Examination of Witnesses (Questions 160
- 179)
WEDNESDAY 21 NOVEMBER 2007
MRS HELEN
GHOSH
Q160 Chairman: Let me just be clear,
you have already made it clear that you are committed now to a
five per cent year on year reduction in your administrative budget;
that is part of the CSR.
Mrs Ghosh: That is part of the
settlement and we put that over there in the admin box.
Q161 Chairman: That is part of the
settlement. You have also said to us that the amount of money
that you have to prioritise has been reduced by these key priority
area expenditures. Is that right?
Mrs Ghosh: You are putting it
the negative way round; I would put it the positive way round.
Ministers identified a number of areas to which they wish to give
a higher priority.
Q162 Chairman: Is it correct to balance
the books that you have advised your senior managers, your directorate-generals,
that in addition to the five per cent off they are going to have
to find some further savings of £270 million in addition
to the savings that you have publicly promised as part of the
Comprehensive Spending Review?
Mrs Ghosh: The five per cent is
about administrative spend; that is about head count, how we do
our shared services. Put that to one side.
Q163 Chairman: What was it that you
gave as the presentation to ministers and your officials when
you were trying to explain all this to them? You have done that,
have you not?
Mrs Ghosh: Of course we have,
as any well-run government department would have done. All over
Whitehall now there is a business planning process going on where
people take the CSR settlement, they say, "Okay, this is
the money we have, how do we spend it?" Of course we are
having those discussions and we have had those discussions with
ministers. What we have done with ministers is identify those
areas which have already been identified by them as priorities;
we have examined and looked at all of our spend in relation to
our strategic outcomes and said that if these are our strategic
outcomes—as you know we have a new set of PSAs and departmental
strategic objectives—what are the best ways (this is, in
a sense, our opportunity for a real root and branch look at this)
of achieving it? How far can we achieve some of our outcomes not
through high spend but through influencing people? How can we
work with other departments? How can we get better leverage? We
have had a very strategic look at all our spend.
Q164 Chairman: I just want to stop
you there because I want to get down to some numbers. You can
tell us about the methodology, but let us get down to the numbers.
I said to you that it would seem that you have asked people to
find £270 million of additional savings within your overall
envelope over and above the savings which you are committed to
as part of your comprehensive review.
Mrs Ghosh: No, that is a fundamental
misunderstanding. The five per cent saving we are committed to
finding is on our administration spend. What we have done, just
to give you a particular example, is said to the department (to
directors in this case) "For the purposes of your administrative
spend, just assume that you will carry on having the head count
in year one which you have at the beginning of the year; we will
give you appropriate learning and development and TNS and so on
for all those things. We will hold the rest of the admin pot centrally
and then we will decide where we spend it.
Q165 Chairman: Are you telling me
that on the programme spend—because we do understand the
difference between them—you have not asked for £270
million of additional savings over and above any other savings?
Mrs Ghosh: We have not asked for
any other savings. This is why I think this five per cent is just
a confusion. We have a total CSR pot. What we need to do is to
get to the end of the business planning process and agree with
ministers a budget that balances. When you take the CSR pot which
you have described we had some things which are already, as it
were, taken out the pot (the kinds of initiatives that I described
there, the idea of a departmental allocated provision so we have
a reserve in future years) and we need to say that if those are
givens we now to look at everything else we spend and decide how
we distribute the rest of the CSR pot.
Q166 Chairman: Why then did you e-mail
round within your department within the figure of £270 million
a request to effectively break that down into different types
of cut, some of which was a £130 million figure which you
thought were less radical and a £140 million package which
you thought were more radical? Did you send that information out
to people?
Mrs Ghosh: Although I absolutely
believe that one should not comment on leaks, yes I did.
Chairman: So you did make a request for
a saving that got up to a figure of £270 million because
£130 plus £140 is £270 by my arithmetic.
Q167 Mr Cox: What you are saying
is that it is not an overall figure.
Mrs Ghosh: It is not an overall
figure. If you look at the department's budget as a whole it is
simply saying that if you have those things—any householder
budget is like this—to which you are committed in a fixed
pot you have to take the money from somewhere else.
Q168 Chairman: You described it in
a message to your department as savings.
Mrs Ghosh: Savings compared with
what people are spending now. It is a re-prioritisation. What
we have done—again this is what decent management boards
and decent organisations, public and private, would do—is
to give some sorts of indications about what kinds of things,
fitting in with the strategic analysis we have done, they might
like to think about. That is what they are going through.
Q169 Chairman: So put simply, if
you are going to meet the things within the overall envelope you
have promised to spend, there is going to be pain elsewhere.
Mrs Ghosh: There needs to be re-prioritisation.
Q170 Chairman: That is a fancy way
of saying "pain".
Mrs Ghosh: No, I think it is an
extremely important point. If you say it is all pain you are assuming
that all the rest of the spend that we are currently spending
is perfectly aligned, is excellent value for money; there will
be programmes, for example, that have a natural end in the coming
year, in which case the directors involved for developing the
budget will be able to stop doing them. That is not necessarily
pain. I think it would be a very bizarre organisation that said,
"Okay, we have a three year budget, let us just assume we
roll everything forward". We take the example—which
I am very keen to take—of Natural England funding and indeed,
as you will have heard, we are (as we are with all our delivery
bodies) in dialogue with them about spend but if you look at the
Rural Development programme for England we are doubling that.
The spend on bio-diversity through Natural England over the next
seven years is twice as much as over the previous seven years.
If you look at the overall package that is going into some of
these areas—Natural England would be an obvious one—actually
the money is increasing. Nonetheless we are having negotiations
and discussions with them and with all of our delivery network
and indeed our internal programmes to say, "Okay, how could
we achieve the outcomes we want to achieve in different kinds
of ways, spending our money in different kinds of ways?"
This is just a re-prioritisation exercise against a new strategy.
That is what the department and directors are currently doing.
Q171 Chairman: Why is it that you
want to take £30 million out of your smaller programmes?
Mrs Ghosh: I will describe this
to you.
Q172 Chairman: What are those programmes?
Mrs Ghosh: They are a variety
of things and we did an analysis as part of the discussion and
again this is cutting-edge practice when it comes to how any organisation
works. We did an analysis of our high impact programmes and the
fit with our strategic outcomes. Again Hilary, when he came, described
what he thought we should be focussing our money on: licence to
operate areas, climate change, natural environment, working with
partners. So if those are the areas where we should be spending
our money—they are the top, high impact, close on strategies—are
there things when you actually look at the spend (and some of
them may be hangovers over a number of years) where there is less
impact and it is less clearly linked to our strategy. There are
some smaller programmes—that is why I specifically say,
"Please look at some of these smaller programmes"—which
are not worth enormous money in many cases, they may well absorb
(this goes back to the discussion we had earlier) significant
amounts of administrative time. We should have a look at those
and see if there are some of those where we can get spend out.
That is why we said, just as a target figure, let us see if we
can get that kind of amount out. People may come back and say,
"Well actually we think we could get more out"; people
might come back and say, "No, that is a very high political
priority and excellent value for money programme" so we will
keep that in. What we are trying to do through this business planning
process is end up with a sustainable budget and we have to look
at all those sorts of options.
Q173 David Taylor: The way you describe
it it seems to be a fairly leisurely process with not too much
of a sense of urgency about it. There is not a hope in hell of
you saving £50 million on your admin costs. You have another
five per cent cut in that budget on the horizon. You are going
to be facing the position that those programmes that are not within
the key four priorities that Hilary Benn set out are going to
have cuts.
Mrs Ghosh: Not necessarily.
Q174 David Taylor: Arithmetically
it is inevitable. It is not "not necessarily"; arithmetically
it is inevitable. You are in month nine of the present financial
year.
Mrs Ghosh: I think we are getting
confused here. What I am describing is a process from 2008/09
onwards. We have discussed this year's measures.
Q175 David Taylor: Can I just say
that some of your smaller programmes are clearly having to plan
their budgets for 2008/09; they have had no certainty from you
about continued funding. There seems to be no sense of urgency.
They are going to have to issue precautionary redundancy notices
before the end of the calendar year (because some of the staff
are entitled to three months redundancy) for want of a sense of
urgency, sense of priority, sense of clarity from the main department.
It is no wonder that the big ones like the Environment Agency,
British Waterways and the medium ones like Natural England and
the Commission for Rural Communities are all bracing themselves
because they do not feel that they are part of the core priorities
that the Secretary of State spelt out a week or two ago. What
on earth is happening? Are you driving this process? Are you in
charge of this process?
Mrs Ghosh: I am in charge.
Q176 David Taylor: Are you not asleep
at the wheel?
Mrs Ghosh: I am certainly not
asleep at the wheel. In fact we have moved very swiftly on this
process. As I say, we had done a very detailed analysis of our
strategy; we have already started talking to most of our delivery
bodies and organisations about the kinds of options that we have
in a very open way I hasten to add. We have asked our directors
to come back with their proposals on how they think they would
like to spend their budgets on a very short timetable. All our
delivery bodies, including the small ones, are well aware of this
process. We have had a number of open meetings with them and hope
to have concluded all our discussions by February, well in advance.
By comparison again, if you look at other government departments,
that is a perfectly swift timetable. As you know we did not have
the CSR settlement until October. This is not just a matter of
slicing up a cake and handing it out, actually this is our opportunity
to make sure we can deliver the PSA outcomes we have been given.
It has been a sophisticated process; it has been an open process
with our delivery bodies. If there are any particular issues of
the kind you describe in terms of particular concerns about funding
or the kinds of thing you describe which I know is a particular
issue for voluntary bodies, my teams will be in discussion to
make sure that people are getting an early enough indication of
the kinds of figures that might emerge to avoid that sort of situation.
There has been no delay in this process whatsoever.
Q177 David Taylor: It is far too
late; you will be a month from the end of the financial year.
The small bodies in particular are experiencing the departure
of core staff because they do not want to be caught up in a process
which they sense is inevitable and is just around the corner.
Mrs Ghosh: As I say, if there
are particular issues about smaller organisations then I can assure
you my teams, for example on the rural side, will be discussing
those with the bodies concerned. We are already in discussion
with all our delivery bodies about likely outcomes and asking
them to exemplify various options, so they are completely engaged
in this process; it is not suddenly going to be revealed in February,
it is part of an on-going process to make sure we end up with
this balanced budget that targets our strategic outcomes.
Q178 David Lepper: You told us that
in the course of the next three years there are likely to be some
programmes currently running which are going to come to an end.
Could you just give us an example or two of what those programmes
might be and the kinds of money involved? Could you also give
us an example, because I do not have it clear in my head, of what,
in terms of this exercise, would be considered to be a smaller
programme which you might have to look at to see whether or not
its life has come to an end?
Mrs Ghosh: I am trying to think
of a good example. It may be that I just volunteer to give you
some examples. As you know, what we are trying to do in the department
is to move to a much more project based system so that you will
have projects to achieve. An example—although most of that
spend would be admin spend actually—would be things like
seeing through the process of implementation of the Animal Welfare
Bill or those sorts of things. We will have some things that will
happen and will come to an end. It is probably better, rather
than busk it, to just think of some examples and let the Committee
have those.
Q179 David Lepper: With an indication
of the finances involved.
Mrs Ghosh: I am grateful that
the Committee has not sought to go more into the detail and commitments
and so on because, as I say, it is genuinely the case that the
business planning process is going on and ministers have taken
no decisions. I want to be sure that these are not areas where
ministers might decide, when they have considered other bits of
evidence, that they would continue the programme or whatever it
may be. I will try to find some rock solid examples of the kinds
you describe. The interesting but quite challenging thing about
Defra's spend is that 75 per cent of our spend goes out through
25 programmes so most of our spend is the big stuff. When you
get down to what we would describe as a smaller programme it could
be a million or so up to—again I will let the Committee
have the figures as to precisely how we define it—tens of
millions.
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