreement when the subject is raised that it is a good idea to bring within the ambit of rehabilitative services those offenders who receive such sentences, as at the moment very little provision is made for them. He is right to say that it will come at a cost, but it is difficult to be precise about the cost of that provision, which was another point raised by the hon. Member for Darlington (Jenny Chapman). Until we have finished designing a provision, we will not know precisely what it will cost.

Another aspect that needs to be clarified by the design process is the sanctions regime. Part of the cost will be incurred by deciding what to do if someone who is under such a sentence and who will be expected to participate in rehabilitation after that sentence does not comply. We must go through a number of processes in the design of the scheme before we can be more precise about the costs, but we confidently expect the cost of incorporating those 46,000 extra offenders will be covered by the savings we can make by competing rehabilitative services for medium and lower-risk offenders. That is one of the central advantages of taking that course.

My right hon. Friend also made the point that it is important to have in the management of the Department the right people with the rights skills to carry out the work we are asking them to. He is right, of course. He will almost certainly know from his review of the work of the Department that we have set up a capability steering group to consider those issues. One of the major issues for us to address is skills in programme and project management. We are very conscious of the need to make sure not just that we bring in new people with those skills where we need to do that, but that we give those skills to existing staff who will come into contact with programmes of various sizes and shapes.

[Nick Smith (Blaenau Gwent) (Lab)]

From the Select Committee’s report I thought the emphasis on delivery and implementation was strong. However, I looked at the Government’s response to the Select Committee’s criticisms and, on the issue of project management, it felt very thin. How many of the Department’s senior managers have project management qualifications so that they can introduce this new culture of delivery?

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[Jeremy Wright]

As I said, we recognise the need to make sure not just that we bring in new people who have these skills, but that existing staff gain those skills, so taking a snapshot of how many have a particular qualification at this point may not be the most helpful way of looking at the issue. We are trying to make sure that civil servants who want and need these skills are given them, and that where there are gaps in the Department and particular skills are required, we plug those gaps.

Let me move on to talk about prison costs. We are keen to push down those costs. Across the custodial estate our strategy is to ensure that we have sufficient places to meet the demand of the courts, while securing best value for money for the taxpayer. We are committed to driving down the cost of imprisonment and to closing old and inefficient accommodation, which will contribute significantly to that. I am surprised that the hon. Lady expressed doubts that such an approach would save money. It seems clear that it would do so. The reason—

[Jenny Chapman]

rose—

[Jeremy Wright]

If the hon. Lady will forgive me, I will explain and then I will give way.

It is a straightforward point that older accommodation is more expensive to run and to maintain. Newer accommodation is much cheaper in both respects. That is one reason why we want to transfer from an older estate to a newer estate. It is not the only reason, but if the hon. Lady wants to intervene, I will give way.

[Jenny Chapman]

My doubt was based on assertions from the Secretary of State that there is going to be some “supermax” prison, yet there is a lack of information about how much that would cost, when it would be built and where it would be. I would be interested to hear the Minister’s response to those questions. If they cannot be answered, I will keep my doubts.

[Jeremy Wright]

The hon. Lady is entitled to her doubts but she needs to be fair. We have said that we will look at the feasibility of providing just that sort of prison, although I would not use the language that she used. We are looking for a system of imprisoning offenders that is most efficient for the taxpayer, but not just in financial terms. Also—this is what I was going on to say—newer estate is much more susceptible to providing work in prisons, as my hon. Friend the Member for Dartford (Gareth Johnson) described, and the rehabilitative agenda that we all want to see outside as well as inside the prison gates. I can reassure the hon. Lady that once we have had the chance to have a look at the sites that we might want to pursue for a larger prison and at the economics of doing it, we will give her all the detail she could possibly want, but we are not going to rush into it because, perhaps unlike our predecessors, we do not believe in spending money hand over fist until we get it right. We will make sure that we have got it right first; then we will bring forward our proposals.

Let me move on briefly to youth justice, which was mentioned by the Chairman of the Select Committee. As he said, in February we published our plans for the future of youth custody. Young people who commit serious and persistent offences need to be properly punished and it is right that they are sentenced to custody, but custody is not delivering good enough results. The costs of youth custody are very high, yet 73% of young people leaving custody go on to reoffend within a year. It is not acceptable to spend so much yet get such poor outcomes. That is why we launched our vision for secure colleges that refocus a young person’s time in custody so that it is education with detention, rather than detention with education as an afterthought.

My hon. Friend the Member for Dartford and the Chair of the Select Committee mentioned the court estate, reform of which is key to a transformed justice system. In identifying ways in which it could operate more efficiently, the Ministry has closed 132 courts—84 magistrates courts and 46 county courts. However, we recognise that there is a need to carry on looking at how our estate is most effectively utilised, and we will want to keep in mind the points that were raised on that. Spending money to keep underused and unsuitable courts and tribunals open is not a good use of taxpayers’ money, so we continue to keep the use of our estate under review to ensure that it meets operational requirements.

The Select Committee is also right to emphasise how important co-operation across the criminal justice is for improving outcomes. In July last year, we set out important reforms now under way across the criminal justice system in the “Swift and Sure Justice” White Paper. We are building on those reforms to ensure that victims have a louder voice and that the criminal justice system commands public confidence.

[Jenny Chapman]

I cannot let that point go without observing that the new victims commissioner will be working 10 hours a month. Is that sufficient to give victims the voice they need?

[Jeremy Wright]

I do not believe that it is the number of hours spent on the job that matters, but what one does in them. The effectiveness of this particular victims commissioner will become apparent. We think we have an excellent candidate for the job and that she will do a first-class job for victims. I am sure that the hon. Lady will support her in that work as she does it.

We want to make optimum use of the available resources so that the criminal justice system is quicker, less bureaucratic and more efficient. Therefore we are working closely with the Home Secretary and the Attorney-General to ensure that we all look at the whole system to tackle its weaknesses. My right hon. Friend the Member for Berwick-upon-Tweed was right to say that the Ministry of Justice cannot solve all these problems on its own. We are, as he knows, often described as a downstream Department, and we need to work with other Departments, not just those that I have mentioned, to ensure that we all do the right things to bring down offending and reoffending. He will know that we will shortly publish a criminal justice strategy and action plan to set out how we will deliver further change.

Legal aid is a fundamental part of our legal system but, as the Chair of the Select Committee rightly said, resources are not limitless and publicly funded legal support should be reserved for cases where there is genuine need. The Legal Aid Sentencing and Punishment of Offenders Act 2012 contains reforms that focus help on those cases where there is a genuine need of assistance from the state, and those proposals will be implemented in April. We are determined to protect fundamental rights of access to justice, but we must tackle an over-reliance on the courts and legal system at taxpayers’ expense. That involves directing people towards less stressful and less adversarial means of resolving their disputes wherever possible. I was taken with my right hon. Friend’s point, with which I entirely agree, that if we necessitate the use of lawyers in some of these tribunals, and those tribunals are not operating as they should, that was not the intention and it should not be the way in which we proceed in the future.

We are keen that in addition to transforming the services delivered by the Department, it transforms itself so that it has the right skills structures and agility to operate optimally. As my right hon. Friend and the rest of the Select Committee know well, in 2010, the Department reviewed its operating model, which resulted in more streamlined structures and a reduced work force. However, further reform is required if we are to live within our means in future and operate in the most effective and efficient way possible. We have therefore commissioned a review of the business structures and functions across the Ministry of Justice. That includes our agencies and arm’s length bodies. The review will look closely and critically at the ways in which services are commissioned and provided. In doing so, we want the digital-by-default agenda to be put at the heart of the Ministry’s operations, and for creative ways to embody and implement the principles of civil service reform to be found.

I know that the Select Committee has previously recommended that the different parts of the Department be further integrated. My right hon. Friend referred specifically to the European teams today, and I entirely understand his reasons for doing so. A range of different expertise is represented by different people in different departments, so although we will look closely at any opportunities for rationalisation, in this context, as it happens, the opportunities for rationalisation are not as great as they may at first appear. However, the question of greater integration more generally, as well as the delaying of grade and management structures that the JSC has also sought, is firmly within the scope of the review that we are carrying out.

I thank my hon. Friend the Member for Dartford for his remarks. He is entirely right that work in prisons is a fundamental part of improving the services we offer in custody and beyond. He is right that working in a prison context allows offenders to develop not only the hard skills but the soft skills that might make them more employable. The idea of working a standard day or more hours in the week are hugely attractive from that point of view. I can tell the hon. Member for Darlington, who I know was concerned about this, that we are delivering more worked hours by prisoners in the prison estate than we were previously. Of course there is more work to be done, but we are heading in the right direction.

[Jenny Chapman]

I am grateful to the hon. Gentleman for giving way, because it is important that we understand what is really happening. There is an idea that our prisons are somehow becoming little hives of industry in which prisoners are beavering away, but they are not. In about half the categories of prison in this country prisoners are actually spending more time banged up in their cells and less time doing purposeful activity. Perhaps most worryingly, that includes prisons for young offenders. Officials need to be a little more upfront with the Minister on that issue.

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[Jeremy Wright]

I have made it clear that we do not believe that we have done all we need to do on that front. I think that it is important to link a number of things. We need to ensure that the prison regime is conducive to work and that prisoners are incentivised to work, rather than to be idle. We are looking at both things, but the prison system needs to deliver more hours and a more regularised working day, for reasons the hon. Lady will entirely appreciate. We want to ensure that we get prisoners as close to the normality of the outside world as we can while they serve their sentence so that they have a better chance of being employed after they leave.

[Michael Ellis (Northampton North) (Con)]

Does my hon. Friend agree that it is a bit rich for the Opposition to talk about investment in the Prison Service? Throughout the Labour Government’s 13 years in office there was minimal investment and deep overcrowding, so we are having to rectify a lot of the damage done by that failure to invest.

[Jeremy Wright]

I was going to move on a little later to the damage that we are trying to undo, but my hon. Friend is right that we have not inherited a beneficial legacy. I am afraid that there is considerable work to be done with the prison estate, as in so many areas of Government, because of the mess left behind. I will return to that in a moment, because the hon. Member for Darlington made a few comments that I think need to be addressed.

My hon. Friend the Member for Dartford was right to describe the potential of payment by results, which is at the heart of our proposals. We believe that payment by results has a place in the reforms we are making because we think that it is important to pay for outcomes, not simply for processes. He rightly described why we want to ensure that people are rewarded for getting the outcomes we need them to get, and in this context that is a simple outcome to describe, although perhaps not quite so simple to design in the system: a reduction in reoffending. That means fewer victims, less misery for communities and less cost to taxpayers, which are eminently desirable outcomes.

My hon. Friend was right to focus on the challenges we face in designing the system. We need to avoid cherry-picking and “creaming and parking”, which effectively means looking after only those whom it is easiest to turn away from offending. We are conscious of the need to design our system to avoid those perverse incentives and will do so. He is right that payment by results is the way to deliver those better outcomes.

[Nick Smith]

It is good that payment by results will be introduced into the Prison Service, but surely the Minister must accept that it would have been better if the Secretary of State had piloted the ideas he proposes to introduce to ensure that they and that the principles he talks about work. Payment by results might be effective, but surely pilots would have let us know what works.

[Jeremy Wright]

It is a myth that no learning is available about payment by results, even from pilots. It is not always necessary to complete a pilot in order to get something from it. A good deal of learning is available to us from the pilots that have been in operation and, indeed, from the operation of payment by results elsewhere in government. We will take that learning with us in designing the scheme that we are attempting to put in place. The truth is that we could pilot for ever. Piloting in this context is an excuse to do nothing, and we do not intend to adopt that approach because we want to take action to drive down high rates of reoffending. We want to see innovation; we want people to come forward with new ideas within this system. If we expected to have to pilot every single one of those new ideas, we could pilot for ever and never make progress. We do not accept that that is the right way to deal with reoffending rates that are far too high.

Let me return to the point raised by the hon. Member for Darlington and my hon. Friend the Member for Northampton North (Michael Ellis). When we listen to the hon. Lady and her colleagues say that there are difficult budgetary pressures, that the Department is having to cut costs, and how regrettable all that is, we should not allow her to forget the reasons we are having to make these difficult decisions. One would think that we had inherited a benign economic legacy involving piles of cash that we stubbornly refuse to spend, but that is simply not the case. We inherited a note on a Treasury letterhead saying, “I’m sorry there’s no more money”, and a pile of debt. We are doing our very best to deal with the mess that her party left.

[Jenny Chapman]

As I have acknowledged, the Department has a very difficult financial task ahead because of the decisions of the previous Secretary of State. The Minister admits that some of the commitments he has made are uncosted and that he has no idea whether their outcomes will be good value for money. I am trying to help him by pointing that out and steering him in what might be a more sound financial direction.

[Jeremy Wright]

I am extremely grateful for the hon. Lady’s help, but she is missing the point. The problems that we face with the finances of this Department and the Government more broadly have nothing to do with the previous Conservative Secretary of State for Justice; they are to do with the behaviour of the previous Labour Government. That is why we are in the mess we are in, and we are doing our best to get ourselves and the country out of it.

The hon. Lady mentioned the size of the contract package areas and asked about the proposal for 16 of them. We asked respondents to the consultation that has recently concluded whether they believe that that is the appropriate number, and we will consider what they said. It is a starting point, and we will see whether people believe that it is a sensible one. I am sure that there will be arguments about whether we have drawn the map in the right way, and we will consider all those in deciding whether we have reached the right conclusions. We will need contract package areas that are large enough to enable payment by results to operate effectively while not losing the local partnerships and connections that my right hon. Friend the Member for Berwick-upon-Tweed mentioned.

Proving what works is clearly crucial in the context of payment by results, and the hon. Lady is right to raise that. She will have seen in our proposals that we are interested in the idea of a justice data lab that will enable those providing rehabilitative services to understand exactly the effects and benefits of what they are doing. In the end, the test of what works will be whether the desired outcomes are achieved. As my hon. Friend the Member for Dartford rightly said, if they are not achieved, the full contract value will not be paid. That is at the heart of payment by results, and that is why we believe that it is a productive way to go forward.

The Ministry of Justice has made great strides in delivering a justice system that is more effective, less costly, and more responsive to the public. The ministerial team has a clear vision for continuing to transform the justice system over the remainder of this Parliament and beyond. I believe that we can deliver better rehabilitation of offenders, a smarter system of detaining and educating teenage offenders, a cheaper and better prison system, and a legal aid and criminal justice system that commands public confidence—and that, at the same time, we can bring costs down.

I hope that the many Members who take an interest in the Ministry of Justice’s activities—they have not all participated in this debate—recognise the improvements that have been made to how the Department organises itself and delivers its services. I know that the Department remains committed to building on these improvements and working with Ministers to deliver our vision for a transformed justice system.

Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).