Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 80-99)

14 JULY 2004


  Q80 Mr Beard: It is on that basis; it is not individual assets which you can point to as being ready to flog off.

  Mr Macpherson: No, this is not some sort of detailed bottom-up forecast; it is a long-term objective which can then inform and guide us.

  Mr Beard: Thank you very much.

  Q81 Mr Fallon: This £30 billion is not a new figure. You have been selling £5 billion to £6 billion of assets a year at the moment and you are telling us you are going to do £30 billion in five years time. There is nothing new about that, is there?

  Mr Macpherson: I think it is.

  Q82 Mr Fallon: £5 billion times 6 years is £30 billion.

  Mr Macpherson: I think asset sales have been very strong over the last two years. In the years before that, they were more in the £4 billion direction. I would say it is a stretching target. It is not something which will just happen. It is not going to be simple, but, equally, I think with the right approach it is achievable.

  Q83 Norman Lamb: You do not know what you are going to sell but it is going to be simple to sell it.

  Mr Macpherson: I highlighted the worth of the asset base which is reflected in the Department's accounts. There are approximately £650 billion of assets out there, so there are quite a lot of assets you could sell.

  Q84 Mr Fallon: If I could bring Mr Stephens in here. In paragraph 1.15 of your document you quote the savings figure of £20 billion a year by end of plan, 2008. What proportion of that £20 billion is taken by the reduction of 84,000 headcount?

  Mr Stephens: That would account for between 10 and 15%.

  Q85 Mr Fallon: We were told in earlier evidence that it was probably around 20 to 25%, but yours is the authoritative figure, is it?

  Mr Stephens: That is what we reckon it will be.

  Q86 Mr Fallon: So 10 to 15% of the £20 billion is the headcount saving. The headcount total includes another 20,000 to be achieved by the devolved administrations. Has that been agreed with the devolved administrations?

  Mr Stephens: As the Chancellor set out in his statement on Monday, that indicates the sort of opportunity that is there for the local government and the devolved administrations if they apply the sort of efficiency measures that have been planned for central government in England and the UK government.

  Q87 Mr Fallon: It is a wish list, is it not?

  Mr Stephens: Local government and the devolved administrations are all embarked on their own efficiency programmes. The detailed measures for those programmes are of course for them to adopt. This indicates the sort of opportunity that is there if they adopt the sort of measures that the government is planning for central government.

  Q88 Mr Fallon: They have not agreed these targets, so neither the devolved administrations nor local government have accepted the 20,000 figure.

  Mr Stephens: I can just repeat what the Chancellor—

  Q89 Mr Fallon: Could you answer the question: Have they accepted this figure or not?

  Mr Stephens: As the Chancellor set out in his statement on Monday, they are all embarked on efficiency programmes. They are committed to the equivalent of 2.5% efficiency savings a year. This indicates the sort of opportunity that is available to them if they follow the mix of efficiency measures that departments are planning for their responsibilities in England and across the UK.

  Norman Lamb: So the answer is: No.

  Q90 Mr Fallon: The answer is: No, they have not accepted this figure.

  Mr Stephens: I can set out the position again.

  Q91 Mr Fallon: Do not repeat it for a third time. I would rather you answered the question. Can you help us with paragraph 2.19, the second to last line, where you refer to the 20,000 posts as "civil service posts". Does that include local government posts?

  Mr Stephens: Yes, that does include local government.

  Q92 Mr Fallon: So these are people that you cannot require either the devolved administrations or the local authorities to reduce. That is the position, is it not?

  Mr Stephens: Local government has agreed, as is set out in the table of efficiency targets, a target of efficiency savings by 2007-08 of, from memory, £6.45 billion, and that is the target the local government has agreed and accepted. It would be for local government to decide how those efficiencies are achieved—what mix between reductions in back office, which is likely to involve reductions in the workforce, and what mix in efficiencies in procurement, etcetera. Those decisions are ultimately for local government and devolved administrations to take and set out, but we are indicating the opportunity that is there if they follow the sort of mix of measures adopted by central government.

  Q93 Mr Fallon: I understand that. It seems for English local government you have some kind of commitment. What proportion of the 20,000 is English local government compared to Scottish and Welsh?

  Mr Stephens: I think the proportion is roughly a quarter for local government and three-quarters for the devolved.[1]

  Q94 Mr Fallon: So you have some commitment on a quarter, but 15,000 jobs you are hoping Scotland and Wales will reduce.

  Mr Stephens: All the devolved administrations—and of course in the case of Northern Ireland they are not currently devolved—have efficiency programmes in train. It is for those administrations to set out the details of those efficiency programmes.

  Q95 Mr Fallon: Could I ask you about the efficiency programmes themselves. Is that a question for you or Mr Martin?

  Mr Stephens: I am happy to answer.

  Q96 Mr Fallon: The Department of Education has a target of making school teachers and university lecturers work 30% harder. How do you measure that?

  Mr Stephens: In terms of releasing the amount of time that can be spent on delivering front-line service (that is, time spent in the classroom directly on educating pupils), that can be measured by surveys and the full details could be set out in the technical notes to be published at the end of October. But that is part of a pattern across education that is reflected in a reduction in headquarters, in the levels of inspection and in the levels of communication between headquarters and schools, which in turn releases resources in the schools and colleges, etcetera, to spend on direct teaching to pupils.

  Q97 Mr Fallon: How have you got the department to agree to a 30% target before you have been able to publish the technical note or agree that with them so that the rest of us can measure it?

  Mr Stephens: The technical note, when it has been published, will be the subject of scrutiny with the NAO or the Audit Commission as appropriate. The figures set out in the White Paper indicate the agreement that the department has reached: that it believes, on the basis of the detailed work and evidence gathering done by Sir Peter Gershon, working with the department is an achievable and realisable target.

  Q98 Mr Fallon: Why have the technical notes not been published with the spending review? You have been at this for two years.

  Mr Stephens: Sir Peter Gershon started his work last autumn. It is important that the efficiency technical notes are seen to be objective and measurable. They will be put through a process of scrutiny by the appropriate audit body and before being published in October. This is the sort of process that we have followed with PSA targets.

  Q99 Chairman: You mentioned extra productivity. Do you envisage more class contact time by teachers?

  Mr Stephens: Yes.

  Mr Fallon: 30% more.

1   Note from witness: The correct proportion is actually a quarter for the devolved countries and three quarters for local government. The Chancellor corrected this point during his select committee appearance on Thursday 15 July. Back

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