Examination of Witnesses (Questions 340
- 359)
WEDNESDAY 30 APRIL 2008
MS HELEN
GHOSH, MR
BILL STOW
AND MR
STEPHEN PARK
Q340 Chairman: Is he still interim?
Ms Ghosh: We are just going through
an appointment process now. Since he was doing such a good job
I encouraged him to stay on but because under the Civil Service
rules strictly speaking we had not gone through a fair and open
competition we have to keep describing him as interim but he has
been here since summer 2006 but he is still doing a good job.
Q341 Chairman: You envisage a falling
off.
Ms Ghosh: As we have taken some
funding out of the RPA for this year as efficiencies come through
and the investment comes back, we are expecting the RPA line to
go down. As Tony has said, what we are anticipating at this stage
is having worked extremely hard this year to get data errors out
of the system and the entitlements basis good and overpayments
and underpayments sorted, we would expect whatever payment pattern
we have in the 2008 scheme to be the model basis on which we move
forward. We are expecting stabilisation. What steady state looks
like is what we will do in the 2008 scheme.
Q342 David Lepper: You told the Public
Accounts Committee that over the CSR period you expected the RPA
to lose a further 1,000 staff working on the Single Payment Scheme.
Is that still the case?
Ms Ghosh: That is still the case.
Although we do not have for the CSR period specific head count
targets, what we all have are administrative constraints.
Q343 David Lepper: Those estimated
1,000 staff are lost to the department completely?
Ms Ghosh: Yes, lost to the department
completely. What we mean is that at the RPA staff, to use an old-style
word, establishment would be 1,000 people lower. As the posts
became surplus, what we would do, in the way that we would always
do in the department, you may get some natural wastage, people
would move, but in the first instance they would be offered posts,
if they were suitable, elsewhere in the department or in the rest
of the Civil Service. I do not know what levels of natural wastage
the RPA has at the moment. A large number of those you would probably
get through the normal turnover in that kind of operation or department.
Q344 David Taylor: When you were
last involved in that process, not you personally but your predecessor,
in terms of head count a lot of the head count reduction metamorphosed
into agency staff who were greater in number. What level of agency
staff usage do you have in the RPA at the moment?
Ms Ghosh: Very, very many fewer.
I am very happy to send the Committee the updated figure. What
Tony has been doing over the last year is converting most of the
casual agency staff into permanent appointments so that is a proceeding
that has been going on this year both for economic and customer
service reasons. The answer is substantially fewer than we had
at the height of the problems but I would be very happy to send
you details of that.
Q345 Chairman: I was asking a moment
ago about animal welfare savings and you told us that the £121
million was going to be achieved by greater efficiency, is that
correct?
Ms Ghosh: Yes.
Q346 Chairman: On page 245 of the
Pre-Budget Report, paragraph D12.4 it says: " ... an increased
sharing of responsibility for animal health and welfare with the
industry including further utilisation of cost sharing mechanisms.
This will generate annual net cash-releasing savings of £121
million by 20010-11." Could you explain the seeming inconsistency
between what the Treasury believe is going to happen and what
you have just told the Committee?
Ms Ghosh: I am very happy to send
the Committee a note. What that describes is an assumption that
what we would do by the end of the CSR period is raise £120
million by charging people more for things we can already charge
them for, the kinds of tests and so on.
Q347 Chairman: That is not what it
says here. It says "an increased sharing of responsibility"
it does not say a review of the charging mechanisms. It talks
about responsibility.
Ms Ghosh: What I described is
absolutely true. The new proposals on cost sharing, for example,
if this was the conclusion that ministers reached, by raising
a levy is something that would only come into place when we had
legislation. The new responsibility of cost sharing propositions,
industry levies or however it might be done, a new body if it
is a new body, do not impact on the CSR 07 period. It is rather
like Estimates and estimates. That is not talking about responsibility
sharing in the same sense but is actually talking about using
our existing powers to charge more. That is what that is talking
about.
Q348 Chairman: That is a remarkable
use of language. I am used to the fact that words do not always
appear to mean what they say on a piece of paper but I am afraid
"an increased sharing of responsibility for animal health
and welfare with the industry" seems to me to be an elegant
use of words to sum up a direction of travel of your policy. I
am not for a moment disagreeing with your statement to us earlier,
which I am sure was given in all good faith, when you said we
are not certain whether we are going to get the agreement with
the industry and, as far as I am concerned, we have not written
into our budget any kind of net increase in monies coming in because
of what we may do with the industry but that is not the way the
Treasury are putting it.
Ms Ghosh: It is not the way the
Treasury are putting it. I am simply telling you what it is we
are actually doing. I would be very happy to sent the Committee
a note.
Q349 Chairman: I think I would write
a note to the Chancellor.
Ms Ghosh: That is not describing
our policy on Responsibility and Cost Sharing. That is about making
use of the existing powers we have to charge to get more income
or look for other ways of saving money on the animal health budgets.
When I described efficiencies, we are making savings on the animal
health budget as much through efficiency so we are busy saving,
and I will be happy to particularise, a significant amount of
that £120 million already. We will be happy to write to you
but that does not hang on legislation or the new structures.
Q350 Chairman: We will look forward
to the letter and the reaction of the Treasury to it. You have
to achieve a 5% annual efficiency saving in your department across
the CSR 07 period. Is that going to be achieved by a dominance
of changes in core Defra or is it going to be equitably put across
both core Defra and the bodies that you fund?
Ms Ghosh: That 5%, 5%, 5% relates
to the administration budget essentially for the core department,
so it is people, it is procurement, it is travel, it is professional
services; it is all those things. It does not have an impact on
the programme spend that we give out to the Environment Agency
or the bodies we have described. It does not, on the whole, or
I think it is does not at all, have an impact on the budgets of
any of our executive agencies because they are, as most executive
agencies are, funded through programme because it is delivery
of services. The admin budget, which is where we have to find
the savings, is the core department. Clearly we will be looking,
since we are always looking for savings on programme spend as
well, for efficiency. If Tony Cooper makes efficiencies at the
RPA, that gives us greater scope on programme spend but the 5%,
5%, is at the core department so we will be looking at it in a
variety of ways. We will be looking for it through better procurement
in grouping together the procurements we do. We will be making
sure we do keep a control on our head count numbers since they
are one of the key drivers of our admin spend. We will be making
sure that we minimise the use of external professional services.
We will be doing a variety of things to contain the minus 5, minus
5, minus 5.
Q351 Chairman: Could the achievement
of those targets be a combination of redundancy or compulsory
redundancy or both?
Ms Ghosh: We have said to staff
that we have made no provisions in the coming year for any kind
of voluntary redundancy schemes. Indeed, the fact we have slightly
over-achieved on our head count reduction means we have some head
room within our admin budget for this year to recruit and refresh
our skills base. We will be planning the number of people we need
and the skills we need on an annual basis through our new programme.
There may be instances where we have staff who have skills we
no longer need and equally there may be skills we do not have
in the department. We have not ruled out the fact that we might
do some targeted, but obviously it would have to be affordable,
departure schemes in the future if there was a group of people
with particular skills that we did not need any more but we do
not have any plans for general VER/VES schemes.
Q352 Chairman: Have you a budget
for redundancy payments?
Ms Ghosh: No, we do not have any
budget at the moment for redundancy payments and that is why I
said we are not planning any in this coming year.
Q353 Chairman: I am slightly confused.
If you are going to achieve these targets, you may have to do
it over the period of the CSR 07.
Ms Ghosh: If you take people as
the real driver of admin spend, and for us people are the real
spend of our admin budget, what you need to do is to make sure
you have some idea over the period of how much money you will
have and about how many people you will be able to afford so we
have given indicative budgets to directors.
Mr Stow: This year we have cut
the pay budget for each of the programme areas by 3% with a bit
more out of the centre which means that we think we will be able
to manage that through a natural wastage process. That is around
the level of current voluntary departures. We have given indicative
budgets which go down further in the following two years but we
have a process now for shifting resources around on a constant
basis rather than in one big bang every three years. We will have
an approvals process for new priorities which will mean at the
same time we cut existing ones. We do need to do some more in
the area of workforce planning, as Helen said, because although
the absolute numbers we have may be right numbers they may not
be quite the right people so we may have gaps in some areas that
will be thrown up by our new flexible way of working.
Q354 Chairman: We have a few moments
before the vote comes so if we have to curtail activities we may
drop you a line on some of these other points. I wanted to turn
to the information which the Committee has been provided on your
overall levels of savings in terms of your quarterly reporting
schedule and your move towards efficiencies. In terms of waste
implementation, the Office of Government and Commerce tables show
that the financial savings for the waste implementation so-called
Procurement Project were £102 million below target by the
end of December. Why has progress been so slow in this area?
Ms Ghosh: I am very happy to report
to the Committee on the latest set of figures. I actually saw
the latest set of figures on all three elements of our efficiency,
what we might call our Gershon efficiencies, yesterday. I believe
from those figures we are confident that we are over-achieving
on both the cash savings we are committed to and the head count
savings and are on track to deliver our relocations. I think the
situation has changed since then but I am happy to let you know
the latest set of figures we are about to supply to Treasury.
Q355 Chairman: You are in the process
of self-validating your improvements, is that not the case?
Ms Ghosh: I do not think we tell
them and they believe us. There is a process of external validation
of our efficiency.
Q356 Chairman: Who does that?
Mr Park: The NAO but I will let
you know. We do not just pluck the figures out of the air.
Q357 Chairman: You were like a greyhound
out of the trap to say there is an external validation and then,
between the two of you, you do not know who is doing it.
Ms Ghosh: We supply the figures
to the Treasury. We supply the figures that we get in good faith
on the basis that we have agreed with the Treasury for the purposes
of the efficiency programme. Given the fact, for example, that
the Treasury always uses the NAO for validating the figures we
put in our PSA delivery targets, I am assuming that there is a
validation process. They will not just take these at absolute
face value and, therefore, these figures that we supply are subject
to scrutiny. I am very happy to let you know what the scrutiny
is but we are conscious that we have to be accurate.
Q358 Chairman: I am surprised to
learn that the finance director does not know who is doing the
external scrutiny because it is a bit like a company saying "We
think we have some external auditors who come along and we think
they do some work for us but we are not actually sure who they
are." Normally a company will discuss with the auditors the
process of audit and the methodology. That is part and parcel
of a company's letter of appointment to its auditors, the methodology
that is going to be employed, and there is a discussion as to
how the audit should be done. That is partly helpful to the company
in ensuring it can layout its financial information in such a
way as it satisfies the auditors, and they are aware of what the
criteria is that auditors are actually employed to do their job.
I am rather surprised that you seem unaware of the auditors and
clearly not aware of the methodology they employ to validate the
work that you are doing.
Ms Ghosh: I do not think this
is surprising at all. The Gershon efficiency programme, although
we have to supply information—and we are very happy to describe
to you the process in which we collect it—is a programme
that is led and driven by the Treasury. They have to assure themselves
through their audit processes. I can absolutely assure you that
we understand the nature of our audit, both with the NAO and European
auditors and so on, and Stephen could give you an excellent account
of that. This is not part of a departmental budgeting process.
It does not form part of the departmental accounts. It is part
of a cross-cut of data that the Treasury asks us to provide to
support their programme, the programme they lead, to say have
we or have we not delivered the Gershon delivery programmes. It
is, in fact, for the Treasury to both agree with us in advance
the nature of the data we give and to make sure it is right. I
am doing my best endeavours, and will describe to you how we collect
the information, but I do not audit it.
Q359 Lynne Jones: Are you saying
basically that these figures are extracted from other figures
which are audited and you understand the audit process for that?
Ms Ghosh: Yes. It is a Treasury
programme and there will be a basis on which my efficiency team
have agreed with them that we extract the data, for example from
local authority information systems. We will have agreed where
the data comes from. On things like our head count, that is data
we hold within the department and I am monitoring very closely
all the time. Indeed, I know how many posts have been relocated
so that is actually quite straight forward information as far
as we are concerned.
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