Examination of Witnesses (Questions 340-359)
MR MARTIN SYKES AND MR MIKE ACHESON
WEDNESDAY 23 JANUARY 2002
340. Why do they not do it?
(Mr Sykes) We are in dialogue to make sure that they recognise that they have this leadership role in estate matters across the government.
341. Are they responding positively
(Mr Sykes) Yes. I am hopeful they will adjust the present policy and put appropriate resources in to keep that up.
342. Was that the only implication of that phrase, "we would not wish to see this position diluted"?
(Mr Sykes) Yes.
343. The OGC are relying on departments to supply savings to meet a target of £1 billion over three years
(Mr Sykes) Yes.
344.how much are you likely to save out of that?
(Mr Sykes) How much have we saved?
345. It is a target over three years, over the period?
(Mr Acheson) At the end of the last financial year we had saved in the order of £250 million VFM improvements, the majority of that was Highways Agency, approximately £200 million, the Central Department £29.8 million, the other agencies £6.2 million and on NDPBs it was £11.4 million, coming to £47.4, excluding Highways, which was approximately £200 million.
346. You are talking about a total of about £250 million.
(Mr Sykes) Yes.
347. What year?
(Mr Sykes) The last financial year. We have to emphasise that not all savings are cumulative, some are one-off opportunities, so we cannot guarantee we can do £250 million every year for three years.
(Mr Acheson) We measure it every year. The return is every year. We measured it in the last financial year and we will be measuring it soon in the current financial year.
348. If you did £250 million in one year presumably you can do something in the second and the third year, you are well on the way to swamping the target at that rate?
(Mr Sykes) It is not all repeatable, but my personal target this year for the area I have control over is £10 million.
349. Have the figures you are quoting now been audited or independently evaluated?
(Mr Acheson) No. When OGC put together their matrix for evaluating value-for-money improvements they said this is what you should do, here is a stack of guidance. There is no indication that we should independently audit, we could be, so we were not being generous, shall we say. There is no independent audit, no.
350. That is quite an achievement in one year, what is your estimate of the second and third years?
(Mr Sykes) As I said
351. I accept what you said, that it is not going to be repeated, presumably there will be other projects coming along?
(Mr Acheson) The other complication is government changes in the summer, so the total we looked at was at DETR, a big chunk of our department has moved to join with ex MAFF to form DEFRA, so our department is now a bit smaller. Nevertheless, one would hope, excluding Highways, from £47.4 million in total we ought to get £30 million.
352. Over the next two years?
(Mr Acheson) Over the next year.
353. What about Highways?
(Mr Acheson) I would not like to commit Highways to a figure, that would be unfair. I am not sure how much of the £200 million will be repeatable if it is a one-off. One would assume, just looking at the bald figure, that ought to be repeatable but whether it is, or not, I do not know.
354. The £250 million last year, and you are now talking about a much smaller figure for this year, Highways, I presume, is in your figures for this year and so therefore any savings? You are a bit doubtful, you are responsible for Highways, are you not, do they know how much they are supposed to be saving this year?
(Mr Acheson) Like health we have not been given a target by OGC, they did not give individual departments a target and we in turn have not given agencies a target. We have never been given a target. A professional procurement person does not need a target to do a good job.
355. You are half way through January at the moment, so you have only a couple of months of the financial year left, what have you got pencilled in for savings? Last year it was £250 million, this year is the first of the three years, this year is important, last year is history. This is the first year that will contribute to the £1 billion, so how much are you thinking of throwing in the pot this year?
(Mr Sykes) I was not aware this was the first year of the three. This year is the second year.
356. 2000-2001, 2001-2002, 2002-2003, and this is the first of them, we are just coming to the end of it. You are right. Go on then, £250 million in the bag in the first year, what is the second year?
(Mr Acheson) Well
357. Just tell us?
(Mr Acheson) Without repeating what I said just now, because that would be silly, we are hoping that Highways will be able to replicate the £200 million, we do not know that and we cannot commit them to that. We are hoping that the Central Department and the other agencies and a smaller number of NDPBs should be able to rack up something in the order of £30 million. That is a guess.
358. Can I ask you a question that intrigues me, are you allowed to spend these savings? Once identified are they lost to you or are you allowed to save them?
(Mr Acheson) The incentive for departments to make VFM improvements is that they can then use that money for other schemes, we do not have to give it back to OGC, it is still part of our money rather than giving it away, so yes is the answer.
359. Can I be clear about your expectation of OGCs target for you, you report annually to the OGC on how you are getting on, now you have done the first year and are coming up to the end of the second year, are you aware of what OGC are expecting you to contribute to their £1 billion target?
(Mr Sykes) No.