Meg Hillier on running the Public Accounts Committee, Whitehall contracting headaches, and what keeps perm secs awake at night

Written by Tamsin Rutter on 22 January 2018 in Interview

After two years as Westminster’s chief public-spending watchdog, Meg Hillier tells Tamsin Rutter her frustrations and aspirations on pre-scrutinising projects, taking the fight against tax evasion to the US and extending FOI

Photos: Louise Haywood-Schiefer

Soon after being appointed Home Office minister in 2007, Meg Hillier told her civil servants that their erudite policy descriptions were not going to cut it during the 30-second window she gets to impress her constituents on the doorsteps of Hackney.

“This was translated by the private office into, ‘Meg wants 30-second briefings on this’ – which is not quite what I said,” she tells Civil Service World when we meet in the grand House of Commons office given to Public Accounts Committee chairs.

Hillier was trying to convey the importance of distilling work into a simple message about what government is doing for taxpayers, and she tries to keep to this principle in her role as the second elected – and second female – PAC chair.

While the committee continues to do what she calls “very big work” that specialists will want to trawl through, Hillier also now films 30-second Twitter briefings summarising key points of reports. “I have to think about what matters to people out there about this piece of work that we’re doing,” she says. “It’s actually quite a good discipline.”

Hillier’s perception of the civil service has evolved since she was a busy minister focused on the myriad decisions which kept her departmental machine moving. “There’s a sausage machine element to [the PAC] in that I’ve got to produce things and keep on timetable,” she says, “but actually there is a lot of time to reflect and think about what’s working well in government. I think that’s the bit you don’t have time to think about as a minister.

“Am I less reverent about the civil service as a result? I think I see that human frailty… even good, talented people can make mistakes. But those mistakes when you’re dealing with big contracts and big budgets can cost the taxpayer dear. You see the consequence of an action when you’re a minister very directly in your portfolio, but seeing it on this scale is sobering.”

‘We should be better at contracting by now’

Hillier was elected Labour MP for Hackney South and Shoreditch in 2005, and has served on the PAC for more than six years, leading it for the last two.

She jumps straight to what causes her the most angst about the civil service: contract management. Her manifold complaints encompass everything from poor letting processes to inadequate data collection, hazy oversight and bad behaviour on the part of private companies, some of which are too busy “raking in the money” to call out problems when they see them.

“Government after government has contracted stuff out,” says Hillier, “so we should be better at this by now. It’s quite depressing really. We still get too much badly wrong, from rail franchising through to HS2 accounts.”

A browse of the PAC’s current portfolio of work brings up contracting headaches from all over Whitehall. The Department for Business, Energy and Industry Strategy and Hinkley Point C; the Ministry of Justice and satellite tracking tags for offenders; the Education & Skills Funding Agency and Learndirect; the Department of Health and NHS Shared Business Services.

Hillier struggles (and fails) to think of a single exemplar of good Whitehall contracting. “The danger is that I tell you one and then it goes belly up,” she says. “Not that I’m cynical.”

Many of the problems, she adds, come in waves. Take equipment purchasing by the Ministry of Defence. When Hillier joined the committee in 2011, the MoD was in “a really bad place”. The PAC complained the department was unable to set out openly its gap between income and expenditure, and that suppliers of complex projects were offering unrealistically low cost estimates that the MoD consistently failed to challenge. Under pressure from the committee, the department then appeared to get a tighter grip on costs and procurement procedures. But the 2015 Spending Review outlined plans to buy £24bn of new military equipment, and the MoD budget is once again overcommitted.

“And now we’ve got a new secretary of state for defence right in the middle of it,” Hillier says. “One thing about Michael Fallon [is] he understood numbers and money, and that’s quite important for the Ministry of Defence.

“It’s not just about waving the flag for our armed forces, it’s actually – have they got the kit to do the work? We’ve got aircraft carriers without aircraft, we’ve got Royal Marines without amphibious boats, and we’ve got aircraft without pilots. It’s not looking good.”

What’s Whitehall to do?

Government recognises its dearth in contracting skills, and chief commercial officer Gareth Rhys Williams told CSW last month that 110 new senior officials had been appointed to commercial roles since April 2016. But for Hillier, improvements are not coming quickly enough, and she is not planning to ease up PAC’s incessant messaging on the virtues of good project management.

To keep abreast of civil service skills gaps she works closely with Public Administration and Constitutional Affairs Committee chair Bernard Jenkin – who crossed paths with CSW on his way out of her office. In fact, closer working between select committees is a particular aim of Hillier’s. She wants CSW readers to be aware that evidence they provide in hearings “won’t just roll into a corner and get lost” – it may well be followed up by other committees.

She does have sympathy for officials lumbered with overambitious secretaries of state who try to push through a wide range of policy proposals simultaneously. MoJ is the prime example, where Michael Gove – during his 14-month stint at the department – reversed many of the policies begun by predecessor Chris Grayling. “You’ve had two quite different personalities, changing things quite dramatically,” says Hillier. “That’s a lot of change for one department to cope with.”

“I would love it if we could routinely look at projects at the early inception and say: Well, clearly that’s going to be a bit odd, and that’s not going to work” 

There’s a duty, then, for MPs to educate themselves on running government. Hillier has a lot of praise for the Major Projects Leadership Academy, which now trains the senior responsible owners of all government’s major projects. She wants it to start training politicians as well. Looking at the Whole of Government Accounts, meanwhile, is one of her favourite annual tasks – it’s particularly pertinent, she says, for the opposition to get up to speed with the state of government accounts given the fragility of the current minority government.

“We shouldn’t all become administrators, or technical about it, but we do need to understand that when we’re making policy,” she says.

‘A nice juicy pre-project’

Returning to Whitehall, Hillier divulges a personal aspiration she believes will help minimise contracting cockups. One of the things she’d most like to achieve during her chairship is to tempt a permanent secretary into offering up “a nice juicy project” for examination before it is implemented. PAC has already started to dabble in pre-scrutiny – it uses hearings with HS2 officials, for example, to look to the next phase of the project as well as the previous one – but Hillier wants to do more.

“I would love it if we could routinely look at projects at the early inception and say: ‘Well, clearly that’s going to be a bit odd, and that’s not going to work’. With the best will in the world, you’ve got a small civil service team beavering away on what can be a very fast-paced policy announcement or having to backfill a policy that’s been announced at short notice,” she says, adding that PAC members, while not experts, can bring “common sense questioning” to the process.

Hillier cites the coalition government’s unpopular and now-abandoned Green Deal initiative to loan households the money for insulation and new boilers as a policy that was in desperate need of pre-scrutiny. As shadow energy secretary, Hillier had asked the team putting the Green Deal together who they thought would take out loans against the value of their home for the scheme, and how people on low incomes who did not own their own property would benefit.

In the end, the Green Deal cost taxpayers £240m and didn’t generate additional energy savings. Just eight people in Hillier’s constituency took out loans. “It was a complete flop,” she says. “If there had been pre-scrutiny of that, I think it would have been a good example of something that probably would never have gone ahead.”

Spend time in the real world

Another unpopular scheme Hillier believes may have been better navigated with a bit of pre-scrutiny is HM Revenue & Customs’ “crazy” office closures plan – consolidating 170 nationwide offices into 13 regional hubs. The PAC has criticised rising costs, the decision to sign 25-year leases with no break clauses, and the lack of consideration given to the potentially negative impact on local employment and economies.

“There are a lot of MPs around the House upset about losing jobs in their areas,” says Hillier, adding that many were unhappy not to have been consulted on the plan. “MPs are finding out sometimes a bit late in the day.”

She takes this kind of input from her colleagues very seriously, because “MPs are pretty tuned into what their constituents want”. Whitehall, on the other hand, “seems distant, it seems big numbers, it doesn’t seem very relevant” to the people it serves, she adds.

Hillier’s Twitter bio includes a mission statement that seems to summarise her preferred approach to governance: “Spend time in the real world too”. It’s a sentiment she is forever championing in select committee hearings, and she sometimes invites senior Whitehall officials to visit her constituency surgeries.

“I think what we try to do as a committee is remind people to think like a user and act like a taxpayer, but to bring that user perspective into the committee room,” she says.

‘PAC should be clear on what it cares about’

The committee, which Hillier boasts is “probably the most well-resourced select committee in the world”, is also working to improve its follow-up. Reports have recommendations with dates attached; officials are pressed to be specific about when changes will be made; and the committee has pledged to call them back time and again until it is satisfied (HMRC chief executive Jon Thompson told CSW last month that he’d been to 27 PAC hearings).

The committee has started assigning aspects of specific inquiries to the MPs that know most about them. It’s something that Gavin Freeguard, head of data and transparency at the Institute for Government, picks out as a particular success of the past two years.

“People who know about subject ‘X’ are the ones involved in scrutinising that a bit more,” he says, adding that using MPs’ strengths in this way can help the PAC to make more of an impact. “That sounds like it’s been quite an interesting experiment, and a good thing from our perspective.”

Freeguard offers suggestions for what he’d like to see the committee take on this year: a role scrutinising the effects of Brexit (see box); a focus on getting better data out of government; and setting out clearly its priorities for this year.

“Obviously it’s been quite a disruptive year in terms of the election, which we know has delayed and interrupted scrutiny with committees having to be reset up after the election,” he says. “But I think being clear, being very public about what it is PAC really cares about achieving over the next year or so [is something the IfG would like to see].”

Taking tax international

As well as stepping up pre-scrutiny – “Any offers from CSW readers would be great” – Hillier’s priorities for 2018 include building on two things she’s particularly proud of: the committee’s work on tax and her efforts to improve public sector accountability.

Tackling tax avoidance was a mantle passed down by her predecessor Margaret Hodge, another Labour MP who, like Hillier, was once an Islington councillor and has been “in very many respects a role model”. Hodge now smiles down on Hillier as the last and only female portrait in a 20-strong series of former PAC chairs nailed to the wall of her office. The current chair thought about placing Hodge in the centre, but in a building obsessed with the “politics of pictures” and a room with asbestos in the ceiling and contraptions that protrude from the walls with no apparent purpose, she decided it was best to leave well alone.

Hodge is widely credited for putting tax evasion on the map, hauling the chief executives of major corporations and accounting firms in front of her committee for a grilling.

“Since I became chair we’ve taken that international,” says Hillier, referring to the PAC’s Global Tax Transparency Summit of December 2016, where parliamentarians from around 30 countries committed to campaign for greater tax transparency by multinational companies. “One of the things we really agreed on is that citizens are getting angry about tax, and we as parliamentarians have a duty to put pressure on our governments to be bolder about this.”

Hillier’s dream is to get public accounts committees from around the world to conduct hearings on the same topic at about the same time. She already works with her counterparts in Europe on matters of VAT, and PAC is going to Washington in February to lobby the US Congress on tax. “We’ve got to crack America,” she says. “Well, we certainly need to be starting having discussions in America, because so many of the issues we’re dealing with [come from there]. We could haul in the Amazons and the Googles of this world every time there’s a query about a tax bill, but that’s not going to solve anything because there’s a global issue.”

Strands of accountability

Hillier is proud of the way her committee seeks to question officials who worked on a particular project “wherever they are” now – because while departments are institutionally responsible there’s “nothing like being asked to explain what you did”. She sometimes asks permanent secretaries what keeps them awake at night, and respects the honest ones. “It helps remind us how many priorities they’re juggling,” she says.

“I believe FOIs should be extended to the bits of an organisation that are funded entirely by taxpayers. If companies run a public project they should be open to be sharing information about that just as the public sector would” 

But problems with public sector accountability run far deeper than the Senior Civil Service. One of the chair’s biggest frustrations is fragmentation in health and education services. She finds it difficult to ascertain who is responsible for certain decisions in the NHS: it used to be a case of writing to a primary care trust, but the clinical commissioning groups that replaced them have a narrower remit. Schools are too “opaque” about how they spend their money, with academy chains that don’t disaggregate their budgets a particular bugbear for Hillier. And then there are Local Enterprise Partnerships, where transparency initiatives have not kept pace with their expanding budgets and role in communities.

Hillier insists she believes in devolution and does not want to see services run exclusively from Whitehall. But that doesn’t mean departments can “wash their hands and say: ‘It’s down to local areas now’,” she says. Hillier adds that she wants to see central government do more to analyse local performance and share best practice. “They still have a role to call things out”.

She’d also love to see the introduction of local public accounts committees, but knows how tricky this could be in practice. The PAC has the National Audit Office as “an absolute backbone of our work” so the figures the committee uses are indisputable, agreed between the NAO and departments. “You couldn’t really replicate that locally without it costing more,” she says. But systems of accountability should be foremost in mind for the newly elected mayors of combined authorities, she adds. “[They should] say from the beginning: ‘I want to be held to account for the money I’m spending that’s coming down from Whitehall. I want to set up some structure that means that you’re watching me spend those pounds’.”

Another major provider of UK public services is the private sector, and Hillier is sceptical of the “commercial confidentiality” rationale that precludes it from the types of accountability common in government. A final “great achievement” she’d like to accomplish as PAC chair is to compel contractors to report more of their accounts, and to expand the scope of the Freedom of Information Act.

“I believe FOIs should be extended to the bits of an organisation that are funded entirely by taxpayers’ funding,” she says. “Whether it be Serco or Capita, if they’re running a public project they should be open to be sharing information about that just as the public sector would. They are an extension of government. There are very few of them, they’re large companies that seem to mop it up, and have it hidden behind a wall because they’re private.

“Wherever taxpayer money is being spent it should have accountability.”

The PAC and Brexit

Hillier recognises that permanent secretaries have a difficult job at the best of times, but says Brexit presents unique challenges for officials now “not in control of the timetables thrust upon their already heavy workloads”.

Intermittent progress in Brussels means a “backlog of decisions” is building for Whitehall, she says, “all of which require some change or implementation. I don’t envy being a permanent secretary at this moment in time.”

Departments are reviewing their priorities in light of increased workloads, but many programmes of work are already well under way and halting them could prove costly. Hillier suspects it will be a case of “reprogramming things so they’re delayed or slower” rather than stopping them altogether.

She says departments’ Brexit work will be scrutinised by the PAC where it intersects with its other inquiries – and the committee has produced recent reports on the future of UK borders and customs – but many investigations will be picked up elsewhere on the committee corridor. “It’s not about what an individual committee does, it’s what we do collectively,” she says.

But the IfG’s Gavin Freeguard believes the PAC, with its oversight of so many areas, is “uniquely placed” to bring together common Brexit themes from across government. He sees the committee having a role next year in “scrutinising the short-circuiting of normal parliamentary procedure” given the new “measures in place for technical directions and departments being able to draw down money before it’s gone through Parliament”.

About the author

Tamsin Rutter is senior reporter for Civil Service World and tweets as @TamsinRutter

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Submitted on 22 January, 2018 - 14:17
One of the reasons why a gap has opened up between MoD’s income and expenditure is because it has never bothered to consider the cost of new equipment procurement programmes on a through-life sustainment basis, preferring instead to bear down on initial acquisition costs – notwithstanding the fact that, the cost of acquiring and re-provisioning Support Assets required to sustain military equipment over the whole life cycle, can be in the order of four to five times the prime equipment costs. A point that came to light at a recent Defence Select Committee hearing, which was told that MoD did not know what the Whole Life Cost of the first tranche of 48 F-35s was. This has come about because, for as long as anyone can remember, MoD has rigorously applied a policy of buying Support Assets for its military equipment separately, on a piece-meal basis, via a steady stream of short-term, renewable Post Design Services contracts let during the in-service phase, as and when the need arises rather than upfront, at the time of acquiring the prime equipment. The fact of the matter is that the ability to identify, quantify and then confidently price Support Assets can only be accumulated progressively as the Technical Solution is being advanced during the design, development, systems integration and prototyping phases of each equipment acquisition programme – it cannot be gained overnight! Central to the quantification of Whole Life Cost is the systematic determination of the inherent reliability of the prime equipment, bottom-up, starting with each individual Maintenance Significant Item. A methodology that has not been applied by Defence Contractors, because they have not been specifically directed to do so by MoD. But what is especially worrying is that, instead of using common sense and setting-up a single fixed, all-in Through Life Budget for each new military equipment acquisition programme to encompass costs for the prime equipment and its associated Support Assets required for through-life sustainment, MoD has created two separate, expandable budgets – the Equipment Procurement Plan and the Equipment Support Plan – thereby giving a clear indication to Industry, that it is happy to continue with the practice of procuring new equipment using one pot of money for the prime equipment, and paying for its in-service support costs from the second, using Post Design Services contracts – just like in the bad old days of the Defence Procurement Agency and the Defence Logistics Organisation, the predecessor stand-alone entities to MoD’s arms-length defence procurement organisation at Abbey Wood, Bristol. This tried-and-failed policy of buying Support Assets separately also gives the impression that MoD’s leadership has accepted that the Contractor supplying the Support Assets can be different from that which produces the prime equipment – unwittingly betraying its collective ignorance of what it is that makes Private Sector organisations tick, and how obsessively possessive they are of Intellectual Property Rights linked to their products. @JagPatel3

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