Examination of Witnesses (Questions 60-79)
DAME MAVIS
MCDONALD
DCB, MR PETER
UNWIN AND
MR NEIL
KINGHAN
12 OCTOBER 2004
Q60 Chairman: Were you satisfied with
the rate at which parliamentary answers were dealt with last year?
Dame Mavis McDonald: No. A lot
were good and then we had some really bad ones where we were very
slow, and our clerk has put in place a much tighter monitoring
and chasing system to try and ensure that does not happen.
Q61 Chairman: Has there been an apology
to Parliament on that?
Dame Mavis McDonald: I think we
have apologised to individual members where we have been very
slow in replying to them and quite often Ministers have sent letters
as well to accompany those answers to give a fuller explanation
why there has been a delay.
Q62 Mr O'Brien: Pressing you further
on the energy efficiency savings that you referred to in the report,
the significant proportion of the efficiency savings target is
to come from bodies over which you have no direct control. How
will the Office ensure that real and sustainable efficiencies,
as opposed to reducing service delivery, are achieved with these
arm's length organisations?
Dame Mavis McDonald: I think we
should split the answer to that in two. One, our non departmental
public bodies and, also, our local government and we have two
separate efficiency plans, the one covering the Office and our
non departmental public bodies and agencies, and another separate
one for local government where we will lead on some of the programme
and where we are working with the OGC across Whitehall on the
remainder of the local government programme. On our non departmental
public bodies we do have various exchanges and various levers
to work with them to make sure they do achieve the efficiency
savings, not least the grant in aid that they get covering their
administration budgets.
Q63 Mr O'Brien: But if you cut to reduce
the grant in aid then that reduces the services, and I would hope
that the exercise of efficiency savings is not to reduce services,
so what guarantee do we have?
Dame Mavis McDonald: The aim is
not to reduce the services: it is to think about different ways
of working which sustain and, in some cases, speed up the service
but are not as staff intensive or as expensive as some of the
current ways of working or some of the current locations.
Mr Unwin: And in many cases we
are working very closely with the bodies concerned to help them
develop the savings we can implement, so for example on social
housing we are working with the Housing Corporation to get significant
savings in that through smarter procurement, through partnering
arrangements of procurement, through efficiency in management
and maintenance through capital works consortia. So we are working
with them to help develop the tools that will get the savings
without reducing services.
Q64 Mr O'Brien: What about Regional Development
Agencies?
Mr Unwin: DTI sponsor regional
development agencies and they are leading on the overall savings
for them, and they are working with the RDAs at the moment to
get their efficiency plans developed.
Q65 Mr O'Brien: And the question of Fire?
Where can you explain the proposed savings with Fire and the Services?
Mr Kinghan: Most expenditure on
Fire is the Fire Authority's expenditure. They are part of the
local government programme of efficiency savings and, as you know,
we are engaged with the employers, the Fire Authorities, in a
modernisation process at the moment which we hope will yield something.
Q66 Mr O'Brien: In my area, in the north
of England, the Development Agencies and Fire are very important
services. The projected service or saving that you refer to is
an annual increase of 73% for RDAs and 104% for social housing
and RSL spending and 105% for Fire from 2005 to 2008. Are these
targets realistic?
Mr Unwin: Yes.
Q67 Mr O'Brien: Can you give us a little
more information as to how you judge them to be realistic, because
I found in our area that the RDAs are being pressed, particularly
with urban regeneration, for better services for more resources.
If that has come out of efficiency, how can it be achieved?
Mr Unwin: The RDAs have had a
substantial increase in the Spending Review, so an increase in
resources, but we are looking for efficiency savings from them
as across all our bodies. You ask about how these will be monitored
and reported. At the moment we are developing what is called a
technical note to underpin the efficiency delivery plan and we
aim to be publishing that next month, so you will see from that
how we intend to monitor those and you will be able to monitor
those with us to see how we achieve them.
Q68 Sir Paul Beresford: What is the total
efficiency saving as a total of your spending?
Mr Unwin: We have efficiency savings
over three years of £622 million—
Q69 Sir Paul Beresford: As a percentage?
Mr Unwin: —on a budget of
about £7 billion a year. The average percentage is about
2.5% a year.
Mr Kinghan: And for local government
the target is £6.45 billion over three years, which is a
very large sum of money, but that is about 2.5% of local government
expenditure.
Q70 Sir Paul Beresford: It is pitifully
small. Any business in this country would look at that and smile
and get out the nail files, but you are having a hell of a time
doing it and organising all sorts of systems to monitor it and
so on, and one wonders whether, by the time you have done your
efficiency savings, you are going to have lost it in the methods
you are devising to produce the savings?
Mr Kinghan: We will be monitoring
the savings. One can, on the one hand, say they are very ambitious
savings and, on the other hand, say they are pitifully small.
£6.5 billion does seem quite a large saving; local government
thinks it is an ambitious target but they have not rejected it.
Sir Paul Beresford: Well, there is a
well-known saying, "They would say that, wouldn't they"?
Q71 Mr O'Brien: Pressing you on this
question of the regional development agencies, the department
have just published their document on the Northern Way, which
is a sister project to the regional development agencies, the
core cities and the redevelopment and the necessary spending to
make sure that the Northern Way can be achieved. Obviously it
is not in the report but it is part of the targets. How do you
see that new introduction of the Northern Way impacting upon the
regional development agencies in the north and their budgets and
efficiencies?
Dame Mavis McDonald: The three
regional development agencies have agreed together, because they
think the benefits of pursuing the proposals in the Northern Way
are worth it in the long term, that they will from their existing
budgets put together £50 million to help promote that programme,
and we have said we will find the same money, but we are not taking
it out of the new regional development agencies programme. We
can find that within existing resources for the regional development
agencies.
Q72 Mr O'Brien: How can you find it within
existing resources if you are not taking it out of that?
Dame Mavis McDonald: Because we
have some flexibility in the regional development agency programme.
Q73 Mr O'Brien: Without reducing the
services?
Dame Mavis McDonald: Yes, and,
of course, the regional development agencies in the Spending Review
did get more money to spend as a whole, so what we are looking
for in some of these efficiency savings is extra output plus the
output from the additional cash. Peter mentioned the social housing
programme and the Housing Corporation, and we have quoted figures
expected output which assume an 8% efficiency saving on the purchasing
of new RSL housing which is part of the package, so there is extra
money and then the extra output we expect from those improved
efficiencies.
Q74 Chairman: But it is smoke and mirrors,
is it not, really? You say you are going to get extra efficiency
and you are going to get a bit more money, and it is very difficult
at the end of the day to work out whether you have actually got
more efficiency at the end of the day?
Dame Mavis McDonald: It is not
difficult to work out whether we get the output we are targeting—
Q75 Chairman: Yes, but you do not know
whether that is as a result of greater efficiency or the extra
money, do you?
Dame Mavis McDonald: I think we
can monitor the unit costs that the Housing Corporation are getting
from the large scale purchases, and we have quite a good tracking
of those over time so we can see whether we are getting more housing
for the same amount of input.
Q76 Chairman: That may just be that greater
volumes tend to produce greater efficiency.
Dame Mavis McDonald: We have not
seen that over the last three or four years in the Housing Corporation
programme, hence we think there is scope to focus in hard here
with additional funding because it has not actually seen as large
an increase in output as we might have expected till last year
when we put a lot of effort into the way in which the programme
was managed with the Housing Corporation to try and maximise the
output.
Q77 Sir Paul Beresford: So part of your
savings or the reading of the savings comes from a greater output
for the same amount of money, is that what you are saying?
Dame Mavis McDonald: Yes.
Q78 Sir Paul Beresford: So the taxpayer
does not see a saving?
Dame Mavis McDonald: The taxpayer
sees more housing.
Q79 Mr O'Brien: On the question of the
regional development agencies and the efficiencies that you are
looking for and the introduction of Northern Way, in all those
aspects local government is a strong partner with the regional
development agencies and the introduction of the Northern Way.
Now, local government obviously are looking for additional resources
to make sure they can maintain their services in a better programme
for local services. How will you monitor, how will you audit the
efficiency of the regional development agencies with a background
of local government having to call upon them for additional resources
and make sure they achieve local government targets, and reduce
council tax bills? All this is part of the exercise, and it will
be difficult to understand how the regional development agencies
can reduce their expenditure without impacting upon the services
of local government. Has this been an exercise that you have given
serious consideration to?
Dame Mavis McDonald: We are not
asking the regional development agencies to reduce their expenditure—
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