Administration and expenditure of the Chancellor's departments, 2008-09 - Treasury Contents

Examination of Witnesses (Questions 340 - 359)



  Q340  Ms Keeble: But you have the lead on child poverty.

  Sir Nicholas Macpherson: Of course we do and I do not seek to duck responsibility for that.

  Q341  Ms Keeble: You are responsible for the 21 measures dealing with material deprivation. Have you costed them? Do you have any legislative measures in place to enforce the standards in the material deprivation indicators?

  Sir Nicholas Macpherson: Our estimates of material deprivation do not hinge on what is in the legislation but on the real life experience of individuals.

  Q342  Ms Keeble: But do you have any measures to get families out of material deprivation?

  Sir Nicholas Macpherson: Yes. Clearly, the government seeks to intervene on quite a wide front.

  Q343  Ms Keeble: Can we take one of them: the bedroom standard? That is the only indicator that deals specifically with housing. What bit of legislation do you have in place, or what intervention has the government made, to enforce a bedroom standard?

  Sir Nicholas Macpherson: I do not know the answer to that question. There will be people who do; it is just that there are limits to how much the Treasury can do in that regard.

  Q344  Ms Keeble: I am a former housing minister. The bedroom standard is that each child over 10 can share a bedroom only with another child of the same gender. The legal standard is quite different from that; it is that all rooms over a certain size in the house count as bedrooms and there is no issue about gender. For children under 10 there can be four to a room. Why have you not aligned your indicators for material deprivation with the reality of what the government is prepared to fund?

  Sir Nicholas Macpherson: No doubt that was an issue which your department would consider.

  Q345  Ms Keeble: The material deprivation indicators are the ones for which your department is responsible; you have the lead responsibility for it, not any other department.

  Sir Nicholas Macpherson: We do have the lead responsibility for reporting on this and we chair the interdepartmental group which takes it forward and we take responsibility for it. Equally, responsibility for individual sub-components of what you acknowledge is an extremely complex basket of indicators would be taken forward by relevant departments.

  Q346  Ms Keeble: Referring to child care, I think it is acknowledged that a key way out of poverty is work. I do not believe we have yet had information about the take-up of the child care element of working tax credit. Can you say what is happening there?

  Sir Nicholas Macpherson: I do not have in front of me the current figures for take up. The trend has been a rising one. I was responsible for this policy area in the late 1990s. I believe that in those days about 15,000 families took up the child care element within family credit and now the figure is several hundred thousand, so there has been substantive progress.

  Q347  Ms Keeble: Can we have the figures? The information we had at one stage was that it had stalled. Since it is topical can you say how much you will save by taking away the tax relief on child care vouchers?

  Sir Nicholas Macpherson: I do not know the answer to that question.

  Q348  Ms Keeble: What will the net saving be if they switch to the child care element of the tax credit?

  Sir Nicholas Macpherson: I will have to add that to the ever-increasing list of additional information.

  Q349  Ms Keeble: How can you deliver on child poverty if you do not have the tools to measure some of the key factors?

  Sir Nicholas Macpherson: Having information is critical. I believe we do have information in relation to a number of these indicators. You have also drawn attention to issues like relevant legal standards. This is a very complex area. We have at our disposal quite a lot of instruments but there is a whole series of other areas where progress is more difficult.

  Q350  Chairman: You are to examine Ms Keeble's questions in more detail and come back to us with all the information you have that may enable you to answer them?

  Sir Nicholas Macpherson: Yes.[6]

  Q351  John McFall: What is the present shortfall in the government's target to halve child poverty by 2010?

  Sir Nicholas Macpherson: All I can tell you is that in the past couple of years the child poverty figures have remained unchanged.

  Q352  John McFall: It is still 3.4 billion?

  Sir Nicholas Macpherson: It is on page 79 of the document.

  Q353  Mr Love: In the context of the comment you made right at the beginning that in your time at the Treasury this was the hardest year you could remember are you still confident you can deliver the £35 million of efficiency savings outlined in your annual report?

  Sir Nicholas Macpherson: Yes.

  Q354  Mr Love: Even in the context where it appears that very little of it will be delivered by reductions in staff?

  Sir Nicholas Macpherson: That is correct. Louise may want to explain how we are to deliver it.

  Q355  Mr Love: Before she does so, I read through the Treasury document which says that for the core Treasury you will deliver the savings by "rationalising its organisational structure to exploit synergies across business areas". I do not understand that, but can you tell me how that can deliver the savings you outline?

  Ms Tulett: Obviously, the efficiency is not just about making the savings; it is also about either maintaining outputs or improving outputs for the same inputs. The reason we can achieve efficiency by redeploying staff is that provided we can improve outputs by redistributing the same staff to a higher level of productivity that is an efficiency gain, even though the expenditure stays static, so it is important to understand the relationship between them. The paragraph to which you have just referred is part of the description we have given in our VfM Delivery Agreement published on our website in July about how we are to achieve savings. We have already rationalised some areas. We are trying to maintain a very lean governance structure and are currently going through a governance review to make sure we are effective in not allowing overheads to creep up. We are quite diligent when vacancies arise to assess whether we need to replace somebody or remove that post. Having removed the post we may wish to redeploy the resources to create another post somewhere elsewhere. You will note that under financial services stability we moved quite a lot of people into international finance.

  Q356  Mr Love: All of that sounds fine but you are talking about increasing productivity at a time when according to all outside opinion your workload has gone up substantially.

  Ms Tulett: Yes.

  Q357  Mr Love: As I understand it, all of this must be a net cash saving. That is a major task, is it not?

  Ms Tulett: It is.

  Q358  Mr Love: To do it without the increased workload would be a major task. I question whether you can gain that productivity improvement against the backdrop of an enormous workload. Is it seriously considered that you can deliver this?

  Ms Tulett: It is a major task and it is one that we are on track to deliver. The second half of the programme to deliver will clearly be harder than the first half because one picks the low-hanging fruit first. Our Autumn Performance report should be published before recess in December and the figure that we put into it will be audited to ensure we deliver sustainable savings and efficiency gains. I do not belittle the size of the task, but in another way in an organisation that has quite a lot of innovation and new areas of work it makes us examine what is lower priority and what one can stop doing. An organisation that goes through the massive change that the Treasury has experienced sometimes sets the right culture to be exploratory in how it can do this.

  Q359  Mr Love: Sir Nicholas, have you had any conversations with the Chancellor along the lines that this is a relatively small amount of money in terms of the overall efficiency savings being demanded across government and to continue this may impair the ability of Treasury staff to respond to the many demands that the Chancellor places upon them?

  Sir Nicholas Macpherson: The Chancellor and I have had a number of conversations about how we resource ourselves through the crisis and the Committee was quite helpful and supportive in suggesting that we needed more resources. We have taken in more resources and on the financial stability side in particular the Treasury is much bigger; it has grown in size during this period. All I would say is that it has been helpful to us to have the resources to deal with what we have had to do, but it should not mean that we give up on the efficiency agenda. Things like getting better use of our accommodation, rationalising our estate and thinking through how our corporate services work remain really important. In a crisis one needs to bring in more resources. The Treasury has had to operate on a far wider front and what it has done over the past year in that respect has been very sensible.

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