Annex
TRANSITION EXPENDITURE
The transition programme to establish the EHRC
commenced in September 2005, with the Chair appointed by September
2006, the Board during December 2006 and the Chief Executive
by March 2007. The transition programme had to deliver the start-up
of the new EHRC and at the same time to manage the integration
and transfer of business from the Disability Rights Commission,
the Equal Opportunities Commission and the Commission for Racial
Equality (as they would concurrently cease to exist as EHRC came
into being on 1 October 2007). This all had to be achieved
within 24 months.
It is important that the costs of the transition
programme—£27.7 million and a further £11.1 million
for the associated voluntary early retirement and severance scheme—are
seen in the context of what needed to be done, and in what timescale.
The transition programme had to deliver the establishment of a
new, single organisation infrastructure and at the same time rationalise
and integrate the three former Commissions' staff, estates portfolio
and associated office fittings, furniture and ICT and telephone
systems and equipment. The profile of the full £38.8 million
transition expenditure for the set up of the EHRC and costs that
arose from the bringing together the three former Commissions
into one organisation is set out in Annex 1. The main deliverables
for the transition programme were;
— the establishment of EHRC with an organisational
design for around 500 staff; and
— a suitable infrastructure for the business,
including accessible office accommodation and centralised office,
IT and telephone systems to be operational by 1 October 2007.
In seeking to establish the EHRC with an organisational
design for around 500 staff, it was essential not only that
skills and knowledge from the former Commissions were retained,
but that there was the scope to recruit new skills to support
the considerably wider remit of the EHRC. In addition to race,
equal opportunities and disability the EHRC deals with age, religion
and belief, trans-gender, sexual orientation and human rights.
The three existing bodies employed between them over 600 people
and the plan was to transfer around 350 staff to EHRC to
provide the right balance between continuity and the necessary
flexibility to bring in new skills.
To achieve this, the sponsor Departments responsible
for the three out going Commissions agreed with Treasury the setting
up of a voluntary early retirement and severance scheme. The terms
of this needed to be in line with the Civil Service rules, as
the staff of the legacy bodies were members of the PCSPS, which
determined their retirement and redundancy arrangements. The scheme
facilitated the departure of 185 individuals at a total cost
of £11.1 million and gave the EHRC the flexibility in
its staffing levels (with around 347 former Commission staff
transferring) to recruit the additional skills and expertise it
needed.
In establishing a suitable infrastructure for
the business (including accessible office accommodation and centralised
office, IT and telephone systems) the combined portfolio of property
and the former Commissions' IT and business support systems were
reviewed against the EHRC business needs and current Government
guidelines.
EHRC was bringing together three different organisations
into a new, single-culture organisation and this was to be achieved
by 1 October 2007 without any handover period or gradual
transfer of undertakings, as the former Commissions ceased operations
on the 30 September 2007. Ultimately, the transition from
three functioning organisations with helplines and regulatory
functions to a single body with much a much wider remit had to
take place over a single weekend.
The three existing bodies had twenty separate
office locations across GB ,many in the same cities (particularly
London, Manchester, Edinburgh and Cardiff). It was necessary to
consolidate these into single locations which resulted in some
instances in EHRC establishing a new office and the need to dispose
of the former Commissions' lease holding. A number of the offices
were either not able to accommodate the combined number of staff
transferring staff from the former Commissions or had poor accessibility
or inadequate facilities (of particular concern for an equality
body advocating good practice in employing a diverse workforce).
As a consequence of the changes in the offices, a number of the
existing fixtures and fittings, IT and office systems were also
disposed of (details are given in Annex 3). Where possible, the
better quality equipment and furniture from the former Commissions
were relocated to the new EHRC offices. In the case of the Manchester
offices, as these were in the same office block they were remodelled
to give single reception, security access and a standardised fit
out for the EHRC.
The transition programme expenditure included
the costs of accommodating the transition team through their inception
in 2006 through to March 2008, the costs associated with
the initial lease and running costs for new EHRC offices (as they
were being prepared to accommodate the transferring staff on 1 October
2007), and the costs of winding down and ultimate disposal for
the former Commission offices found to be surplus to requirement.
The details of the £2.7 million costs arising from these
activities are shown in Annex 2. The details of the legacy Commission
properties and how they were integrated into the EHRC or disposed
of are shown in Annex 4.
Overall the rationalisation of the legacy commission
portfolio and improved use of the floor space has meant that whereas
the legacy commission portfolio consisted of 20 separate
offices, with 122,534 square footage and accommodating 580 work
stations, the current portfolio (shown in Annex 5) involves a
25% reduction in office locations (down to 15), a one-third reduced
square footage (now 82,435 ) but with the potential to accommodate
a higher number of work stations if needed. Further rationalisation
is planned with the '151 BPR' site being disposed of in March
2010, and when the lease for 3 More London ends it is planned
that the staffing requirement in London will be reduced and an
alternative location found.
The Commission is still seeking the disposal
of legacy body properties—Fox Court, London; The Old Tun,
Edinburgh and Ty-Nant Court, Cardiff. The on going liabilities
for these properties have been accounted for in the 2008/09 financial
statements.
The final major undertaking was to develop a
suitable infrastructure for EHRC to be operational on 1 October
2007, including the web site, the help desk and all business support
systems (such as the intranet, finance systems, case and contact
management, data storage and office systems). The former Commissions'
IT and business support systems were reviewed against the EHRC
business needs and current Government guidelines. In some cases
a former Commission's base system was adopted by EHRC (for example
the finance system, the telephone system), which had the advantage
that some transferring staff would be familiar with the system
and it helped in the transfer of skills and archive data. A consequence
was that some former Commissions' own supporting infrastructure
systems were therefore obsolete or incompatible with the EHRC
infrastructure and so the associated IT software, IT and telephone
hardware and linked office equipment was disposed of. The cost
of this is included in Annex 3.
NOTE ON
THE ACCOUNTING
ENTRIES
The profile of the £38.8 million transition
spend is shown by month in the attached Annex 1. In reviewing
this schedule it should be noted that the £38.8 million
transition programme costs were recorded in the DCLG and transition
finance systems on the basis of when the invoices were received
and payments made. At the year end the EHRC finance team reviewed
all of the financial details, and in agreement with the NAO re-allocated,
corrected and restated that transition team monthly expenditure
which properly related to the EHRC operations and also that in
relation to the fixed asset acquisitions. The work also included
making year end accruals and some corrections to the categories
some expenditure was being reported under in the draft financial
statements. These adjustments are reflected in the 'Year End'
column shown in the schedule. Accordingly the schedule provides
the best estimate of when expenditure took place for the period
2006-2008.
The details of the disposal of legacy Commission
properties are shown in Annex 4. The accounting treatment for
these transactions is complex, with some costs recorded in the
liabilities of the closing Commissions and other costs being recorded
in the EHRC costs of transition. For these reasons it is not possible
to cross refer this schedule to the details of the £2.7 million
expenditure (shown in Annex 2) reported within the £38.8 million
transition costs. The accounting treatment for the disposal of
the legacy properties has been reviewed and agreed with the NAO.
Annex 2 sets out the expenditure details
for the costs arising from the set up of the EHRC and disposal
of unwanted properties inherited from the Legacy Commission £2.7 million.
The detailed review of these costs by property has been limited
as the transition programme records did not capture the property
location for every transaction. The analysis therefore captures
the regional location and where possible the exact property. The
schedule gives an indication of the cost of rationalising the
legacy Commissions' holdings in Cardiff, Edinburgh, Glasgow and
London.
Annex 3 sets out the Loss on disposal of
unwanted assets inherited from the Legacy Commissions. The analysis
is by the type of fixed asset and by the legacy Commission. This
reflects both the disposal of assets, fixtures and fittings, IT
infrastructure associated with Legacy Commission properties disposed
of together with the disposal of IT equipment considered obsolete
or surplus to needs.
13 January 2010
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