Supplementary memorandum submitted by
HM Treasury (20 September 2004)
Q133. STAFF TURNOVER
Public Sector Turnover: Key Facts
The Chartered Institute of Personnel and Development
(CIPD) "Labour Turnover" survey assesses annual turnover
rates throughout the UK economy.
Latest results from the 2003 CIPD survey finds that the UK Public
Sector had a relatively low turnover rate when compared to rest
of the economy in 2002, and in particular when compared to hotel,
catering and IT sectors. The 2003 CIPD survey finds:
Average public sector turnover in
2002 = 12.5%.
Turnover across the economy in 2002
Average cost of UK turnover in 2002
= £4,301 per leaver.
The survey can be broken down by specific public
sector area as follows:
TURNOVER (%) BY SPECIFIC PUBLIC SECTOR AREA
|Public Sector Area
|Other public services||11.4%
* CIPD 2003
For the UK in general, labour turnover for all
employees stood at 16.1% in 2002. This was the lowest rate for
the past four years.
Highest rates of turnover (of around 40%) in 2002
were found in call centres, catering, and leisure and hotel sectors.
Turnover in 2002 was also high (greater than 30%)
in IT services, food, drink and tobacco, retail and wholesale
sectors, and also among sales workersmany of whom are employed
on flexible, short term contracts.
Lowest turnover (around 10%) was in manufacturing,
transport and storage, and paper and printing sectors. Also low
turnover in managerial and administrative staff (as well as public
An alternative approach to measuring labour market
turnover is to look at job tenure rates: ie the percentage of
workers that are in the same job one year later.
Analysis of job tenure shows that public sector
workers tend to be less mobile and stay in the same job for longer
periods of time.
shows that (using LFS) public sector workers were least mobile,
with 83% in the same job one year on compared to 74% for the private
sector in 2001.
Q135. PENSION CREDIT
As set out in the 2004 PSA White Paper, the DWP has a target
to be paying pension credit to at least 3.2 million pensioner
households by 2008. Projections of future Pension Credit take-up
were set out in the answer to PQ 187352 from David Willetts (attached).
Mr. Willetts: To ask the Secretary of State for Work
and Pensions what the assumptions are for the number and percentage
of eligible pensioners taking up pension credit that underlie
his pensioner benefit expenditure projections for (a) 2003-04,
(b) 2013-14, (c) 2023-24, (d) 2033-34, (e) 2043-44 and (f) 2053-54.
Malcolm Wicks: The Government do not currently produce
long-term projections of the pension credit caseload. In the interests
of fiscal propriety they do issue long-term expenditure projections.
Tabled are the caseloads underlying the projected expenditure.
13 Sept 2004: Column 1394W
Numbers of pensioner households claiming pension credit underlying
the long-term projections of pensioner benefit expenditure are
These figures represent take-up of around 75%, corresponding
to the achievement of the PSA target of 3,000,000 pension credit
households by 2006.
Estimates have been rounded to the nearest 100,000 cases,
are subject to a wide margin of error and should be used only
as broad indications of the likely caseload.
The methodology behind the long-term projections was described
in more detail in "The Pension Credit: Long-term Projections",
published by the Department in January 2002. A projected growth
rate in pension credit spending is derived by applying income
growth assumptions and demography projections to the sample pensioner
population in the Department's Policy Simulation Model. This growth
rate is applied to the medium-term forecast of pension credit
"The Pension Credit: Long-term Projections"
(Ref: DWP-PCP-2) is available in the Library and can be found
on the internet at: www.dwp.gov.uk/publications/dwp/2002/pencred/pencred.pdf
QQ178 & 181. DATING
As stated in Budget 2004, the Government's provisional economic
judgement is that the current economic cycle began in mid-1999
when actual output moved above the trend level. In the second
half of 2001, the economy moved below trend with actual output
remaining below the trend level since then. The economy is forecast
to return to trend by early 2006.
Progress against the golden rule is measured by the average
annual surplus on the current budget as a percentage of GDP since
the cycle began. As stated in Budget 2004, the average surplus
on the current budget since 1999-2000 is positive in every year
of the projection period. The economy is expected to return to
trend by early 2006, meaning that over the whole cycle the average
surplus on the current budget would be around 0.1% of GDP. On
this basis, and based on cautious assumptions, the Government
is on track to meet the golden rule and there is a margin against
the golden rule of £11 billion in this cycle, including the
With the economy assumed to be on trend from early 2006,
the projections show, based on cautious assumptions, that the
average surplus over the period 2005-06 to 2008-09 is 0.1% of
GDP. Therefore, the Government is on track to continue to meet
the golden rule after the end of this economic cycle.
To meet the sustainable investment rule with confidence,
net debt will be maintained below 40% of GDP in each and every
year of the current economic cycle. Net debt is projected to remain
low and stable rising from 31% stabilising at just under 36.5%
at the end of the projection period. The table below (shown in
Budget 2004) presents the key fiscal aggregates. The table indicates
that the Government remains on track to meet both its fiscal rules.
The Government will update its economic and public finance
forecasts in the 2004 Pre-Budget Report.
SUMMARY OF PUBLIC SECTOR FINANCES
|Per cent of GDP
|Fairness and prudence||
|Surplus on current budget||-1.2
|Average surplus since 1999-2000||
|Cyclically-adjusted surplus on current budget
|Public sector net debt
|Public sector net borrowing (PSNB)|
|Central government net cash requirement
|Public sector net cash requirement||2.1
|Cyclically-adjusted Treaty deficit23||1.5
|Treaty debt ratio
|Memo: Output gap||-1.2||-1.4
Q254. MEASUREMENT OF
IN NHS EFFECTIVENESS
Departments provide updates for the performance information
website to the Treasury for publication. The Department of Health
will publish their plans for measuring the impact of efficiency
measures on service effectiveness on their website in October.
Q272. DECENT HOMES
Where additional investment in their housing stock is not
required, council tenants can choose for their homes to remain
under direct council ownership and management. Very many social
homes will meet the decent standard through this retention option
without the need for extra resources.
Where local authorities decide they need additional investment
to meet the Decent Homes standard by 2010, they are able to choose
from three options: Arms Length Management Organisations (ALMOS)
Private Finance Initiatives (PFI) and stock transfers. Of these,
ALMOs and PFI leave the stock under local authority ownership.
Transfers mean the stock is owned and managed by registered social
landlords (RSLs) which raise significant sums of investment from
the private sectorover £5 billion so farto
bring up their stock to the decent homes standard, and often go
much further. RSLs are not-for-profit social businesses and reinvest
any surpluses back into the housing stock, and which are regulated
by the Housing Corporation.
Local authorities are being asked to go through a rigorous
Options Appraisal process to decide which option best suits them.
The outcome of the Appraisal is then put to a vote by tenants.
Where tenants reject a local authority's Option Appraisal the
Office of the Deputy Prime Minister (ODPM) has urged local authorities
to work closely with tenants within the framework set out by the
Government to deliver a solution that will deliver decent homes
Authorities that do not pursue these options cannot expect
increased investment above that provided for through mainstream
housing funding. There is no 4th Option for additional funding.
The Government will not simply throw extra resources at the problem.
Where additional money is provided the Government wants to drive
up performance, secure value for money and give tenants a say
in how the money is spent.
The three options available are all flexible enough to be
tailored to suit individual circumstances, while still delivering
Decent Homes. The ODPM is prepared to enter into constructive
dialogue within the framework set for delivering Decent Homes
and discussions have taken place with a number of local authorities
ODPM is working closely with local authorities that are experiencing
difficulties to support them in the Options Appraisal process
and to ensure they can meet the target by 2010.
Q284. ETHNIC MINORITY
In recognition of the persistence of disparities in employment
outcomes for people from ethnic minority groups, the Prime Minister's
Strategy Unit reported to Government in March 2003
The recommendations included specific policy measures, reviews
of current policy and carrying out research where evidence on
the best policy response is required. These were accepted by the
Government and are now being taken forward by five Government
departments working together through the Ethnic Minority Taskforce
Recommendations include action to:
improve employability by raising levels of educational
attainment and skills;
connect people with work by reforming existing
employment programmes, tackling specific barriers to work in deprived
areas, and promoting self-employment; and
promote equal opportunities in the workplace through
better advice and support to employers, and through more effective
use of levers such as public procurement.
Since April 2004, specialist employment advisers have been
introduced in Jobcentre Plus districts with high ethnic minority
populations, to work with employers on diversity issues and open
up vacancies to ethnic minority jobseekers. In recognition of
the important role that employers play in enabling people from
disadvantaged ethnic groups to overcome barriers to their participation
in the labour market, Budget 2004 announced the introduction of
"Fair Cities" initiatives in three areas later this
year, to work with employers and other local stakeholders to develop
strategies in order to improve employment outcomes for people
from disadvantaged ethnic minority groups.
Budget 2004 also announced the piloting of worksearch premium
of £20 per week, for those in a family in receipt of the
Working Tax Credit who are not working, who agree to join the
enhanced New Deal for Partners, and who voluntarily choose to
actively search for a job. The pilot areas will be in parts of
London, Birmingham, Bradford, Blackburn, Leicester and Luton.
This initiative will address the inactivity of partners of those
in lower paid employment, and has the added advantage of addressing
the lower employment rates of some ethnic minority groups.
Q310. RESOURCE ACCOUNTING
The key benefits of using resource based accounts and budgets
are that they distinguish between resource consumption and capital
investment and better capture the full economic cost of delivering
public services. Resource accounts record costs and income when
they are actually consumed or the benefit is received rather than
when cash is spent or received. They also capture the non-cash
costs related to capital investment, including:
depreciation, representing the consumption of
capital assets over their useful economic life;
a cost of capital charge of 3.5% on net assets,
reflecting the opportunity and financing costs for government
of holding capital; and
provisions for future payments such as compensation
payments or early retirement liabilities.
This better information on true costs of delivering services
is a cornerstone of the system of public expenditure planning
and control, and informs the setting of resource budgets which
are affordable within the fiscal rules.
Resource budgeting also provides incentives (through the
capital charges and the ability to retain the proceeds from most
asset sales) for departments to scrutinise their asset base and
dispose of superfluous assets to release resources for other priorities.
Resource based information informed budgetary allocations
to departments in the 2004 Spending Review. Departments were required
to fully consider the non-cash consequences of their investment
plans. This information was scrutinised by the Treasury and discussed
with departments and has informed the resource allocations in
this Spending Review. Following the completion of the Spending
Review, departments are required to publish revised Departmental
Investment Strategies (DIS) in the autumn. These will set out
their overall asset management strategy over the Spending Review
period in more detail, including an asset disposal strategy explaining
the budgeting impact asset disposals will have.
The Treasury will continue to work with departments to ensure
that the accounting and budgeting rules support the fiscal rules
and set the right management incentives for departments.
From 1 May 1997 to 1 April 2004, when departments most recently
submitted data to the Treasury, PFI projects with a total capital
value of £36.2 billion were signed. As part of our commitment
to openness and transparency in our PFI programme, we report to
Parliament on the total number of PFI projects signed, details
on the projects themselves and their total capital value in the
The table below sets out estimates of the capital value of
PFI projects currently in procurement where contracts are expected
to be signed over the period of the Spending Review:
|Year||Estimated Capital Value of PFI projects (£m)
The actual capital value of projects signed in later years
will be higher than the figures in the above table. This is because
they will also include projects that are currently being developed
and are not yet in procurement.
Data on projects in development is not held centrally by
Chartered Institute of Personnel and Development (CIPD), "Labour
Turnover Survey 2003", Table 5. "Turnover" is calculated
by CIPD using the "crude wastage method". This is defined
as: (No of leavers in a set period/Average No employed in same
period) x 100. Back
"Job mobility and job tenure in the UK", http://www.statistics.gov.uk/articles/labour-market-trends/jobmobility-nov03.pdf Back
At end March; GDP centred on end March. Back
At end December; GDP centred on end December. Back
General government net borrowing on a Maastricht basis. Back
General government gross debt measures on a maastricht basis. Back
Ethnic minorities and the labour market, Cabinet Office
Strategy Unit, March 2003. Back
Department for Education and Skills, Department of Trade and Industry,
Department for Work and Pensions, Home Office and the Office of
the Deputy Prime Minister. Back