UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 124-iHouse of COMMONSMINUTES OF EVIDENCETAKEN BEFORETHE COMMITTEE OF PUBLIC ACCOUNTS
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This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
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Transcribed by the Official Shorthand Writers to the Houses of Parliament: W B Gurney & Sons LLP, Hope House, Telephone Number: 020 7233 1935 |
Oral evidence
Taken before the Committee of Public Accounts
on
Members present:
Mr Edward Leigh, in the Chair
Mr Richard Bacon
Nigel Griffiths
Mr Austin Mitchell
Geraldine Smith
Mr Don Touhig
Mr Alan Williams
________________
Mr Amyas Morse, Comptroller and Auditor General, National Audit Office, gave evidence.
Ms Paula Diggle, Treasury Officer of Accounts, HM Treasury, gave evidence.
REPORT BY THE COMPTROLLER AND AUDITOR GENERAL
EQUALITY AND HUMAN RIGHTS COMMISSION ACCOUNTS
Examination of Witnesses
Witnesses:
Mr Jonathan Rees, Director
General, Government Equalities Office, Mr
Trevor Phillips OBE, Chair, and Mr
Neil Kingham
Q1 Chairman:
Good
afternoon and welcome to the Public Accounts Committee. First of all I would like to welcome the
Beijing Municipal Audit Bureau headed by Mr Yan Kiu Wai, who is Director of the
Disciplinary Inspection Team of the Beijing Municipal Audit Bureau. The group is visiting the
Mr Phillips: First of all, thank you very much, Chairman, for inviting us here to essentially try to explain where we are. I think the answer to your question about what was going on is as follows. I was appointed Chair of the Commission in September 2006. I took up office that month but in effect started work in November. We had 11 months to get the Commission into place and to open its doors, bringing together three rather different bodies, plus taking on responsibility for new mandates - sexual orientation, religion and belief, age and promotion of human rights. That is the context. It took some months to bring our Chief Executive into role.
Q2 Chairman: Can I just stop you there to get the timeline right? You were in place by December 2006?
Mr Phillips: By November 2006.
Q3 Chairman: And the Chief Executive was not appointed until April 2007, is that right?
Mr Phillips: She was appointed in January 2007. She was able to gain release from her employers to start work in March 2007.
Q4 Chairman: So this thing we are looking at today, the re-employment of staff, when did this happen? Was it in the time before the Chief Executive was appointed or after?
Mr Phillips: In practice I think the time period you are concerned with is after the Chief Executive came into office.
Q5 Chairman: Were you told what was going on?
Mr Phillips: I was told at the time,
because we had discussed it, that when we had to open our doors on
Q6 Chairman: So you knew what was going on and you yourself took a conscious policy decision, working with the Chief Executive, to re-employ these people as consultants despite the fact that they had already received voluntary early severance payments?
Mr Phillips: I knew that the Chief Executive wanted to bring back some people who had previously worked. I was not fully aware of the details, though I knew some of them had -----
Q7 Chairman: Did you know or did you not know that they had already received severance payments?
Mr Phillips: I knew that some of them had, but, to repeat my point, as far as I was aware there was nothing novel about this, and indeed I do not think that was a point on which the accounts were qualified.
Q8 Chairman: Thank you for that. Mr Kingham, you have to answer for this now. Why did you ignore clear Treasury rules and re-engage senior staff from the Commission for Racial Equality without proper authority?
Mr Kingham: The Commission has accepted that we did not make an adequate business case before re-engaging the staff. We did in fact obtain approval in one case for the re-engagement of one member of staff up to 30 September. The Chief Executive wrote to the Permanent Secretary at CLG in May about that and that approval was given, but that was only up until 30 September and I think the main issue is about the re-engagement of staff after that. We accept the criticism in the Comptroller and Auditor General's report; we should have made a proper business case, but the Report itself does recognise that there were intense pressures on the Commission during that period to be ready for opening on 1 October and the skills which the re-engaged staff brought were needed in the Commission. They also brought a level of expertise which would not have been available elsewhere. There were exchanges between the Commission and the sponsor department about re-engagement at the time and the Commission was under the impression that the sponsor department was sympathetic to the case, but again I accept that we did not make -----
Q9 Chairman: Stop there. Over to you now, Mr Jonathan Rees. Were you aware of the Commission's plan to re-engage staff? Why did you not stop it?
Mr Rees: Thank you, Chairman. We were aware that the Commission planned to re-engage staff. As Mr Kingham and Mr Phillips said, that is not in itself something that is not allowed in managing public money. However, the position of the Department throughout was very clear, that this could only be done if value for money was shown, and that almost certainly means a competitive tendering process. Indeed, the Department made absolutely clear to the Commission before 1 October that they should only re-engage those staff if they could justify the pay rates, and the fact was that they were not able to justify the pay rates to our satisfaction either then or subsequently and therefore, when we did eventually come to put the case to the Treasury, we were not able to support it.
Q10 Chairman: Why was your Department then not more in control of what was going on? Clearly, in the setting up the Commission was in trouble. There was a failure to plan, there was no clarity of purpose, some of the problems were obviously massively underestimated. Why did you not act more promptly as the sponsoring department, Mr Rees, to get a grip on this?
Mr Rees: There were three phases. There was the phase whereby the Commission was set up running up to the period on 1 October 2007 and, as you know, I think there are lessons to be learned from the way the then department handled this, and indeed there were about three departments involved as responsibility moved from one department to the other, about how that phase was handled. The second phase, of course, was after the Commission went live. The Commission had its own Accounting Officer, who is responsible for managing public money for the operations of the organisation. I think it is also fair to say that when Parliament set up the Commission they amended the Government's proposals to lessen the powers that the Government had over the Commission and put in a specific clause to say that we should have regard to the desirability of putting as few constraints on the Commission's operations as possible. I think the position that we were in was that Parliament had said that they wished the Commission to have as few constraints as possible. We ensured that there was an accounting officer, an audit and risk mechanism, and we relied on the Commission to abide by the rules.
Q11 Chairman: Mr Kingham, I was quite upset to receive this letter from you only yesterday. This hearing has been timed for some time. This letter was received with no warning. "In the case of one individual the total consultancy fee quoted was £105,000." This is you writing to me yesterday. "I have now been told that a further payment of £15,000 was made directly to the individual concerned after he had left the Commission". You go on to say, "I am not yet clear why the payment was made". This is not the way, Mr Kingham, to run a public body in this country.
Mr Kingham: I understand your concern, Chairman. I regret that I found it necessary to write to you. As I said in my letter, I found out about this last week and immediately tried to find out exactly what had happened and why, and whether the £15,000 had been included in the £105,000. After such researches as we were able to carry out, it appeared clear that it had not been. I did tell both the Government Equalities Office and the National Audit Office about it last week but I wanted to give you the best understanding of what happened that I could, and I regret that it was not possible to write to you until yesterday. I still am not clear exactly what the circumstances were which led up to the payment and I have put in hand an inquiry into that which I will, obviously, report back to you and the National Audit Office on when I have the results of that. The payment was authorised by the Interim Chief Operating Officer of the Commission, who had the authority to do so, but that does not in itself give an adequate explanation of what happened and I do apologise that I did not write earlier.
Q12 Chairman: Do these breaches of the pay remit and staff complement indicate that you still do not have effective control over this Commission?
Mr Kingham: This particular issue relates back to something that happened in 2008. The problems with the pay remits were earlier this year and also in 2008. We do now have effective control over staffing numbers in the Commission. We have learned the lessons of the problems that were experienced. We do recognise the significance of those problems, but in the course of this year we have put in hand strong arrangements to control our staffing numbers and I am pleased to be able to say that our staffing complement, having been at 574 in the middle of July, which was well above the level that we were legitimately allowed to have, is now down to 511, and we do now have proper procedures to make sure that we will not exceed those limits in the future, but I do recognise that that is not a story that is particularly good.
Q13 Chairman: A last question for you, Mr Phillips, before I pass to my colleagues. Do you accept that you were not sufficiently proactive yourself in monitoring the performance of the Commission and planning for its set-up in an efficient way?
Mr Kingham: Yes, I accept my share of responsibility personally. I think the board would now say that it did not exercise the level of scrutiny that it might have done. I think that we would also say that we were too ready to accept that the difficulties of the speed of our set-up meant that there were things which were happening which we were uncertain about but we were too ready to accept the explanation that that was the cause. With hindsight I would say there were definitely two things. First of all, the judgment which we made was that moving the start date of the Commission later would have been at too great a cost both financially and reputationally for us to go to ministers with that case. I think with hindsight that judgment was probably wrong. We should take a leaf out of the book of Ofcom, who did move their start date by six months. I do not know if they had a similar problem but certainly they decided to do that when their first Chief Executive appeared. Secondly, over the period which we have been discussing the board, and particularly its audit and risk committee, of which I am not a member, should have been more active in drawing the full board's attention to some of these issues.
Chairman: Thank you, Mr Phillips.
Q14 Mr Mitchell: Mr Phillips, you say that you accept your share of responsibility. Why did you not know what was going on? Was it that you were doing too many things? I see there is an enormous list of other activities besides chairing this Commission that you are embarked on. Why did you not know what was going on?
Mr Phillips: First of all, I do not think that I do have an enormous list of other things. I have actually only done one other thing.
Q15 Mr Mitchell: Pepper Productions, Aldeburgh Productions, the Bernie Grant Centre, the Sickle Cell Society, Chair of the Runnymede Trust. It is not light stuff.
Mr Phillips: I am no longer Chair of the Runnymede Trust, I have not been for some ten years, but I take the point that you are making. I am associated with a number of charitable endeavours but they are not ones that take my attention away from the Commission.
Q16 Mr Mitchell: But you have a production company as well.
Mr Phillips: Yes, and we have not made any programmes since 2002, I am afraid, which I am very proud about, but that is the nature of the work that I am engaged in. I understand the import of your question and the answer is that all of us, including all members of the board and the executives, were absolutely stretched to the maximum to get the Commission on the road. In the end we decided to launch the Commission in two phases, with a soft launch in October 2007 and a full launch in April 2008. Otherwise we would really just not have been able to meet either Parliament's expectations, indeed, the GEO's expectations, or indeed those of other stakeholders, so the issue is not that I or anybody else was distracted by other things; it was simply that there was too much to do. The problem there was a judgment that I made and it was probably, with hindsight, the wrong judgment.
Q17 Mr Mitchell: Why was there such a mess and such a rush? The Report says that at the start there was an underestimation of the size and complexity of the programme which resulted in limited due diligence work, some weaknesses in budgeting and a particularly acute shortage of staff at senior management level. Why were these problems there? Why were they not tackled in advance?
Mr Phillips: I think the principal answer is simply one of time. For example, as I said, I was appointed in September. I could not start full time with the Commission until November because the Government had to appoint a new Chair for the Commission for Racial Equality so that I could be released to work full time for the Equality and Human Rights Commission. That happened in November. At that point I had to start the process of advertising and interviewing for a new Chief Executive at the same time as supporting the then Secretary of State in appointing commissioners. The truth of the matter is that no matter how hard you work, I mean hours a day you work, if you are going to advertise you have to allow six weeks, so in the end the earliest we could have got our Chief Executive in was pretty much the date that we did. We could not appoint the next tier of managers until she had arrived and she then had the same problem. This is not a complaint; it is simply a fact, and the responsibility I take here is that I think we should have been as a board more conservative, I guess, in our estimation of what we would be able to do in those 11 months.
Q18 Mr Mitchell: You said in answer to the Chairman, if I heard it properly and I am a bit deaf, that you had a conversation with the Chief Executive and she decided to employ these staff. Was that a joint decision or her decision?
Mr Phillips: It was her decision.
Q19 Mr Mitchell: And you concurred?
Mr Phillips: She is the responsible officer.
Q20 Mr Mitchell: Who recommended it?
Mr Phillips: The discussion that we had was first of all about the shortage of skills that we had. For example, we could not appoint a Director of Communications, which is a pretty essential post when you are opening a new organisation. She and I discussed quite what skills were necessary. We agreed. She then proceeded to fill those posts in the best way that she could. I was consulted about a couple of the individuals who were taken on as consultants because I had worked with them previously at the CRE; she just asked my opinion of the individuals, but I would not have wanted to be involved in the process of recruiting people, nor would I be allowed to.
Q21 Mr Mitchell: But why these seven staff in particular and why did they all come from the Commission for Racial Equality?
Mr Phillips: I will just say that most of the people involved were people who had worked in the transition team.
Q22 Mr Mitchell: So you knew them?
Mr Phillips: I knew most of them because they had worked at the CRE, not all of them, but the decision was made by the Commission's managers, not by me.
Q23 Mr Mitchell: Okay, but they had got pretty good deals, had they not, in terms of payoffs and redundancy? You are telling us, are you, that they were brought back because of the immediate pressure, not because of some sweetheart understanding that they would be right?
Mr Phillips: I do not do nudges and winks, Mr Mitchell. That is not my style. All the conditions under which these people received voluntary early retirement and voluntary early severance payments were the same as for everyone else, and, by the way, that scheme was not one run by the Equality and Human Rights Commission. It was run by the legacy commissions. It was not in our control at all. The decision to re-hire these people, and also, by the way, to bring in other people who had not been associated with the legacy commissions, was a decision for the Chief Executive. I felt that she did what was necessary and right at the time.
Q24 Mr Mitchell: Mr Kingham, why these seven?
Mr Kingham: First of all, you asked earlier on about why it was necessary to bring people back in this way. Part of the explanation for that does lie in the voluntary early retirement scheme. As Mr Phillips has just said, it was something that was run by the legacy commissions, so the Equality and Human Rights Commission did not have any control over it. The Commission did not have any ability to say that it would like to keep some of the people who were leaving as a result of that scheme. The Commission did make representations to the sponsor department, I think, in July 2007 to suggest that the scheme might be delayed, at least in respect of some of the individuals, but the answer was that that was not possible, so that was part of the background. As far as the seven are concerned, the first thing to say is that actually there were only five of them who came back in 2007. The other two came back in 2008 in slightly different circumstances. As far as those five are concerned and the skills they brought, as Mr Phillips said, one of them was a Director of Communications, most of the others were lawyers. They were bringing corporate law skills which were the sorts of skills that the new Commission needed both in order to go forward but also to deal with some other aspects of its inheritance because it had inherited leases from the previous commissions and these people had skills which were helpful.
Q25 Mr Mitchell: You have got these jokers. They have got their money. Why did you not provide the full information to the Government Equalities Office until January 2009?
Mr Kingham: I think the sequence of events starts from discussions in July 2007. The Commission provided information which it thought justified their re-engagement, which included an assessment of how much was being paid for each of them by comparison with the market rates that were being charged at the time on the basis that these people were being re-engaged on a by-the-day basis as contractors, so there was a lot of exchange between the EHRC and its sponsor departments both in 2007 and subsequently. What then happened was that it took a very long time before it became clear that a business case should be put formally to the GEO and the Treasury and that was the basis on which the Treasury eventually decided that -----
Q26 Mr Mitchell: It seems pretty slapdash. Let me ask the Treasury, was the Treasury aware of the re-engagement before January 2008?
Ms Diggle: No, we were not. That was the first time that we heard about it and we looked at the information provided. It was not sufficient for us to make the proper decision. There was some more information and it was only by May, I think it was, that we were able to make a firm decision, so we had to get information in order to make the decision.
Q27 Mr Mitchell: Thank you.
Mr Rees: Just to be clear, it was fair that the formal case went to the Treasury in January 2009. The Treasury were informed about it earlier.
Q28 Mr Touhig: Mr Phillips, you said that when the Commission was set up you were desperately short of senior management. It would have been to you, I am sure, that you did need some really key people, so who thought it was a good idea for all staff with the legacy commissions to be offered a voluntary severance package? My question is to all of you. Who thought it was a good idea?
Mr Phillips: I do not think we actually had any choice about that. Once we had a package I think it had to be offered to everyone, but, as I say, it was not the Equality and Human Rights Commission's own scene.
Q29 Mr Touhig: No, I appreciate that, but what about the sponsoring department? Were any representations made to the sponsoring department that this was not a good idea, that clearly the new Commission was going to want some people to get it off the ground?
Mr Rees: Yes. To be clear, it was the decision endorsed by the sponsor department and the Treasury that, as the three existing bodies were to be subsumed into the new body and the three existing bodies actually employed between them over 600 people and the new body would employ, as it does now, around 500 people, then clearly, given that the new body was going to have a much wider scope, so it was not just going to deal with race, equal opportunities and disability; it was going to deal with age, sexual orientation and human rights, it was not an unreasonable decision for the transition team to take, endorsed by ministers, to run a voluntary early retirement and severance scheme.
Q30 Mr Touhig: But this cost £11 million.
Mr Rees: That is correct.
Q31 Mr Touhig: £11 million, and nobody had the foresight to think, "Hang on: some of these people might be needed by the new Commission. Are we doing the right thing?"?
Mr Rees: A number of the people in the existing organisations did indeed transfer to the new Commission but I think it was not an unreasonable decision to take.
Q32 Mr Touhig: But the new Commission was left with 140 people short of its complement. Was anybody not managing this?
Mr Phillips: May I offer a point here? You are right: it has cost £11 million, but on the other hand, since Parliament had decided that we were required to TUPE across all staff, this gave us the opportunity to have an establishment that was 100-plus people fewer, and therefore the number of people that we are paying is far less than we would otherwise have been paying.
Q33 Mr Touhig: That is for the Commission but I am talking about the fact that the overall package has cost £11 million. Was that figure anticipated? Did you know that was what it was going to cost? I am not sure who is going to answer but somebody must have had some responsibility somewhere.
Mr Rees: I think we would have anticipated a figure of that sort.
Q34 Mr Touhig: Did you have a firm figure? You say "anticipated" - on the back of a cigarette packet or what?
Mr Rees: When the scheme was set up I do not think people would know, and indeed you cannot know, how many people are likely to take advantage of that figure. The eventual numbers were just over 200 actually sought information about what they would get and about 185 took the figure. I was not there at the time but it seems to me that that would have been a reasonable figure to have so that you would have the right balance of continuity and a significant number of people transferred from the three, as we call them, legacy commissions, and also giving headroom to bring in new skills for the new body, so yes, I think that that was anticipated.
Q35 Mr Touhig: It was anticipated?
Mr Rees: Yes.
Q36 Mr Touhig: So this vast amount of money was anticipated and then it was not anticipated right at the beginning that certain of these key people would definitely be needed by the new Commission.
Mr Phillips: If I could add to this, I think it is worth re-stating that we had no choice about the way this could be done. Once Parliament had decided that staff had to be TUPE-ed across we had no option but to offer this on a voluntary basis. I think the view was that we would certainly need and would have fewer staff and that in itself would in the long term put us in a favourable public expenditure position. The cost of that, as you rightly point out, was that we could not then dictate who stayed and who went.
Q37 Mr Touhig: I understand that, Mr Phillips, but you said that you were definitely short of senior management, so you had the foresight to know you were going to need those people. Were any representations made to the sponsoring department or anybody else to say, "We are really going to need some of these people to come across. We have got to get to work on trying to persuade them to come across"?
Mr Phillips: There would not have been any point because no-one could have insisted that those people would stay.
Q38 Mr Touhig: What I am saying is were you proactive in trying to keep these people because what has happened at the end of the day is that they have had a fortune in redundancy pay and they have spent a fortune in re-engaging them?
Mr Phillips: I can say that as far as I could discern the Commission's transition team managers did their best to make the case for people to regard the new Commission as a good place to work.
Q39 Mr Touhig: I am sure, but some of these people were part of the transition team.
Mr Phillips: But in the nature of things once the original TUPE decision had been made we could not create a situation in which we could tell people to stay.
Q40 Mr Touhig: I am trying to discover whether you were proactive, because what you did was spend £629,000 on severance pay and then re-engage people at £323,000, so was that value for money?
Mr Kingham: I think on balance it would be hard to say that represents value for money overall; I think that is true.
Q41 Mr Touhig: So would I.
Mr Kingham: The issue is primarily about the operation of the early retirement scheme and the way in which that operated, but overall it would be hard to say that was -----
Q42 Mr Touhig: You accept it was not value for money?
Mr Kingham: I think the decision to re-engage the staff in the circumstances that the Chief Executive then faced was a reasonable one, but I would find it -----
Q43 Mr Touhig: I think we have established that better efforts could have been made to keep the staff in the first place and save the taxpayer money. I understand the point you just made. The C&AG has qualified your accounts, of course, and we see in his Report that six months prior to going live the Commission had not agreed a business strategy, an organisation design or a transition strategy. What were you doing in all that time?
Mr Phillips: Since I was the only one of us who was there, what we were doing first of all was appointing a board. The board met for the first time in December 2006. We appointed a Chief Executive who was not able to start until March. It was, I think, pretty inconceivable that we would have been able to assemble a fully fledged business plan within the 60 days without any of our senior management.
Q44 Mr Touhig: And so you accept you had no business strategy, organisation design or transition strategy in place six months before you went live?
Mr Phillips: I am not accepting -----
Q45 Mr Touhig: That is what the C&AG's Report says.
Mr Phillips: I do not think that none of this was in place. It certainly was not in place to my satisfaction and I would say that it is reasonable that in an ideal world we should have been better placed, but the circumstances that we were in meant that it was impossible to make certain things happen.
Q46 Mr Touhig: You delayed going live from 1 October until 1 April - April Fool's Day, a pretty good date to start.
Mr Phillips: We did not delay going live. We opened our help line, we opened our offices. We transferred staff on 1 October. What we did not do was make a great fanfare about our launch in October. We delayed certain things until April when we felt that we were better able to cope with, for example, some demands by stakeholders.
Q47 Mr Touhig: The NAO says that those responsible for setting up the Commission initially underestimated the scale and the complexity of the task. I know the most perfect view is always the one looking back. Would you agree with that?
Mr Phillips: Yes, I think so.
Q48 Mr Touhig: In conclusion then, what we have got is a Commission that has been set up. First, a lot of staff were allowed to go at great expense. Then it was realised that they were needed so they were re-engaged at great expense. You initially employed too few people, then too many people. Then you had to get key people back. You had no strategy or direction for this Commission six months before you were going live. Of the three gentlemen before us you were the person who was there the whole time, Mr Phillips; the other gentlemen were not involved to that degree. Do you accept that this is your responsibility for this debacle?
Mr Phillips: I would not accept the form of words that you have just given. May I -----
Q49 Mr Touhig: What would you accept?
Mr Phillips: May I offer an alternative way of framing this? We were given the responsibility to get the Commission open in a certain time. I was myself over-optimistic about what we could do in that time and I would certainly accept the responsibility that as Chair of the Commission I might have persuaded the board to ask me to approach ministers to extend the time. I did not. I would say that in the time that we had we did things as quickly as it was possible to do, and, given all the circumstances, I would also say that the important point was, by 1 October were we able to offer advice to disabled people, people who were victims of discrimination, were we able to take their cases? Yes, we were. Were we able to undertake compliance action against public authorities who had breached public sector duties? The answer, yes. There were a number of other things that I would like to have been able to do that we had to put to one side. In regard to the matter of recruiting staff, I would simply say that there was a choice for us: did we continue to employ over 600 staff at the public's expense when it was certainly the view of myself and of the board that we did not need that number of people for this Commission? Indeed, that was one of the points, and, though it meant that we risked not having a certain number of skilled staff, in the end the balance in relation to public expenditure we thought was, and I think in retrospect proved to be, massively favourable. Of course it created problems for us but that was the decision we took.
Mr Touhig: My time is up. You have had the last word.
Q50 Geraldine Smith: Mr Phillips, you said you do not do nudges and winks, but you did not do open recruitment processes either, did you?
Mr Phillips: I did not do what? I am sorry?
Q51 Geraldine Smith: It was not an open recruitment.
Mr Phillips: Which one?
Q52 Geraldine Smith: The people that got the large severance packages were just recruited as consultants. Other people were not given the opportunity to apply for those jobs.
Mr Phillips: I think that was true in some cases. I was not involved in it.
Mr Kingham: That is correct.
Q53 Geraldine Smith: Do you think that sets a very good example? Does it not look like equality for the in-crowd? You said yourself the manager had asked you what you thought of some of these individuals. Presumably you gave them a good reference for the jobs they were going to get. These were transition team staff. They had been on an average of £100,000 per year. They had got a large severance and they were taken back as consultants, £197,000 for four of them, for three to six months. It does not look very good, does it?
Mr Phillips: May I make two points. First of all, you cannot presume what my opinion of the individuals was because it was asked of me privately by one of my colleagues.
Q54 Geraldine Smith: Not a very good way of conducting a selection process, I would say. Not one that I would be happy with.
Mr Phillips: All I am saying is you cannot presume what my opinion was and, secondly, the normal way of appointing people to the Commission is indeed by open selection. I think there were particular circumstances in these cases which meant that the management decided to do something different.
Q55 Geraldine Smith: It seems that when it suits you have an open selection process.
Mr Phillips: May I finish my sentence. I do not set the process or make recruitment for anyone in the Commission other than the Chief Executive. I was not involved in that process at all.
Q56 Geraldine Smith: Do you think that process was wrong?
Mr Kinghan: I think we would accept that they should have been recruited in a competitive way. We have accepted that before now and I accept it now. The circumstances at the time, as we have discussed before, were that the Commission was in a great hurry to be ready. These people were, as you have said, in place, they had special expertise, which was not only their professional expertise but also their knowledge about the position of the Commission. In those circumstances the decision was made to keep them, but, actually, they should have been recruited for on a competitive basis. I accept that and, as Mr Phillips said, the Commission does now make all of its recruitment on a competitive basis.
Q57 Geraldine Smith: You would accept that that sets a very bad example for other people?
Mr Kinghan: I accept that it was a mistake at the time, yes I accept that.
Q58 Geraldine Smith: Was there a break in the contracts of those individuals?
Mr Kinghan: You mean was there a gap between them?
Q59 Geraldine Smith: Yes.
Mr Kinghan: No, I do not think so. There are seven people here. Two of them were re-engaged in 2008 so there was a gap so far as they were concerned, but the other five, no, I think they carried on.
Q60 Geraldine Smith: Were they asked to give any of the severance back then because there was no break in the contract?
Mr Kinghan: No. That issue was considered at the time and the Commission consulted the Cabinet Office about whether they should be asked to give their severance back and the advice was they should not be asked on the basis that it was not necessary to ask them, to be more precise.
Q61 Geraldine Smith: It was not necessary, so taxpayers' money did not really matter in that case?
Mr Kinghan: I think the point that was under consideration was first of all their entitlement to their severance payments. I think you would agree that their severance payments were calculated on the basis of the years that they had worked for the previous Commissions, so actually they were on that basis entitled to the amount that they were given. They were then reemployed on a contractual basis and we have said some aspects of the procedures were wrong, but they were reemployed on a daily basis and when people are reemployed and are employed in those terms their pay per day may look quite large but of course that reflects the fact they do not get paid when they are not there and there is no contribution to their pensions.
Q62 Geraldine Smith: What I would say is that you do not make people redundant or give them early voluntary retirement if you still need them. That would seem like a bit of a shambles in the senior management.
Mr Kinghan: I think, as we said earlier, that was the result of the voluntary early retirement scheme over which the Equality and Human Rights Commission had no control. That was why they went on that basis.
Q63 Geraldine Smith: But you managed the more junior staff, the less well paid staff. Presumably you managed to TUPE them across?
Mr Kinghan: We did, but we also TUPE-ed across some more senior.
Q64 Geraldine Smith: You did not make any mistakes with any of the low paid staff and grant severance to them and end up paying them again?
Mr Kinghan: Some of the staff in this group were relatively lowly paid. They were not all highly paid.
Q65 Geraldine Smith: Excuse me, relatively lowly paid? Can you give me some examples?
Mr Kinghan: I am sorry, I have not got ---
Q66 Geraldine Smith: Because it does not look too bad, an average of around £50,000 for three to six months' work. I think most people would settle for that when they were taken on as consultants.
Mr Kinghan: I am sorry, I have not got all the details in front of me.
Q67 Geraldine Smith: So you would say that is low paid, would you? Can I ask how much you are paid then just so as we can have some comparison?
Mr Kinghan: Yes, I am paid £1,000 a day.
Q68 Geraldine Smith: Yes, I guess maybe you would think it was low pay.
Mr Kinghan: Can I answer. One member of staff was paid by the previous Commissions £37,000 which is, you may say, a reasonable rate of pay but not very highly paid. There were two others paid in the 40s of thousands of pounds.
Q69 Geraldine Smith: But your transition team averaged around £100,000 a year, the 83 staff in the transition team which some of these people came from?
Mr Kinghan: The transition team were employed over a period of, I think, 18 months and were paid varying amounts of money depending on how long they were there and what their expertise was and so on.
Mr Rees: Can I just say that the figures in annex B, if you are drawing it from there, are of course the figures for two years so I think you will find the average is nearer £50,000 and not £100,000.
Q70 Geraldine Smith: £50,000 is still not low pay I would have thought for most people. Job descriptions - that would be another thing the Commission is concerned about, making sure that everything is above board. Did everyone have job descriptions to start with?
Mr Kinghan: Every member of the Commission when they started in October 2007? No, I do not think they did because some people were moved across on a team basis from the areas of work they had worked for with the previous Commissions into the new one.
Q71 Geraldine Smith: From my trade union background I would say it is not a very good way to run things in terms of equal opportunities. People have jobs; people get early voluntary retirement and then they can come back and they are paid as consultants; no real job descriptions for a while, for five months I think for some staff. It does not really set a very, very good example at all. In fact, it is a terrible example.
Mr Kinghan: I think Mr Phillips has made the point that everything was done very quickly. With hindsight I think we all take the view that it might have been better to delay starting the Commission which would have made it possible to address those issues. It is also relevant to say that it would have cost the taxpayer more overall if that had happened. I accept that it would have been better if people had started with job descriptions for every individual job. I entirely accept that.
Q72 Geraldine Smith: You could argue that it would cost the taxpayer more if you employed a couple of hundred more people but you are not going to do that, so I do not think that is a very good argument.
Mr Phillips: May I make a couple of points about the points you have just made. I completely concur with the sentiment of what you said and it is certainly where I would have liked to have been. There are two points. First of all, the transition staff were not employed by the Commission. When I arrived the whole transition team had already been employed and we were not in a position to employ them, dis-employ them, reduce their salary or anything of that kind. It was not until the Chief Executive became the accounting officer in May 2007 that any of us - the board or the senior staff - had control of these matters. Secondly, on the issue of job descriptions, this of course was part of the problem with the set-up. You will know the whole process of TUPE then leads you to job matching and we had to negotiate every single job description with our trade union colleagues individually for 500-plus people. This is a mighty task, not just for the Commission but for the trade union side, too. I completely concur with what you are saying in general but the circumstances did not allow us to do it.
Q73 Geraldine Smith: Mistakes were made and I think you have accepted that. Was anyone disciplined at any level for these mistakes?
Mr Kinghan: There was no disciplinary action taken against individuals responsible for the issues that we have just been talking about. It is however the case that a number of people have left the Commission for various reasons since we started and, among those, four people left under terms which were confidential by virtue of compromise agreements.
Q74 Geraldine Smith: So they got payments as well?
Mr Kinghan: I think we have sought to learn as many lessons as we can from the exercise and that is one of the reasons why Mr Rees and I jointly commissioned a report about the experience, and will obviously want to learn from that for the future.
Chairman: Thank you. Mr Bacon?
Q75 Mr Bacon: May I start with Mr Kinghan. When did you become interim Chief Executive?
Mr Kinghan: In May this year.
Q76 Mr Bacon: May 2009?
Mr Kinghan: Yes.
Q77 Mr Bacon: And you have been paid £1,000 a day since then?
Mr Kinghan: I have.
Q78 Mr Bacon: How much have you been paid so far in total?
Mr Kinghan: I think it is now about £110,000 or maybe £115,000 up to the end of November.
Q79 Mr Bacon: Can you send us a note with the exact figures?
Mr Kinghan: Certainly.
Q80 Mr Bacon: How much longer are you expecting to be the interim Chief Executive?
Mr Kinghan: My present contract runs until the end of January.
Q81 Mr Bacon: Perhaps you could include in your note how much you expect to earn during that period?
Mr Kinghan: I will.
Q82 Mr Bacon: When I heard you say that
-and it says in the Annual Report that you are the interim Director General and
there is a photograph of you here - I thought you were some sort of interim
management specialist like the Sir John Cuckneys (as was) or David Jameses of
this world, but when I looked at your CV you are from a classic Whitehall
background. You were Private Secretary
to Michael Howard, John Patten and Ian Gow.
You were Director General of Local and Regional Governance at the
Department for Communities and Local Government, a classic
Mr Kinghan: Well, the previous Chief Executive left in May.
Q83 Mr Bacon: So you overlapped.
Mr Kinghan: No, she technically left on May 14. In practice she had some leave so I started on 7 May. I was recruited via a competition that was held for the interim post and I took part in that in April.
Q84 Mr Bacon: Why was it a competition? You are perhaps not the person to answer this. Maybe Mr Rees but either of you: why was it a competition for an interim post? Why did they not just hire and appoint a Chief Executive?
Mr Kinghan: I think Mr Rees or Mr Phillips might want to answer that.
Q85 Mr Bacon: Mr Rees, do you want to answer that?
Mr Rees: I am happy to answer it although it is indeed the Chair who appoints
the Chief Executive and not the Government.
In practice, when the previous Chief Executive resigned to take up a new
post as High Commissioner in
Q86 Mr Bacon: And that process is on-going now, is it?
Mr Rees: That process is still on-going, yes.
Q87 Mr Bacon: Mr Rees, you said earlier "We told the Commission before 1 October that it would require Treasury approval". Those were your words right at the beginning of the hearing in answer to the Chairman. How soon before 1 October did you tell the Commission that it would require Treasury approval?
Mr Rees: I think the Comptroller and Auditor General's report sets out the very clear email traffic and I have read all of those emails between the two parties. It was clear in August that we said that we were not opposed to certain key staff being reengaged provided that there was a clear process of competition and provided that the salaries were properly tested in the market. There are clear email exchanges which make it clear that we did not believe that the salaries the Commission was proposing to pay were appropriate.
Q88 Mr Bacon: Can you explain this question of TUPE-ing people across because it seems if you are TUPE-ing somebody across then they have a right to the new job in the new institution, which precludes open competition. How many of the people were affected by the TUPE-ing across?
Mr Rees: In a sense, the three old Commissions, as I said, employed just over 600 people. The decision was taken that the new Commission, which had a much broader remit, would need a staff of around 500 people, and therefore clearly if all those 600 people wished to come across there would have been a problem, so that was the reason why it was felt that we would see whether there were people who did not wish to come across to the new Equality Commission and there could have been people who, for whatever reason - because they were passionate about their particular strand and wished to pursue it in a different area - decided not to come across. That process took place and, as I say, 185 people decided not to come across. The rest decided to come across.
Q89 Mr Bacon: Mr Kinghan, you said a moment ago that you took over in May 2009. The OGC flagged up that there was a problem with the lack of clear organisational design and that there were no job descriptions in place and so on. Five or six months prior to the doors opening why could not have all the things that needed to be done to get an organisational design in place, to have a clear business strategy, to get a budget organised and so on be done in not quite six months, or five months?
Mr Kinghan: It was May 2007 the OGC report you are referring to, and I think the answer is that most of the things that the OGC report recommended were done. A business strategy was put in place, a budget was sorted out and an organisational design was created, though, as I was discussing with Ms Smith, the time constraints only allowed people to be moved across on a team basis. The recommendations of the OGC report were followed and I think it is fair to say that the OGC went back in May 2008 and actually recognised that the Chief Executive had taken action to address the issues that had been identified in May 2007. The trouble was that everything had to be done very quickly and some things, as we have discussed, were not done according to the right procedures.
Q90 Mr Bacon: Mr Rees, can you say something about the change in the sponsoring department because it went from one government department to another and from one accounting officer to another. Why was that necessary?
Mr Rees: I think it is fair to say that the accounting officer throughout
this period did not in fact change. That
was the accounting officer Peter Housden who remained accounting officer until
I took up my post on
Q91 Mr Bacon: Mr Phillips, you said right at the beginning there was immense pressure to get the doors open. From whom?
Mr Phillips: To start with from Parliament itself, also from ministers and also from our stakeholders. There were two real issues. The board discussed this at its first and second meetings and the view that the board took was that though we thought it was going to be immensely difficult, the cost in disappointed expectations and also the cost of keeping the old Commissions going were unacceptable and I think that was the basic reason that we pressed ahead to open in the way we did on 1 October.
Q92 Mr Bacon: The amazing thing to me is Mr Rees has just described this as a high-risk process but we were not getting a rocket to the moon. We were taking three agencies and turning them into one agency with related but differing responsibilities. It ought not to have been that difficult to figure out the things that were required, whether it was a business strategy, whether it was organisational design, whether it was a budget, how many directors you had and the timetable for hiring them, and then implementing a set of milestones for when you had done all those things by, including making sure you had got skills like an HR function and a finance function and so on. Where was the problem? This is what I am struggling with? You spent £38 million doing it of which £8.7 million were the salary costs for the transition team. It is one thing to make a Horlicks of it; to spend an enormous amount of money making a Horlicks of it takes some doing, does it not?
Mr Phillips: I have been fortunate or unfortunate enough to have been through four mergers in the commercial world. I have been lucky enough to be part of a takeover team and I have been taken over, and in the commercial world what you say might be true, although in my experience it is not always the case. In this case, what we were merging to begin with were three organisations, two of them with 30-year histories with very different ways of operating, different financial systems and different cultures. We also had to take on responsibility for areas where there were very substantial expectations from NGOs and indeed from Members of this House. The issue was not just a straightforward can we fix the financial systems, can we get HR together. We also had to deal with the expectations and needs of the stakeholders. We had to deal with the different ways of working of the various groups of staff. If I may say so, I empathise with your bafflement, as I say, having been through this in the commercial world several times, but this was not a process that was as straightforward as that.
Q93 Mr Bacon: You certainly do not have to persuade me that commercial mergers do not always go smoothly. Plenty of people make money out of the fact that they do not. I am running out of time but one quick question perhaps for a note. The Comptroller and Auditor General's report to us includes a summary of the expenditure on transitions, which is a total of £38.8 million of which £11 million was redundancies and £8.7 million was these salary costs for the transition. I take it that is the bit that was paid at day rates? Is that correct?
Mr Kinghan: Some of it.
Mr Rees: Just to be absolutely clear, we are talking about two years here.
Q94 Mr Bacon: Exactly and you come to my question. What I want to know is when was each bit of this £38 million spent. I want a breakdown. I want to see how much of the £8.7 million was spent when, how much was end-loaded in the last three for four months, and so on. Can you do that for me for the entire £38.8 million?
Mr Rees: We will certainly try. It is worth underlining that the costs of the embryonic Commission, like the new Chief Executive, the Chair and all those staff, were also part of those transitional costs, but we can break it down.
Q95 Mr Bacon: Each bit of the business expenditure must have a date attached to it. All you have to do is look up the cheque stubs.
Mr Rees: We will endeavour to do that.
Chairman: Thank you. Nigel Griffiths?
Q96 Nigel Griffiths: If I look at some of the posts that were created I am a little surprised that when this whole exercise was embarked on that there was not a bit of brainstorming as to who should be in place, especially a programme director to lead with the transition, who seems to have come in at a late stage and had been one of those consultants. How did that gap appear, to your knowledge, Mr Rees?
Mr Rees: One of the issues throughout the programme was that there were in fact four programme directors for a programme that lasted not much more than 20 months and that is a very high turnover of programme directors. What I think you are referring to is the programme director who was appointed in May 2007 following the second OGC report.
Q97 Nigel Griffiths: Were these programme directors civil servants?
Mr Rees: That one was not.
Q98 Nigel Griffiths: Sorry, I meant the first, I am going back to the brainstorming. What you are saying is that you had a programme director in that very initial phase?
Mr Rees: Yes, I am saying that there was always a programme director.
Q99 Nigel Griffiths: And then?
Mr Rees: I think one of the issues that has come out of the lessons learned report that we commissioned was that these were actually outsiders, and there is a case that we should have had a better balance of skills within the whole of the transition team between people who may understand how you do mergers but also people who understand how the public sector works.
Q100 Nigel Griffiths: So all the programme directors were outsiders?
Mr Rees: Not all of them.
Q101 Nigel Griffiths: The reason I put that is because you will well know in the Civil
Service we have all worked with civil servants who have been asked to delay
appointments. I do not know if our new
High Commissioner to
Mr Rees: Are you asking whether it was considered whether to delay the start-up of the Commission?
Q102 Nigel Griffiths: It is classic. To lose one programme director is careless, to lose four ---
Mr Rees: The position, as far as I can understand it from looking at the papers, was that at no stage did anybody advise that the programme be delayed to give more time. With hindsight, again looking at the papers, I am surprised that that was not done.
Q103 Nigel Griffiths: I am not going to dwell on it much longer but it seems to me a programme director is a critical post and if it is a civil servant then it is part of a career move and they should not be, except in an emergency, promoted or moved out of that job. I am not sure from your answer whether you can guarantee that that did not happen or whether you know it did happen and should not happen again. Those are the sorts of lessons we are trying to draw out from this session.
Mr Rees: I would be happy to give you a note on why the programme directors moved. Some of them were there for relatively short periods of time and, as I said at the beginning, four programme directors in 20 months is not the best way to ensure that a programme of this size succeeds.
Q104 Nigel Griffiths: I have some sympathy for a Chief Executive who comes in in March and faces a report from the Office of Government Commerce Gateway in May which highlighted some of the problems that Mr Bacon spotted in paragraph 23. I am just not sure whether they might not have got to grips with some of those issues and why they inherited them anyway. This is "no agreed organisational design, no clear understanding of what the Commission would do" - although I gather amendments in Parliament may have affected that.
Mr Kinghan: May I just say that one of the points I made to Mr Bacon was that the recommendations of that OGC review were acted upon very quickly by the Chief Executive.
Q105 Nigel Griffiths: That is great but it is looking back the way, I am afraid, that we are trying to learn the lessons. If we were to go through this again we would want to know how we got there and also whether the Chief Executive did and should in two months have got to grips with that or, as I suspect, there may have been an overlap in the review.
Mr Phillips: Could I try to help here? May I just make one point because I would not like an unfortunate subtext here to stick which is that civil servants are not capable of doing extremely good jobs in these circumstances. In my own case, if I may, saving their blushes, Mr Rees and Mr Kinghan have been incredibly helpful in getting us to a place where we can actually report to you some of the things that you find unbelievable or difficult.
Q106 Nigel Griffiths: Mr Phillips, that was not the thrust of my question.
Mr Phillips: I just want to answer your point because I understand exactly the point you are trying to make.
Q107 Nigel Griffiths: If it was four or five private sector people they can move on unless it is in their contract. When it is civil servants - and I am not questioning their quality - it is the moves.
Mr Phillips: I think the lesson to be learned here is this: there had been a transition programme in place prior to the chair and the board being appointed. I think it was strange to imagine that the board of an independent body would not arrive with views of its own about what that body should do, how it should do things and so on. I think that somewhere there was a thought that all the work that had been done would somehow be presented to the board and the board would simply say, "That's fine, get on with it." For example, when I arrived there had been some work done on organisational design and there was a proposal to spend a really extremely large amount of money on further work along that line and I simply said, "No, stop," because I do not think you can make those presumptions until the board has had a chance to discuss what kind of organisation it should be. I think the lesson that we might learn here is that if you are going to appoint an independent board to lead an NDPB do not presume that it will simply accept what has been set in place by a transition team set up by the government.
Q108 Nigel Griffiths: Okay. Let me ask finally about the procurement process. Was there a justification for not having a competitive procurement process? In other words, were time constraints such that that was not deemed practical?
Mr Kinghan: You are talking now about the reengagement of the staff?
Q109 Nigel Griffiths: This is for the reengagement, yes.
Mr Kinghan: I think I have accepted already that there should have been a competitive procurement process. The Commission as a matter of course uses competitive procurement.
Q110 Nigel Griffiths: If I may be blunt Mr Kinghan, I know you have accepted that but are you just telling us that because you feel that that is necessary or if you look at it empirically at the time with all the pressures that were on it was that also a practical option as well and should have been followed?
Mr Kinghan: It would have been very difficult to do it competitively at the time. The pressures that the Commission was under to move from addressing the issues identified in the Office of Government Commerce report to the launch, by then four or five months later, made it very, very difficult. I think it would still have been better to pause and recruit people competitively but it was very difficult at the time because of the time constraints.
Q111 Nigel Griffiths: If this had been entirely private sector what do you think they would have done?
Mr Kinghan: I would not venture to comment. It seems to me it is quite likely they may have proceeded by retaining the people whom they had who had the special expertise that was thought necessary.
Mr Phillips: Yes.
Chairman: Your last questioner is Mr Alan Williams.
Q112 Mr Williams: There is nothing much left you will be glad to hear. When you were setting up you disposed of assets from the previous organisations and you lost £1.4 million in getting rid of them. Why? Is £1.4 million not worth considering?
Mr Kinghan: I think this is a reference to the write-offs that were made by agreement with the auditors, by agreement with the National Audit Office, on the closing down of the old Commissions. I think that is what you are talking about?
Q113 Mr Williams: Yes, that is right, but there were these assets which you sold at a loss of £1.4 million and then you spent £9.3 million on new equipment, so there is a total cost there of nearly £11 million.
Mr Kinghan: Some of this is about property and about the fact that ---
Mr Williams: I am coming to the property in a moment.
Q114 Mr Bacon: Property is 2.7 and that is a different line.
Mr Rees: Perhaps I could help about the new capital expenditure because I was just talking to my officials about that before I came here to try and understand it. I think it is worth being clear that for instance a new computer terminal with all of its associated on costs can be quite considerable, well into £3,000, so when you have to provide, as the Commission did, for about 400 new staff, new computer terminals, and so on, that is where that cost comes from. I think your question about what were the losses from disposal of unwanted assets, unless colleagues can answer it now, we will provide you with a note.
Mr Kinghan: I think that would be the best thing to do.
Q115 Mr Williams: I am surprised that you are not able to give an account of it. Then you inherited a series of relatively low-cost old leases. Why did you not stay with them?
Mr Kinghan: A judgment was made that some of the leases related to buildings which would not be suitable for the new Commission, partly because the new Commission was going to be differently organised geographically, it needed a bigger office in London than was available from the old Commissions, partly because the accessibility standards of some of the buildings that were inherited were quite low and the new Commission was keen to ensure that it was an exemplar in relation to accessibility standards.
Q116 Mr Williams: But it cost you another £2.7 million to dispose of those old leases. Why did it cost you that much?
Mr Kinghan: We will give you a detailed note on this ---
Q117 Mr Williams: That is another detailed note instead of an answer.
Mr Kinghan: May I say I think what that relates to is getting rid of the leases that were still left on those buildings and the payment ---
Q118 Mr Williams: Why did you need new buildings? The NAO for example recently had to make a decision on what to do when its building was running into considerable trouble and it stayed where it was and it was far cheaper than the options that were available.
Mr Rees: I think it is fair to say that the three legacy bodies each had a
head office in
Q119 Mr Williams: All outside
Mr Rees: No, some of them were in
Q120 Mr Williams: Where in
Mr Rees: There is one called
Q121 Mr Williams: I was reading in the Guardian the other day that the
Government is about to cut the number of quangos across
Mr Kinghan: Sorry, could you say that again?
Q122 Mr Williams: We are told the Government is going to cut the number of quangos
across
Mr Rees: If I can answer on behalf of the Government. We have been having discussions with the
EHRC, which has a significant number of its staff already in Manchester with,
as Mr Kinghan said, some staff in London and some staff elsewhere, and we
believe that one of the things the Commission should be doing is to be having
more of its staff in Manchester and fewer of its staff in London. I do not think it would be feasible for the
Commission to have no staff in
Q123 Mr Williams: Will you explain to us why you needed new buildings as opposed to the buildings you already had? They were obviously convenient for the previous occupants. Why were they not convenient for you?
Mr Kinghan: They were
convenient for the previous Commissions who had different numbers of people in
Q124 Mr Williams: How many is that?
Mr Kinghan: We now have
about 160 in the building near
Q125 Mr Williams: What is the problem with that site?
Mr Kinghan: The building
needs refurbishment. It needs work doing
to it, but we are negotiating with the landlords about that. We are actually reviewing our estates across
the country, partly with a view to reducing the number of buildings that we
have in order to save money. Some of our
buildings, for example the building that we have in
Q126 Mr Williams: So if you rationalise you will rationalise with a reduction in
Mr Kinghan: We will
undoubtedly have a smaller team in
Mr Phillips: May I add one point to perhaps put in context the question you have raised about why we needed to move. As Chair of the Commission for Racial Equality, I worked in the CRE building in Borough High Street which I do not know if it would have accommodated all the number of staff but what was absolutely certain - and this goes back to the point I guess that Mr Bacon made and also Ms Smith - the standards that we set for ourselves have to be high. For example, we could not contemplate using that CRE building because it did not have appropriate facilities for escape in case of fire for wheelchair users. It would have been inconceivable that we could use that building at the same time as we were offering guidance to other people saying they should not have buildings like that. So to take your point, some of the requirements for us are not simply about what is the lowest price; it is also about, as you put it rightly, that we have as best we can to set an example.
Q127 Mr Williams: So from your point of view how important is it that you retain the
numbers of staff in
Mr Kinghan: As I said earlier, when the lease runs out on the building we have in London at the moment in More London, our plan will be to reduce the number of people working in London at that point.
Q128 Mr Williams: The timescale?
Mr Kinghan: The lease runs out in 2013 so it is likely by the end of 2012 we will be in that position.
Mr Rees:
Just to be clear, the Government's position is that we think they should have
fewer people in
Q129 Mr Mitchell: I am just interested in the seven people who did so well for themselves as to where I can send them my begging letters. Here we are, you have got 600 people shrinking into 500 and they are transferred under Transfer of Undertakings which meant nowt basically, no money for them, and you have got seven who took a more cunning decision. They took the early exit scheme and that got them £629,276 and they then got £323,708 in consultancy fees, so there is a total between the seven of them of 952,000 quid, nearly a million quid. These really are the Magnificent Seven! Were they just lucky or were they extraordinarily cunning? Why was money showered on them in this way when most of the staff transferred got so little?
Mr Kinghan: The payments which they received, as you say, were partly severance costs which reflected the amount of time that they had worked for the previous Commissions and were calculated in line with the normal rules of those schemes. They were then reengaged on a contractual basis and ---
Q130 Mr Mitchell: And they had no idea that was coming?
Mr Kinghan: I am sure that they knew that was a possibility. We need to be clear that of those seven five were reengaged in 2007, the other two came back in 2008, but the payments they received under the severance scheme were the payments that they were entitled to and they were then reengaged on a contractual basis. The Chief Executive at the time had to decide how best to recruit the skills which they provided and took the view that retaining those staff was the best way to do that, bearing in mind both that they had the expertise that was needed and clearly the knowledge of what they had done in their previous time.
Q131 Mr Mitchell: They did well for themselves, did they not?
Mr Kinghan: As I said, the ---
Q132 Mr Mitchell: Do you think they did well for themselves?
Mr Kinghan: The payments they received were ones that they were entitled to. Lots of people leave public sector bodies, or indeed private sector bodies, under various terms, and then take on new jobs and that is in a sense what they did.
Q133 Mr Mitchell: Are they still there?
Mr Kinghan: No.
Q134 Mr Mitchell: Where are they? In the south
of
Mr Kinghan: I do not know exactly where they are. One of them ---
Q135 Mr Bacon:
Mr Kinghan: They may
well be in
Q136 Mr Bacon: Just a couple of requests for notes, if I may. The first one is about the programme directors. There was a whole swathe of them and they came from different backgrounds. Can you send us a list of who they were, not a huge CV but a couple of sentences on their background, where they came from, the date of their appointment and then the date they left, so we have some sense of who they were and why there were so many because it seems to be very odd, as you yourself Mr Rees acknowledged, to have so many. The whole point surely of a programme director is you appoint them with the job of delivering the programme of getting an agency up and running. I would like to know more about that. The second thing is to follow up from what Mr Williams was saying about property. This relates to the schedule of total cost of the transition. There was a figure in there of £2.7 million arising from the disposal of unwanted property and a further £1.4 million on other assets. As far as the property is concerned, could you give us a list of all those properties, their individual addresses, where they were, their rent, their square feet, how many staff worked in each one, the length of the lease and the cost of terminating it. If you want to check the transcript to get all those that would be excellent. Also your current costs in relation to the new buildings which, Mr Kinghan, you said you are now in the process of reviewing through an estates review. Finally, one for the Treasury really because when I read the phrase about the lack of an adequate finance and HR function, of course I thought back, as I am sure you did, to the Revenue and Customs Prosecutions Office.
Ms Diggle: I did indeed, yes.
Q137 Mr Bacon: Therefore I am wondering when is the Treasury document "Setting up a new organisation in the public sector" going to be finalised and circulated, because it does seem to me this is getting to be a bit of a scratched record, and were there such a document - and if you want I will help you write it but it would be better if it had a Treasury imprimatur, I am sure they would take more notice of it - that many of these problems could be solved if there were very clear guidance from the Treasury: here are the 23 things you need to consider when you are setting up a new organisation and here is the timescale within which you could reasonably expect to deliver those 23 things, and anything less than that would be high risk. Presumably there is no guidance of that kind at the moment otherwise these mistakes would not keep on occurring?
Ms Diggle: There is and there is not, Mr Bacon. There is a part of "Managing Public Money" that sets out what you do when you organise and run what is called an arm's length body, of which EHRC is one such, so whenever any such organisation is being set up the advice that we give is look at that and that will tell you the basic things to check.
Q138 Mr Bacon: There is "The responsibilities of an accounting officer" and there is "Spending Public Money". The title of the booklet I think you ought to publish is "Setting up a new organisation in the public sector" and make sure you cover all of those points in some detail.
Ms Diggle: If I may what I was going to say was we are in the process of considering, how can I put it, how to refresh "Managing Public Money" for the various things that have changed since the last edition. Could I think about putting something together as part of that?
Mr Bacon: Thank you.
Chairman: A last one from Geraldine Smith.
Q139 Geraldine Smith: Just a quick question. The five individuals who received severance and then were kept on, I understand that they received higher payments than previously. Why was that the case? Why were their salaries increased?
Mr Kinghan: They received payments on a per day basis when they were kept on which are, if you annualise them, higher than they received as employees of the CRE or the transition team but that reflected the fact that they were being paid on a per day basis.
Q140 Geraldine Smith: What was the highest payment per day?
Mr Kinghan: £822 per day.
Geraldine Smith: Very good.
Q141 Chairman: Gentlemen, that concludes our hearing. Mr Rees, we do not expect to see such significant weaknesses in the Commission's performance in the future and we will expect you to undertake to sort the matters out so that if you are summoned back in a year's time you can give it a clean bill of health. Mr Rees, you are nodding and that is a yes. On a lighter note, may I say that as you managed to control me as an aberrant junior minister 16 years ago, doing this should be very easy for you!
Mr Rees: I assure you, Chairman, this is much more difficult.
Chairman: Thank you very much.