Oral evidence: The work of HM Passport Office, HC 238Tuesday, 17 June 2014

Oral evidence, 17 June 2014.

Witness

Paul Pugh, Chief Executive, HM Passport Office, and Registrar General for England and Wales, gave evidence.

Chair

Mr Pugh, thank you for coming to give evidence today. I am sorry that you have been waiting. We had a Division in the House that has delayed our proceedings by roughly 15 minutes. You are now confirmed—I think, earlier this year—as the permanent Chief Executive of the Passport Agency. Is that right?

Paul Pugh

That is correct, yes.

Chair

Just for the record, if you could remind this Committee of your salary scale?

Paul Pugh

My salary scale? I am on the salary scale that applies to senior civil servants, pay band 2.

Chair

Which is what?

Paul Pugh

My current salary as a matter of record is £104,000 a year.

Chair

Thank you. Now, this Committee wrote to you last week, as we do to witnesses where we are dealing with very complicated and important inquiries, and asked for some figures—some basic figures—about the number of applications that have been made and the number of applications that are still pending. Do you remember receiving that letter?

Paul Pugh

We received a request from the Committee yesterday, I think, for some detailed information, yes.

Chair

Why is it that you did not reply to this letter until 2.45 pm today, bearing in mind you were due to give evidence at 3.15 pm?

Paul Pugh

Which letter are you referring to, Chair?

Chair

If we could pass this to Mr Pugh. A letter asking you how many applications were made for each month since January this year, figures we thought you might have; the number of applications for adult passport renewals; the number of first time adult applications and the number of children’s applications; service standards and staff numbers and unit costs. Why have you not been able to provide this information to the Committee today and why did you not have the courtesy of informing the Committee that these very important pieces of information would not be available for us? You have known for some time that you have been going to give evidence to this Committee.

Paul Pugh

Yes, Chairman. To the best of my knowledge, the request for this information was only received yesterday and that the information is being compiled and being checked and validated, and as soon as that has been done it can be made available to the Committee.

Chair

When you say “checked and validated”, if a Minister asked you—as I am sure the Prime Minister has, because he answered these question in the House last week, and the Home Secretary has—how many applications were made in April of this year, do you not have those figures to give to Ministers?

Paul Pugh

Some of that information is available, but some of it is—

Chair

Well, give us the information you have because we would like to base this evidence on facts, Mr Pugh, rather than supposition, and for you to give us the information after the evidence hearing does not help us try and establish the facts. Perhaps you can tell us, what is the total number of applications that you have had, for example, for May of this year?

Paul Pugh

I can give the total number of applications that we received since 1 January this year, which is now approximately 3.6 million. The total number of applications that we have received since 1 April, the start of the financial year this year, is now approximately 1.9 million.

Chair

What is the current backlog that you have? I know you are reluctant to use the word “backlog” because you do not regard anything above your service standard as a backlog, but the Prime Minister told the House last week that there were 30,000 applications that, in your words, were not straightforward. Is that figure correct? Did you give the Prime Minister those figures?

Paul Pugh

I think we are talking about slightly different figures, Chair. I do not want to—

Chair

Let us ask about those figures. Is it correct that 10% of the applications that were made—the figures the Prime Minister gave the House, very openly and transparently last week—were the passports that were not transparent, the applications that were not straightforward?

Paul Pugh

I can give you some updated figures, again quite high level because I do not have all the detailed statistics on straightforward to hand, but I can confirm that since 1 January we have issued just over 3.14 million.

Chair

No, I do not want to know those figures. Why are you giving me figures I have not asked for, Mr Pugh? I am asking you for the outstanding numbers, not how many you have issued.

Paul Pugh

I am just coming on to give you those.

Chair

We would like to know those, if you could tell us. What are the outstanding figures?

Paul Pugh

You mean the ones that have not yet been processed?

Chair

Yes. That is normally what “outstanding” means.

Paul Pugh

Yes. We have a significant amount of current work in progress.

Chair

No, what is the figure?

Paul Pugh

The figure, as of Monday, I think, was just under 480,000 work in progress. We receive over 150,000 applications each week and our output similarly in a week is over 150,000. In fact, our output was over 160,000 cases completed last week alone.

Chair

At the moment you are dealing with 480,000 applications?

Paul Pugh

Broadly speaking, yes. I cannot confirm the absolute number, but it is certainly of that. That is the order of overall level of work in progress that we have to work our way through.

Chair

We were given some figures as a comparison by the unions, though we would have preferred to have the figures from you as you are the chief executive of the agency. You have now given us some figures that are the same as the union figures. Is this more or less than last year?

Paul Pugh

It is more than last year.

Chair

What was last year’s figure by comparison?

Paul Pugh

It was nearer to 280,000 at this time.

Chair

So it has roughly doubled?

Paul Pugh

I would need to confirm that, but it is perfectly—

Chair

Is it roughly double?

Paul Pugh

It is perfectly normal for us to have to have a high level of work in progress, and as we have indicated previously, we certainly have a much higher level of work in progress this year than we would normally expect to have at this time of year. That is because we have a substantially higher intake and a substantially different pattern of demand this year than we ever experienced before.

Chair

But you of course highlighted that there would be changes, didn’t you? You highlighted that the application numbers would have gone up. Last year, in your foreword to the annual report, you said that the closure of the overseas posts would result in an additional 350,000 applications being received onshore. You highlighted that, didn’t you?

Paul Pugh

Yes, but I think it is important to understand the context of those figures. What I indicated there is that, over the course of a full 12-month period, we would expect to receive, broadly speaking, 350,000 overseas applications. Having looked more closely at the numbers since last spring, our forecast overall intake on overseas applications during the course of 2014 we expect to be in the order of 390,000 to 400,000 over the whole of the 12-month period.

Chair

So the forecast you put in your report was wrong, your introduction? You expected 350,000, but in fact it is more?

Paul Pugh

It was a broad-brush indication based on historical patterns of applications submitted to the Foreign Office. Of course the number of applications overseas and domestic will vary from year to year, and each year, ahead of the year in question, we will do quite a lot of detailed work during the planning period in the autumn to try to establish more clearly what the actual forecast intake will be in the year in question.

Chair

So you knew that there would be an increase. Given what has happened over the last few weeks, do you think that the public is owed an apology from you as the chief executive of the agency for what appears to be a genuine crisis in the Passport Agency? Do you think you would like to take this opportunity to apologise for the fact that the public have had to go through these very large delays?

Paul Pugh

Oh, I would like to say that we—we in our organisation—recognise and fully appreciate how important the passport is, not just as—

Chair

I think we all do.

Paul Pugh

A travel document, but as an important indicator and confirmation of an individual’s identity. It is our job and we expect each year to serve over 5.5 million customers every year—year in, year out—and I would like to put on record that we realise the impact that it has on individuals, on individual members of the public, when we do not meet their needs.

Chair

Mr Pugh, I understand that. You sound like a brochure for the Passport Office. We know how many you deal with. I asked you would you like to apologise, because the Prime Minister, who is not responsible for the Passport Agency—he has other things to do with his life—and the Home Secretary, who is not responsible for doing your job, have both recognised the distress that has been caused. Would you like to take this opportunity to apologise to all those who have been waiting? I have a sheaf of letters from members of the public and Members of Parliament who are very, very angry. You do not seem to recognise the fact that people are very upset and angry. Would you like to apologise?

Paul Pugh

Absolutely. I absolutely, Chair, recognise the anger and distress that some people have suffered and I would like to put on record, yes, that in every case where we have not met our service standards, where we have not been able to meet the customer’s need, yes, certainly, we are sorry for that.

Chair

So we take that as an apology?

Paul Pugh

It is an apology.

Chair

It is? Excellent. Having made that apology, could I ask you about what the Home Secretary announced on Thursday? The Home Secretary announced some very important emergency measures to try to help you. This is her decision, when she came before the House on Thursday to try to help clear this backlog of 480,000 cases. Do you think that that will now deal with the issue for the public? Do you think we now have a way out of this situation?

Paul Pugh

Yes, we are facing a very difficult and challenging situation. We have experienced very high levels of—

Chair

No, I know all that. Do you think what she has proposed is going to be helpful to clearing this backlog?

Paul Pugh

Absolutely, I think it is helpful. It is helpful alongside a whole set of other measures that have we have already taken, that we are already taking, that will make sure that in the short term we increase our capacity to make sure that we are able to get back to our service standards for every single one of our customers as soon as we possibly can.

Chair

Are you aware that there is still a problem, because I myself had a passport issue case on Saturday, where a constituent of mine travelled from Leicester to Durham, was told to collect her passport and when she arrived there, having gone all the way to Durham to collect her passport to go on holiday on Monday, that passport was not available. Do you know who I rang in order to resolve this issue, Mr Pugh?

Paul Pugh

I am aware of that particular case, yes.

Chair

Good, because I rang you and I rang your office, which I assumed would operate an emergency number like all the other members of staff who are there from 7 am to midnight. Nobody picked up the phone, so I had to text the Home Secretary herself. I then received a call back from her Private Secretary, who then sorted out the problem and had the passport issued. Isn’t it an embarrassment to you that a Member of Parliament has to ring up the Home Secretary because they cannot get through to the chief executive of an agency who is paid £104,000—more than the Minister for Immigration—to sort out a constituency case in Leicester? Isn’t that an embarrassment?

Paul Pugh

In any case where we have not been able to deal successfully with queries that members have raised with us, of course that is not right, it should not happen.

Chair

It is not her job, is it?

Paul Pugh

It should not need to be the case. I know people were in the office during that time, because I was there myself at the time, so I do not understand why it would have been difficult for you to get through on the phone.

Chair

Nobody picked up the phone, because I did ring you first. Finally, did you receive a bonus last year?

Paul Pugh

No.

Chair

You did not? How many people in the Passport Office of your management team received a bonus?

Paul Pugh

Of my management team, two, I believe, last year.

Chair

What was the total amount that they received?

Paul Pugh

Of course the bonus arrangements for senior staff are those that apply across the Home Office as a whole—they are not within the gift of the Passport Office—so I do not recall exactly what the specific amounts were.

Chair

You do not know how much bonus your staff received at senior level?

Paul Pugh

I do not know what the individual amounts were, that individual members—

Chair

What is the total amount then, Mr Pugh?

Paul Pugh

For individual members—

Chair

No, no, the total amount of bonuses that your management received last year.

Paul Pugh

I do not know the specific answer to that, because it is not my decision. I am not the person—

Chair

No, I know it is not your decision. You mean people who serve under you on your board can get a bonus and you, as the chief executive, have no knowledge as to how much that is?

Paul Pugh

The arrangements for bonus awards to senior staff are those that apply to senior civil servants across the Home Office. Therefore, the decisions as they apply to me individually and to those who receive—

Chair

Basically you do not know what the amount is? No one has told you?

Paul Pugh

No.

Chair

No one has told you how much—

Paul Pugh

The scale of the amount is published in our annual report, so I am—

Chair

But you do not know it?

Paul Pugh

I know broadly what it is, but I do not know the exact amount.

Chair

What is it broadly then, Mr Pugh?

Paul Pugh

I think you will find that is less than £5,000 each.

Chair

What is the total?

Paul Pugh

Well, two of them, it would be less than £5,000.

Michael Ellis

Mr Pugh, you are on £104,000 a year. Are you planning to take a bonus this year if you are awarded one?

Paul Pugh

No.

Michael Ellis

Can you confirm whether or not the Passport Office was in deficit back in 2010 and whether it is in surplus now?

Paul Pugh

Yes, I can confirm that. Yes.

Michael Ellis

So it was in deficit in 2010 and you are now running a surplus?

Paul Pugh

We now return a surplus to the Home Office, and through the Home Office to the Treasury, yes, that is correct.

Michael Ellis

Right. The staff under your control and authority, are you content that at all times you have oversight of those staff, that they are working efficiently and that they are serving the public in the way that you would expect as their chief executive?

Paul Pugh

Yes, I am, but I would like to put on record my gratitude and admiration for the many thousands of staff across the organisation who are exceptionally committed, who are very proud of the work that they do. I receive examples every day of members of staff who have gone the extra mile.

Michael Ellis

Yes, thank you, Mr Pugh, for that, and we all acknowledge the good work of your staff, but are you satisfied that all of the staff under your control are operating efficiently and doing the job that they are paid to do?

Paul Pugh

In so far as it is possible. You can never be certain, and I do not suppose one would ever get to a position of being able to say they are working perfectly efficiently. In any organisation there are always improvements that can be made and I am sure if I were to talk to any of our front-line staff, they would—and I would be very delighted—have ideas about how things could be done better in their particular area of the organisation.

Michael Ellis

Forgive me, because you sound a little bit cagey, Mr Pugh. I am sorry if I am interpreting your answers incorrectly, but you do sound a little bit cagey. You have line managers, you have supervisors under your chief executive authority. They must be reporting back to you on a regular basis. Have you any reason to believe anecdotally or otherwise that there is a history of not operating efficiently and competently?

Paul Pugh

I do believe before 2010, yes.

Michael Ellis

Can you elaborate?

Paul Pugh

Because I think looking at the history of the organisation before 2010, first of all, it was gearing up to implement the National Identity Scheme and creating all the infrastructure that was necessary for that at the same time as running day-to-day business.

Michael Ellis

Yes, but you are getting your excuses in before you have given us the answer.

Paul Pugh

No, I am not giving any excuses.

Michael Ellis

Sorry?

Paul Pugh

I was not in the organisation at this time—

Michael Ellis

All right, so what are you trying to say?

Paul Pugh

That was long before my arrival. When I did arrive, I did find that during the quieter months of the year, outside the summer peak season, many staff in passport operations simply did not have enough to do. They were under-employed, and as a result, many of them were dissatisfied and demoralised.

Michael Ellis

What were they doing if they did not have enough to do? I do not follow you.

Paul Pugh

They were finding ways of filling their time, frankly.

Michael Ellis

Can you elaborate?

Paul Pugh

Well, tidying the office, keeping things up-to-date, filing, in some cases reading books.

Michael Ellis

Right, so you are saying that has not been happening since 2010?

Paul Pugh

That has certainly not happened since 2010, no.

Michael Ellis

It has not happened under your watch?

Paul Pugh

Absolutely not.

Michael Ellis

You are sure?

Paul Pugh

Yes.

Michael Ellis

Can you tell us how many passport applications were processed last week and how many of those were within service standards?

Paul Pugh

I can, yes. Last week, it was just over 165,000. Of those, across all types, I think it was approximately 90% were within the agreed service standards.

Michael Ellis

90%?

Paul Pugh

90%, yes.

Michael Ellis

How many customers do you believe, therefore, received their passports in line with service standards last week?

Paul Pugh

Last week? It would have been that number.

Michael Ellis

Right. Is it right that a passport now is cheaper than it was back in 2010?

Paul Pugh

Yes. We reduced the fees by £5 about two years ago, yes.

Michael Ellis

What are you doing to correct the issue? 90% is well and good, but those 10% represent a significant inconvenience to a large number of taxpayers and our constituents. What are you doing to address the issue of that 10%?

Paul Pugh

We are doing a great deal to address that 10% and have been over many weeks and months since we have been experiencing these levels of demand. On top of our existing complement of staff, we have already redeployed 250 staff into passport processing.

Michael Ellis

Where from?

Paul Pugh

Internally.

Michael Ellis

Internally? Within the same department?

Paul Pugh

No, within the agency, and we need to make sure we have efficient and effective customer contacts as well as passport processing. We have been redeploying staff to make sure that we are dealing with customer inquiries as promptly as we can. We are planning even now to increase capacity still further by temporary redeployment of staff from some other parts of the department, so we will overall increase capacity by an additional 400.

Michael Ellis

Thank you. The final question from me is, extra staffing will get you through the short term, moving them within the department will cope with the demand, but in the long term, surely the answer is to improve the efficiency of your systems and learn from the errors in forecasting and modelling, because it is a seasonal business largely, isn’t it, what you are doing? Do you think there is room for improving the efficiency of your forecasting and modelling?

Paul Pugh

Certainly what we have experienced this year has been completely out of line with the forecast, which has been reliable over previous years for many years.

Michael Ellis

So you do need to improve that?

Paul Pugh

Certainly, yes, I have asked for a kind of independent external review of our forecasting.

Chair

Mr Pugh, were you the author of the memo that was leaked to the press, to The Guardian, which stated that there had been a request to relax the scrutiny of overseas passports?

Paul Pugh

There had been no request to relax the scrutiny of overseas passports.

Chair

What was the relaxation that was required then?

Paul Pugh

I think the memo you are referring to, Chair, is one that talked about a procedural change in the processes that apply to certain types of overseas application, particularly to evidence that is required of—

Chair

This is what was in The Guardian.

Paul Pugh

An alternative address for applicants.

Chair

Yes, this is what was in The Guardian.

Paul Pugh

Yes. This is not a request to relax scrutiny, because what the procedural guidance makes clear is that that discretion should only be applied in those cases where the person considering the application is satisfied on other evidence that there is no indication of fraud.

Chair

But were you the author of this? Did it go through you? Did you approve it going to Ministers or did it not go to Ministers, because Ministers—

Paul Pugh

It did—

Chair

Can I just finish? Ministers were not prepared to support what you were proposing? Is that right?

Paul Pugh

That is right. No, it did not—

Chair

Did Ministers come back and say, “Do not do this. This would be wrong.”?

Paul Pugh

It did not go to Ministers and certainly I accepted—and indeed said to Ministers directly—that it was an error on our part that before putting this particular procedural change into place we should have sought their agreement so they could take a full view of the impact and effect of it. It is important to see, however, it was part of a series of proposals emerging from looking at our approach to processing overseas passports.

Chair

Given that error and what has happened in the last few weeks, did you ever consider your position as to whether you should resign as the chief executive of the agency, given the crisis that has embroiled the Prime Minister and the Home Secretary, indeed Parliament? Did you ever consider this, Mr Pugh?

Paul Pugh

In the light of all that has happened over the last few months, of course I have considered whether it would have been right for me to step down, whether it would be helpful for me to do so, but my job is to lead the agency through tough times as well as through less tough times, and that is what I intend to do.

Chair

You do not think somebody better could do this, given that the forecasting was wrong, memos were produced that had errors in them and the very large backlog? You do not think somebody else should do this job?

Paul Pugh

It is my job to lead the agency and that is what I intend to do.

Ian Austin

I have had more constituents contact me in the last few weeks than in the last nine years, so it is clear that there has been a huge backlog and that has caused big problems, but I think it is only fair to say that on each one of those, I have contacted your office personally and every single person from Dudley who has been worried about getting their passport in time to go on holiday has been sorted out, so I think it is fair to put on the record my gratitude to you and your office for having ensured that my constituents who have contacted me have been able to go on holiday. But the thing I want to ask you about is how much of the increase in demand that you are experiencing is in relation to applications from people living abroad, because as I understand it demand is up by about 300,000 compared to previous years, but a similar number of passport applications were dealt with abroad in previous years, so hasn’t a substantial part of the problem been caused by Ministers’ decisions to transfer applications that have previously been dealt with abroad back to the UK?

Paul Pugh

It important to understand the kind of history of the overseas work. I think the figures that you are referring to are a bit like comparing apples and pears. We knew when we were preparing to take over the overseas work that we would need additional capacity to deal with that work. That was planned for, that was built into the organisation and indeed we recruited a substantial number of staff and trained them specifically in expertise of overseas work to make sure that that could be dealt with. What we have seen in first few months of this year is an intake that is more than 400,000 more than the equivalent period in 2013 and almost 500,000 more than the forecast for 2014 would have suggested would be expected in this period. What we do not yet know, of course, is whether over the course of the 12-month period we will see the overall intake for 2014 rebalance itself, so the issue that has presented us with such a challenge is not so much simply the sheer volume of work, but the fact that it has occurred in a pattern of demand that is completely unlike anything we have ever seen in terms of customer behaviour in previous years.

Ian Austin

It has been reported that applications from overseas have experienced the lengthiest delays. Why has that been the case?

Paul Pugh

Again, I think it is important to understand why the transfer of overseas work took place. Broadly, there were three key aims behind that. One is to ensure consistency of processing, because historically different standards have been applied in different regional centres. One was to improve security and integrity of the process on the basis of a more evidence-based risk assessment. The third was around value for money for customers and we have been able substantially to reduce the overseas fees. Now, a lot of the work is very different to domestic work. Domestic work for our processing staff is high volume, but broadly very consistent. The overseas work is of a different kind. It is low volume and highly variable, depending upon which country people are applying for. I think the other factor that has been important is that in order to enable the transfer of overseas work to take place, we introduced a new online application channel for customers to make it possible for them to apply and to submit their application online. What we found in transition is that we need to improve the information for customers to make sure that we are getting the right information first time, because a substantial proportion of overseas work, we have discovered, has required further rework, further inquiry, further documentation for the customer. We also need to make sure that our staff develop their familiarity and therefore we can get to a position where we are in, if you like, a kind of steady state on the overseas work. We know we are not where we want to be yet on the overseas work, but I think it is important just to recognise that the lengthy periods that people have talked about are not universal. The way that an overseas case is processed will differ very significantly depending upon the country, depending upon the level of risk and depending upon the complexity of the application, so I would expect over the next few months for us to get to a position where we would be able to see the great majority of straightforward properly completed overseas applications being turned around in no more than four to six weeks.

Chair

Thank you.

Ian Austin

A final question from me. On this question of forecasting demand and preparing for it, are you able to tell us at what point, both months ago and during this recent crisis, when you asked for more staff and more resources, how quickly those decisions were taken by Ministers? You probably cannot tell us that now, but can you write to us and say, “We asked for these resources on this day and we received an answer then,” and so on? Would you be able to do that for us?

Paul Pugh

I can broadly answer, and the answer is very quickly. When we felt we had come to a point where in order to maintain our service standards and to keep them where we wanted them to be we needed to be able to mobilise staff from other parts of the department, those discussions with other parts of the department and with Ministers took place in a matter of days. I cannot recall exactly which days, but it was very, very quickly and we are already seeing some of the staff have been deployed from UK Visas and Immigration taken into our Liverpool office, being trained, getting down to work this week.

Chair

Thank you. Mr Pugh, on the overseas sections, who took the decision to close them and redeploy into onshore?

Paul Pugh

That was taken by Ministers several years ago.

Chair

We were in Nairobi and we met a woman, who was 92 years of age, a British citizen who has been waiting three months for her passport to be extended. We went to the entry clearance office in Nairobi and we were told that it could not be done in Nairobi any more, but it took her three months to send the passport, you to consider it and then send it back. Surely you should look again at this decision and allow some of this work to be done overseas. The Home Secretary, after all, has announced an extension for those who are overseas, an automatic extension. This is probably a good time to look at this again.

Paul Pugh

That would be a policy decision for Ministers to take, not an operational one that would be within my remit.

Chair

No, I understand. I am not asking you to take the decision now—I would not dream of putting you in that position—but is this something perhaps we should look at again?

Paul Pugh

Personally, I think we are still learning from experience. There are a number of processes and other improvements that we can make. I am sure there are lessons we can learn from some of the recent experience. I am not aware that Ministers have considered giving any consideration to the basic policy, for the reasons that I said at the outset as to why that transition was decided upon in the first place.

Mr Winnick

How would you describe, Mr Pugh, your relationship with the union representing the passport staff?

Paul Pugh

My relationships with many representatives of the PCS are extremely good. Whenever I visit an area office, I nearly always meet the local PCS representatives and we have very fruitful and constructive discussions.

Mr Winnick

At national level?

Paul Pugh

At national level, if I remember rightly, late last year the national PCS representatives for the Passport Office attended, at my invitation, a meeting of our management board and had a very sensible and constructive discussion with all the members of the management board for the first time ever, I think, in the history of the organisation.

Mr Winnick

That must have made them happy. We have heard evidence from Mr Mike Jones; you are familiar with the name Mr Mike Jones?

Paul Pugh

I am familiar with the name, yes.

Mr Winnick

You are familiar of course with the job that he does. He told the Committee in evidence just before you came in, Mr Pugh, that it has been very difficult to get positive results from talks, that in the main the attitude of management—presumably yourself and your predecessor—has been, to say the least, rather negative. You would refute that, would you?

Paul Pugh

I would absolutely refute that, yes. I have not met Mr Jones. To the best of my knowledge, Mr Jones has never asked to meet me. Obviously I was not in the room when he was making his remarks. Therefore, I do not know the detail of exactly what he said, although I did hear the very beginning of his remarks, some of the comments made about the nature of the organisation, which I, and I think many of the members of staff, would not agree with.

Mr Winnick

During his evidence, he said to the Committee that he has written twice to you as chief executive in the past week. There has not even been an acknowledgement. You deny that, do you?

Paul Pugh

I have replied to his letter today.

Mr Winnick

Today? I see.

Paul Pugh

Yes.

Mr Winnick

Just a coincidence it happens to be the time when both of you were giving evidence? That is purely a coincidence, Mr Pugh?

Paul Pugh

Perhaps it also a coincidence that he did not write to me ever or contact me at all until last week.

Mr Winnick

Mr Pugh, can I put it to you or ask you whether you really feel that the job of a union is a perfectly legitimate one in trying to negotiate on behalf of their members? You accept that, do you?

Paul Pugh

Absolutely, and indeed, I have been a trade union member myself for nearly 30 years.

Mr Winnick

Do you really feel that you have responded in the way that should be the response of management, not necessarily agreeing—obviously no one has ever suggested that should automatically be the position—but a willingness to listen, to understand the concerns of the staff? You accept all that?

Paul Pugh

Absolutely, yes, yes. I think, as I said, my contacts with PCS representatives across our organisation are generally extremely good and I meet them frequently.

Mr Winnick

You see, if that is so, why should Mr Jones come along and tell us something that is quite different? Clearly both of you have a different interpretation of what has been going on.

Paul Pugh

That is clearly a question you would have to ask of him rather than me.

Mr Winnick

There is a possibility, as you know, that the union may consider consulting their members about industrial action and we all know the repercussions on our constituents if industrial action occurs. What do you think can be done to prevent the union coming to a decision that they should consult their members? They would not do so lightly, presumably?

Paul Pugh

It is not for me to really take a view about how the PCS trade union conducts itself internally and how they arrive at—

Mr Winnick

No, no one has suggested it is. What I am asking you really is that if the union is in such a concerned mood on behalf of their members, presumably they are not making it up as they go along; they are not seeking industrial action for the sake of industrial action. I doubt anyone would want that accusation. They must have very serious concerns on behalf of their members. All I am asking you, Mr Pugh, is a simple question: what can be done by management to try to negotiate and listen carefully to what the union is seeking and obviously to seek a compromise whereby industrial action is not likely to occur?

Paul Pugh

All I can say, Mr Winnick, is that I talk to members of staff every day in my job, I listen to what they have to say. What they tell me about the mood and feeling and morale within the organisation and their commitment to the organisation is not the picture that I think, as far as I understand, Mr Jones has given to you. Now, clearly I am very happy to listen to the views that Mr Jones has to put about the picture of our organisation as he perceives it, but I do not believe that the PCS union are the sole means by which the views of staff within the organisation are legitimately expressed.

Mr Winnick

So you are saying you have a better understanding of the staff than the union that the members belong to? Is that what you are saying?

Paul Pugh

I am not saying that. I am saying I probably spend a lot more time in our organisation talking to our staff than Mr Jones does.

Mr Winnick

Does that mean that you are not very willing to discuss the outside issues?

Paul Pugh

I am very willing to meet Mr Jones, or indeed any other representatives of the union, and discuss any matters that they would like to.

Mr Winnick

So you are willing to meet Mr Jones—

Paul Pugh

Absolutely.

Mr Winnick

In the very near future?

Paul Pugh

Absolutely, yes.

Mr Winnick

Can we work on the basis that, arising from what you have just said, a meeting will take place either this week or early next week?

Paul Pugh

I am happy to make myself available.

Chair

Thank you. We are very keen that you do that, because obviously members of the Committee would not like to see industrial action. Perhaps on your way out you could start the process in the corridor.

Mr Winnick

It is easy to talk to him. He is just behind you.

Chair

Then at least the Select Committee would have been of some use to try to resolve this problem. Can I bring in Nicola Blackwood just before you, Mr Reckless? I am sorry, because she does have to be away and I missed her earlier on. My apologies, you will come in next. Nicola Blackwood.

Nicola Blackwood

Thank you, Mr Chairman. There has been quite a lot of focus on people waiting for passports who are going on holiday. I would also like to make the point that some people waiting for passports are also trying to go away on business and so that is something we would like to look at as well. You mentioned earlier in your evidence about some lessons that need to be learnt about the situation and also you have spoken about some of your concerns about the failures of forecasting and how your forecast of 350,000 was not adequate for the level of demand that you are now experiencing. You also mentioned the fact that when you contacted Ministers, you did have a very quick response, and you are now redeploying staff and so on in order to deal with the situation. I just wonder if you think that you should have contacted Ministers earlier, you should have taken more pre-emptive action when you realised that the demand was rising so quickly. What do you think that you could have done in order to circumvent the situation that we are in now?

Paul Pugh

We put in place, and indeed took, a series of kind of planned management measures from January onwards. Some of it is our normal planning, for example, introducing staff who are on part-year appointments, who are on evening shifts; that normally starts at that time of year. When demand is high, and of course it can fluctuate from month to month or week to week, we have a range of management interventions that we can put in place, which we did over the succeeding weeks. I think as it became clear that the pattern of very high demand was persisting over a longer period, we took a further series of measures, some of which I have already described, about internal redeployment of staff. Throughout that period, I had a very open sharing of the position and describing what we were doing with Ministers. At no point did I ever feel that there was anything that I was asking for or that I needed that I was not receiving.

Nicola Blackwood

No, my question is that with hindsight, do you think that there are actions that you could have taken that would have improved the situation or do you think that you could have spotted this rise in demand earlier if you had used different analysis? What do you think that we could do to prevent this happening again?

Paul Pugh

I think one of the things arising from all this is clearly the forecasting model that we have used and that has been, before 2013, reliable over a long period, at most years to within 2% or 3% of overall intake. That forecasting model has not at all accurately reflected the pattern of demand that we have seen this year. Therefore, I think, yes, we need to go back to, is there a better way, what can we learn from the pattern of demand that has occurred this year and does it represent a significant permanent shift in the pattern of seasonality?

Nicola Blackwood

So what do you think is different about this pattern of demand? We heard some speculation that it is overseas applications or it is new citizenship applications. Is it something other than that?

Paul Pugh

I hope I was clear with Mr Austin that I do not believe that the overseas applications is the factor driving the overall increase in demand, other than that which we have allowed for. I did hear some speculation that it was related to newly naturalised citizens. That is not the case at all, I do not think. Newly naturalised citizens represented last year only roughly 100,000 of all our applications and I do not think we have seen any significant increase in them, so I do not think that is a factor. What it appears to be is a significant shift in the seasonality of customers’ behaviour. We did do some analysis to try to understand whether what we were experiencing in 2014 was demand that could have occurred in previous years but did not. That is to say were there people whose passports expired in previous years but chose not to renew them, that sort of latent demand.

Chair

Thank you. Mr Reckless, my apologies for coming to you so late.

Mark Reckless

Thank you, Mr Chairman. I think it is widely accepted as just discussed, but also stated in your annual report, that demand was not modelled accurately in 2012, 2013. Are you aware of any organisation that accurately forecasted the record rise in employment and turnaround in the economy we have seen since then?

Paul Pugh

Am I aware of any? No.

Mark Reckless

Could you take into account in advance the recent rise in the level of sterling, which has made holidays cheaper for people from this country?

Paul Pugh

It would be extremely hard to take into a passport demand forecasting model fluctuations in currency rates in the short term.

Mark Reckless

Thank you, Mr Pugh. That has answered my questions.

Lorraine Fullbrook

Mr Pugh, can I ask, some people say it is very easy and simple to process a passport application, particularly a renewal of a passport. How exactly has the British passport, as an important security document, obviously, changed in recent years and how does that compare to foreign passports?

Paul Pugh

Particularly in one respect. We introduced a new design of the passport itself in 2010, I think, which was a much more sophisticated design in terms of the security features that are part of the book itself. For obvious reasons, I would not want to go into the exact detail, but in terms of the security of the UK passport, it is recognised worldwide as one of the most secure in the world and our passport processes are recognised as one of the most secure in the world. As result of that, a British passport holder has access without visa or without additional checks to more countries than virtually any other citizen of any other country.

Lorraine Fullbrook

Given the gold standard reputation of the British passport, what freedoms does this give travellers to other countries?

Paul Pugh

It enables people to travel freely to other countries—in more cases, I think, than almost any other citizen; I am not sure it is absolutely the first in the world—without them having to go through any additional checks that are required by that particular state before the person is permitted entry.

Lorraine Fullbrook

Can I just ask one final question about the modelling and forecasting? From here on in, how are you going to change how you model and forecast?

Paul Pugh

I think it will depend upon the independent review of our forecasting model, which I have now asked should take place. I want to make sure that we get the best possible advice, the most expert advice, which tells us both what can we learn from what has happened in 2014 up until now, but I guess more importantly, in looking forward, what is the most robust, the most reliable way of forecasting into the future in order to understand whether we have seen any significant permanent demographic shift in the population of customers.

Lorraine Fullbrook

Thank you. Can I just ask finally what impact do you think industrial action would have on the Passport Office?

Paul Pugh

I think it would be extremely damaging. It would be extremely damaging to our customers and to our public.

Lorraine Fullbrook

Thank you.

Chair

We all hope it does not get to that if you start negotiations, courtesy of Mr Winnick, who is acting as a kind of Acas in respect of these matters. Paul Flynn, and finally Yasmin Qureshi.

Paul Flynn

You say you understand the anger of families who have been left distraught in recent weeks by worry, by the possibility that their holidays were going to be cancelled, the extra expense of travelling to Liverpool or wherever it might be. Do you appreciate how much satisfaction they might get if you now resigned?

Paul Pugh

I am not sure my resignation—

Paul Flynn

It is worth a try anyway.

Paul Pugh

I am not sure how it would help people in any way. It certainly would not—

Paul Flynn

It would allow them to vent their anger. Particularly if I asked my correspondents whether they would like you to stay in office, I am quite certain they would say with unanimity, “He should go.” Who is responsible for this? We know the Prime Minister is not, we know the Home Secretary is not, so who is it, Mr Pugh?

Paul Pugh

I am responsible for the operation.

Paul Flynn

Would you describe your style of running the service as management by panic? The Home Secretary introduced several new measures, obviously brand-new measures, into there to deal with this crisis. Isn’t that worthy of a resignation when you behave in that way?

Paul Pugh

As I have explained, what we have done over a number of months, in response to a wholly exceptional set of circumstances, is implemented with care, with proper planning and with absolutely no compromise on the quality and security of decision making—

Paul Flynn

So it is the public’s fault for being so inconsiderate as to demand passports at time when it was awkward for the Passport Service? Can I tell you this—

Paul Pugh

I did not say that at all, Mr Flynn. Sorry, I think that is—

Paul Flynn

We are just interpreting as best we can, rather than have another discursive explanation. I have represented hundreds of passport workers since 1972 as a local councillor and as an MP, and a major passport centre has been in my constituency all that time. There has never been a crisis like this, has there?

Paul Pugh

There has never been a challenging situation of this kind, not in recent years certainly.

Paul Flynn

It has caused a great deal of heartache, you would agree with that, you had the grace to apologise—

Paul Pugh

Absolutely, I apologised earlier and I would just like to say that I absolutely recognise and empathise with the distress and frustration in any case where we haven’t been able to meet the requirements of our customers.

Paul Flynn

You will be fully compensating financially all those who suffered losses because of failures by the Passport Service?

Paul Pugh

We have a very clear approach to compensation in relation to where someone has suffered a financial detriment as a result of our error.

Paul Flynn

How much will that and the overtime and all the other additions you had cost?

Paul Pugh

It is not possible to put a figure on something that is part-theoretical.

Paul Flynn

Would you agree that the present situation was exacerbated or possibly created by cuts made in the past that left the service in a position where they could not respond to unusual demand?

Paul Pugh

No, I don’t think that is a right representation of the position. The size of the organisation has increased by roughly 300 people in the last two years.

Paul Flynn

You have employed an extra 100 people recently. Why didn’t you employ them in Wales, where the Passport Service took away the only counter service that existed in Wales? You did that in 2011. Wouldn’t it have been more sensible to reintroduce the best service in Wales for all the people from my area or from Newport or Cwmbran who, in panic, in order to get their holiday, had to travel to Liverpool, and some of them stayed overnight?

Paul Pugh

First, let me say that we have not taken away the counter service in Wales. In Newport is one of our customer service centres where the full range of counter services is available.

Yasmin Qureshi

Just three small questions. Going on from the point that Mr Flynn just mentioned, you have taken 100 people from the naturalisation unit. How many weeks is it going to take to train them up to be able to deal with passport applications?

Paul Pugh

What, the staff from UK Visas and Immigration? We have deliberately selected staff from UK Visas and Immigration who are already well familiar with nationality law and, therefore, that is one of the key aspects of being able to take decisions about passport entitlement in relation to understanding nationality. Therefore, those staff already come with those skills.

Yasmin Qureshi

They already know how to process passport applications?

Paul Pugh

They know the legal background and the legal context. What we need to train them to do is how to apply their existing knowledge in the specific context of a decision about a passport application.

Yasmin Qureshi

A normal training course is about six weeks, I understand, for people coming afresh.

Paul Pugh

Yes.

Yasmin Qureshi

How long would these people be trained for?

Paul Pugh

No, the training course isn’t normally six weeks. A brand new recruit fresh off the street who has no previous knowledge of anything of this kind would expect to probably spend two weeks in the classroom and then a number of weeks with a mentor or a desk trainer working alongside them. The majority of the time that they spend in the classroom would be spent on getting them familiar with nationality legislation.

Yasmin Qureshi

Right. Is it right that from the year 2012 to 2013 your department had a budget surplus of £73 million? Is it also right to say that with delays happening a lot of people were paying the higher urgent rate? Did that contribute to the £73 million surplus?

Paul Pugh

What, the number of people choosing our premium or fast-track services?

Yasmin Qureshi

Yes, because of delays in the passports with the normal service.

Paul Pugh

No, I don’t believe that was a factor, no.

Yasmin Qureshi

I know you said you have not had a discussion with Mr Jones, but it is quite clear from what evidence we heard from Mr Jones that there have been issues where employees of the Passport Office have tried to tell the management that there is a chronic shortage of staff. Were any attempts made to increase the number of staff, bearing in mind that you have £73 million budget surplus for the last year?

Paul Pugh

We have increased the number of staff by approximately 300 full-time equivalent posts in the last two years.

Yasmin Qureshi

Then my final question, which is, last week we had the Home Secretary saying there is no problem, there is no backlog. A photograph appeared in The Guardian showing a whole load of files stacked in meeting rooms in the Liverpool office and then the next day the Prime Minister said that there was a backlog. I understand your department has started an investigation to find out who took that photograph and, therefore, you are obviously spending a lot of money and resources on this. Do you think that is appropriate in light of the fact this person has probably done a great service for the country?

Paul Pugh

What we did was remind our staff of the existing policy and protocol that applies to all civil servants and all people within our organisation about contact with the media. We are all bound by the Civil Service Code and, therefore, the rules that apply to public comments and providing information. What the picture demonstrated was a well-ordered, well-contained area for holding work ready for consideration and processing.

Yasmin Qureshi

You are not carrying out an inquiry into it, then?

Paul Pugh

I am not aware that there is a specific investigation.

Yasmin Qureshi

There is a circular, which was issued by Andy Bannon, who says, “This is being viewed as a serious security breach and I’ve notified the internal investigation team accordingly. They will be making a full investigation and if there is clear evidence linking a member of Her Majesty’s Passport Office, Steria or our contracted staff to the breach, formal misconduct procedures will be considered.” If that’s not an inquiry and a witch hunt against somebody who has provided public service, what is?

Paul Pugh

It would be perfectly normal practice whenever there is an indication that a member of staff had unauthorised contact with the media to try to establish how that happened and how it took place.

Chair

Can I just clarify because we are coming to the end of your evidence. You gave us a figure of 489,000 applications. This is work in progress, is it?

Paul Pugh

I think I gave a figure of approximately that number. That number will vary from—

Chair

Of course, but can we just stick to the facts. I don’t need an explanation for a moment. If you just answer these it will be helpful to the Committee because we don’t have the figures that we asked for. You don’t regard any of this as being a backlog?

Paul Pugh

I don’t see a large amount of work in progress in an organisation that is receiving and processing 150,000 cases a week—

Chair

No, I understand that. Can I just explain? You don’t know the history of this because you don’t know the Committee’s concern about service standards and the way in which the Home Office has used this in order to say there is not a backlog. In terms of plain English here, do you regard any of the 489,000 cases as being a backlog because the Prime Minister last week gave us a figure of 30,000 that are outside service standards? Do you regard things that are outside service standards as being a backlog or not?

Paul Pugh

I don’t want to get into a debate about terminology.

Chair

No, it is not a debate. I am just asking a question. Do you regard this as a backlog or is this work in progress? “Backlog” is a fairly simple word that we have used in many, many reports that we have produced over the last 20 years? A backlog is where it is not within service standards. What is your backlog?

Paul Pugh

That would not be my day-to-day interpretation of what a backlog constitutes.

Chair

Right. What is a backlog to you then?

Paul Pugh

To me a backlog is an accumulation of work that is not likely to be dealt with in a reasonable time.

Chair

What is a reasonable time?

Paul Pugh

A reasonable time would depend upon the nature of the piece of work.

Chair

This is why we get so confused and why the public get so worried and frustrated. You have talked about a reasonable time and depending on the piece of work. That does not give any clarity to this Committee but you are saying that the work in progress, the applications you have at the moment, is 489,000?

Paul Pugh

I will need to absolutely confirm the current figure because it will change from day to day, but at the present time the total level of work that we are working our way through would be of that order.

Chair

There are a number of members who have emailed us before this meeting. Given what Mr Austin has said, I am going to hand you these urgent cases because he is quite right, when we ring up your private office, when we get through—of course, you were not there or they did not answer on Saturday, hence my call to the Home Secretary. There is a private secretary called Farooq Belai, whom we would like to commend for the way in which he responds very swiftly, not just to me and Mr Austin, but other Members. If you are looking for someone to run the Passport Service, well, he must be one of the candidates because he does come back to you immediately in respect of these matters. A big thank you to him. But, of course, the members of the public don’t always go to their Members of Parliament, who have the privilege of ringing your office. Many go to the hotline and the problem with the hotline, as we have discovered from these emails, is that they are not getting back to Members quickly enough, so Members can’t get back to their constituents. It is a customer service issue. It is in the emails. We would like you to look at them and respond to them.

Paul Pugh

Certainly, I will look at any individual cases that—

Chair

Yes, we will pass them on. Secondly, in respect of our letter to you requesting information, you have signed off these figures, have you?

Paul Pugh

I have not yet received or seen those figures.

Chair

Right. When do you anticipate receiving them?

Paul Pugh

To the best of my information, before I came into this meeting my information was that the figures were still being compiled and validated.

Chair

Right. Who is compiling them?

Paul Pugh

It would be a number of people responsible for statistics and management information within the Passport Office and the Home Office.

Chair

Who validates them?

Paul Pugh

It would be the statisticians and those who own the information would have to confirm their accuracy.

Chair

Can I suggest—this is just a suggestion because you are running the Passport Agency, not the Home Affairs Select Committee—that you get these figures on a weekly basis, so if Ministers and Members of Parliament, whom I know have tabled a lot of questions, ask these questions they are able to be given to Parliament in a very quick and efficient way. We will expect this answer, all these figures, by 12 pm on Friday—I am giving you extra time. The way to deal with Select Committees, Mr Pugh, is if you cannot meet a deadline you write in plenty of time, send us an email and give us an explanation, not at 2.45 pm on the day you are giving evidence. If they are not with us at midday on Friday I will expect to see you back at this Select Committee next Tuesday with an explanation. Do you understand that?

Paul Pugh

Yes, I absolutely understand that.

Chair

Thank you. Let me go, finally, to the day you were appointed as chief executive. When you were appointed, Mark Harper, who was then the Minister, described the service, and he said this, “It continues to provide a gold-plated passport service to British nationals in the UK and abroad,” and we went on to say, Mark Sedwill of you, “Under Paul’s watch the UK passport has remained one of the most secure and trusted documents in the world. Paul has worked for the Home Office for almost three decades and his experience and professionalism is indispensable.” You said in that press release, “I am delighted to be taking on the role of Chief Executive permanently. I look forward to continuing our work to modernise how to provide passport and civil registration services, building on our great customer service and the security and integrity of all those we seek to protect.” At the moment, this Committee is not impressed with what has happened over the last few weeks under your watch and we would expect to see a rapid improvement in the services that are provided. Let us be clear, I want to see these figures by midday on Friday. If not, you will appear before this Committee again on Tuesday with an explanation. We would like to see you in a month’s time, after the Home Secretary gives evidence to this Committee, with a confirmation that the work-in-progress figures have been reduced to such an extent that the public is satisfied that the service is working and you live up to the very good words that Mark Sedwill and Mark Harper said about you when you were appointed. Do you understand, Mr Pugh?

Paul Pugh

Absolutely.

Chair

Thank you very much for coming. Order, order. That concludes the Passport Services evidence session. We now move on to extremism in Birmingham. Oral evidence: The work of HM Passport Office, HC 238 5