Examination of Witnesses (Questions 20-28)
NATIONAL AUDIT
OFFICE
21 FEBRUARY 2005
Q20 Chairman: Why are you asking
the taxpayer to finance a 26% increase in your consultancy budget
for 2005-06?
Sir John Bourn: Because I will
produce eight times that amount of money as a return. The consultancy
budget covers the consultants we use for the financial audit.
You will remember that we were asked to increase the amount of
financial audit outsourced to 25% of the total. So it is for the
financial audit, it is for the value for money audit and some
for things like our own IT arrangements.
Q21 Chairman: Does the increase in
this budget denote a lack of skills perhaps in your organisation?
Sir John Bourn: I do not think
so, because an organisation like ours cannot really expect to
provide fulltime jobs for every level of expertise you might want.
We would always want to do the value for money studies by mixtures
of insiders and outsiders. If we are looking in the health service
at things like hip replacements or treatment of heart disease,
you need medical people to be on the team. That is essentially
why. On the financial audit, we have been asked to have 25% contracted
out. If you had told us to do it all ourselves, we would have
done that.
Q22 Chairman: Perhaps you could give
a breakdown in a note on how it comes in and you got this increase?
Sir John Bourn: Yes. [3]
Q23 Chairman: You told us last year that
NAO travel costs would only grow by 6% in 2004-05. In fact, according
to paragraph 7 of the memorandum it grew by 13%. Why was your
estimate wrong?
Sir John Bourn: The estimates
were not wrong; this 13% covers two years. Most of the increase
in the last year was for international travel which was funded
by the international work. It just leaves a 3% increase in 2005-06,
which is more or less in line with the increase in travel costs,
rail fares, petrol and so on.
Q24 Mr Field: Twice when you have
been asked a question, you have actually knocked the ball to the
boundary with great confidence saying that for each £1 spent
you gain £8 back for the taxpayer. Your body language was
totally different in answering those questions to answering other
questions. I just wondered whether the 1:8 was the right ratio,
that you find it rather easy to meet that criterion and whether
we should not actually up it a bit.
Sir John Bourn: It is not met
easily and it is something which has to be fought for every year,
because it is a substantial amount to find. I do not rule out
the fact that in the future I might be asked to do 1:9, it used
to be 1:7 and I went to 1:8.
Q25 Mr Field: It has already worked
once then.
Sir John Bourn: Yes. Of course,
since I am asking for an extra 6% in terms of resources, in fact
the eight times will produce an actual increase in savings, so
there will be more each year.
Q26 Mr Field: None of us doubts the
effective way you go about that. In your report you agreed with
the Commission, did you not, that you would cut infrastructure
costs by 2.5%?
Sir John Bourn: Yes.
Q27 Mr Field: In fact you are coming
in higher than that, are you not?
Sir John Bourn: No, I am not,
I am glad to say. The infrastructure costs were £14.4 million
and are coming down to £13.5 million, £450,000 of that
relates to adjustments in Wales, because I do not have to have
a building there and things like that. The other £450,000
is for the economies I said I would do; in fact it comes out at
more than 2.5%, but it is done by improvements in human relations
management and better procurement, so I am achieving what I said
I would do.
Q28 Mr Field: So the change in the
setup with Wales is not affecting your unit cost because you are
being able to get rid of the fixed costs in Wales?
Sir John Bourn: That is right,
the building and of course the staff who are now employed by the
National Audit Office will, from 1 April, be employed by the Wales
Audit Office.
Chairman: My colleagues have no further questions,
Sir John, thank you very much for assisting us this afternoon.
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