Anyone hoping that the Justice Committee's questioning of Rory Stewart, prisons minister, and MoJ officials on 26 June would give a clearer picture of the Department's finances was emphatically disappointed (1). The event illustrated the limitations of the Commons Committee system, in which each of a dozen or so MPs is in turn given the chance to ask 'their' list of questions. When the answer is unclear or evasive, the questioning often moves on without the issue being resolved. Particular so, when complex financial matters are discussed (2). The effect is like watching a confused battle at night, where the occasional flash briefly illuminates something - but you are not quite sure what – or how it connects to the rest of the battlefield.
In my analysis of 14 May, I described MoJ's finances as out of control, bursting the settlement agreed in SR 2015 in many directions simultaneously, by, I estimated, as much as a billion a year.
Here's what we learned from this hearing - or didn't [my comments in italics]:
Questions posed by the Committee which the MoJ could not or did not answer:
Confusion still reigns. However there is nothing here to suggest that my analysis of 14 May wasn't broadly right.
If I were advising the Committee. I'd say: don't take more oral evidence until MoJ have supplied a table showing:
a) the provision agreed in SR 15 and the main assumptions used, including prison population;
b) revised provision showing what increases agreed since the SR were for, including changed assumptions, and how funded;
c) what MoJ now thinks it needs next year and to, say, 22-23, separating capital and revenue, and the population assumptions it is using;
d) the revised building and closure programme, showing when new prisons will start and when become operational, how much capacity they will provide, and when existing prisons will close, the capacity lost through closure
e) to match d), all costs of the programme including building, fitting out and staffing and opening new prisons, estimated capital receipts from closure, transitional revenue costs of closure e.g. redundancy and of opening e.g. training, showing extent of double running (old capacity still operating while new is still not fully operational).
When the Committee has that, it could have a useful further oral examination. Trouble is, I doubt MoJ know half these things.
A final curiosity. The CFO told the Committee not once, but three times, that MoJ has a 'very strong system of financial management'. Now, believe it or not, I am very sympathetic to the position finance officials in MoJ and elsewhere in Government find themselves in. It is a far more challenging job than the one I had as FD of the HMPS around 2000, and to know that you are spending your working life systematically degrading vital public services, while publicly supporting minsters' pretence that funding is adequate to maintain services, must be hellish.
Still, when one considers that on their own admission, the last SR was disastrously mishandled, that on their own admission, maintenance contracts collapsed because MoJ didn't understand its own costs, resulting in additional spending, that MoJ as been forced to partially reverse deeply damaging cuts in prison staffing and hence exceed again the SR 2015 settlement, that probation contracts have become sustainable because MoJ didn't understand volume risk and this too may exceed the settlement provision, that MoJ's massive building programme has utterly failed, that MoJ cocked up increases in fees , that the court modernisation programme is costing more than budgeted but say the NAO may realise fewer savings than planned, that MoJ is so far adrift financially that its PUSS has had to tell Parliament he cant yet set a proper budget for the current year – when you consider all those things, then if I were the CFO, I would not go around telling Commons Committees that the MoJ has 'very strong financial management systems'.
(2) I made the same point in my book, regarding the PAC's failure to spot the MoJ's role in the SERCO/G$S tagging scandal (page 74)
I was formerly Finance Director of the Prison Service and then Director of the National Offender Management Service responsible for competition. I also worked in the NHS and an IT company. I later worked for two outsourcing companies.
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