Examination of Witnesses (Questions 560-579)
2 MARCH 2005
LORD WHITTY,
MISS OONA
MUIRHEAD AND
MR BRIAN
HARDING
Q560 Chairman: Right,
but there is a view around that RDAs first of all have an urban
focus rather than a rural focus. My own RDA takes delegations
to India and China and the United States and there is a difference
in scale in doing that and working with a community group in say
Cropwell Bishop, which I know you have been to. There is a bit
of disbelief around that the RDAs are going to take this seriously.
Lord Whitty: Well,
I have just referred to the RDA Tasking Framework and it gives
them a bigger focus on rural matters and indeed bigger resources
to deal with the rural dimension going into the RDA pot. So yes,
it is true that RDAs are often seen as urban and big scale but
that is not their remit. Their remit is to intervene strategically
where they can help the social and economic development of those
areas. Of course there will in relation to their remit here also
be the focus on disadvantage, and those areas which lack accessibility
or job opportunities or whatever should benefit from the RDA's
attention in rural areas as well as urban.
Q561 Mr Jack: I wonder
if you could help me understand in terms of the future delivery
of various programmes that Defra is responsible for how the Integrated
Agency fits in. I am referring particularly to the fact that you
said in one of your documents talking about simplification of
funding schemes that the proposed simplification builds on existing
work across Defra and other agencies, notably the Forestry Commission,
to simplify the current 100-plus national, regional and local
funding arrangements to a new framework around three major Defra
funding programmes. One of those funding programmes, funding programme
three, deals with environmental land management and it says your
objective is to achieve natural resource protection and the accompanying
Defra public service agreement which seems to touch on a lot of
the work of the Integrated Agency. Would it be responsible for
delivering particular programmes with budgets and handing out
money to people?
Lord Whitty: Yes,
it would take over the work of the RDS currently in that field,
and the social and economic ones will be devolved to the RDAs,
so that covers a number of different schemes.
Q562 Mr Jack: In the architecture
the Integrated Agency has responsibility for the RDS, does it?
Lord Whitty: The
RDS becomes part of the Integrated Agency. The three predecessor
organisations or a significant part of the—
Q563 Mr Jack: And that
does not require any legislative change to bolt it into it?
Lord Whitty: There
is no statutory existence for the RDS separate from Defra at the
moment so we therefore do not have to alter statutes, but we have
to delegate what have hitherto been Defra functions to the new
Integrated Agency.
Q564 Mr Jack: Right. Just
help me to understand in clause 2(2) how is the work of dealing
with the RDS covered?
Lord Whitty: It
is covered in a number of respects. The agri-environment schemes
will promote nature conservation and biodiversity and conserving
the landscape in some respects. Some of the RDS schemes make a
contribution towards promoting access and to the educational dimension.
I think that a number of the RDS schemes which are ERDP-funded
under the present system or some of the national ones would make
a contribution to pretty well all of those. Brian, do you want
to add anything to that?
Mr Harding: No,
I do not think so.
Q565 Mr Jack: When we
are talking about going down from 100 of these various streams
to a limited number how is this going to be done? Is the new Integrated
Agency going to manage down, administer the end of existing scheme,
and invent new ones?
Lord Whitty: No,
the schemes which are running will clearly continue to run on
their current terms, but be brigaded into the three areas in which
in the environmental one landscape and biodiversity money will
be largely administered by the Integrated Agency.
Q566 Mr Jack: It says
here that you have got 100-plus funding arrangements. How many
funding arrangements will the new Integrated Agency is responsible
for?
Lord Whitty: Most
of those 100 will not exist. There are on-going commitments under
the ones that already exist.
Q567 Mr Jack: I am interested
to get some feel for the workload of the new Integrated Agency
in addition to taking on the English Nature functions that we
talked about earlier. I am trying to establish in my mind whether
we are asking the agency to be doing more work than the sum total
of the parts that are currently there but which are going to be
put into it.
Lord Whitty: Not
more work. Obviously the whole point of creating a single agency
in this area is that the new agency will be more than the sum
of the parts but that is in quality rather than in quantity.
Q568 Mr Jack: Help me
to understand the budgetary arrangements around this. We have
got the RDS and we have got English Nature. I am talking about
the administrative budgets. The reason I am asking this question
is clearly if you are going to bring the agency into power then
it has got to be properly resourced for the role and functions
which we have just been discussing and you are posting a number
of savings which you hope are going to be made and yet the task
appears to be as big as English Nature's together with the re-engineering
of current programmes into lesser programmes, so there is quite
a lot of work to be done to get to a point at which you are going
to have a new, streamlined, more efficient programme. And according
to all of this if you are to yield the £13.8 million saving
which you are proposing in 2007-08 this is all going to be done
rather quickly and yet you have just told me that the Integrated
Agency will be responsible for looking after the continuing stream
of payments associated with a large number of existing programmes,
so where are the savings coming from?
Lord Whitty: The
savings are not so much in the programmes.
Q569 Mr Jack: I am talking
about the administration of them. You are going to be reengineering
and carrying on with the existing ones; where are the savings
going to be coming from?
Lord Whitty: The
savings largely come from the overheads and economies of scale.
When you say they are responsible for a large number of on-going
schemes, there are schemes that go on longer but most schemes
maybe go on for two or three years, some of the agri-environment
schemes go for seven years, and they are responsible for what
has already been committed. They are not responsible for just
continuing those schemes in their present form. They will be responsible
for deploying the money in a more flexible way than the tight
constraints on those 90-odd individual schemes.
Q570 Chairman: You talk
about economies of scale. Are you able to give me a bit more detail
as to how the resources are going to be deployed and how the savings
are going to be generated? For example, if we take the numbers
of people who are currently employed in the constituency elements,
the RDS and English Nature, is the agency going to have less people
or more people?
Lord Whitty: It
will have fewer people than the sum total of the existing organisations,
partly because some of the personnel in the existing agencies
will have been deployed elsewhere and partly because there will
be some avoidance of duplication in overhead activities like finance,
personnel, estates, et cetera, which will be delivered and also
some avoidance of duplication of the functions of front-line staff,
for example inspectors going on land for all purposes rather than
one inspector coming from English Nature and another one coming
from the RDS, so there will be a number of economies of which
probably the overheads is the largest but there will be a reduction
in staff generally in various areas.
Q571 Mr Jack: How does
this effort to make savings contrast with the fact that the Integrated
Agency, in terms of implementation costs, is going to cost anywhere
between £25 and £37 million?
Lord Whitty: That
takes on the previous costs of English Nature, part of the previous
costs of the Countryside Agency, and part of the previous costs
of the RDS. I do not entirely recognise the figure of £27
million. Did you say £27 million?
Q572 Mr Jack: The figures
that we have been given show the one-off implementation charges
which I presume are all the costs of moving people around, redundancy
payments, new IT systems, the move to the palatial world of Nottingham
in the new premises. All of these add up to a range of between
£25.3 and £36.8 million.
Lord Whitty: We
are confusing two issues. We are confusing the issue of the ultimate
savings which is—
Q573 Mr Jack: We are not
confusing but contrasting between the savings that are claimed
to be able to be made and the costs of establishing it. I suppose
what I am looking for is some kind of net saving to Defra as a
result of all this and whether in fact the organisation will have
sufficient resources at its disposal to do all of the work that
we have had identified for it?
Miss Muirhead:
I think there are a number of different strands to this and perhaps
I might try and tease out some of them. Firstly on the funding
stream simplification, the intention there is to move away from
the situation where there are a lot of small schemes each with
their own set of rules, each with their own process that needs
to be serviced, if you like, and servicing a process takes people's
time and therefore costs, so the more you can simplify and reduce
the lower the cost will be.
Q574 Chairman: Oona let
me stop you because it is a long sprint from here to the Lords.
Larry, are you going to vote and see how you do? If it is okay
with you we will carry on. We are being told this is legalistically
possible and we are not breaking any conventions. We have got
two star witnesses.
Miss Muirhead:
It is very kind of you to say so. Brian and I will try and do
our best. If I may continue on the funding streams, I think in
a sense you have to look at that as part of, but separate from,
the establishment of the Integrated Agency. We wanted to do that
anyway in the current organisations, and indeed that is of course
happening with the introduction of the Environmental Stewardship
Scheme which will in itself start off the process of simplifying
the number and form of environmental land management schemes so
that instead of having a number of schemes you will have this
single scheme within which there will be a range of payments depending
on which bit of the menu the land manager wants to take on. All
that simplification of the funding streams will in itself help
to make more cost-effective delivery, if you like, and indeed
I think you can see this from the way in which the RDS is changing
over the next 12 to 18 months where they are taking on a significant
amount of work, their numbers will be increasing in the very short
term in other words, in the course of this year, to handle that
extra work with the entry level scheme and higher level scheme,
then because of the better process and IT platform to support
that, the numbers will go down next year. All that will happen
before the Integrated Agency comes into being. If you can see
this process continuing with the further simplification of funding
streams, being ex-MoD I would say you can get "more bang
for your buck". That is one aspect of the costs and savings.
In terms of the establishment of a new organisation from the merger
of three, clearly there are things that you need to do in order
for that organisation to work together as a single entity and
at the moment we are indeed doing some work on that and there
is work in hand to ensure that the three organisations can e-mail
one another easily, can communicate, can start to work together
in a much more collaborative way. Clearly on the IT costs—and
we have given you a range for the moment because we need to tease
through precisely what they will include—include all the
sorts of things around knowledge management and web-based working
within the organisation that you would expect in one that you
want to be outcome focused and agile and all the rest of it. That
perhaps gives you a flavour of the investment that we are looking
for on the IT side. You will also expect to get e-HR, which is
electronic HR, and there are savings that come from that. You
would expect some savings from the way in which business is done
from the introduction of slicker processes and IT support.
Q575 Mr Jack: Are those
savings compared to the budgets of the three existing parts now?
In other words, if I said how much—and you have got the
start-up cost for the Integrated Agency, which is English Nature
and the bits left over from the Countryside Agency and the Natural
Resources Directorate, which Mr Harding looks after, all being
welded together—are these savings reductions versus their
budgets as at the moment?
Miss Muirhead:
That is one way of looking at it certainly. I do not think we
will put Brian into the Integrated Agency; we will keep him in
Defra.
Mr Harding: Good,
thank you very much!
Miss Muirhead:
Certainly if you look at the cost baseline then you would say
the cost baseline in administrative terms for the Integrated Agency
is the running cost of English Nature, the cost of running that
bit of the Countryside Agency and the cost of running the majority
of the RDS and, as Andy Brown said earlier, there are some complications
there because a lot of support provided to the RDS is provided
from the core department of Defra so we have had to try and start
to tease out exactly how much it costs to run RDS and therefore
to see what is the baseline for the future. You are absolutely
right you look at your baseline as being the running cost of the
existing organisations.
Q576 Mr Jack: Because
one thing, having gone back to what you are saying on expenditure
via RDS, to achieve the rationalisation you want, means that things
go up. That was not reflected in the evidence in 26A which you
kindly provided us with.[4]That
shows a continuing mounting stream of savings and does not particularly
post that extra temporary increased expenditure.
Miss Muirhead:
I think there are two things on that. Firstly, you have got to
superimpose on to efficiency savings that investment bulge which
is the £30 million for the Integrated Agency, or £40
million overall, and then the other thing you have got to take
into account in looking at efficiency savings is of course a large
part of those are not from the Integrated Agency, they are from
the non-Integrated Agency element of the Countryside Agency and
also from the bit of the Defra department that Brian and I sit
in where we are also making efficiency savings over the next three
years, so I think there is that correlation between a hump and
then your costs are starting to reduce thereafter.
Q577 Mr Jack: Does the
Commission for Rural Communities have to make savings as well?
Miss Muirhead:
I suppose if you think about it in headline terms, the Countryside
Agency in 2003-04 had a manpower size of about 660 staff. If you
then slice off the bit that is going to the Integrated Agency
and you slice off the bit that is going to the RDAs, which is
about 50% of what was needed for the Countryside Agency to deliver
it because they are adding to their functions in the RDAs not
taking on completely new ones, and then you take away the size
of the Commission, you are left with a saving, and so I think
I would rather look at it in that way rather than that you are
making an efficiency by creating the Commission. The point about
creating the Commission is to have an advisory body which is not
distracted by delivery, that is focusing on being nasty to government
and public bodies.
Q578 Mr Jack: But in that
context would it be presented with a budget and be told, "You
can be as nasty but that is how much you are going to get for
being nasty," or is it going to have the ability to try to
negotiate, because if you read the powers and the responsibilities
of those powers it could range pretty widely if you wanted it
to? Obviously it is not going to have (just as the Countryside
Agency did not have) limitless resources for the tasks, but is
it going to have the same amount of money as the Countryside Agency
in the way you describe, which is to leave something which is
the leftover which becomes the new Commission? In budgetary terms
will it have the same, more, or less than that than which the
Countryside Agency would have had?
Miss Muirhead:
I think that is a very good question and it is something that
we and the Countryside Agency have been grappling with because
your instinctive starting point is to say this is what the budget
looks like and so therefore we will do a slice off from that budget,
but actually of course the way in which one really wants to do
it is to work bottom up, by saying these are the things that we
think we need to deliver and this is what it will cost you, Defra,
to do that. When I say deliver I mean advice; it is not going
to be delivering schemes. We have done a bit of both, if you like.
In the Rural Strategy we said that the budget would be something
approaching £10 million. There will of course be a negotiation
every year—there always is—between executive bodies
and NDPBs and the parent department as to how much money is required
to deliver a particular set of outcomes. That is the contract,
if you like, so I am sure that those negotiations and discussions
will continue between the Commission and Defra. I would say also
that we looked at some comparators, for example the National Consumers'
Council which has got an extremely wide remit (in fact it is GB-wide
rather than England-wide) has a budget of around £4 million,
so that gives you some idea of the kind of resource that the Commission
will have to play with.
Q579 Chairman: Can we
just return to the big headline figures. The cost of reorganisation
is in the region of £40 million, I think that is right, so
there is an up-front cost and savings to be made later on. How
robust are the savings because figures that we have seen from
the Department suggest savings in 2009-10 of £21 million.
My impression is that those are fairly speculative sums at the
moment. Are you going to give us more reassurance than that? How
far would you be prepared to commit to saying, "I am going
to achieve those"?
Miss Muirhead:
Can I take you through it in a slightly different way.
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