Comprehensive Spending Review-2012-2013 and Delivery - Ministerial Response

Findings

Comments

1

There  is  no  vision  between  the 2 key  Ministers.  There  is confusion  about  the  objectives, scope  and  role  of  the  CSR Programme  and  what  is  within the scope of other initiatives. The Minister  for  Treasury  and Resources  viewed  CSR  as  a programme  that  was  re-defining the shape of the States – what it did and how it did it. It was all- encompassing.  However,  in contrast, the Chief Minister saw the CSR essentially focused upon achieving £65 million short-term savings within the 3 year period.

The objective of the CSR has been clearly defined  in  successive  Business  Plans  and Budgets. The 2012 Business Plan stated that the  CSR  is  about  controlling  public spending  but  it  is  also  about  introducing changes  intended  to  extend  the  States planning  horizons  and  give  stability  for departments  to  plan  their  services  over  a longer  timescale.'  However,  it  is  also recognised that, in order to achieve a 10% target  saving,  the  States  has  to  do  things differently and the process of change is now embedded. The previous Chief Minister and the  Minister  for  Treasury  and  Resources, along  with  an  Assistant  Minister  for Treasury  and  Resources,  comprised  the Ministerial  Steering  Group  for  the  CSR which met every 2 weeks during this year. That Group was clear of its remit in relation to CSR and both Ministers were aligned in the vision and objective of the programme, even if expressed in different ways. The new Chief Minister endorses both the short- and longer-term objectives of the process.

Findings

Comments

2

Defining Core Services has only happened  in  some  Departments and  not  in  the  context  of  an overall  vision  and  definition  of the role of government in Jersey, despite the initial assurance that it would occur. Even within a "core service" there will be elements of non-core activities which must be identified, costed, and appropriate strategies developed. Soft market testing  with  private  and  third sector  organisations  is  an effective  way  to  develop  a challenge to the existing services model.

Defining core and non-core services can be helpful when evaluating savings proposals, and  the  Scrutiny  Panel  in  its  report acknowledges  that  the  CSR  process suggested Departments ask themselves 7 key questions to assess whether a service should be provided and, if so, by whom and who should pay. Ministers completely agree that market testing is beneficial and helpful, and is currently being undertaken for a range of procurement services with the aim of saving £6.5 million by 2013. However, whether a service  is  designated  as  core  or  non-core does not exclude it from being provided by an external supplier – the critical question is to ensure that service is delivered efficiently and effectively to the public.

3

The  Programme  Management Office  would  appear  to  be effective  in  managing  the  CSR Programme,  but  the  Panel questions the value it is offering in  providing  capability  to  help Departments really transform.

Although in the first 6 months of this year it is probably true to say the Programme Office was  fully  engaged  in  setting  up  the monitoring and reporting processes for the CSR,  it  is  now  actively  supporting Departments  and  projects  specifically  with project  management  skills  (especially  in Health  and  for  the  Terms  and  Conditions Project)  and  also  assisting  Departments  in identifying required resources as appropriate.

4

The lack of congruence between the vision of the Chief Minister and  Minister  for  Treasury  and Resources has contributed to the absence  of  a  clear  Business Transformation Programme. The qualities required to run the CSR programme are not the same to those required to run a Business Transformation Programme.

It  is  agreed  that  the  skills  and  resources required  to  change  a  business  will  be different from those needed to progress the CSR  and  the  wider  and  broader  Business Transformation  Programme  is  now  being considered  along  with  the  resources  and capabilities required to successfully achieve it. However, many Departments are already actively  engaged  in  transforming  their businesses/services, such as –

• TTS – working with staff to review terms, conditions  and  practices  for  new  EFW plant.

• The Housing Transformation Programme is  being  progressed  in  parallel  to  CSR savings,  so  the  business  is  modernised ahead of any potential alternative service model being considered.

• EDD is progressing an alternative service model for some of its services.

Findings

Comments

• The Treasury is now actively managing the  Balance  Sheet  and  not  just  the departmental  expenditure/income elements.

• The Tax Transformation project is now underway and will transform the way that Department does its business.

5

Some  Departments  are  doing better  than  others  regarding making  their  savings.  Some Departments  have  rated  nearly their  entire  CSR  3 year programme  as  green;  therefore, they  are  confident  in  achieving their  savings  targets.  However, we also note that in March 2011, 54%  of  the  overall  total  was defined  as  red.  We  would therefore question the likelihood of the CSR achieving its overall target by the end of 2013.

It was true that in March this year over 50% of  the  target  saving  was  rated  as  Red. However, at present, only 18% is Red rated and this includes the £7 million unidentified savings  in  Education,  Sport  and  Culture [ESC] as a result of the States' debate on P.72/2011 as amended. CSR target savings for  2011  were  over-achieved  by  nearly £500,000 – more than compensating for the ESC  schools  subsidy  saving  that  wasn't delivered.

6

The  average  total  compensation package for the public sector now significantly  exceeds  the equivalent for the private sector.

Accepted;  and  that  is  one  reason  why  the Terms  and  Conditions  Review  was implemented.  However,  the  average  may conceal  significant  variance  at  different salary levels.

7

The  review  of  Staff  Terms  and Conditions  is  one  of  the  most critical  indicators  to  the  CSR Programme's  success,  and  there are  significant  risks  attached  to the realisation of this saving.

The Ministers agree with this finding and the CSR  Programme  Office  is  now  actively supporting the Project Team to assist in this proposal.

8

It  appears  that  the  biggest spending  Departments  are unlikely  to  achieve  their  targets which will endanger the success of  the  CSR  Programme objectives.

It is true that Education, Sport and Culture now  has  £7 million  unidentified  out  of  its £11 million target, and that the other bigger Departments  have  some  red-rated  projects, but  only  £4.7 million  out  of  the  total  of £65 million. The CSR Programme Office is working with these Departments to mitigate against the risks of not delivering, including identifying alternative proposals should they be required.

Findings

Comments

9

We  have  found  examples  of Good  Practice  that  should  be shared  more  widely  amongst Departments.

Agreed  and  accepted  and,  although  the Scrutiny Report cites 6 Departments where success has been recognised, the report of Panel's  Independent  Advisor  attached  at Appendix A  to  the  Scrutiny  Report  cites 9 Departments where good practice has been identified. The 3 not specifically mentioned include  the  larger  Departments –  Home Affairs,  Health  and  Social  Services  and Education,  Sport  and  Culture.  In  addition, and  as  mentioned  in  the  advisor's  report, departmental  officers  involved  in  the  CSR process  now  meet  on  a  regular  basis  to discuss successes and issues and share best practice.

10

The  evolution  of  the  public service is an ongoing process. In some  Departments,  the  priority has  been  to  make  savings  until 2013, with no vision for 2014 and beyond.

Agree that the evolution of the public service is  ongoing  and,  although  the  current  CSR Programme covers the 3 years 2011 to 2013, the period thereafter will be fully discussed in Strategic Plan deliberations with the new Council of Ministers and States Assembly.

11

Ministers  need  to  acknowledge the  importance  of  cross-cutting initiatives.  Cross-cutting initiatives are fundamental to the CSR process. The Panel believe that there is insufficient evidence of  resources  being  allocated  to allow for significant cross-cutting savings to be initiated.

The Ministers acknowledge the importance of cross-cutting initiatives and the Scrutiny Panel  has  recognised  the  work  being undertaken  on  procurement,  building maintenance  and  ICT.  Funds  from  the Restructuring Provision have been allocated in  2011  to  support  the  Procurement Transformation  Programme,  together  with the  Terms  and  Conditions  Review  and support  for  organisational  review,  and  a requirement has been highlighted in 2012 to support ICT initiatives.

12

Although frontline staff are able to suggest savings through their managers,  the  Panel  has  found insufficient  evidence  that Managers  are  working  "with" their  staff  in  order  to  make significant cultural changes. The command and control philosophy still permeates the States' system.

There  are  areas  of  excellence  across  the States,  and  many  staff  are  making suggestions either to their managers, through the Value Jersey initiative or via the CSR e-mail address. In fact, over 500 suggestions have been received and are being considered. Furthermore, staff engagement is considered vitally  important  in  transforming  how  the States works. To this end, work is underway to enhance engagement – Treasury's recent We  All  Count'  training  day  for  staff  in support services across the States was a great success  in  identifying  and  sharing  best practice, team work and engagement.

Recommendations

Comments

1

The  Panel  recommend  that  the CSR  Programme,  as  a  matter  of urgency,  clarifies  the  objectives, scope and role of the Programme. It is also recommended that this is within  the  context  of  a  wider discussion to determine the vision for  the  Island  and  the  role  of government.  To  this  aim,  the Panel  recommend  that  there should be a public debate, led by Executive  politicians  about  the role of the States.

Discussions on the new Strategic Plan will incorporate the current CSR and a vision for the  future.  This  will  be  widely  consulted upon before a States debate.

2

A  clear  statement  must  be produced  from  the  Council  of Ministers  on  the  direction  they intend  to  take  the  Island,  and  a vision for the level of government expenditure and priority areas for that expenditure.

This  vision  may  relate  to  the provision  of  the  most  effective public  services  in  Europe  as  a catalyst  to  attract  further  inward investment.  Such  a  vision  could clearly be a mechanism to stop the benchmarking  of  practice  in mainland  UK  (often  to  find reasons not to change) and make Jersey the ultimate benchmark.

It would also reinforce the concept of CSR being with the States for life, not just 3 years.

The Strategic Plan will provide this.

3

The Panel recommends that it is imperative for all Departments to once  again  revisit  what  are  the Core  Services  to  their Department –  which  services  are no  longer  required  and  which services are mandatory or political necessities.  Also  if  they  are required,  who  is  best  to  deliver them –  the  Department,  another Department, the private sector, or the third sector. There should be no  areas  that  are  not  open  to challenge.

The Ministers agree that there are no areas not  open  to  challenge –  the  CSR  was implemented  on  the  basis  of  no  sacred cows'.  Although  the  analysis  of  core and non-core  services  is  not  considered particularly  helpful,  answering  the 7 questions  as  originally  put  forward  by CSR  and  included  in  the  Scrutiny  Panel Report  is  completely  supported  and,  if appropriate, this exercise can be facilitated within  Departments  to  ensure  all  service areas  are  challenged  as  to  whether  they should  be  provided,  by  whom  and  who should pay.

Recommendations

Comments

4

Councils  such  as  Birmingham City  Council  (Appendix C)  have properly  constituted,  high  level teams  with  political  ownership and  Directors  of  the  main  cross cutting  services  (Human Resources,  Information Technology,  Property  and Procurement).

In  order  to  take  Business Transformation  forward,  there needs  to  be  a  high-level  team within the States of Jersey taking ownership with effective political leadership.

The  Ministers  agree  that  a  robust governance structure is required. CSR has a strong  political  and  executive  governance structure and any Business Transformation Programme will be established accordingly.

5

The CSR Programme must ensure that there is complete consistency on the application of Red, Amber, Green reporting status definitions.

Agree;  although  definitions  of  the  RAG ratings  to  be  used  were  agreed  by  the relevant groups in the governance structure for  the  CSR.  However,  in  the  future,  the CSR Programme Office will ensure that all Departments are working towards the same definitions and interpretations of the rating system so no misunderstandings occur.

6

The  easy  solution  would  be  to freeze  the  public  sector's  wages bill.  Evidence  has  shown  that there is an emphasis on "catch-up" once the freeze is lifted, and the net effect is counter-productive.

The importance of the terms and conditions  revision  cannot  be stressed too strongly. This is the most difficult area of the CSR to accomplish and it is likely to take some time. It is, however, crucial and  it  is  essential  that  adequate resources are devoted to this area, and that the implementation plan is  fast-tracked  to  deliver significant  and  long-lasting changes to terms and conditions.

The  importance  of  the  Terms  and Conditions Review is paramount, and part of  this  recommendation  has  already  been implemented  with  assistance  from  the Programme  Office  to  ensure  the  project stays on course, on timescales and dedicated resources are now in place. The Terms and Conditions project has 2 elements –

• Savings of £14 million to be delivered by 2013 – the 2012 element has already been deducted from the base budget.

• Modernisation  of  the  Workforce –  this will simplify pay structures throughout the  States,  review  all  benefits  and allowances  and  promote  performance management to encourage and support a more flexible and responsive workforce to  meet  the  needs  of  the  future  and increase productivity.

Recommendations

Comments

7

Any failure in the Review of Staff Terms  and  Conditions  has  the potential to de-rail the entire CSR Programme.  There  is  significant evidence that this can be the case from  the  UK  Mainland,  where some  authorities  have  not  been managed such reviews effectively, resulting in all other initiates being put  on  hold  for  several  months. We would recommend that this is considered  as  one  of  the  main priorities  and  appropriate resources in terms of engagement as  well  as  programme management is invested into this area.

Agree  and,  as  mentioned,  improved  staff engagement  is  now  being  actively progressed  and  project  management resources identified.

8

It  is  essential  that  changes  in services  are  monitored  to  ensure that  alternative  methods  of delivery of services do deliver the savings.

Agreed. The CSR Programme Plan has been developed to ensure the savings made are tracked, identified correctly and sustainable.

9

The Panel recommends that each major  element  of  the  CSR programme  must  have  a developed contingency plan in the event  of  non-delivery  of  their savings target.

Agreed.  It  is  crucial  that  alternative proposals  be  developed  in  case  a  current proposal  cannot  be  delivered  and  some Departments  (for  example,  Home  Affairs) have already identified both short- and long- term options for this very reason. The CSR Programme  Office  will  be  collating  these options  for  future  consideration  by  the Programme Board and Steering Group.

10

Departments  must  continue  to evolve  their  services  and  evolve their  thinking  in  order  to  make savings  in  future  years  and become  more  efficient. Departments  should  be  planning to make further efficiency savings in  2014,  2015,  and  2016  and beyond.  There  needs  to  be  a cultural  challenge  to  enable continuous  challenge  and improvement.

Agreed. The CSR is the start of a change in providing States services, and Departments will be working on this. Again, the Strategic Plan will articulate and identify the vision and the targets for the future.

Recommendations

Comments

11

The  approach  to  improving services  is  an  integral  part  of business transformation. Whilst a leadership  programme  should  be commissioned  to  develop  and coach senior managers to be able to  think  laterally  and  deliver services in a more effective way, there must be a change of culture throughout the States.

Business  Transformation  is  key  to  the future; and the training of senior managers and staff at all levels in helping to change the way services are provided has already been  identified  and  started  within Departments.  Cultural  change  takes  time, but  has  started  and  there  are  already examples throughout the States where staff are  leading  the  way  in  changing  how services are delivered.