Oral evidence: Government motoring agencies – the user perspective, HC 1109Tuesday 13 May 2014
Oral evidence, 13 May 2014.
Witnesses
Stephen Hammond MP, Parliamentary Under-Secretary of State, and Brian Etheridge, Managing Director Motoring Services, Department for Transport, gave evidence.
Chair
Good afternoon, Minister. I am sorry for keeping you waiting. I understand that you want to make an opening statement.
Stephen Hammond
Thank you, Mrs Ellman. I would be grateful for that opportunity. You will have seen that the Department has already submitted extensive written evidence, but I think it would be helpful if I had the opportunity to make a short statement. It is important because the Department for Transport and its motoring agencies are pursuing a programme of ambitious reform—a reform that will lead to better services and a reduction in costs. Where possible, this reduction in costs will be returned to service users in reduced fees and charges. As with any change of this nature there is a long way to go, but I hope that you will acknowledge that there has been some progress so far. Each agency has published its business plan for the coming year and we have set out ways in which we are going to accelerate that transformation. A number of changes for both the short and medium term are already in place. DVLA is embarking on a major programme of IT transformation to deliver new and better services online. It is committed to achieving £160 million of net savings on 2013-14 by the end of 2016-17. That represents a 30% efficiency saving over the next three years. They are also leading the way in delivering Government digital services, changing from a paper-based to a modern digital organisation. Three of the Government’s current 25 digital exemplars are being developed by the DVLA. You will have noted that the recent Riley review of the DVLA recommended that it accelerate the pace of digitalisation to bring a better customer experience. Further changes are on the way, such as new digital records, removal of the tax disc and the paper licence counterpart, and an opportunity to use direct debit to pay. I believe the way that the DVLA is developing and delivering new digital services is impressive. These services are being delivered quickly, more cost-effectively, and can respond instantly to customer feedback and change. Applying the Government’s digital standard, DVLA will provide a new generation of digital services that will match the best from the private sector. I would like to suggest, and I hope the Committee will take up my invitation to undertake, a visit to Swansea to see some of the developments that are being put in place. On 2 April this year we launched the new Driver and Vehicle Standards Agency—the DVSA—which merged VOSA and the DSA. The combination of these two agencies together will improve the provision of services. The DVSA will focus on sharing ideas, expertise and functions more quickly and develop a single approach to common customers. There has been a huge shift in the way that we deliver HGV testing, with now over 70% carried out at authorised testing facilities which are not owned or run by the Government. DVSA customers report that this saves them time and the costs of fuel and labour. This is a model that could potentially be used for other services. DVSA is already working with partners to model new approaches to bring the driving test closer to customers as well. DVSA is exploring sites where the services of the former DSA and VOSA can be combined. Those savings will be passed on to customers in the form of reduced fees. Lastly, the Department has been exploring new commercial approaches to deliver better services. While we recognise that one size does not fit all, there are good reasons in the case of the VCA for moving it into a more commercial world and away from the Government. Therefore, the Department is looking at a joint venture with a private sector operator and a process is under way to identify the best partner through open competition. The VCA provides a high-quality and trusted service internationally. I am convinced that we can move to this model without losing that. I want to maximise its opportunities for growth and its contribution to the UK automotive market. I am very clear that the agencies must continue to grow and develop. They must embrace change and innovation. They must deliver customer needs and services and must deliver them in a convenient and effective manner. The motoring services strategy of late 2012 said that we would put customers at the heart of everything we do. I think we have made a good start in doing that. We have not shied away from some difficult decisions, but of course I recognise there is more to do.
Chair
Minister, you have spoken about making efficiency savings. How can we be assured that this does not just mean cuts in services?
Stephen Hammond
Some of the ways that we are delivering, for instance, the DVLA’s digitalisation ensures that we still have the opportunity for people who need to have face-to-face contact through various methods to do so. You are already seeing a huge shift towards digitalisation. For instance, at the moment 96% of all new vehicle registrations are now being done online; 97% of driving theory tests and 94% of driving practical tests were booked online in the last year. It is making it easier for customers to access those services and making them more cost-efficient. As I talked about the ATFs in my opening statement, it is bringing services closer to the customer, making them more available and delivering cost savings.
Chair
What have you done to find out if any categories of customer are being left out in this—for example, people who live in rural areas where there might be access problems, and disabled people who may have difficulty using the systems? Have you done anything specific to see what is happening there?
Stephen Hammond
As I said, were there to be a problem for disabled people, there is an arrangement with the Post Office to provide value-for-money services, including taxing vehicles and renewing driving licences. If you do not have access to online, you can still do it in that manner. If you look at the ATF spread, we have ensured that there is a very good geographic spread. In terms of the access to other services and the testing facilities, we have set a standard of having a test centre for everyone within 20 miles. We have hit a target of 93% on that so far. Is that right—93%?
Brian Etheridge
If you look at the nature of the services that are being provided, then none of them has been excluded by the changes that we are making. Although you mentioned a couple of times in the earlier session that it was digital by default, we are not saying we are going to all digital. All the agencies are keeping open various channels and looking to improve all the channels. The ambition, of course, is to make the digital channel the preferable channel. The service will be so good that people will themselves choose to use it. In using it, as the Minister has already said, it is far cheaper for the agencies to do that and that is where the efficiency savings come from.
Chair
What mechanisms do you have in place to adjust the programmes if you find that people are being left out?
Stephen Hammond
I set out a moment ago that there are mechanisms. People would presumably most likely go to what they had seen as their previous source of access, particularly for the licensing of vehicles in terms of tax or whatever. That facility is still in place with the Post Office.
Chair
Has the Department specifically authorised driver data to be sold to third parties by the DVLA?
Stephen Hammond
I think you are probably referring to car parking data.
Chair
That is correct.
Stephen Hammond
There is a licensing and framework arrangement for data to be provided to car parking companies, but those car parking companies must be licensed either by their trade association or the local authority. The Government have therefore set up a framework such that this is properly monitored. Where there are breaches of that, the company is suspended from receiving that data, or local authorities are suspended from licensing those companies.
Chair
You have spoken about a framework. Does that mean that the Department authorises this activity?
Stephen Hammond
As a normal contractual arrangement the Department authorises car parking companies, regulated either by their trade association or their local authority, to receive data in the enforcement of car parking.
Chair
Are you satisfied that there is no improper use of that information?
Stephen Hammond
As I said a moment ago, Mrs Ellman, if there is improper use of that information and it is found, it is dealt with quickly and effectively. Hence in the last year there has been action taken against 20 companies, and 30 local authorities’ ability to regulate has been suspended.
Chair
Do you consider that the DVSA pursues foreign drivers and hauliers for fines and penalties as diligently as they pursue domestic offenders?
Stephen Hammond
I believe that, quite rightly, the DVSA do do that. If you have had the opportunity to go with them in terms of their targeted enforcement vehicles, they absolutely do pick up. They have a huge database of knowledge through the automatic number plate recognition system. They are able to target hauliers effectively, both UK and foreign, who have a poor record of maintenance and driver operations, and therefore work very effectively to do so. They absolutely enforce against foreign drivers.
Chair
Are you satisfied with the requirements for the Certificate of Professional Competence? Do you think the requirements are rigorous enough? We have had some representation saying that they are not. Is that something you have ever looked at?
Stephen Hammond
We continually look at the Certificate of Professional Competence. As you know, it was introduced some few years ago. It requires 35 hours of training over five years. There are some issues about it, some of which we are considering at the moment. I am considering whether or not there should be a safety element within the element of training. We are also looking at some other representations from organisations we have had. The concern for some people is that it might allow a repetition of the same training every year. If you speak to responsible hauliers, they understand the need to ensure their drivers are kept up to a level of professional competence. There is also a huge range of appropriate courses out there which are being offered, which people have to do. We are continually reviewing—sorry, “continually” would be the wrong word. We are reviewing, have reviewed and are at the moment in the process of reviewing the CPC regulations. With particular regard to safety, as I said, we have had some representations and we are looking at that at the moment.
Graham Stringer
On that point I would like to read you a quote from Leon Daniels of Transport for London, which does not sit easily with what you have just said about the Certificate of Professional Competence. I apologise—it is a slightly long quote but it is important: “I went through a series of different sorts of syllabuses, including the safer urban driving module, where we make PCV and HGV drivers ride bicycles round London. That was hugely illuminating, mostly for the PCV and HGV drivers. I could have got my driver CPC by going to the same course in the same office on five consecutive days and sitting through the same syllabus on five consecutive days. At the end of that week I would have the same card as I have now. It is entirely inappropriate that there is a shortcut that allows people to get their driver CPC in that way.”
Stephen Hammond
First of all, I am aware of Mr Daniels’ point. I am also aware of what he and his organisation are lobbying for, which is a complete overhaul in terms of some of the rules, which is what I was alluding to a moment ago. You could, if you chose to do what he has just said, do that. That would be poor use of the driver’s time. It would be poor use of their employer’s time. If we were to go to the sort of regime he is talking about, we would have to accept that there would be a huge additional cost burden. It is not proven that it would do anything for safety. He and his organisation have yet to make that point. However, as I said a moment ago in answer to Mrs Ellman, we are looking at some representations, principally about the construction of the CPC. There is also a broad European review, and the important thing is that we feed into that. The UK needs to make sure that we have drivers up to a level of professional competence while ensuring that the costs are proportionate.
Graham Stringer
As well as the safety aspect of what Mr Daniels says, he talks about doing the test for the Certificate of Professional Competence on five consecutive days. You implied that you had to do it on separate days over five years. I do not know very much about this but there seems to be a conflict between what you say and what he is saying.
Stephen Hammond
No; the two things are perfectly possible. What I am saying is that in a five-year period you have to have done 35 hours of training. He is saying that he undertook his seven hours of training for that particular year on five consecutive days.
Graham Stringer
That makes sense now; thank you.
Sarah Champion
I have two questions. I was with my local transport police and we were specifically talking about foreign vehicles. They were very concerned from a health and safety point of view. They spoke very highly of the DVSA team but said that they felt they were dramatically under-resourced for the scale of the potential problem. What are your thoughts on that?
Stephen Hammond
I cannot comment on that because I do not know exactly what they have said and how they are evidencing that. I am sure that in an ideal world everybody wants more money for every particular subject. I have had robust discussions with the chief executive of the DVSA to ensure that he has what he needs to make sure the UK roads remain the safest roads in Europe. You will have heard me say already that the targeted system they use enables us to be much more effective about stopping vehicles and making sure we stop the vehicles that are most likely to be causing health and safety—or, indeed, vehicle maintenance—issues. The enforcement of the new foreign vehicle duty means that we have particular ways of enforcing that through cameras. That again enables us to detect vehicles that are more likely to be coming into the United Kingdom and causing a problem. Without substance to the comment, it would be very difficult to make a detailed remark, but I would reject the idea that we do not resource the DVSA. I would certainly reject the idea that we do not have safety as paramount in what that organisation and this Government are trying to do.
Sarah Champion
My second question goes back to the DVLA and the selling of data to third parties. I am not overly comfortable with that, but I was particular surprised to realise that we are losing money on each of these transactions. What are your thoughts on that?
Stephen Hammond
Losing money on?
Sarah Champion
We were told by the chief executive that the price they are selling the data for is not covering their costs.
Stephen Hammond
I assume that that is part of the framework that they have set up with the various companies. Overall, each agency has to set its fees at a level which will cover its costs. I assume they have decided that there is some cross-trade in that. Mr Etheridge, is there anything else that you want to add?
Brian Etheridge
The Minister is absolutely right that they have to do that. I do not think they are losing a great deal of money on this. It would be wrong if the impression is given that that is the case. There is a constant fluctuation when you set a fee. You have a number of fixed overheads, but your fee throughput is variable. We constantly ask the agencies to review their fees. That will happen again this year as it has happened in previous years. We work with the Treasury to make sure that we have a balance. We would not want it to be the case, going forward, that the agency does not fully recover its fees. It is quite difficult on a day-by-day or year-by-year basis to get that absolutely right. You have to keep readjusting to get that right, and I suspect that is the situation that was being described to you by the chief executive of the DVLA.
Chair
How will the VCA benefit by becoming a joint venture with a private partner? What are you trying to attain by doing that?
Stephen Hammond
Let me give you a very clear example which I hope will explain the point. The Vehicle Certification Agency has an international reputation for what it does in terms of certifying vehicles. The chief executive came to me almost 18 months ago and asked whether he might be allowed extra budget to exploit the possibility of setting up an office in Brazil, the cost of which—memory probably distorts—was about £600,000 to set the office up. Naturally, there was some concern and question as to why. The reason is because the Brazilians recognise the international reputation of the VCA and it will allow them to certify vehicles coming into Brazil rather than the Brazilian Certification Agency. By simply setting up an office there, it will enable UK plc to export into Brazil and to get certification significantly quicker. My point, therefore, is that this has been a huge boost to car exports into Brazil because it has that international reputation. By the model we are suggesting and allowing it to partnership with the private sector, it will allow it to exploit further opportunities internationally to use its reputation as a certification agency. It will allow those opportunities to be brought forward more quickly without necessarily having to reference, through Government funding, some of the opportunities that are there, and yet at the same time remaining and having the benefit of Government backing as a type approval agency.
Chair
How is the project being run? How are you identifying an appropriate partner?
Stephen Hammond
This has now been an ongoing project for about a year. We first of all investigated the proposition about whether or not there was a benefit to moving it from the model it is currently into other models. We then tested which models would be most appropriate. We have finalised the model that we are now proposing is most appropriate. We are effectively now tendering for a private sector partner. That will be done in the usual rigorous way.
Chair
When do you expect that process to be completed?
Stephen Hammond
I am expecting that to be complete by July.
Brian Etheridge
At the moment this is a standard Government procurement process. That is the only avenue open to us to get a fair and open competition. At the moment we are at the stage of a pre-qualification questionnaire. We are looking at the prospective bidders. We will examine those; a certain number will be taken to the next stage. We will then negotiate with them. We hope to be clear about that and have a new partner up and running before the election in 2015.
Chair
How are you going to make sure that it is a good deal for the British taxpayer?
Brian Etheridge
As with any procurement, we will have a set of criteria against which we will measure the bidders. In setting up this arrangement we are very clear about a number of things. One is that we are expecting the partner to bring a great deal of benefit to the organisation. It will be a requirement that we do not change the services that we currently offer to our current customers in any way. We expect the same sort of level of service and expertise to go forward. This is bringing more to the organisation to enable it to grow in a way which it cannot do under the constraints of being a Government agency. If you think about it, the logic is absolutely clear. In order to grow, it needs to continue to demonstrate the value that it already has to customers. It would not be in our interests, not in the organisation’s and not in the joint venture partner’s, to begin to offer anything other than an improved service going forward.
Stephen Hammond
Mrs Ellman, I apologise, because in my answer to the last question I said July. I meant that we would be through the pre-qualification process by July. Therefore, as Mr Etheridge said, we would be expecting to announce the partner prior to the election next year.
Chair
You have merged two of the motoring agencies. Why did you not merge DVLA with DSA and VOSA? Did you consider merging those three?
Stephen Hammond
The short answer is that we looked at a more joined-up working arrangement across the agencies. We continue looking to make the processes better and simpler. Effectively, we have put together an operational agency and a registration and licensing agency. I think the functions make sense at this stage. There is a lot of work to continue to do in order to achieve those efficiency savings out of the first merger. We will keep it under review, but as yet I am not convinced, because there were obvious areas of skill overlap and obvious areas of operation, whether they would fit more comfortably together, putting VOSA and DSA together. I am not yet convinced that we need to make the next step with the DVLA. As a Department, we will have gone from five agencies down to two by the time of the next general election.
Chair
Do you think that vehicle excise duty has a long-term future as a form of motoring taxation?
Stephen Hammond
Mrs Ellman, I think in the time-honoured fashion this is a matter for the Treasury. Were I to stroll into it, first of all the Treasury would be unhappy, and, secondly, my time scale in this job, whatever it will be, would be shortened.
Chair
Have you thought of any other ways of collecting it, should it continue?
Stephen Hammond
You will have seen, Mrs Ellman, the Green Paper that I was responsible for as the Minister which we published last year. That basically set out how the Highways Agency was going to move from an agency to a company. It also set out some ideas about funding. The final chapter of that discussed some methods of looking at potential ways of ensuring that we get private sector investment in the roads and highways sector in the future. The last chapter was very much a piece of blue-sky thinking. Some of those ideas reflected possible remedies were VED to be no longer appropriate. It is probably fair to say that we have deliberately set this as something for the future, not something for now.
Chair
If there are no further questions from members, thank you very much. Oral evidence: Government motoring agencies – the user perspective, HC 1109 18