Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of witnesses (Questions 1 - 19)



Mrs Dunwoody

  1.  Good morning, Sir Andrew. You are most warmly welcome to this Committee. I hope that, if I may just start with a slight disclaimer, you will not be too disorientated if the Chair gets up and leaves for the Finance Committee. I can assure you, it is not in any way a judgement upon the performance of the witnesses. Indeed, the Chairman of the Environment Sub is hoping to be with us, but he has rather more faith in transport than I, as a railway MP, have learned to develop over the years. May I ask you, firstly, to introduce yourself, for the record, and your colleagues?
  (Sir Andrew Turnbull)  On my left, John Ballard, who is the Principal Finance Officer for DETR. On my immediate right, Brian Leonard, the Director of the Environment Protection Strategy Directorate, which pulls together the work of Environmental Protection across the Department, and indeed across Government. On my far right, Richard Hillier, who is the Director of Resources and Planning for HSE, and he is standing in for Jenny Bacon, who unfortunately is unwell. Richard is the referred member of the HSE Executive.

  2.  We are very grateful. Did you want to make any general remarks, or may we launch straight at you?
  (Sir Andrew Turnbull)  No, you may launch straight in.

  3.  Sir Andrew, tell us how the integration is working, how the decisions are made and what improvements you see at the integration of this vast Department?
  (Sir Andrew Turnbull)  The first point to make is that this was not done as a piece of administrative tidying up, of absorbing a Department, like Energy, for example, that had got too small to be viable, or simply to save money, it was done with a purpose, and the purpose really was the belief that there are many issues which the old DoE and the old DoT needed to collaborate on and could not handle themselves, and a belief that they could do it better bringing a lot of these issues of transport and the environment together. Now in the year, we merged, the announcement was made on 16 June, the first thing was to merge various kinds of operational things, like the Private Offices and the Press Office; we then had a review and we have set up a structure of policy directorates, we did not make huge changes but, for example, we moved Planning next to Roads and Local Transport. That has now all been completed. We have merged the three service areas, that is Legal, Finance, Corporate Services. So, in terms of structure, we have completed this remarkably quickly. In terms of systems, pay, IT, and so on, we are also quite well advanced.

  4.  Because, initially they were different systems, were they not, they were totally different systems, on pay, for example?
  (Sir Andrew Turnbull)  What has really surprised us was how far, in a world in which Departments were given derogation to develop their own pay systems, their own staff appraisal systems, two Departments, that for many years shared Marsham Street, could move apart, and so we then had to move those things back together again. So we had different IT systems for our accounts, different office automation systems, and we are now in the process of bringing them all back together again.

  5.  This is the power of the mandarins, Sir Andrew, why are you surprised?
  (Sir Andrew Turnbull)  I do not know, I think it was partly ministerial policy that Departments should be looked at as businesses, and I think we now think that we would put rather more emphasis on the fact that they are all part of a single Government and they should be working closely together. So, in terms of structure and in terms of systems, and in terms of kind of identity, logo, etc., etc., we have done remarkably well. The next thing is, how far have we brought the policy thinking together, and I think you can look at a number of things that we have done, or are about to do, which will be very much better as a result of the merger. The Integrated Transport White Paper, which will come out shortly after the——

  6.  What date did I hear? Shortly after the ...
  (Sir Andrew Turnbull)  Shortly after the Comprehensive Spending Reviews, which I think will probably be in the second week of July, so we are looking at more like the third week; anyway, that is what the powers that be decided. But that whole corpus of work, I think, will be of a higher quality than would have been possible for two Departments, even where they wanted to collaborate. We then will follow up with a review of the Roads Programme, which will integrate issues like regeneration and environmental consideration into the Roads Programme better than has been done before. And the third piece of work is, we have only last week finally agreed in Europe the Kyoto targets; we now have to produce a plan which will tell the world how we propose to do that, and that will involve energy efficiency measures, economic instruments, but also a number of measures in the transport field, and that body of work, I think, will also be better. So the policy work is coming on. The bit that is slowest, and I think will probably take another couple of years, is, do people in their hearts and minds believe that they belong to one Department, or do they still think that "I am an Aviation person", or "I am a Housing person". We have a target, which is that 25 per cent of postings, staff moves, should be cross-posting, across the older divide, and we are on target to achieve that. There is still this sensitivity, I have to admit, the feeling that Transport has been taken over, although the truth is, if you ask, what does the Secretary of State, the Deputy Prime Minister, what is his passion, it is transport. There is no sense in which transport policies have been devalued, down-played, but, nevertheless, some people feel that, because he chose to operate out of Eland House and the Permanent Secretary came from the old DoE and the Head of his Private Office came from the old DoE, there is still a feeling of takeover, which I have tried to work to break down and my successor will have to work at as well.

  7.  Yes. In what areas have there been any alterations, for example, in resources, what evidence could you give us that resources are being better used, because of this giant which is being created, than would have been in the previous two Departments, separated?
  (Sir Andrew Turnbull)  Can I divide that into two, which is the programmes and our running costs. In terms of programmes, we have not made major switches; partly that is because the policy of the new Government has come in, saying, "For the first two years we will largely work with the previous plans". There have been some adjustments, the Roads Programme has been slightly reduced and underspent, and we have had to meet some other pressures elsewhere and find money, for example, for regeneration. In terms of our running costs, the merger itself will over time enable us to save probably about £8 million on—that is an annual budget now of about 240[1], so it is quite a significant saving of bringing together——

  8.  On things like office costs, are we talking about; have you shed any staff? What are we talking about?
  (Sir Andrew Turnbull)  We are talking about the central services, that you end up with. You had two Finance Directors, two Heads of Internal Audit, two Heads of Procurement, all these things, and IT Services; by merging those together, and Personnel Services, we have saved probably 150 to 200 posts. Over time, I think we will save more.

  9.  By which you mean you have lost 250 posts?
  (Sir Andrew Turnbull)  Yes. The Departments together have probably, the centre of them, lost more as a proportion, more posts, than any other Department in Whitehall; the centre is now about 3,500 and it was over 5,000 in 1994, so there has been a huge reduction in this DETR central. Most of that reduction has come from the central services, where the merger has, in a sense, come at the right time, because it has enabled us to meet what were some pretty ferocious running cost targets that we had been set in a previous survey.

Mr Gray

  10.  Sir Andrew, still on the machinery of Government—although, incidentally, can we congratulate you on three outstanding events this week: you have got a knighthood, you have been appointed to the Treasury and you are giving evidence to the Environment Sub-Committee of the DETR Select Committee; all three of them are very important. But, on the machinery of Government still, how far are discussions with MAFF progressing, with regard to setting up a rural department, which would take the countryside bits out of DETR?
  (Sir Andrew Turnbull)  They are not, really. This thing comes about and it floats around in the newspaper. There are no specific plans to set up a Department of Rural Affairs. The first thing you have to do is define, really, what you mean by that, because we have, in DETR, two sets of countryside functions. The first relates to habitats and species, the regulation of the countryside, SSSIs, the European Birds Directive, Habitats Directive, and so on, largely carried out for us by English Nature; and there is the second set of responsibilities, which is about people and the countryside, people who live and work in the countryside, and the whole question of access, and then there is also the question of landscape, Areas of Outstanding Natural Beauty. I think my Department would argue that we have an important locus on both of those; you can question whether a Department which is dominated by farming and in turn dominated by the European policy on farming is really the Department that should be responsible for the regulation of habitats, species, and so on, and I think there is a very good argument to say those two things should be, in some sense, separate. When you get to the question of people and the countryside, the argument is less clear cut, you may say, well, why do you distinguish between economic activity inside the factory, inside the farm gate, some of which is farming and some of which may be tourism or leisure, and economic activity outside the farm gate, and do we need to find ways of bringing those two things together. Now what we have actually done is to take the responsibility for rural regeneration and have deliberately put this into the Regional Development Agencies. We did not wish to have a view that the Regional Development Agencies were really Urban Development Corporations writ large, that these are responsible for the entire region; and the region you represent is actually very largely a rural region, so if your RDA did not have responsibility for rural regeneration it would be a sort of weak and rather partial organisation. There are also other linkages. The whole question of how do you take the pressure off the dispersal from cities to countryside; the answer is by making——

Mr Gray:  So there is no change envisaged; we are not going to have a Department of Rural Affairs?

Mrs Dunwoody

  11.  Not at the moment?
  (Sir Andrew Turnbull)  We may do, but it is not on the fore-burner.

Mrs Dunwoody:  Sir Andrew, with the greatest respect, I really do want to question you on what you have been doing, not on what you might not do. Can we bring in Dr Whitehead here. And, also, I do apologise, I am going to leave you. I shall read every word you say with great care. Mr Olner is going to be kind enough to take the Chair for me.

-In the absence of the Chairman, Mr Olner was called to the Chair

Dr Whitehead

  12.  Sir Andrew, how are you getting on with the implementation of resource accounting?
  (Sir Andrew Turnbull)  I think, quite well. In some sense, the merger has delayed us, because of the process of bringing various systems together, but there were various press reports saying we were singled out as a Department that was lagging behind, but I think we will meet all the central requirements and be able to reach those targets, along with most other Departments. But John Ballard may be able to give you more detail on that.
  (Mr Ballard)  The first step is to comply with still what we call Stage One, and there are several requirements laid down by the Treasury as to what we should do. Part of that is a letter from myself to the Treasury, setting out how we propose to produce resource accounts, which obviously needs to be convincing; that letter was sent in May. We need to have the NAO's endorsement to our systems; we have had that. We need to produce a departmental resource accounting manual; we have produced that. So we are simply waiting for Treasury sign-off, which we expect to get later this month, or early next, and we are not anticipating any problems in that respect. So we are firmly on track in respect of Stage One. Thereafter, the next stage will be Stage Two, where we are supposed to produce auditable, dry-run accounts for 1998-99 by September 1999, and we do not anticipate any difficulties in doing that. The main hiccup has been, simply, if one goes back in time, both the former Departments were on track to produce resource accounting without any difficulty, but, as Andrew Turnbull has already said, with merging the two Departments we have had to go for a common, IT system, and that means not only deciding which one it should be, you then have to train people across the Department, and that is what has been the main concern; that training will be completed by September this year. So we do not anticipate any difficulty in meeting the timetable.

  13.  So were you always singled out on an unfair basis, or would you say the original singling-out was fair but you have now caught up?
  (Mr Ballard)  No. I think we have maintained quite stoutly that we thought that the singling-out was unfair, because we have had the basic analysis, basic systems, in place, we have simply been tackling, if you like, a sort of mechanistic problem of how you roll out a single system across a new Department that is itself in the course of construction.

  14.  Bearing in mind you have integrated all these accounts, how are you going to make it possible for people like us to see in future years that your future resource accounts are going to be comparable with the preceding cash accounts, and particularly bearing in mind the two different Departments obviously have come together?
  (Mr Ballard)  I think the first assurance is that we have an equal interest in being able to compare one with the other; the second is that both systems, cash accounting and resource accounting will be run in parallel for three years, and part of our task will be, in producing those two accounts in parallel, to produce an Explanatory Note as to how you relate one to the other.

Mr Olner

  15.  Can I just ask, on that three-year programme, as you are rolling it forward, what implications are there in your resources and those resources of the Regional Development Agencies and the Government in the regions?
  (Mr Ballard)  This is something that we are exploring. We have, to be honest, at the moment, only a broad idea of what the additional costs will be. But, clearly, if you are asking people to compile information on two bases, it will take them longer than if they are doing it on one, so there will be some additional staff time, in terms of the inputs that are made into the basic system.

  16.  But will the Government Offices in the regions be able to talk to your computers?
  (Mr Ballard)  Yes, they will. Part of the programme of extending the common IT system includes Government Offices as well, and we expect to finish that in the autumn.

Dr Whitehead

  17.  Can I just seek confirmation, Chairman: the opening balances for the 1998-99 shadow resource accounts have been done?
  (Mr Ballard)  We have not quite got to the stage of producing opening balances, but we are satisfied that we have the systems in place by which we can do so by about September. We obviously need to be quite clear where we finished up at the end of 1997-98, and, given that we then have to take that information which is produced in cash terms and convert it into resource accounting, we have satisfied the NAO that we have the means to do that and will be able to produce it by September. So there is no difficulty, in effect, in producing retrospectively an opening balance for 1998-99, and we have satisfied the NAO and the Treasury that we can do that.

Mr Brake

  18.  Sir Andrew, can we come on to green issues. Was there any reference to the DETR's Green Minister in the DETR Annual Report?
  (Sir Andrew Turnbull)  I think the answer is yes, I think there is a table in there which lists not only our Green Minister but all the other Green Ministers.

  19.  That was not my understanding, my understanding was that there was actually no reference to the DETR's own Green Minister; maybe you can point to the specific reference, or respond in writing to that point? And if you can confirm that, in fact, there was——
  (Sir Andrew Turnbull)  Can I just correct that. Page 81, Figure 10.c, there is a list of Green Ministers, sixth line down: "Environment, Transport and the Regions, Glenda Jackson MP."

1   Witness correction: £260 million. Back

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