Supplementary note from DWP on the Quarterly
Report to the Office of Government Commerce on Efficiency Savings
1. It would be useful in assessing progress
to date if the Department could provide earlier versions of the
OGC report. The reports at the Pre-Budget 2005, Budget 2006 and
Pre-Budget 2006 are considered to be the most useful. We would
be grateful if the Department would provide these OGC reports.
Formal quarterly reporting was only put in place
for the final quarter of 2005-06, after OGC published their official
guidance on the measurement of SR04 efficiencies in April 2006.
Earlier informal efficiency information has not been provided
to the Committee as it is not presented in a format consistent
with the current reporting mechanisms.
2. We are aware that the OGC has completed
risk assessments of individual department efficiency programmes
and provided an overall risk assessment. We would be grateful
if the Department could consider providing details of any OGC
risk assessments completed to date and specifically the overall
risk assessment for the programme.
OGC have advised us that their risk assessments
of departments' efficiency programmes are their subjective judgements
and should not be disclosed. They consider disclosure could be
prejudicial to the monitoring and challenge role they have with
individual departments.
3. A recent National Audit Office report
The Efficiency Programme: A second Review of progress, concluded
that of the £13.3 billion efficiency savings reported across
Government in the Pre-Budget Report 2006, only £3.5 billion
"fairly represented the efficiencies made." The remaining
£9.8 billion was described as "representing efficiencies,
but carry some measurement issues and uncertainties" [£6.7
billion rated as amber] or "measures used either do not yet
demonstrate efficiencies, or the reported gains maybe substantially
incorrect." Several references to the DWP efficiency programme
are made in the NAO report and we would be interested to see any
information the National Audit Office may have provided to the
Department on the validity of its own reported efficiencies savings.
The NAO analysis of the reported efficiency
savings across Government was based on a sample of 25 projects
covering 36% of the reported efficiency gains at the time of the
2006 Budget. The sample included the five projects reporting the
highest levels of efficiency gains and a further 20 projects selected
at random from those which had reported more than £5 million
of efficiency gains. The NAO's aim was to gauge whether reported
gains fairly, rather than precisely, represented changes made
by projects. Because the assessment is based on a sample it is
only valid at the level of the programme as a whole, not for individual
departments.
Only one DWP project was included in this sample—the
Direct Payments Initiative (DPI)—which was rated as green
("the reported figures fairly represent the efficiencies
made"). The NAO did not offer any conclusions about the total
DWP efficiency programme and did not provide any further information
beyond the reported comments on DPI—treatment of costs (paragraphs
2.19 to 2.2 of the report), reliance on customer surveys to assess
service quality (paragraph 2.37) and assessment of measurement
methodology (Appendix 3).
Separately, the NAO reviewed the robustness
of DWP headcount reductions—a major component of the
DWP efficiency programme. The NAO concluded that
the reported reductions were based on sound information systems
and use consistent definitions for headcount over the reporting
period. The NAO has not provided the Department with any additional
assessment of its headcount numbers apart from what is in the
report.
4. Three of the four workbooks in the OGC
report have lines described as "offsetting costs and headcount."
We would appreciate an explanation for these lines.
Offsetting costs
The offsetting line for financial savings includes
smaller projects which are not included within the main efficiency
change programme but are contributing to the overall financial
savings. The line also includes projects that are currently adding
costs but are expected to deliver savings in the future.
Offsetting headcount
The OGC workbooks provide details of headcount
reductions and forecasts relating to the main delivery businesses
and corporate units in the Department:
— Disability and Carers Service
In addition the other areas within the Department,
not shown separately in the OGC workbooks, also have planned headcount
reductions as part of the Department's overall efficiency challenge.
These include The Rent Service, the Client/Policy Groups and the
Department's Shared Services function.
The "offsetting costs and headcount"
line on the OGC workbook totals these other areas so that the
final line on the OGC workbook accurately reflects the total headcount
reductions achieved and planned for the whole Department. The
line is also used to reflect any areas where staffing numbers
may have increased (for example as is currently the position in
the Child Support Agency), as the OGC guidelines do not permit
negative numbers against any other lines.
5. The Procurement non-cashable efficiency
gains project shows £180 million efficiency savings from
March 2005 to March 2006 but this has not been carried forward
in the cumulative figure to the next quarter. We would welcome
an explanation for this.
From June 2006, following a review of the reported
efficiency savings, the Department took the view that, wherever
possible, the Procurement non-cashable efficiency savings should
be reported against the individual projects that have generated
the savings, for example IS/IT related gains are now shown against
the PSD IT Transformation Programme.
6. The Headcount HR Transformation Programme
reports some unexpected figures in table for staff reductions.
Actual reductions to date for the HR Transformation Programme
are reported as 1,033 at the end of September 2006 but only 127
at the end of December 2006. We would appreciate an explanation
for this.
On 1 September 2006, the Department established
a separate Shared Service function to undertake a number of transactional
Human Resource and Finance functions together with its Debt Management
activities and transferred 926 staff from Human Resources to the
new organisation. The transfer of staff resulted in a discontinuity
in the reporting of headcount reductions for Human Resources,
but it did not affect the reporting of DWP's total headcount savings.
The reductions already made for these functions previously reported
(in Q2 2006-07) under the HR Transformation Programme are now
included (as from Q3 2006-07) under "Offsetting costs and
headcount". From Q4 2006-07 Shared Services will be identified
in a separate line.
7. In response to the Committee's questions
on the Autumn Performance Report 2006 the Department confirmed
in the response to question 32 that Human Resource and Finance
staff would contribute 581 and 814 respectively to the staff reductions
total. The OGC report however suggests contributions of just 232
and 513 from the two areas. We would appreciate an explanation
for the difference between the two sets of information. Additionally
we would appreciate some further information on how the finance
staff savings will be delivered without affecting the quality
and robustness of financial management in the Department.
The differences in the figures is a timing difference
due to the establishment of the Shared Services as a separate
organisation within the Department. The table originally supplied
to the Committee in June was prior to the setting up of Shared
Services while the OGC Reports reflect the new organisation.
Turning to financial management, the headcount
reductions in Finance have been enabled principally by substantial
investment in our Resource Management System (Oracle), a Central
Payments System and a Finance Transformation Programme, with the
aim of improving efficiency and elimination of manual processes
in all areas of Finance.
8. In response to question 33 from the Autumn
Performance Report 2006 the Department confirmed that just 93
head office posts had been relocated away from London and the
South East by September 2006. We would be grateful for the following
information on staff relocations; how many corporate headquarters
posts remain in London and the South East; what roles do these
posts perform; and why they were not considered appropriate for
relocation?
At the end of January 2007, the Department had
a total of 1,998 corporate headquarters posts remaining in London
and the South East, of which 1,920 were based in London.
These posts undertake a variety of functions.
The majority consist of Client Group Stewardship and Policy Development,
Strategic Finance and Human Resources, Corporate Planning and
Departmental Communications. Private Office functions are also
included.
As part of the Lyons Review the Department considered
all posts in terms of their suitability for relocation. Three
key criteria were used in determining that certain posts were
not appropriate to be relocated. These were:
— the need for proximity to Ministers,
senior officials and other government departments, often at short
notice;
— the need not to add to the risks
we already face in recruiting and developing staff with the appropriate
policy analysis and other skills and experience who are already
located elsewhere as a result of our previous relocations or;
— where posts have a fixed lifespan
eg project posts.
9. In response to the same question from
the Autumn Performance Report 2006 it stated that of 3,809 operational
staff relocated, "the posts are a mix of processing functions
and customer contact roles. It is not possible to provide a breakdown
between the two categories because some of the posts include both
processing and customer contact." We would appreciate an
explanation of the specific initiatives that have enabled the
Department to relocate Job Centre Plus, Pensions Service and Disability
and Carers Service customer contact staff out of London and South
East.
The Specific initiatives were:
Jobcentre Plus—The majority of relocations
from London and the South East are associated with the implementation
of the new operating model for Jobcentre Plus, which included
utilising a number of strategic Contact Centres for first contact
and Jobseeker Direct. Jobcentre Plus Contact Centres, outside
London and the South East, provide a standard operating model
covering the country enabling Jobcentre Plus to maintain customer
service.
A number of other initiatives have also assisted
the relocation programme, including the new Organisational structure
for National Directorates, and the Human Resources Operating model,
which has moved transactional processing from disparate regional
teams into one central team in Sheffield, together with centralised
processing for National Insurance Number applications.
The Pension Service—has rationalised its
operations from 450 office locations into a much smaller number
(currently 20) of Contact Centres supported by a face-to-face
services for hard to reach customers. The Contact Centres delivering
services to customers in London and the South East were, by design,
established in other parts of Great Britain realising improvements
in efficiency and customer satisfaction levels.
Disability and Carers Service—have relocated
operations from Sutton Disability Benefits Centre to the North
West of England.
The main function of the Sutton centre was primarily
to process new claims and maintain those claims for the initial
three months before passing the case onto the Operations unit
in the North West for ongoing case maintenance.
Customer contact with the Sutton centre was
made primarily via the Disability and Carers Service Helpline,
located in the North West of England—therefore the re-location
of Sutton centre workload into North West Operations did not impact
the existing primary customer contact methods.
10. In addition to the target to reduce
staff numbers by 30,000 there was a sub-target to re-deploy 10,000
staff to front line roles. The OGC tables do not appear to provide
details of the progress to date on this target. We would appreciate
a table, similar in format to table 3, confirming progress against
the target to re-deploying 10,000 staff to frontline roles.
OGC do not require the Department to report
the re-deployment of staff to front line roles in the same way
as other headcount efficiencies and therefore the information
is not held in a similar format. A table has been constructed
based on the information that is available and is included at
Appendix 1.
In April 2006 the Department commenced development
of a new, more precise data collection and tracking system. Previously
one element of the target (increases in Personal Advisors, about
12 per cent of posts) had been estimated but the new system distinguishes
Personal Advisors separately. During the transition to the new
system the Department did not report an update on the target.
Testing and validation of the new system is now complete and in
April 2007 the Department will report a substantial increase in
staff re-deployed.
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