Official Report: Minutes of Evidence
Committee for Finance and Personnel, meeting on Wednesday, 11 March 2015
Members present for all or part of the proceedings:
Mr D McKay (Chairperson)
Ms M Boyle
Mrs J Cochrane
Mr L Cree
Mr J McCallister
Mr A McQuillan
Mr Peter Weir
Witnesses:
Mr David Sterling, Department of Finance
Ms Brigitte Worth, Department of Finance
Draft Business Plan 2015-16: Department of Finance and Personnel
The Chairperson (Mr McKay): From the Department of Finance and Personnel (DFP), I welcome David Sterling, the permanent secretary, and Brigitte Worth, the finance director. David, I invite you to make some opening comments on the draft business plan, and then we will move to questions.
Mr David Sterling (Department of Finance and Personnel): I do not want to say very much.
Mr Sterling: Do I take that as a compliment?
You have our targets, which are still in draft, and there are two main reasons for that. We are still waiting decisions on the roll-forward of the Programme for Government (PFG) into 2015-16. As you know, for some areas, we traditionally do not set targets until we get the end-year figures. They include the rate collection target and the debt recovery target. You just have the raw targets. I do not envisage that additional targets will come out of the roll-forward of the Programme for Government. This is where we are today.
The Chairperson (Mr McKay): Are these targets more ambitious than last year's? How do we know that these are challenging for the Department?
Mr Sterling: We have fewer targets, and that reflects the fact that we are coming to the end of a corporate plan period, during which some things have already been done. We also tried to reduce to a set of more strategic targets. They are certainly stretching. The Minister, as I said, will finalise targets on rate collection and debt recovery, and he is always keen to set stretching, demanding targets in those areas. I am happy to take members' comments on whether they are stretching enough.
The Chairperson (Mr McKay): The balanced scorecard covers the PFG commitment on community benefits, including social clauses. The target is to:
"Monitor implementation of the ... Executive’s policy on social clauses".
This issue has been raised with the Committee on a number of occasions. How could we make that more challenging, given that there have been weaknesses in the monitoring and reporting arrangements to date?
Mr Sterling: As you know, the Strategic Investment Board (SIB) has been engaged to undertake a review of social clauses. We expect that review to comment not just on the substantive point about social clauses but on the way that they can best be monitored. The Department and the Central Procurement Directorate (CPD) are keen to see the outcome of that report and to find out what we can learn for the future.
Mr Sterling: I do not have that; I will let you know.
Mr Sterling: I think that the review is under way. Sorry, are you talking about the plan itself?
Mr Sterling: We are keen to get the plan signed off as soon as possible. It will probably run into the new financial year.
Ms Brigitte Worth (Department of Finance and Personnel): We would normally have it signed off round the end of April, because we need to see the performance on the rate collection side before we set next year's targets to make sure that those targets are stretching enough. If we were to set a target now, based on what we think the year-end outcome might be, we might not set a stretching enough target.
The Chairperson (Mr McKay): Are there any plans to include anything on flexible working? You are talking about a reduction to the office estate, but we have also learned that there are proposals for more stations for flexible working in, I think, Omagh and Derry. Should that be in the draft business plan, or could you consider that in the next couple of weeks?
Mr Sterling: We could consider it. We do not have a specific target at the moment. Obviously, we are preoccupied with implementing the voluntary exit scheme, and we will then have to address the fairly substantial redeployment that will go alongside that. An element of workforce planning will be needed to make all that work. That is the sort of thing that we could certainly consider.
Mr Sterling: Yes. There is no doubt that we will see considerable movement across the Northern Ireland Civil Service (NICS). If the scheme is successful, 2,400-odd people will leave, but they will not be in the jobs that are the lowest priority. There will have to be a lot of movement of people not just in Departments but across Departments. This will be a big challenge for the Civil Service.
Mr Sterling: I think that it was reported in the media that, as of the end of last week, there were over 3,500 applications. I do not have a more up-to-date figure than that.
Mr Sterling: That was at the end of the week.
Mr Sterling: Yes. It opened only last Monday. It seems a lot longer.
Mr Weir: Could you not get a "hands up" of who exactly wants to stay?
Mr Cree: Surely those people are only asking for details.
Mr Sterling: No, it is a bit more than that. It is an expression of interest. When you go into the screen, you are asked to indicate whether or not you intend to apply, so it is more than just saying, "I am curious: tell me a bit more about this".
Mr Cree: How much more information do you get then?
Mr Sterling: Basically, if you express an interest, you are effectively indicating that you will be applying, and you then have to fill in the application form and submit it before the end of the month.
Mr Sterling: No, but you can speculate as to the motives of those who expressed an interest and said that they will apply. There will probably not be 100% conversion, but we expect a very high conversion rate. In other words, we expect that most of those who expressed an interest in applying will apply.
Mr Cree: Would that meet your target for year 1?
Mr Sterling: It would mean that we have sufficient numbers.
The Chairperson (Mr McKay): The target for the office estate has not yet been decided. Can you give us an indication of the range that it would be with regard to vacation?
Ms Worth: They were thinking of around 2,500 square metres, but we still have to agree that with the business area and also to put it to the Minister for agreement. I would not really want that to be quoted as an actual amount.
Ms Worth: Unfortunately, I do not have that figure to hand.
Mr Sterling: Sorry. We should have had that figure.
Ms Worth: I am sorry. I know that it was about 400 workstations.
The Chairperson (Mr McKay): What I am trying to get at is whether the target for 2,500 square metres this year is more challenging than last year's target.
Ms Worth: It would be helpful if we could write to you on that.
Mr Sterling: Obviously, we do not yet have this year's out-turn. I know that a lot of things were happening late in the year.
Mr Sterling: We are looking to reduce DFP numbers by 300.
Ms Worth: On average, we are working on staff leaving at the end of December, because we know that the tranches are between September and March. We are targeting around £2·5 million for DFP.
Mr Sterling: That is not a full year cost.
Ms Worth: That is just the final three months, so that would give us a £10 million reduction in subsequent years.
Mr Sterling: It varies a little, but, by and large, the percentage is about the same. When you take in the 2,400 from the voluntary exit scheme, the 1,000 that we expect to lose through suppression of vacancies and the moratorium on recruitment, that will lead to more than a 10% reduction overall.
The Chairperson (Mr McKay): On sickness absence, it was indicated to the Committee last November that the Department was on track to meet its departmental target of 7·6 days. Is that still the case, and why is the target the same? Should it not be something more challenging?
Mr Sterling: The latest figures that I recall suggest that we may still hit it, but there is a risk that we will not. We are going through the two or three months of the year that tend to have the highest sickness levels. We are close to target. We are still, I think, the best or second-best performing Department across the NICS. At NICS level, we do not expect to meet the target, but we still hope that DFP will meet the target. Given that we are at a point at which it is a very fine margin, the target for next year is to hit the same target.
Ms Worth: It is the same. That is cascading down from what we expect the PFG target to be, which will be to maintain the level rather than to target a further reduction.
The Chairperson (Mr McKay): What actions are proposed to ensure that that number stays down for next year? Are there any initiatives that Departments will undertake?
Mr Sterling: We are pressing hard on Departments to ensure that there is compliance with absence management procedures, particularly return-to-work interviews. We know that, if people conduct return-to-work interviews after somebody has been absent, it improves the position. At NICS level, we are —
Mr Sterling: I suppose that a variety of things happen. It allows line managers to get a better understanding of the issues affecting the member of staff. It means that, if there is an underlying cause, there is a better chance of finding a way to address that in discussion with the individual. Maybe the staff member needs to be referred to the occupational health service (OHS) or welfare services, or he or she may require some adjustments. You cannot establish those things unless you have engagement between an employee and a line manager. We know that that works, and, at NICS level, we will monitor it across Departments so that there is a bit of naming and shaming. In other areas, league tables can improve performance in terms of improving compliance. There are no other major initiatives.
Mr Sterling: It is not intended to put pressure on staff; it is good management practice. As I said, if somebody has been off sick, the line manager is required to have a discussion with that person. It does not have to be adversarial or confrontational. It is about establishing whether there is anything that can be done. Is there a pattern? Are there things that we need to address? It makes a difference, and, as I said, it is good management.
Mr Sterling: There are no new initiatives under way in that regard. As I said, we are focusing very much on managing the upheaval that we will face with voluntary exit and so on. We will be looking at things that help us to manage the process.
Mr Sterling: I do not know whether I can answer that.
Ms Worth: I do not know whether that data is available.
Mr Sterling: We will see whether we can find out. Obviously, people are interested in working in the north-west. When DARD asked who would be interested in working in Ballykelly, it got over 1,500 expressions of interest from across the NICS. However, I do not know how many people in DFP drive that distance to work in Belfast.
The Chairperson (Mr McKay): I am trying to get a sense of the number of staff who will be based at the new stations. We got correspondence from the Department a couple of weeks ago stating that Omagh, Cookstown and Newry would be considered in the future, as well as Ballykelly. Obviously, the Department is making moves.
Mr Sterling: Is that DARD?
Ms Worth: DFP may be taking an initiative on behalf of the service as a whole. It would not necessarily be only DFP staff who would avail themselves of that.
I have an idea of how many of my staff travel such distances, but that is a very small percentage of the Department as a whole. One member of staff travels from Newry to the Stormont estate every day, and another travels from Omagh.
Ms Worth: It varies. They are both in our internal audit unit, so they occasionally undertake audits in different locations.
Mr Cree: My question is in the same area. The balanced scorecard has a target for well-being and promoting staff health. If we relate that to the sickness absence that we have just spoken about, we know that roughly one third is due to mental health issues. Is it not a little bit slow to take a whole year to promote the WELL programme across the estate? Should there not be some urgency, particularly in those areas in which we know that people have mental health problems?
Mr Sterling: The well-being programme is directed at the whole of the NICS, but, if people have particular issues, they can be addressed through referrals to the OHS. I go back to my earlier point. If somebody has a pattern of absence, and it is clear that mental health issues are one of the underlying factors, I would expect an early referral to the OHS. Indeed, I am fairly sure that, if people indicate a mental health problem when they go off sick and are off for more than seven days — I think that is what it is, but I can check the exact figures — there is an automatic referral to the OHS. We are particularly active in that matter.
Mr Cree: David, would that not have happened anyway? That would have been the normal modus operandi.
Mr Cree: It is still the case that one third of those on sickness absence are off as a result of stress, anxiety or depression.
Mr Sterling: Yes. I cannot give you exact numbers, but a significant amount of the mental health, stress and anxiety issues are not work-related. It would be wrong to assume that, if you see mental health, stress and anxiety issues as a cause of absence, that is due to work pressures. That is not the case.
Mr Sterling: It could be, yes.
Mr Cree: With the trauma that is ahead of you and losing all those staff, it is bound to increase the pressures on the remaining staff.
Mr Sterling: Yes, we are alive to that.
Mr Cree: Could we ramp up this well-being programme rather than letting it drift for a whole year? Could more emphasis be put on it now?
Mr Sterling: We are taking steps to ensure that we do not cut back on our welfare or well-being services because of the upheaval that we will face over the next year. We are very clear on that, and the permanent secretaries have agreed that we need to ensure that those support mechanisms are available for staff. It will be equally important that all staff in a leadership role, right down to executive officer level, are sensitive to the issues that people will face over the next year.
I was in Scotland recently, and we talked about how it has been managed there. I also met people from Birmingham City Council and have spoken to people in Whitehall Departments. We have picked up some of the things that they have done and some of the lessons that they have learned while they have been downsizing, and one of the messages that came across is that we need to continue to maintain those types of support services for staff. We are seeking to do that.
Mr Weir: We touched on rate collection. Although it is not specified, you are looking to increase net cash collected. Have you identified any additional initiatives for the identification of properties? One of the issues about rates is that there has been a failure: Land and Property Services (LPS) has sometimes been slow to identify and rate new properties, and to start to charge straight away. Can you talk us through any initiatives that you are working on?
Mr Sterling: LPS is constantly looking to improve its procedures in that area and to maximise the amount that we collect. I do not have any detail of any specific initiatives, but we can certainly get that for you.
Mr Weir: There is another interrelated issue. LPS will be vital in targeting these things, but has any thought been given to enhanced cooperation with the councils? It strikes me that, with rate collection, there will always be an issue if you have a double buy-in. It will probably be more so for the councils than LPS because whatever we collect is used as part of the regional rate. In one sense, it is a reasonable chunk of money, but it is only a very small percentage of the overall budget. If you increase the amount of money collected, it could have a very dramatic impact because that is really the source of income for councils. There is quite a strong incentive for that level of cooperation. At times down the years, I have seen mixed levels of cooperation and how proactive LPS has been.
Mr Sterling: There are two points. With the review of public administration (RPA) and the new councils coming in next month, LPS has been focusing on building relationships with those councils. It is intended to continue to improve performance in that area. LPS is sensitive to the fact that it was criticised quite heavily by councils in the past about performance, particularly in collecting business rates. In the last few weeks, LPS has set about a strategic review. Looking ahead to 2020, it wants to be a more agile organisation and to have better relationships with clients, customers or whatever way you describe the people whom it serves. Central to that will be better relationships with local government. At the moment, it is defining where it wants to be, but, over the next few weeks, and maybe even running into a few months, it will be coming up with a programme that we designed to address that.
Mr Weir: It is a delicate judgement balance. It is difficult to say precisely what is correct. On the one hand, relationships can be built gradually, and change can be built in incrementally. In many cases, they transfer the same staff, and many functions will be the same, but there are 11 new entities, so this could be an opportunity for a complete step change for cooperation rather than its being a gradual process. I appreciate that there has to be an evaluation, but we should not miss an opportunity.
Mr Sterling: That is a good point. I am not ducking the question —
Mr Sterling: LPS will maybe not thank me for this, but it might be worth inviting LPS to the Committee at some stage to explain how it will engage with the new councils. It is working hard on the issue.
Mr McCallister: In answer to Leslie, you both talked about mental health issues. You used the word "upheaval" about the voluntary exit scheme. You also have an additional bit of upheaval: you cannot guarantee that it will happen. It is in your targets to deliver savings of £26 million, but you cannot be certain that we will have agreement or that the Budget will not be blown wide open in a few months' time.
There is not much more that I can say.
Mr McCallister: Fair point. You are looking to reduce by, say, 10%. "Natural wastage" is a terrible phrase, but you have had natural wastage of about 3% a year. Would that be close enough to the mark?
Mr Sterling: Yes. Although we do not have figures for the year that is just ending, the expectation is that the numbers will be a lot lower.
Mr McCallister: Had we started this a few years ago, you would not need to spend this amount of money.
Mr Sterling: In hindsight, you could make that argument. We looked at what the Scots did. In recent times, I talked to people who were in the Department for Culture, Media and Sport (DCMS) and had to reduce by 50% while delivering the Olympics. I recently met the chief executive of Birmingham City Council, which reduced from 20,000 to 14,000 and will have to reduce by another few thousand. I met the Scots a couple of weeks ago. I met the permanent secretary of the Department for Business, Innovation and Skills (BIS), which had to reduce by 22% in a year. In all those areas, faced with that drive to reduce costs quickly, they used a combination of suppression of vacancies, a moratorium on recruitment and voluntary exit. We are doing something similar.
Mr McCallister: The 2012 Audit Office report stated that Whitehall took into account staff performance and a range of issues when downsizing Departments. Our scheme, certainly in the first year, is very much about who gets their hand up first or who gets to the computer first and signs on. My concern during Budget debates and questioning the Minister has been on what happens if you end up with a brain drain from the Civil Service if you cannot control who is going and are not taking into account performance, absenteeism or any of the criteria that the Audit Office recommended. Are those places that you mentioned — Birmingham, Edinburgh and the Department for Business in London — not still working off those Audit Office recommendations?
Mr Sterling: Everybody has done it slightly differently. A big driver for us is to cut costs quickly. For that reason, the scheme has been scoped widely; nobody is indispensable. If we were to put in any additional requirements, it would take longer, thus taking us longer to reduce costs.
It will be a big challenge for us from a management perspective but doing something that will require a lot of people to be moved around, and people having to be retrained, will give us an opportunity to freshen things up. Moving people into new jobs to which they bring the skills and experience they gained in other areas, and then being trained in a new area, is an opportunity to do things differently and better. The experience of others has been that they got unexpected benefits from freshening things up and moving people around. It leads to a growth in innovation.
Mr McCallister: In moving people around, did any suffer problems with performance or front-line service delivery in struggling to meet the public's expectations?
Mr Sterling: One message we got was that there could be a temptation just to cut all the back-office services. The people in Birmingham said that you needed to be careful that you did not cut so far that you damaged the front line. The back-office people allow the front-line service deliverers to do their job, so we need to be careful.
Mr McCallister: That sort of goes to my concern round all of this. Even if you are accepting that, in the first year, you have to take this and reduce the pay bill very quickly, would DFP not want to look at the arguments for doing it more strategically or bringing workforce planning into it for years 2, 3 and 4?
Mr Sterling: It is an interesting debating point, but we are where we are. We will have to reduce numbers quickly. The challenge for me, other permanent secretaries and the Senior Civil Service is to lead and manage our way through this. The one thing that has perhaps surprised me is that there is a lot of enthusiasm and energy around this. Aside from the voluntary exit scheme, the reduction from 12 Departments to nine has been welcomed. I think that it will lead to more streamlined government, and people see a real opportunity to provide better services and better outcomes for citizens as a result. We had a couple of working groups yesterday with a selection of senior civil servants. Brigitte was at one of those, and the enthusiasm across the piece was quite surprising in that people see it as an opportunity to change for the better. The glass is more than half full at the moment.
Mr McCallister: I take your point on the changes in Departments. The one thing that possibly looks as if it has been at least well thought out is what services and functions are going to each Department and what makes sense. Credit where credit is due on that. I am just concerned that we are in such a haste to deliver the voluntary exit scheme. We have put off public sector reform for so long now, and I am concerned that we are rushing into a system that is not as well managed or as well thought out as I would like.
Mr Sterling: It will not be easy, but I am reasonably confident that we will get through this and will have business continuity. I am still pretty confident that we will do a lot of things better, but you can call me back in a year or 18 months' time.
Mr Sterling: If I am still here.
Mr McQuillan: I want to ask you about staff morale during all this, David. How will you maintain it at a workable level if people are thinking, "I do not give a damn about this now"?
Mr Sterling: I will go back to the point that I was making. It is not just at senior management level. I will ask Brigitte to comment because she has been working across the Department trying to find savings etc. I have been surprised at the level of enthusiasm in the Department for change, and people see what will happen over the next year as an opportunity to fix some things that we have needed to fix for a long time. The challenge now is to give people an opportunity to do that. Yes, some people will be anxious. We will be asking some people to move to new jobs in locations that they may not want to go to, but the reality is that, above AA and AO, all grades in the Civil Service are mobile. Throughout my career, I have, at times, been asked to do jobs that I did not really want to do, but I have done it and have always got value out of it.
Mr Sterling: It has paid off, yes. The experience that you get from moving around frequently brings value to the job that you are doing. The spirit in the organisation is still strong, and we, as managers and leaders, need to capture that and get the best out of it.
Ms Worth: As David said, I have been going round the Department looking for savings. I have attended a lot of workshops. Yes, there is a lot of feeling that this is an opportunity. As David said, there are some things that we have wanted to do for years, and there is a feeling that there is maybe a will to consider them more now. There are obviously people who are more reluctant to change than others, but there are others for whom change is motivating in itself and who are motivated to deliver change more so than to continue with the status quo.
Mr McQuillan: It is a balancing act to bring everybody on board.
How can the people who are applying for it be sure that the scheme that they are applying for will be the same as the scheme that the health service or the education board runs out?
Mr Sterling: They will not be the same schemes. I think that there are probably in excess of 50 or 60 different employers across the wider public sector who will be looking to access the transformation fund. In the time available, you could not develop a single scheme for the whole of the public sector. People who work in the health sector will be availing themselves of schemes that have been agreed at national level. The Civil Service scheme was reviewed only a couple of years ago, and quite a lot of other public sector bodies — arm's-length bodies — have schemes that are tied to the Civil Service scheme. We have the Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC), health schemes, education schemes and Civil Service schemes, and it would not be possible to develop a single scheme quickly, so there will be differences. By and large, the differences are not huge, but there are some differences.
Mr McQuillan: There is the monetary value. Is that the difference?
Mr Sterling: Yes, some are slightly more generous than others. You are not always comparing apples and oranges; there will be different features to each scheme.
The Chairperson (Mr McKay): David, there was an article in the 'Belfast Telegraph' about freedom of information (FOI) delays, and the Department has been flagged up along with Cumbria County Council, Nottingham City Council and Salford City Council as the only four cases where the authorities involved took considerably longer than the statutory time limit of 20 working days to respond. Should that be considered as a target for the next financial year?
Mr Sterling: We are under the watch of the Information Commissioner's Office (ICO) for a period of, I think, three months. Certainly, the intention is to move out of ICO watch by the end of that period.
Mr Sterling: I do not really want to go into a detailed explanation of why we are where we are. However, it is safe to say that there is a commitment to getting us out of ICO watch.
The Chairperson (Mr McKay): Can we go into the detail?
How many cases were you talking about, and what were the reasons for the delays? We have complained a number of times, even about papers coming to the Committee from the Department. If it is also spreading to FOI responses to the public, it is of great concern.
Mr Sterling: We will be working with the Information Commissioner. The particular problem has involved a number of cases that are quite old. Those will be the focus of our work with the Information Commissioner over the next couple of months.
Mr Sterling: We are talking about a few years.
Mr Sterling: There are a number of cases that are outstanding.