Official Report: Minutes of Evidence

The Chairperson (Mr McKay): I welcome David Sterling, permanent secretary. This is your first time here, David, is it not?

Mr David Sterling (Department of Finance and Personnel): I was here with the Minister about a month ago.

The Chairperson (Mr McKay): You were very quiet then, David; you are front and centre today. I also welcome Brigitte Worth and Kathryn Hill to the Committee again.

David, we are going straight into questions, if that is OK.

Mr Sterling: Can I just say one thing, Chair? First, I regret that, on my second appearance here, I am starting with an apology, but I want to offer an apology for the late submission of the return on this. We have been all-consumed by budgetary issues in recent times, but I will make sure that we do better next time.

The Chairperson (Mr McKay): Since you raise that point, I will address it: the paper was not received until 11.41 am yesterday. Can you talk us through why it was so late?

Mr Sterling: I do not think that it is particularly helpful to go into all the processes that we go through, but I just wanted to say that —

The Chairperson (Mr McKay): There are just three or four of them that I wanted to look at.

Mr Sterling: We have been, as I said, all-consumed by dealing with Budget issues in recent times, and it has taken us longer to get it to you than it should have done, and we will do better next time.

The Chairperson (Mr McKay): When did the departmental board consider DFP's performance in this regard?

Mr Sterling: The board would have reviewed performance at its last meeting, which was on 27 October.

The Chairperson (Mr McKay): What assurances can you give us that the needs of the Committee are respected and papers are received on time? This is not the first time that this has happened, to be frank.

Mr Sterling: No, as I said, I will make sure that we get papers to you on time in future.

The Chairperson (Mr McKay): Moving on to questions, a number of the cross-cutting targets in the business plan — R1.01, R1.02, R1.08 and R1.09 — refer to matters being outside of the control of DFP officials. Has any consideration been given as to whether such targets should be reframed to focus on supporting actions that are within the Department's control?

Mr Sterling: Some of our targets are also Programme for Government commitments; the most significant targets include, for example, the one on corporation tax. The desire of the Executive was that, for Programme for Government commitments, there should be one person or one Department identified as the senior responsible officer. I think that that improves accountability, but it means that there are difficulties whenever more than one Department is involved in the delivery of a target. That is just one of the issues that we wrestle with. Certainly, where there are cross-departmental targets, we work hard to try to ensure that there is good cooperation between the Departments involved in the delivery of a target.

The Chairperson (Mr McKay): In regard to target R1.01, which is to agree Departments' spending plans for the 2015-16 financial year by 31 March 2015, what is your assessment of that target, given the fact that the Executive have agreed the draft Budget? What other risks do you see arising from that, such as workforce restructuring, which was referred to by the Department?

Mr Sterling: One of our concerns was that the Executive might not have been able to agree a draft Budget. Thankfully, one has now been agreed. It is one that poses major challenges for our Department and, indeed, for all Departments, which you will be aware of, but we now have a timetable that will see the consultation conclude on 29 December. Ministers will then have to consider what they hear in that consultation. My Minister will have a series of bilateral meetings with all his ministerial colleagues over the next few weeks. On the foot of those discussions, my Minister will want to bring some proposals for the final Budget to the Executive as early as possible in January. On the assumption that the Executive agree a final Budget, that will give certainty to Departments about their spending plans for next year. Obviously, the draft Budget includes very stretching targets for Departments to manage cuts to current expenditure. So, that is going to be a big issue for us all.

The Chairperson (Mr McKay): What are the main risks for the next financial year? What are your main concerns? In the last financial year, health overspent, and, obviously, it is under pressure again this year. What are the big challenges for next year?

Mr Sterling: The big challenges will simply be delivering the scale of cuts set out in the draft Budget. We have to assume that the final budget will not be that different from the draft Budget, given that there is unlikely to be any new or significant spending power on the table. So, the big risk is that this is unprecedented, in my view. I have more than 35 years' experience in the public service, and I cannot recall a time when any Department had to deliver this scale of cuts.

You mentioned pay bill management and workforce planning issues; they will be central to delivering a lot of it. At the moment, we are working with other Departments on how we go about ensuring that there is a coordinated approach.

The Chairperson (Mr McKay): What consideration have you had of revenue raising to try to offset some of the pressures that we face?

Mr Sterling: As officials, our job is to provide Ministers with a variety of options. Ministers had a variety of different things to consider when they were drawing up the draft Budget. We will continue to provide such advice as we feel is appropriate in the circumstances.

Mr Cree: R1.02 is the most difficult one, as it covers expenditure to the year end. There are several points about that. First, one of the things that surprised me most was that no real dangers were flagged up on this issue until after the June monitoring round. Is that right? No real crisis had been identified prior to the June monitoring round.

Mr Sterling: In respect of pressure on public services?

Mr Cree: On the whole Budget.

Mr Sterling: I only joined the Department at the beginning of July. I am not using that as an excuse, but my perception when I was permanent secretary in DETI was that there was definitely going to be a severe squeeze on public expenditure. That was widely known around the system.

Mr Cree: We will just explore some of the individual ones. There are several cases, but one that sticks in my mind is the victims' unit. There was no budget for it at the beginning of the year. It was envisaged that it would be dealt with in the June monitoring round, but there was a delay in that, as you know. I think that I am correct in saying that, in the October monitoring round, suddenly it appears as an inescapable pressure. Can you explain the logic of that? It does not appear in the main Budget and, then, suddenly it appears in-year as an inescapable pressure.

Mr Sterling: I am not aware of the history of that particular issue. However, generally, when we are preparing advice on a draft Budget or monitoring round, we will seek to advise Ministers of all emerging and new pressures. In any draft Budget, we would certainly want to make sure that any pressure that is known about is brought to Ministers' attention. As I say, I cannot comment on that particular —

Mr Cree: It is an easy one, because it was there the year before and the year before that. In fact, staff are involved in it. However, it did not appear in the actual Budget. The intention was to deal with it in a monitoring round — I am just picking up the issue here — but it then suddenly becomes an inescapable pressure mid-year, which leaves you very little time to do anything about it. What is the logic of that?

Mr Sterling: From time to time, pressures emerge. Indeed, on occasion, Ministers have, in the past, decided that, because of constraints on public expenditure, they will use money freed up in-year in monitoring rounds to meet particular pressures that are known. I cannot comment on the issue of victims in particular, because I am not aware of it. However, I know that structural maintenance for DRD has, in the past, been funded by moneys that have become available in-year. That has been an accepted practice over a couple of years, although we have sought to address that in the baseline. There is a variety of ways in which different types of pressures are addressed.

Ms Brigitte Worth (Department of Finance and Personnel): There is probably a DFP example as well. I think that you touched on, in earlier sessions, the non-domestic revaluation of rates. As the decision to do that was taken after the four-year Budget was set, that has had to be dealt with from reduced requirements emerging in the Department during subsequent financial years. There is something in the fact that, in the opening Budget for any given year, particularly for 2014-15, where the opening Budget was set back in 2010-11, things will have arisen since the initial Budget was set that were not anticipated at the time it was set. Therefore, you enter any given financial year with a pressure that needs to be managed in-year.

Mr Cree: I do not want to labour the point, but you would be aware of that at the start of the Budget year when you are knocking up what I call the Budget. I do not subscribe to four-year Budgets; with short- to medium-term plans, there should be an annual Budget. You know at the beginning of the year that that is an existing cost centre and therefore should appear in the Budget. Have you learned anything from that exercise? Is there anything that you are going to change?

Mr Sterling: The draft Budget has sought to address some pressures that were not in departmental baselines. We always want to make sure that people are not reliant on moneys that become available in monitoring rounds, where it is possible to do so. Indeed, in the draft Budget, we have done that in a number of areas.

Mr Cree: Do you think that other Departments have learned that as well, David?

Mr Sterling: Finance directors and accounting officers will be live to that issue. We have good engagement with finance directors and accounting officers across Departments.

Mr Cree: They were not in OFMDFM.

Mr Sterling: Including —

Mr Cree: I will leave it there, Chair.

Mr Weir: I want to touch on one aspect that is close to a lot of our hearts: the ongoing issue with Land and Property Services (LPS). The issue is not surprising, given the debt problems and the situation that we are in at present. Target 1.11 is to reduce the amount of rate debt by about £4 million, or 5%, by 2015. Will you maybe clarify a couple of things for me around the total value of the actionable rate debt, because what is actionable and what is there are two different things? What is your strategy to pursue that and provide an extra impetus in that regard? If you are targeting where you see the potential quick gains, what scope is there to push the target further? If you have a paper target and are, quite frankly, pursuing people with no money, it simply becomes an exercise that costs money but does not realise anything. Will you talk us through that?

Mr Sterling: You have touched on something that has been recognised in the Department, both in LPS and by our Minister. There was a sense that, rather than setting a very broad target about reducing debt, it was better to have a more focused target on tackling the debt that we had a realistic chance of recovering. I know that the Minister pressed LPS very hard to set a target that was very stretching. He has taken a keen interest in ensuring that the target has been met, so far. It was a little behind earlier in the year, but we are still pretty confident that we will achieve it by the end of the year. The intention behind the way that the target is structured at the moment is that we focus very much on those who are in debt but have a possibility of repaying that debt.

Mr Weir: Presumably LPS's intelligence, in every sense of the word, is sufficient to be able to do that. It seems to me that you are saying that the main strategy is a much more drilled-down focus and, consequently, will hopefully have a better result rather than any other specific sort of action.

Mr Sterling: That is right. I can get you more information on the range of measures that are applied, which I do not have to hand now.

Mr Weir: That would be helpful.

Mr Sterling: Certainly, the Department has been very focused in recent years on reducing the level of debt, and this more targeted approach is delivering results. However, as I say, I will get you some information about the specific measures that LPS is taking.

Mr Ó Muilleoir: I want to come in on that. It would be really helpful if we could get a one- or two-page update on LPS. People point to it as a panacea and say that there is money there that we are not collecting, which was the experience in council when dealing with debt. Is it possible for you to provide that information?

Mr Weir: To pick up on that, there is the debt side of it and, linked to that and to LPS, the non-identification of money that is out there and people not coming quickly enough onto that. I am not making a judgement call of where we are presently, but a number of years ago LPS did an exercise with a number of councils; Belfast was one and North Down was certainly one. To take it down to nuts and bolts, essentially, an LPS officer and council officer walked around certain areas to see whether a house that was clearly being occupied was not on the list and did specific lines of targeting. Clearly, people are avoiding the rates bill because they feel under no particular pressure to declare themselves. There are also issues around how quickly we can identify properties that should be paying rates and get them onto the register. If whatever information you are getting on the LPS side of it could be brought back to the Committee in written form, that would be helpful.

Mr Sterling: We can do that. We will get you a written briefing that addresses that issue. In my days in DETI, I would have been aware of councils' concerns about levels of rate collection. We can deal with that. If you wish, we can arrange for an oral briefing on that back of that at some stage.

Ms Boyle: Thank you, Peter — Sorry, David. Freudian slip.

Mr Sterling: I do not even have a brother called Peter.

Ms Boyle: Sickness absence is still very much in the media. Recently, we had a very high-profile story on PSNI sickness levels. Can you give us some information on where the recovery strategy sits at the minute, what we will learn from it and what specific actions are in it?

Mr Sterling: I do not have the full details of everything in the recovery strategy with me; it is with the Minister. It proposes a range of measures, including some that look at perhaps adjusting existing terms and conditions of service.

Certainly, we are seized of the importance of tackling this problem. I am pleased to report that DFP's own performance is pretty good, and we are hopefully on target to meet our own in-year target, although I think that there has been evidence of an increase in sickness levels across the Northern Ireland Civil Service. We have a blend of measures, including our WELL programme, which will help people who are ill to get back to work. We encourage people to look after themselves, and we have a very good occupational health service. We have a good range of measures in place that are helping to address this, but I accept that more needs to be done. That is why the recovery strategy has been prepared.

Ms Boyle: You said that it is with the Minister at the minute. Are we likely to hear any time soon of a timeline in relation to the improvements that could happen?

Mr Sterling: Yes, I will be speaking to the Minister about this shortly.

Ms Boyle: We had the flexible working pattern debate in the Chamber the other day. Do you think that, if that were implemented, it would certainly help some of the issues? One of the big issues that came out of it was the stress-related illnesses that present in people. Do you think that, if the flexible working pattern were implemented in the way that the Committee would imagine, that would have an effect on sickness absence?

Mr Sterling: We have done quite a bit of work on looking at the causes of the stress levels that lead to absence, and we have found that some stress is work-related but that quite a lot of it is not work-related. We do now have a practice where, if somebody indicates that they are off because of stress issues, whether work-related or otherwise, we have instant referral to the occupational health service. I think that that is an important new measure that we hope will make a difference. As an employer, we can look with some pride at the facilities, through flexible working and various forms of part-time working that help people in different scenarios to provide a good level of service and yet, at the same time, address their own particular personal circumstances. Even the Committee has recognised that we are exemplary in that regard. We will continue to do that. Of course, we need to strike a balance between flexibility for the individual and recognising that there is a management need as well. In striking a balance, there is always a certain tension between the two, and it is something that we will continually look at.

The Chairperson (Mr McKay): David, we all know that you are flying when it comes to flexitime, but, with flexible location, there is a fierce resistance in the Department; we have heard that in sessions that we have had over the past couple of years. Why is that? You look at Departments across the water, some of the English councils and BT in the private sector and see that there are huge benefits to be had here. So, why is there such resistance in the Department to this?

Mr Sterling: I have not detected that resistance; it may just be the language that we use around this. I have read the Committee's report, and we are actually doing an awful lot of the things that you suggested we should be doing.

The Chairperson (Mr McKay): Not a wild lot.

Mr Sterling: I do not want to reopen the debate that occurred the other day.

The Chairperson (Mr McKay): I do.

Mr Sterling: I think that we bear good comparison with many organisations in the public and private sectors, but there is more that we could be doing; we are doing more to encourage flexibility. Personally, I think that we need to make optimum use of technology, as it now allows people to work virtually anywhere in the world. I think that, working with Enterprise Shared Services (ESS), we are looking at ways in which we can promote that better. I am not anti-flexible working at all; in fact, I am very much for it. However, there are different aspects within what you might define as flexible working where, as I said, we need to make sure that we get the right balance between the needs of the individual and those of the organisation.

The Chairperson (Mr McKay): One of the problems that we had with monitoring was receiving statistics, and, in particular, detailed information about what is happening with flexible location, from the Department. What we have received seems very patchy and very ad hoc. It is all in the report. Are there any plans to give a more transparent view of what is happening with this?

Mr Sterling: On the back of your report, we will seek to ensure that we have good, consistent data that shows what is happening across all Departments.

Mr Girvan: I appreciate that we are focusing primarily on flexible working, which links into my question about sickness in the Department of Finance. Where does the rationale of the 7·6 days come from? Not that long ago, in 2011 and in 2012-13, the target was at 10·6 days. We are now setting a target of 7·6 days, and I wonder how you came to that figure. I come from the private sector, and I still run a business. If I was getting 7·6 sickness days per annum from my employees, I would not be very happy. I can hit around about 1·5 days, and that seems to be quite the norm in the private sector.

There is mention in your report of an e-learning approach for management. What is meant by e-learning? The terms that you use are as follows:

I would like to know whether that is just a different way of putting it on the system so that it does not register as sick days but is put down as something else.

Mr Sterling: No. The e-learning package is good. One of the things that we concluded from looking across the service was that we needed to remind and instruct all managers, and indeed all staff, about the rules and procedures around sickness. We developed an e-learning package: a short video, if you like, that people could access at their desk, with a questionnaire at the end. Not only do you watch the video, you have to fill in a questionnaire that demonstrates whether you have understood the messages in the package. It has worked very well. It is quite an efficient way of getting key messages to all staff. The alternative is taking people away from their desks and giving them a costly training programme. This has proved to be quite a cost-effective way of making sure that core messages are sent to all staff. It is measurable as well. You know exactly who has done the package, you can check whether they have filled in the questionnaire, and you get feedback in that regard.

Going back to the target level, I know — though not personally — that work has been done to compare how we do things with the private sector. Certainly, different approaches are taken. Our big problem in the public sector is the level of long-term sickness. About 70% of all our absence is people who are on long-term sick. By its very nature, anybody who is on long-term sick has been certified by a doctor as being sick, so there is no question as to whether or not they are sick. We have a range of interventions to help in that regard. The Occupational Health Service is there to assist us in dealing with people who are on long-term sick. We have phased return to work so that people who have been off sick for a long time, for whatever reason, can be encouraged to come back to work on a phased basis. We have approaches to deal with this, but our big problem is definitely the number of people on long-term sick; however, to make a significant inroad into our overall levels of sickness, something will need to be done that reduces that level.

Mr Girvan: Can I ask about how sickness is recorded? Having dealt with some individuals who have said to me, "I took off work on a certain day; I was not well. I thought that I was feeling better and went back for two days and then I ended up having to take off a week".

They then got pulled in about their timekeeping because they have had two sickness incidences, even though it probably should have been only one. However, at the end of the day, they attempted to come back to work. Some of those people feel that they are being penalised because they have made that effort. As a consequence, it drives them down the route of saying, "Rather than taking off two or three days, I will take off the full week just to be sure". Consequently, they are taking more time because of the policy that management implements and the way that it is put forward. Is there any recognition of that being a problem? I hear that it is a problem, and I am sure that others sitting around the table here have heard that.

Mr Sterling: I was not aware that it was a problem. Certainly, if there are examples of it, bring them to our attention. My managers need to be careful. The rule is that, if somebody goes off sick, they should phone in and speak to their line manager. They should not leave a message with anyone else that they are off sick; they should speak to the line manager so that the line manager has a clear understanding of the nature of the illness and how long the person feels they may be off. In the short term, it is not appropriate for the line manager to chase up an individual if, for example, the illness is over only a few days. Certainly, our procedures are very much designed to encourage people to come back when they feel ready to or to come back on a phased basis if they are not ready to come back full-time. As I said, I would be disappointed if there are occasions where that is not working, and I would be happy to deal with any individual instances of it.

Mr Girvan: I appreciate that it might not necessarily be DFP; it could be other Departments.

Mr Ó Muilleoir: David, it is not bad; you came in this morning and had to start with an apology. It is always good to have you on the back foot. Despite that, I think that you are doing sterling work.

I am going to talk about an area that you are doing well in, which is new methodologies for improving services and stimulating innovation that is labelled C1.08. I wanted you to talk us through it, because you have it marked green. You certainly have the right words, because we have an ideas engine and an innovation lab. It is always a good start to get the correct titles. Where the rubber hits the road is in how these ideas will ascertain what will improve our services and save us money.

You say that 100 ideas have gone through and that you are going to start implementation. However, did you want 10 ideas? Did you want 1,000? How many ideas is the correct number? Is it quality or quantity? Maybe you could talk us through that. It seems to me as though it is the sort of issue on performance review that will always come through as green, because it does not really tell us what success looks like other than in numbers. Maybe you could help us with that.

Mr Sterling: Sure. The Minister is a very strong advocate of public-sector reform, and, indeed, the new public-sector reform division has been set up to help to take that agenda forward. We are doing a number of things. At a very strategic level, the Organization for Economic Cooperation and Development (OECD) is being commissioned to do a number of benchmarking studies. I am pleased to say that all the necessary steps to allow that to start have now been concluded, and it will be kicking off shortly. OECD will be issuing questionnaires to Departments that will allow them to provide benchmark information that will show how different aspects of our public sector do against international comparators. This is the first time that the OECD will have been doing anything at a regional rather than a full national level. That work will take place over the next year.

At a lower level, the innovation labs have been tried elsewhere and have shown good success. So far, we have run one successfully that dealt with an issue that my old Department, DETI, was addressing. That was about looking at how we could apply regulatory impact assessments better. Regulatory impact assessments are what we are required to do any time that we develop a new policy, and they are designed to test whether there will be a negative impact on businesses by having new regulations. That innovation lab has come up with some very good ideas, which DFP and DETI will be working on to implement. There are other areas where we will look at labs. You have the dementia innovative procurement, not initiative procurement, and big data. In each of those three areas, there are huge opportunities to improve the quality of service. I am a big believer that we could do much more with innovative procurement by using things like the small business research initiative to find better solutions to public-sector problems and to provide opportunities for our SMEs to win government business and by releasing data that government hold to allow companies and others, such as universities and academia, to use those data to come up with ideas to improve services and develop a commercial project is good as well. Those are just three of the current ideas.

I would not say that the Budget has overtaken this work, but it has given a much sharper focus to it. For example, in DFP, where we are having to find cuts of 10·9% next year, we have extended that ideas process and have the whole Department working on an internal review. I have asked people at all levels of the organisation to come forward with ideas. We have had a number of workshops, and, at the last count, I think that we had 350 or 360 ideas that will help us to reduce costs next year. We will need to work through that over the next two or three weeks to come up with a shorter list of practical things that we can do. I am very strongly of the view that this needs to be bottom-up and top-down, because all our staff have good ideas. Some of those ideas might not yield big savings, but we need to capture anything that can produce improvements in service or reduce costs by a bit. This is only the start. It is something that I want to embed in the culture of the organisation and across all Departments.

Mr Ó Muilleoir: You are asking staff for ideas, but is there a way to involve the public in this work at all? Obviously, you are involving MLAs in it now, because you are listening to what we are saying, but is there a way of allowing the public to look at how government work and say, "We have an idea for the ideas engine or the innovation lab"?

Mr Sterling: The innovations labs are not made up of just civil servants. Indeed, the better regulation lab had a number of people from business and wider areas. In all those other areas, we want to draw people in, but on a general point I think that we need to see whether there are ways that we can get ideas from all sources, given the level of challenge that we have. We will be doing a number of consultation events on the draft Budget. We do not have a lot of time to do it, but we need whatever ideas can come forward.

Mr Cree: There are certainly plenty of ideas from the public, but I do not know whether they would all be helpful.

Mr Sterling: I listened to some on 'The Nolan Show' this morning.

Mr Cree: With regard to the 9,000 square metres of work space, what percentage of DFP office accommodation complies with all the relevant standards?

Mr Sterling: I cannot tell you that off the top of my head, but when we say "relevant standards", we mean that we do not have people working in accommodation that is not fit for purpose.

Mr Cree: You mentioned Workplace Northern Ireland standards, including space utilisation targets.

Mr Sterling: There are space utilisation targets. We occupy a lot more space than is optimal. Whitehall is now talking about standards and about 8 square metres per person. The target that we are talking about would be a bit more than that, but we need to reduce the amount of space that we currently occupy. We have targets in year, and we expect to meet our targets for 2014-15.

One of the ways in which we aim to improve in this area going forward is by removing the delegated authority that Departments have to enter into new leases. We are working on a programme of exiting leases where it is cost-effective to do so. That obviously produces recurrent savings. We then use capital expenditure to buy premises. The intention is to get those premises fitted out with lower space utilisation per person and to produce savings in that way. That, in a nutshell, is the strategy that we are following.

Mr Cree: I am interested to see how that fits into flexible working. It is all part of the magic thing. When was Lanyon Plaza finished, and what financial saving do you anticipate from it?

Mr Sterling: LPS staff started to enter Lanyon Plaza in July or August, I think.

Ms Worth: It might have been a bit earlier than that. It was phased in over a number of months.

Mr Cree: Are they all in now?

Mr Sterling: I think that they are pretty much all in now. I do not have details of the business case with me today, but we can certainly provide that.

Mr Cree: I am particularly interested in the financial savings that are expected from that, because obviously —

Mr Sterling: The financial savings are important, but equally important is the fact that, in my view, co-locating people in an open-plan environment improves management. I say that as somebody who now works in an open-plan environment. I think that open-plan works well.

Mr Cree: I am sorry that you said that, David. One of the exciting visits that we had was to Clare House to see the open-plan system there, but there was virtually nobody there.

Ms Worth: That was in the interim period.

I think that, if you were to go Clare House on a typical day now, you would find it full.

Mr Sterling: Certainly, more people have moved in there recently.

Ms Worth: There was a period when people had moved out and they were preparing to move people in. That was when Clare House was much emptier than it is now.

Mr Cree: Could you pick up on that point?

Mr Sterling: The point about Lanyon Plaza?

Mr Cree: Yes, and tell us what savings are forecast from it. That information would be useful to have, obviously, with the business plan.

Mr Sterling: Yes.

The Chairperson (Mr McKay): Target IP1.01 is marked amber. Where are we now with that, post-the October monitoring? Are any further inescapables to emerge before the end of the financial year?

Mr Sterling: I will let Brigitte take that one.

Ms Worth: You will have to refresh my mind on what exactly the question was. I am sorry.

The Chairperson (Mr McKay): This was drafted before the October monitoring. Now that the October monitoring has been agreed, how much pressure is the Department under? Are there any further inescapables to emerge before the year end?

Ms Worth: Certainly, the bid that we met in the October monitoring has significantly alleviated our financial pressure. I am no longer concerned that we will overspend this year. At the moment, we are looking at our January monitoring position and are seeing what we may be able to do to contribute to the central pressure that remains. The impact of the pay rise has come in lower than we forecast, and we have also had a number of business areas across the Department that are reporting increased levels of forecast income compared with what they thought they would be. I am actually expecting that we will have something to contribute to that central pressure, but it is very early days in sorting out our January monitoring position at the moment. We will be back here in a month's time to give you a more detailed position.

The Chairperson (Mr McKay): What about this target for 2015-16? How confident are you at this early stage that you will meet it?

Ms Worth: I certainly would not rate the risk any lower than amber. I would say that it will be borderline red. It will be very challenging for us to achieve.

Mr Sterling: A cut of 4·4% in year is going to be difficult, so 10·9% is of a completely different order of magnitude.

The Chairperson (Mr McKay): What options are you looking at?

Mr Sterling: As I said, we have several hundred ideas. We will deliver this through only a package of measures. That will include cutting back on discretionary spend where it is possible to do so. However, it will also mean tackling workforce issues.

The Chairperson (Mr McKay): On a cross-departmental issue, we saw another media report this week about hospitality and overseas trips. How much money could be saved across the public sector by looking at things like hospitality and travel in particular? Is there a possibility that that could relieve some of the pressure?

Mr Sterling: I could not tell you off the top of my head what the total spend on hospitality across the public sector is. I know that there have been Assembly questions about that in recent times. Measured against the Executive's £1 billion, it would not be that significant. Certainly, I know that our own spend on hospitality is pretty small.

Ms Worth: We have had a target over the last number of years. Where we have been going through Budget reductions, we have really focused on driving down some of those areas of spend. The board gets regular reports on what we are spending on travel and hospitality and things like that. For example, our hospitality figure has reduced to a quarter of what it was in 2007-08; it is down to around £50,000 across the whole Department. We are holding it to that level, and the board monitors that on a quarterly basis to make sure that it is not exceeded. We are looking everywhere for savings, but I suspect that we have already taken out the bulk of what can be taken out by driving some of those things down over the last Budget period.

Mr Girvan: I want to move on to OP1.03. I am really looking for an update on underperformance and those who are yet to fill in their personal performance agreements. What measures are being taken to make sure that that comes back on track?

Mr Sterling: We have put a lot of focus on that, and I consider it to be very important. It is fundamental, and you should be able to tell staff what is expected of them at all levels. Indeed, all line managers at all levels should be telling staff how they are doing against their targets. They should be not just telling them how they are performing but giving them feedback on their behaviour and the way in which they deliver their targets. Those things are vital to me. Going back to the earlier point about sickness, we know from research that staff who do not feel properly engaged in their organisation are much more likely to take sick. One of the greatest ways of ensuring that there is good staff engagement is feedback between management and staff on performance management issues.

Mr Girvan: I am glad that you mentioned that. It is a two-way system. I always fear people writing their own job evaluation. I think back to when a lot of the Civil Service was going through job re-evaluation. Somebody doing exactly the same job was writing a personal plan of what they were doing, and they sounded as though they were running the country themselves. There is an old song about a boy who cannot bear to look in the mirror because he gets better looking every day and is perfect in every way. Some people have that approach. I wonder whether there is any truth in the idea that, when people are asked to write a personal performance plan, they make out that they are a lot better than they really are. The person who will be most critical of someone is the person who works along with them and sees where their strengths and weaknesses are. Sometimes individuals do not want to see their weaknesses and are brilliant at telling you all the things that they are fantastic at. How somebody's personal performance plan is presented depends how egotistical somebody is.

Mr Sterling: That should not happen.

Mr Girvan: It should not.

Mr Sterling: Individual performance agreements should reflect the key priorities and commitments that each individual has.

There is a basic principle that every member of staff in the Department at whatever level should be able to trace their performance agreement up through the organisation and ultimately see it reflected in a Programme for Government commitment of some form or other. Individual performance agreements should be agreed jointly by the line manager and the member of staff. The in-year and end-year performance reviews should be done by the member of staff and the line manager, and the line manager should be the person who ultimately signs that off. The member of staff has to agree that finally, but it should be done jointly. Managers at a higher level should be making sure that the process is being properly applied across the organisation. The issue has been on our departmental board every month. It is also in our fortnightly stocktake meetings. I have made it clear that completing performance appraisals on staff is a fundamental part of every manager's job. For anybody who is not doing it consistently, their performance is not satisfactory. That is the level of importance that we attach to it.

Mr Girvan: I appreciate that there has been an improvement in recent months. Earlier it was sitting at only 50-odd per cent, and it is now up to 80%. Will it be completed by the end of the financial year?

Mr Sterling: We are now above 90% for the completion of end-year assessments for last year. I hope that performance this year is better. We are putting a lot of attention on this. We will never get to 100%, simply because you have people on long-term sick and there are other cases where it may be just impossible to complete an appraisal. The 90% target is challenging, but we should be able to get there, and I hope that we will make it for the end of this year.

Mr Girvan: Something has come up through contact that we have with the public. They are frustrated about some areas. I wonder whether this will impact on individuals' personal performance targets. Take answering a phone. People say that they aim to answer a phone within three or four rings. The fact is that they might well be sitting at their desk with the phone set on automatic answer. That automated approach seems to be a wonderful way of diverting or delaying work as opposed to not doing it. Is that ever included? The public tell me their frustration at having to contact government bodies, primarily public bodies, and about the difficulty that they have with going around in circles and being told, "If you want so-and-so, press that". Eventually, if you know the extension of the person you do want, you put it in and it invariably goes to an answering machine. You leave a message on the answering machine, and they answer it when it suits them, not necessarily when the customer is available and wants an answer or some action taken. Is that ever included as part of their personal development programme?

Mr Sterling: For staff whose job it is to take calls from the public, their performance agreement should reflect how they are doing. I do not have the details of that. Enterprise Shared Services has a lot of staff handling calls from members of the public, and we can get you details of their processes for measuring performance. I know that they do it in a professional way, but, as I say, I do not have the details of that. We can find out for you.

Mr Girvan: That would be helpful. It is something that we are hearing as a frustration, especially since the technology now seems to be available to put people into a loop where they could spend half a day trying to get to the right area.

Mr Sterling: That should not happen. It is not in our interest to have people disgruntled with the system.

Mr Girvan: I appreciate that, but, if there are people there who do not want to deal with something, that can create an air of frustration.