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Driver and Vehicle Operator Group and the Highways Agency

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Driver and Vehicle Operator Group and the Highways Agency House of Commons Transport Committee The work of the Department for Transport's Agencies – Driver and Vehicle Operator Group and the Highways Agency Ninth Report of Session 2005–06 HC 907 House of Commons Transport Committee The work of the Department for Transport's Agencies – Driver and Vehicle Operator Group and the Highways Agency Ninth Report of Session 2005–06 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 19 July 2006 HC 907 Published on 27 July 2006 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Transport Committee The Transport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Transport and its associated public bodies. Current membership Mrs Gwyneth Dunwoody MP (Labour, Crewe) (Chairman) Mr David Clelland MP (Labour, Tyne Bridge) Mr Jeffrey M. Donaldson MP (Democratic Unionist, Lagan Valley) Clive Efford MP (Labour, Eltham) Mrs Louise Ellman MP (Labour/Co-operative, Liverpool Riverside) Mr Robert Goodwill MP (Conservative, Scarborough & Whitby) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Mr Eric Martlew MP (Labour, Carlisle) Mr Lee Scott MP (Conservative, Ilford North) Mr Graham Stringer MP (Labour, Manchester Blackley) Mr David Wilshire MP (Conservative, Spelthorne) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/transcom. A list of Reports of the Committee in the present Parliament is at the back of this volume. Committee staff The current staff of the Committee are Dr John Patterson (Clerk), Annette Toft (Second Clerk), Clare Maltby (Committee Specialist), Louise Butcher (Inquiry Manager), Tony Catinella (Committee Assistant), Miss Michelle Edney (Secretary), Henry Ayi-Hyde (Senior Office Clerk) and Laura Kibby (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected] 1 Contents Report Page 1 Introduction 3 2 The Department and its Agencies 5 3 Driver and Vehicle Operator (DVO) Group 7 Structure and governance 7 Administration and staffing 10 Efficiency 12 Targets and performance 14 Information Technology 17 Vehicle and Operator Services Agency 20 Younger drivers 22 4 Highways Agency 24 Finance function 24 Cost overruns on major road projects 26 Staffing 28 Property matters 31 ‘Article 14’ directions 34 Water-preferred policy 36 Response to the Committee 37 Conclusions and recommendations 38 Annex – DVO Group 49 Formal minutes 51 Witnesses 52 List of written evidence 52 Reports from the Transport Committee since 2005 54 3 1 Introduction Driver and Vehicle Operator Group 1. The Driver and Vehicle Operator (DVO) Group is part of the Department for Transport. It is made up of four Agencies – Driving Standards Agency (DSA); Driver and Vehicle Licensing Agency (DVLA); Vehicle Certification Agency (VCA); and Vehicle and Operator Services Agency (VOSA). 2. The Group is managed by the DVO Board: the Director General, the Chief Executives of the four constituent Agencies, the Strategy and Resources Director, and four non-executive directors.1 It was established in its present form in 2003 to ‘promote closer collaboration between the constituent Agencies and to develop modernised and joined up services, delivering improved customer services and value for money’.2 The Group provides services to drivers, vehicle keepers and operators across Great Britain and focuses on registration, licensing, testing and enforcement. 3. The Group’s key targets for 2006/07 are focused on: effective services to customers; improved road safety; improved journey time reliability on the roads; better regulation; reduced environmental impact, crime and anti-social behaviour; raising tax revenue to fund public spending; and better value for money.3 Highways Agency 4. The Highways Agency is an Executive Agency of the Department for Transport and is responsible for operating, maintaining and improving the strategic road network in England on behalf of the Secretary of State for Transport. It was formed in 1995. The Board includes a Chief Executive, eight executive directors and three non-executive directors, who secure overall delivery of the Agency's responsibilities. This inquiry 5. The Committee announced an inquiry into the constituent Agencies of the Driver and Vehicle Operator Group and the Highways Agency on 9 December 2005.4 The inquiry considered the purpose of the Agencies and how they contribute to Departmental objectives and policy; accountability and transparency; Agency funding and accounts; shared systems and co-ordination and other Agency-specific issues as they arose. 6. The Committee took evidence on 8 February 2006 from Mr Stephen Hickey, Director General of the Driver and Vehicle Operator Group; and the Chief Executives of the four Agencies: Miss Rosemary Thew, Driving Standards Agency; Mr Clive Bennett, Driver and Vehicle Licensing Agency; Mr Paul Markwick, Vehicle Certification Agency; and Mr 1 DVO Group Corporate Plan 2006-2010, p5 2 DVO Group Corporate Plan 2005-2007, p5 3 DVO Group Corporate Plan 2006-2010, pp12-13 4 Press Notice 17/2005-06, 9 December 2005 4 Stephen Tetlow, Vehicle and Operator Services Agency. We took further evidence from Mr Archie Robertson, Chief Executive of the Highways Agency, and Mr Mel Zuydam, Finance Director of the Highways Agency, on 15 February 2006. 5 5 Press Notice 23/2005-06, 31 January 2006 5 2 The Department and its Agencies Role and purpose of the Department’s Agencies 7. The Department has a number of important functions delegated to arms-length Executive Agencies.6 8. The Trade Unions told us that ‘the Department is not an integrated whole but a collection of businesses bound together’. We understand that there is no Department-wide intranet, no Department staff directory or email directory, and no common information technology systems or procedures.7 This is disappointing. The Trade Union side believes that ‘an absence of central control and common terms and conditions’ works against the Department effectively delivering its policies.8 We agree. 9. There remain serious concerns, not simply within individual agencies, but across the Driver and Vehicle Operator Group as a whole and stretching even further across other Agencies and the Department itself. In particular: there are tensions between the strategic aims of the Department and an inability to link this properly with Agency activity on the ground; the slow development, poor integration and costly and delayed implementation of information technology systems; and a lack of consistent internal working practices and conditions.9 These are not new problems. The Committee has highlighted serious deficiencies in Agencies’ work before, most recently in our work on the Department’s 2005 Annual Report. Shared Services 10. The Department is implementing a Shared Services project which will achieve savings by standardising, simplifying and sharing support service functions across the central Department and Executive Agencies, thereby helping to focus more resources on frontline operations. The project will incur significant up-front costs over the next four years. The Department estimates these at between £44 million and £49.5 million.10 For the Driver and Vehicle Operator Group of Agencies and the Highways Agency, the Department estimated that costs incurred on the project to December 2005 were £463,000.11 11. Shared Services is expected to achieve annual savings of around £16 million, which will be largely achieved through savings on staff,12 although the full annual savings will not be achieved until after 2008-09.13 6 See Annex for details. 7 Ev 121 8 ibid 9 HC 684, pp22-24, paras 84-94 10 Q20 11 Freedom of Information Request F0001853 to the Department for Transport, 9 January 2006 12 Q17 13 DfT Shared Service Project – Outline Business Case Report, version 1.3a 6 12. The interim Business Case for the project appears to be sounder than those documents available to the Committee at earlier stages.14 We have concerns however about some of the cost changes between earlier documents and the current Business Case, in particular whether: • the present level of optimism bias of £5.3 million is enough;15 • there is too much reliance on external input.16 This expertise could be brought in- house, possibly through fixed term contracts; • expected savings will be achieved; • the project received a satisfactory ‘Gateway 0’ review in April 2006; • the Trade Union side is sufficiently engaged and onboard with the project. 13. We expect the Department to keep a tight control on the project to ensure that the planned savings are delivered. The Department itself admits in the Business Case says that financial risk is ‘high’: ‘There are … financial risks resulting from potential delays or non- delivery of functionality to the scope demanded, as any delays to full implementation will erode benefits’.17 The Department has also conducted a ‘sensitivity analysis’ which shows the impact of a 25 per cent increase in costs or decrease in benefits on the project outcome.18 It is clear that there is scope for financial disaster if costs are not tightly controlled. 14. Over the next four years the Department estimates that the Shared Services project will cost in excess of £44 million. The exact cost however remains unclear. It is important that lessons are learned from this complex project. We expect that any problems which may be encountered by the first Agencies to join will be addressed for later Agencies.
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