Examination of Witnesses (Questions 220-239)|
12 DECEMBER 2006
Q220 Mr Todd: So he has both given
a lower figure but, also, suggested that these have not actually
been relocated but have merely been announced for relocation.
Bearing in mind that relocation was partly, presumably, about
delivering savings in establishment costs in lower-cost locations,
has there been any evidence that that has actually happened? Or
that it has been easier to recruit or retain people who have been
relocated to those locations?
Ms Brivati: The purposes of the
relocation programme are many. As you say, it is partly to benefit
from lower-cost locations, it is partly to do with enjoying the
benefit of different labour market conditions in other parts of
the country and partly to do with the possible benefit to local
economies of locating significant government operations out of
London. I do not have any information to hand about the benefits
realisation on that.
Q221 Mr Todd: Just finally, the headcount
reductions area has been a chancy one right from the start. Have
we got a clear picture of exactly how many headcount has been
reduced in this programme?
Ms Brivati: I think we have. There
have been gross workforce reductions of 54,963 posts since the
start of the programme against a target of 84,100
Q222 Mr Todd: That is the gross picture?
Ms Brivati: Yes, that is a gross
picture. Those are the terms in which the target was expressed
when it was announced at the end of SR04.
Q223 Angela Eagle: On the issue of
delivery of high-quality public services, there are some eye-wateringly
tight efficient targets announced here, are there not: the usual
3% per year in baseline savings for central and local government?
Do you anticipate that it is just going to be 3% forever? Is the
Treasury view that it is possible to achieve 3% efficiency savings
every year in public administration forever, because that has
been the assumption for the last few years and continues for the
next three? There is also a 5% reduction in real terms in administration
budgets across departments. That is a very demanding target. How
do you see it being done without any pain in terms of service
Ms Brivati: The efficiency ambition
in the SR04 period was for 2.5% and, as you say, in the CSR07
period it will be for 3%. I cannot speak about forever because
our planning horizon only extends over the CSR period. You also
mentioned the 5% administration budget limit. It is a stretching
target, but the reason why we believe it is achievable and necessary
is that the Government wishes to continue prioritising resources
for frontline services.
Q224 Angela Eagle: I understand the
argument and support the argument of prioritising frontline services,
but have these figures just been plucked out of the air as a sort
of: "That will be okay; we will do that this year",
or has there been some research work to see whether they are achievable?
Ms Brivati: The figures on efficiency,
for example, have been thoroughly researched. In the context of
our preparation for the CSR, departments have been conducting
zero-based reviews of large and significant areas of their spend,
and the progress that departments have made on that, the discussions
we have had with them, the data and the evidence that they have
gone over in order to work towards these ZBRs has informed the
development of these targets.
Q225 Angela Eagle: Why are they the
same across all departments then? It is a bit like the bank charges
are the same across all banks. Why is the 3% target the same across
all departments and the 5% target the same across all departments
if you have been researching with each department? It looks like
a figure plucked out of the air to me.
Ms Brivati: As I say, these numbers
are based on highly researched zero-based reviews and we believe
that this is the right number for the CSR period.
Q226 Jim Cousins: In answer to an
earlier question you said that one of the benefits of relocation
(and I wrote it down) was "to enjoy the benefits of different
labour market locations".
Ms Brivati: Different labour market
Q227 Jim Cousins: "Conditions".
Thank you. Does that mean simply that you pay people less in Rochdale
and the Rhondda?
Ms Brivati: I have got no idea
what we pay people in
Q228 Jim Cousins: What did you mean
by that remark?
Ms Brivati: What I mean is that
like any employer the Government would need to deliver good value
for money in the way it spends money.
Q229 Jim Cousins: That remark meant
that you were going to pay them less after you have moved them.
Ms Brivati: No.
Q230 Jim Cousins: You pay the post-holders
less after you have moved them.
Ms Brivati: No, that remark meant
that, like any employer, the Government needs to get value for
money out of its pay bill and take account of where it can do
Mr Cunliffe: You can often solve
recruitment and retention difficulties or get a better motivated
and skilled workforce by relocating as well. Department decisions
are not just about cost; it is also about the sort of workforce
that is available.
Q231 Jim Cousins: Is it the case
that the Public Sector Pay Committee is committed to the introduction
of regionally variable pay?
Ms Brivati: It has been government
policy to seek local variation in pay, and that has been policy
for some time.
Q232 Jim Cousins: So you are going
to pay people less because they happen to live not in London but
in the regions?
Ms Brivati: It has been government
policy to seek local variation in pay that reflects local labour
market conditions and the requirements of different public sector
employers in those areas.
Mr Cunliffe: We already pay people
less because they do not live in London and the South East, because
we recognise the higher cost
Q233 Jim Cousins: You pay London
Weighting because they live in London.
Mr Cunliffe: People outside London
Q234 Jim Cousins: Paying people London
Weighting because they live in London is entirely a different
project from breaking up national pay bargaining. So you pay people
less because they live in the regions. That is an entirely different
Mr Cunliffe: You pay people in
line with the labour market. You pay what is necessary to recruit,
retain and motivate.
Q235 Mr Gauke: Public expenditure
plans going forward. The IFS has stated that your forecasts imply
that growth in the Government's total managed expenditure would
be 1.9% between 2008 and 2012. Do you agree with that assessment?
Mr Cunliffe: We have set out what
the planning assumptions are, I think, in here, and therefore
2%, 1.9% and 1.9% for the CSR years.
Q236 Mr Gauke: Broadly, you do not
disagree with the IFS view?
Mr Cunliffe: I think the IFS is
just reading what is in the document.
Q237 Mr Gauke: But it is not under
dispute? I was not particularly expecting you to dispute it. That
Mr Cunliffe: Yes.
Q238 Mr Gauke: Within that, presumably,
there will be variations within departments, and that is what
the CSR will determine. If I can just focus for a moment on education
spending, the Chancellor has an aspiration, which he announced
at the last Budget, to get total spending on education per pupil
up to the levels within the independent sector of 2005-06ie
approximately £8,000. Do we know yet at what point that aspiration
is going to be met?
Mr Cunliffe: I will ask Mridul
to come in on the aspiration, but just on the spending assumption,
it is set out on page 223 of the PBR. I did not catch exactly
what the IFS said, but the assumptions are set out there.
Ms Brivati: You asked about the
Chancellor's aspiration set out for funding. There is no date
on that; when the Chancellor announced that at the Budget he made
clear it was a long-term ambition.
Q239 Mr Gauke: Has the announcement
in the Budget of extra spending, which the Chancellor made, taken
us substantially closer to meeting that aspiration?
Ms Brivati: Taking together the
announcement in the Budget and in this PBR