Official Report

 

Finance Committee, 13 Dec 2005

Scottish Parliament
Finance Committee
Tuesday 13 December 2005

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: [The Convener opened the meeting in private at 10:07]


: Meeting continued in public.

Relocation of Public Sector Jobs

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The Convener (Des McNulty): : I welcome members of the press and public and our witnesses to the public part of the 30th meeting in 2005 of the Finance Committee; we opened the meeting in private. I remind everyone to switch off mobile phones and pagers.

The final item that we will deal with this year, before the Christmas recess, is relocation of public sector jobs. As members will be aware, after producing our report on the Executive's relocation policy, we agreed with the Executive that it would give us a six-month update on progress. I am pleased to welcome George Lyon, Deputy Minister for Finance, Public Service Reform and Parliamentary Business, who is paying his first visit to the Finance Committee. With the deputy minister are David Robb, head of the public bodies unit, and Morris Fraser, who is also from the public bodies unit, both of whom have been with us before.

I invite the deputy minister to make a short opening statement before we move on to questions from members.


The Deputy Minister for Finance, Public Service Reform and Parliamentary Business (George Lyon): : It is a pleasure to appear before the committee. I know that it has a fearsome reputation, so it is with not a little trepidation that we appear before you today. I hope that we can work closely with you on this important aspect of Scottish Executive policy. I welcome the committee's continued interest in the relocation policy and look forward to working with the committee on it in the future.

In October I provided a written response on some of the issues that were raised in the committee's previous discussions, and last week I sent the committee a six-month report updating it on our progress on location reviews and on taking the policy forward. In my first few months in the job, I have seen for myself the benefits that the policy can bring to organisations and communities and I am determined to continue the spread of Government jobs within and to the most deserving areas in Scotland.

From within the finance portfolio, I have been pleased to hear about the positive outcomes in relation to productivity, efficiency and staff retention that the Scottish Public Pensions Agency has enjoyed since its move to Galashiels.

Recently I visited Tiree, which coincidentally is in my constituency, and saw the work that is being done there by the crofting house grants scheme team. I was impressed that delivery of the scheme's business has not been compromised by its being on Tiree; indeed crofters have been delighted by the move of crofting-related jobs away from Edinburgh. Half the staff in the team moved from the Edinburgh area, which surprised me; the level of interest in the jobs from within the Executive was surprisingly high. During my visit, staff were keen to impress upon me the fact that the move to Tiree had offered them improved quality of life.

I also plan to visit the new headquarters of the Accountant in Bankruptcy in Kilwinning, when staff move early next year. Although there has been a delay in completing the project, the outcome is that 140 local people in North Ayrshire will be in sustainable and good-quality Government jobs. The fact that the rent there is less than half that of the previous smaller Edinburgh headquarters demonstrates how relocation can help to deliver efficiencies.

However, just as important is the quality of the working environment that is on offer. I was pleased to note last week that the Kilwinning building has just been given a prestigious design award. Such improvement helps to retain good-quality staff, which is also key to improving efficiency.

My predecessor made an announcement on the location review programme when he came before the committee in June. The additions that were made at that time are shown in the annex to the update report. Work is already under way to identify the next tranche of review candidates for announcement next year. A number of candidates are being considered and I will ensure that the committee is kept up to date on those as and when they are agreed formally with ministerial colleagues.

The only review announcement that we have made since our previous update was about the relocation to Campbeltown of most of the small units initiative jobs in the Crown Office and Procurator Fiscal Service. I hope to be able to make more announcements on the small units initiative early next year.

A considerable amount of work has been done over the past year on making implementation of the policy more strategic. Some of that had been commissioned as a result of the committee's earlier report. We have increased reliance on local authorities and local enterprise companies in targeting relocation and a central team now ensures consistency in the review process. The process has also been made more transparent through guidance and the publication of outcomes.

A lot has been put in practice already, but I am keen for us to do more. Much has been made of the costs of particular relocations, but little has been said about the benefits. The committee noted previously that it would be helpful to set out the benefits as clearly as possible. The policy has been in place long enough for us to be able to gather meaningful evidence about its benefits, so we now have in place a framework for evaluation and we have clearer evidence of the benefits of relocation. We will build on that through the evaluation programme that is under way.

As the committee knows, we have had to consider carefully the relationship between the relocation policy and the other public sector reform policies, particularly those on best value and efficient government. We need to balance those policies, but I stress that we cannot let too narrow an interpretation of best value or efficient government thwart our relocation policy. I am sure that the committee would not want those polices to bring the relocation policy to a halt. On the one hand, relocation will be used to drive efficiencies through running-cost savings whenever possible but, on the other hand, with some relocations the socioeconomic benefits will take precedence; dispersal, decentralisation and socioeconomic benefit objectives will outweigh the otherwise overriding need for efficiency. It is extremely important to stress that.

Relocations that deliver on regeneration objectives will need to be as efficient as possible, but there will be higher-level objectives to meet. Relocation must be more transparently aligned with regeneration, whether urban or rural. We already work closely with local authorities and enterprise companies to ensure that that link is made. Simply delivering jobs to areas of need will not necessarily deliver on our regeneration commitments. We need to build capacity in communities so that people can take up the jobs that are on offer in those areas. For example, when we decide to relocate jobs to a deserving area, our regeneration partners can help to provide a range of job-specific training and support, which may even include child care, for the people who are most in need of jobs in the area.

Part of my job is to ensure that best value and efficient government are firmly embedded throughout the public sector, but I also have a duty to ensure that we deliver on our relocation policy. It is important that we continue with our objective of spreading the benefits of devolution to communities throughout Scotland, particularly to areas of social or economic need. I restate my commitment to deliver on the objectives of the relocation policy and to work with the committee to improve continuously the policy's implementation.


The Convener: : We will begin our questions by focusing on specific relocations.


Mr Frank McAveety (Glasgow Shettleston) (Lab): : Has the Executive made any decisions on the relocation of Registers of Scotland and sportscotland?


George Lyon: : The decisions on Registers of Scotland and sportscotland have still to be announced. It is important that we make the right decisions on those bodies. As members are probably aware, changes have taken place to the senior management and board of sportscotland, so it is important to ensure that new people are in place before final decisions are announced. Ministers are still considering the location review report on Registers of Scotland—we hope that a decision will be announced soon.


Mr McAveety: : So an announcement is imminent on sportscotland and further discussion is to be had on Registers of Scotland.


George Lyon: : We hope that we can make an announcement soon on sportscotland. Because of the change of chief executive and chairman—of which I am sure the committee is aware—a slight delay has occurred in order to ensure that the new people are in place and comfortable before the decision is made and announced.


Mr McAveety: : We have heard that three times now.


George Lyon: : I understand the committee's frustration, but it is important to ensure that the new leaders of the organisation are in place and fully comfortable before the decision is finally made and announced, especially in view of the Commonwealth games bid that is coming down the track.


Mr McAveety: : Will decisions on sportscotland be predicated on the relationship that the body will have with the national facilities strategy?


George Lyon: : Yes; that is still the intention.


Mr McAveety: : Obviously, I have a partisan interest because of my constituency—I might as well declare that openly in case people are suspicious. The reason why I ask is that, wherever sportscotland is relocated to, there will be a related debate in the national facilities strategy about building into the development the office and support accommodation that the sportscotland headquarters will require. Will that be taken into account in the assessment?


George Lyon: : That is still the intention. I understand the slight frustration, but I assure you that, now that the new people are in place, it is important that we make the decision and announce it. I hope that will happen soon.


Mr McAveety: : So we will get a decision, but you will not tell me in which year it will be.


George Lyon: : A decision is unlikely to come before the end of this year.


Dr Elaine Murray (Dumfries) (Lab): : I have been interested in this issue for some time as I was one of the reporters for the committee when we produced our report. At the time, I thought that it was an example of the Executive and the committee working well together.

I want to ask about the table in annex A, which lists the organisations that are involved and where the posts have moved to. However, it does not tell us where they have been relocated from.


George Lyon: : I will ask my officials to answer that in detail. However, I imagine that most of the posts came from Edinburgh. The policy is about relocation from the centre. The vast majority of the organisations will either have been based in Edinburgh or are so new that they did not previously have a base in the first place.


Morris Fraser (Scottish Executive Finance and Central Services Department): : A couple of the organisations in the table did not come from Edinburgh. However, as the minister said, the majority are either new organisations or have moved out of Edinburgh.


Dr Murray: : I am worried about the entry for Forest Enterprise. It says that 20 jobs were moved to Inverness and Dumfries. However, those jobs were already there; only two jobs moved from Edinburgh to Inverness. It is a bit misleading to say that that is a relocation.


Morris Fraser: : That is, perhaps, a fault of the table. The sub-total over the page, which shows how many jobs have moved, does not include jobs such as the ones that Dr Murray just mentioned. There are 2,300 jobs in the first part of the table but only 2,171 are shown to have involved relocation.


Dr Murray: : That accounts for the difference between the two figures.


Morris Fraser: : Perhaps we could make the table clearer.


Dr Murray: : I do not expect the minister to be able to tell me now, but it would be interesting to know how many of the relocated posts involved relocating people—that is, a human being moving to another location to follow their job—and how many jobs were filled locally. Obviously, areas of high unemployment would be interested in vacancies being transferred whereas other areas need people of working age to be transferred. Can you provide such a breakdown?


George Lyon: : We can come back to you on that. My officials will correct me if I am wrong, but I think that about 75 per cent of the relocated posts have been recruited locally during the transfer. In the case of the transfer of the Accountant in Bankruptcy to Kilwinning, 100 per cent of the posts were filled locally. About 50 per cent of the posts that were created in Tiree as a result of the relocation policy were filled locally and I think that relocation of the Scottish Public Pensions Agency resulted in about 85 per cent of the posts being recruited from the local population.


Dr Murray: : In June 2005, you published the new relocation strategy. I was a bit disappointed when I saw that, of the 785 posts that were relocated in 2005, all but 26—around 97 per cent—go to Glasgow, which does not seem to me to fulfil the purpose of the relocation policy.


George Lyon: : That figure gave me cause for concern when I first saw it. Clearly, however, if the strategic objective of the policy is regeneration, that must apply to urban areas as well as to rural areas and there is a powerful argument that those jobs will help to regenerate parts of Glasgow, just as there are powerful arguments for other jobs to go to rural areas that we have identified as being in need of regeneration.

As part of our strategic approach, we have worked with local authorities and local enterprise companies to identify 500 locations and buildings that are suitable for relocation projects because they are linked to those areas' regeneration strategies, so we have a list of places in urban and rural Scotland. I think that, in the past 12 months, there has been a run of relocations going to Glasgow, although some jobs have gone to Tiree and Campbeltown—I am happy to declare an interest in that particular relocation, although I accept that it is, perhaps, of not much comfort to people in Dumfries and Galloway.


Dr Murray: : I am just a little bit concerned that a widely welcomed provision seems, at the moment, to be resulting in loads of jobs going to one place.


George Lyon: : Previously, North East Scotland, the Highlands and the Borders all benefited from the policy. However, I accept Dr Murray's point. That is something that we will have to keep a close eye on. As I said, there is a powerful argument that relocation might help to regenerate some of the most deprived areas in Glasgow. Therefore, they cannot be ruled out.


Dr Murray: : I certainly was not suggesting that—


George Lyon: : I think that your colleague, Mr McAveety, might have some concerns if we were to do so.


The Convener: : The report claims that more than 2,000 jobs have been moved. However, if we add up the numbers in the "moved" category in annex A, they do not add up to anything like 2,000. Does that figure represent the number of jobs that could possibly move?


Morris Fraser: : I think that the jobs do add up to more than 2,000. Unless we have done the sums wrong, the numbers that are associated with the organisations in the first column—from the Enterprise and Lifelong Learning Department to the Accountant in Bankruptcy—should come to 2,171. In fact, they come to more than that.


Jim Mather (Highlands and Islands) (SNP): : They come to 2,088. If you take the 505 jobs that are yet to be confirmed—the 245 from Scottish Natural Heritage and the 260 in the second phase of the relocation of NHS National Services Scotland—that reconciles to 2,088, because the total figure of 2,593 in annex A comes to 2,088 if you subtract 505. The numbers do not square.


Morris Fraser: : Again, there is a frailty in the table. We included the SNH jobs as jobs that have moved because they have been advertised and the recruitment process is under way. Perhaps that is not as clear as it could be. You are right to say that the 260 jobs from the NHS National Services Scotland relocation are not included in the figure. My understanding is that the jobs in that column come to about 2,300 but that, if you take out the ones that have not moved, only 2,171 have been located or relocated. We will double check the table and try to make it as clear for the committee as we can.


The Convener: : That would be helpful.


George Lyon: : We will clarify that point for Mr Mather.


Mr John Swinney (North Tayside) (SNP): : I want to return to the relocate-to-regenerate issue, specifically the jobs that moved to, or were located in, Glasgow in 2005, such as those in NHS Quality Improvement Scotland, NHS Health Scotland, NHS Education Scotland, transport Scotland, Communities Scotland and so on. What areas are those posts moving to?


George Lyon: : I will ask my officials to identify the areas. I know that the consideration is that sportscotland will be located near the proposed new sports arena development.


Morris Fraser: : We have asked Glasgow City Council and Scottish Enterprise Glasgow where they would like the jobs to be targeted. For two of the special health bodies, it has been proposed that an area in the east end of the city centre or the city would be suitable. For the others, the council and the enterprise company are keen for the jobs to be as close to the centre as possible, because that would benefit all communities in Glasgow.


Mr Swinney: : I thought that that would be the answer. My point is that it is perhaps a tad misleading to suggest that there is a direct link between relocation and regeneration. The minister said that those jobs were being relocated in areas that were deprived and which required regeneration. The last time I looked at the city centre of Glasgow, it was pretty bustling. I quite accept that locating sportscotland's headquarters in Mr McAveety's constituency might act as a magnet for regeneration in another area, but I think that it is misleading to suggest that there has been a big input that is driving regeneration when what is actually happening is simply that excess office space in the city centre is being used up.


George Lyon: : That is a fair point. However, you might recall that the committee criticised the Executive's piecemeal approach to the relocation policy. One of the strong recommendations in the committee's report was that the Executive should take a more strategic approach. I am trying to set out what the policy now is. Previously, the committee criticised the Executive for having no underlying strategic approach to relocation of jobs. That was a justified criticism and we responded to it. We engaged with our local authority partners and with local enterprise companies to draw up a list of 500 areas and buildings that can play a part in regeneration. John Swinney's point is valid in that previously—before we changed the policy in response to the committee's criticism—the approach was piecemeal and there was no strategic approach to decisions on where jobs would go. That point was picked up by the committee in its report and we responded to it.


Mr Swinney: : You said that a number of the relocations reflect the urban-rural split—again, that relates to points that were made by Elaine Murray. However, when I look at the map, the overwhelming majority of locations seem to me to be either in the central belt or in major conurbations such as Aberdeen and Inverness. There are obviously exceptions, but the majority of locations are in the central belt. When you look at the map, what is your reflection on the statements that you have made about trying to secure an impact on rural Scotland as well as on urban Scotland?


George Lyon: : The map reflects the committee's criticism about the lack of a strategic approach. It was because of that criticism that we amended the policy. We now have a database and there is engagement with local authorities and local enterprise companies about where jobs can best be placed. That is part of the approach that we have to take to ensure that relocations go to the right places to help those places to regenerate. Those places can be in urban Scotland or in rural Scotland.

A number of relocations have gone to the Highlands, including SNH and those that have gone to Kinlochleven and Tiree. There have also been a number of relocations to the Borders and to the north-east. Clearly, we have to ensure that there is a proper understanding and a proper approach to ensure that both rural Scotland and urban Scotland benefit from the policy. That is why we have taken a more strategic approach. We have, at least, identified the proper places to which relocations should go. That is a significant step forward.


Mr Swinney: : The policy has been revised and a series of decisions has resulted in relocation of civil service jobs to Glasgow. Now that the Government has responded to the committee's criticism and taken a more strategic view, can we expect that, when you come back in six months' time, we will have a list of relocations to rural Scotland?


George Lyon: : I certainly hope that we will see relocations to both urban Scotland and rural Scotland. As the minister, I certainly intend to try to ensure that that happens.


Mr Swinney: : Will there be a greater reflection of both rural and urban Scotland? At present, relocations are often exclusively urban.


George Lyon: : Ultimately, the policy is driven by the strategic approach of regeneration: we must ensure that it is taken into account. However, I do not hesitate to say that we want a proper balance between rural and urban Scotland.


Mr Swinney: : Without wishing to be picky, I respectfully point out that the legend on the map describes number 44 as the Crown Office and Procurator Fiscal Service transcription unit in Dingwall, but the number 44 on the map appears to be in Lairg.


George Lyon: : It does indeed.


Mr Swinney: : Lairg is about 50 miles further north than Dingwall. It has a formidable sheep sale every year. I encourage you to reflect on that—I am nothing if not precise.

Finally, I want to explore comments that you made on the relationship between the policy and best value and efficient government. You said that you also had to bear in mind dispersal and socioeconomic factors. In the list of priorities, what ranking is given to the three factors of best value, efficient government and socioeconomic considerations?


George Lyon: : The point that I was trying to make was that the efficient government policy relates to the relocation policy. In England, efficient government is the underpinning rationale for relocation from the centre. When the best-value measures are introduced throughout the public sector in April, they will have an impact on the relocation policy. However, as I made clear, overall the relocation part overrides the other two factors—it is the priority. Although we have to take the other two matters into consideration, at the end of the day, if we were to base relocations on cost alone, the policy might well stall. I certainly, and perhaps the committee, would find that unacceptable. We need to take into account efficiency and best value—those two policies might in their own right create opportunities for further relocations—but at the end of the day, to pursue and deliver the objectives of spreading jobs throughout Scotland and ensuring that the rest of Scotland enjoys the benefits of devolution, the relocation part must be the primary objective in the policy. That will be reflected in our decisions.


Mr Swinney: : If I understand correctly, you are saying that the relocation of civil service jobs is the number 1 priority and that efficient government and best-value issues are of secondary importance.


George Lyon: : Those issues will be given serious consideration, but we must be clear that, if we judged matters simply on best value and efficiency, we might in some instances rule out relocations. It is up to ministers to take the correct decision. However, if we are to pursue the relocation policy that we have laid out, the relocation element will in some instances take precedent.


Mr Swinney: : My final question is on the number of civil servants. You were asked earlier whether people have been relocated or new people have been recruited. You said that, in the Kilwinning example, there was 100 per cent new recruitment. What has been the impact of the policy on total civil service numbers?


George Lyon: : It has had no impact on total civil service numbers, because the jobs have been relocated. Even initial reflection on one or two of the early relocations shows that the policy has had benefits for the organisations and communities that are involved. For instance, in the Scottish Public Pensions Agency relocation, 85 per cent of the jobs were recruited locally. Although there was an initial dip in the organisation's performance, the cost savings have been substantial in the longer term.


Mr Swinney: : I do not dispute that, but I am asking whether, as a result of the policy of moving jobs from A to B, the total number of civil service jobs in A has reduced and the number of jobs in B has increased. If that is the calculation, no increase in civil service numbers should in theory have occurred as a result of the policy. The question I am driving at is whether all the jobs that have been relocated have been truly relocated or whether there has been an increase in total civil service numbers.


David Robb (Scottish Executive Finance and Central Services Department): : I will try to answer that, although the answer will not be as categorical as you would like. With relocations that happen over an extended period, it is sometimes difficult to extract the impact of the relocation itself from other changes that are taking place in an organisation. Registers of Scotland is a good example of that. Through the introduction of technology to many of its operations, its long-term staffing numbers will change considerably, irrespective of any move as a result of the location review.

Similar processes are under way in other organisations. It is hard to isolate the relocation impact of a move, but—if it is possible to generalise—our experience suggests that in most cases a business going through a relocation has an opportunity to consider fundamentally how it operates and can often realise savings through better use of its staff. A number of the managers who have gone through relocation have told us that one of the benefits is the stimulus that the relocation gave them to consider fundamentally the nature of their operation. That will happen over time. Sometimes a bit of double running is involved during a transitional period. However—if it is possible to generalise and isolate the other changes in business pressures and demands on an organisation—our experience suggests that relocation can be a stimulus to slimming organisational structures.


Mark Ballard (Lothians) (Green): : Minister, in your letter of October 2005, you note my request for information on the evaluation of the relocation policy and, in particular, how many existing staff moved to new locations in each of the bodies that have relocated. Your response was:

"We have already begun to evaluate the impact of this policy and intend to produce an evaluation table which will contain costs and benefits along with a qualitative and quantitative analysis of the wider benefits of relocation."

Do you have any information on the timetable for the production of that evaluation report? You say in paragraph 7 of your update report:

"The aim is to have some indication of the outcomes of the evaluation strands by the early summer of 2006."

Can you give us a more concrete idea of when we can expect the whole report?


George Lyon: : We hope that we will be able to let you have the completed report in spring. There are three strands to the evaluation, which we are considering in order to give the clearest picture of the outcomes of the policy. First, we will conduct an analysis of the benefits; secondly, we will consider benchmarking impacts; and, thirdly, we will carry out a comparative international study, which will consider other countries' policies and compare them with ours.


Mark Ballard: : So the report will be completed by the spring. Your update report says only that there will be some indications of the outcomes by early summer. Can you be more firm?


George Lyon: : We are hopeful that we will have the information completed by spring.


Mark Ballard: : Do you have any idea how many relocations you might be announcing?


George Lyon: : I hope that we will be able to announce a good number of relocations in the new year. Again, that is subject to ministerial decisions. I will endeavour to let the committee have that information as soon as possible.


Mark Ballard: : But the information in the evaluation will be too late—


George Lyon: : I think that you perhaps misunderstand. The evaluation will be of what has already been done, not of what is to come. We will do a proper evaluation of all the early relocations such as those of the Scottish Public Pensions Agency and the Food Standards Agency Scotland. I hope that we will be able to provide the committee with information on the analysis of the benefits to the organisation and the wider community, which are important.

You will be aware that Audit Scotland is going to do work on the matter, which I am sure will feed into the same debate on the evaluation of the policy. All the work, especially the comparison with what is happening in other countries, will be interesting. There are different approaches in Scotland, England and Wales. In Wales, there will be three regional centres, which will in fact draw in jobs from some of the rural areas. Audit Scotland's good work will allow the committee and the Parliament to discuss how we might progress our policy in Scotland.


Mark Ballard: : In the business improvements section of your report, you talk about

"Benchmarking occupancy levels, workspace management and running costs".

How wide will your analysis of running costs be? After all, that is quite a broad statement, particularly if the exercise covers all the running costs and compares running costs in various locations.


Morris Fraser: : That issue should be covered in each location review. Running cost evaluations have been carried out because ministers should not be asked to make decisions based on nothing. However, you are right to suggest that, arguably, consultants have been inconsistent in their approach to the issue in the past. Indeed, that is partly why we have established a new central team to drive things.

The relocation guide in the annex to our report sets out what we expect organisations to have considered by the end of a review, which will form the basis of our running cost evaluation. I am not suggesting that we will end up with some final figure that, for example, means that we simply say to organisations, "If you spend more than £14 per square foot, you have to leave Edinburgh." A wide range of factors must be taken into account, but the annex sets out the factors that we would like to focus on.


Mark Ballard: : In your responses to Mr Swinney's earlier questions, you seemed to be saying that, if a relocation proposal met all the objective criteria but was inefficient in cost or operational terms, you would still go ahead with the relocation. Is that really the case?


George Lyon: : Ministers will have to make judgments on such matters. In many instances, we might choose to disregard that element if we thought that there was a justifiable reason for doing so. After all, we need to honour our commitment to relocation and if the policy was driven purely by efficiency and best-value considerations, it might well slow down or stall. I—and the committee—would certainly not want that to happen.

I understand that, in Ireland and Wales, cost is not a factor in relocation. For example, the Irish took the strategic decision that jobs should be relocated out of Dublin because the city was overheating. Such an approach might well have cost benefits, but that does not play a part in the equation or in any decisions. I believe that there is a similar policy in Wales. I should perhaps point out that the comparative analysis will not be restricted to the UK; it will examine models in Sweden and France. The analysis should produce some good stuff that will allow the committee and, I hope, the Executive to form a view on whether we need to change the policy. Indeed, we have already done so in response to the committee's report on the matter.


Mark Ballard: : Are you saying that cost is a factor or that, as in Ireland—


George Lyon: : I am simply saying that it is one of the factors that we have to take into account. However, the relocation policy's overriding driver is to ensure that it continues to deliver jobs to other parts of Scotland.


David Robb: : It is important to take a long view of any benefits or cost impacts. Sometimes, an approach that defines best value or efficiency too narrowly and with too short a timeframe might conflict with certain elements that could bring benefits or produce efficiencies over a longer period. Some of the tensions that the minister has referred to and that politicians have to resolve arise from different timing considerations.


George Lyon: : For example, the Scottish Public Pensions Agency has carried out the first bit of the evaluation, although it has not yet completed the whole process. Looking at the cost of the initial relocation and the disruption of the work programme through the loss of 85 per cent of the staff, one might think at first, "You wouldn't do this, because it has such a strong impact on the business." However, the wider benefits in the long term from the cheaper accommodation costs soon start to look like a sound financial proposition.

Once the new staff had been recruited—the Scottish Public Pensions Agency tells me that the quality of the staff whom it recruited in the Borders was better—output rose by 10 to 15 per cent for the same staff numbers. The agency is now looking to take on other work and to expand further. The issue comes down to horizons: we must look to the long term and to the socioeconomic impact that relocation will have on an area.


Mark Ballard: : You mentioned the Accountant in Bankruptcy, which lost 100 per cent of its staff when it moved to Kilwinning. Surely when an organisation loses all its staff, that has a huge impact on its organisational capacity—the organisational memory goes.


George Lyon: : As I understand it, the Accountant in Bankruptcy's relocation took a considerable time, so it has been able to do a little bit of double running while the new staff are recruited and put in position. There has been criticism of the amount of time that it has taken for that relocation to happen. However, that has had benefits for the organisation, as it has been able to train the new staff while the old staff started to run down. Therefore, the staff loss has not impacted quite so hard on the Accountant in Bankruptcy's performance. That is the general feedback that we are getting. Carrying out the relocation over a longer time has brought benefits.


David Robb: : Mr Ballard makes a valid point. One of the considerations in any relocation review is the impact on continuity of business. One of the reasons why some organisations move to locations in the central belt—an issue that was raised earlier—is that that permits them to have some continuity in the retention of key staff. A distinction should be made according to the type of job. Some jobs can be fairly readily grasped over a short training period; others are at a different level of experience and seniority. However, the impact on the continuity of a business is a key factor in any relocation review and different organisations cope with the issue in different ways. Continuity is one of the factors that are taken into account in a relocation review.


The Convener: : I am getting concerned about a couple of points as the discussion goes on. One is that the message that we are getting from you is different from the one that we got from your predecessor about how cost would be managed and factored into the process. If I understand your response to Mark Ballard correctly, you are saying that cost is a secondary factor and that the prime issue as far as you are concerned is meeting the target for relocating jobs.

That is not a view that the committee has ever put forward—we have been very specific about that. The question of the cost of relocation first arose in relation to SNH. The committee's review stated that we wished to see relocation, but that we wanted it to be done in a balanced way with a proper cost-and-benefit appraisal conducted before each relocation was undertaken. Only when that process was satisfied should relocations go ahead.

As Mark Ballard suggested, the efficiency and effectiveness of a relocated organisation have to be taken into account. The committee wants jobs to be spread to different parts of Scotland—not all jobs should be concentrated in Edinburgh. However, there is no blank cheque for relocation, nor should there be. Moreover, a very firm managerial plan should be in place before relocations go ahead.

Mark Ballard gave the example of the Accountant in Bankruptcy. Recruiting a whole new organisation because of a relocation—apparently, only one member of staff transferred—raises fundamental questions about what we are doing. I am not necessarily arguing that the relocation should not have proceeded, but the committee would like the cases, the costs and the information to be made explicit. We need clear information on what is happening in SNH, in particular. I understand that the costs of that process are escalating, because the industrial relations issues are so difficult. We need further information from you on those issues. You must clarify whether cost-effectiveness is a parameter or whether you are simply saying, "We will go ahead in order to meet relocation targets."


George Lyon: : I did not intend to say that there was a blank cheque. I hope that the committee did not take me to mean that.


Mr Swinney: : That is what it sounded like.


George Lyon: : Certainly not. I am saying that we carry out proper evaluations and provide criteria to evaluate each relocation. Decisions are made on the basis of the information that is presented.


The Convener: : Where is the information published, so that we can see it? One concern in the past was that the way in which locations were being identified seemed to lead to a high proportion of relocations to places within 20 miles of Edinburgh. The result was that institutions popped up in Dunfermline, Livingston and Linlithgow. We seem to have moved off that track and on to a track that involves more institutions moving to Glasgow. There may be circumstantial issues attached to that. For understandable reasons, I may feel differently from John Swinney about the matter. However, at present we do not have the transparency that we need in order to see how decisions are being made and to identify the triggers for those decisions and the benchmarks that you are using to evaluate whether relocation should proceed.


George Lyon: : We will introduce the transparency that you seek—the case study for each relocation will be published. We will also carry out evaluations, which will be important in informing us not only of the financial benefits of relocation, but of the benefits to the wider community. It is important that we take those into consideration as each decision is arrived at. We are certainly not saying that there should be relocation at any price. Each relocation will be evaluated on the basis of the information that is provided and the case that is made for it. In future, that information will be published.


The Convener: : I will indulge John Swinney with a supplementary before coming to Derek Brownlee.


Mr Swinney: : I want to pursue your response to Mark Ballard's question about the Kilwinning example. Any layman who is told that an organisation that is relocating from Edinburgh to Kilwinning will have to double run for a period, because only one of the existing staff is moving, will automatically think that a heck of a lot of money will be needed to fund the relocation. Are you prepared as a priority to publish the evaluation of the entire transfer of staff and to give us today a figure for the cost to the public purse of the Kilwinning transfer?


George Lyon: : The information will be published as soon as the relevant piece of work has been done. We will make the evaluation available to the committee. Are you talking about the initial business case or the evaluation that will be carried out once the organisation has transferred?


Mr Swinney: : I am talking about everything. It is all very well putting an initial case that suggests that it would be a good idea to transfer the Accountant in Bankruptcy from Edinburgh to Kilwinning. However, when only one of the 140 staff decided to transfer, it was necessary to double run the organisation—in effect, to have two Accountants in Bankruptcy—in order to secure the relocation to another part of the country. I am interested in the initial evaluation and the practical financial consequence for the taxpayer.


Morris Fraser: : There are two issues. As the minister says, we will publish the evaluation of the Kilwinning relocation. All future reviews will be published. The Accountant in Bankruptcy is currently operating in one North Ayrshire location and one Edinburgh location. The combined rent of those two buildings is less than that of the organisation's previous headquarters on George Street in Edinburgh, even though they have more floor space. The AIB is already saving money on rent, which is its biggest expense.


Mr Swinney: : You say that the rent is the biggest expense, but it cannot possibly be.


David Robb: : It is the biggest variable.


Morris Fraser: : Yes, it is the biggest variable. We cannot change the number of staff, but we can change the space where people operate and where that space is.


Mr Swinney: : I know, but we were told by the minister a minute ago that the organisation was double running. I understand the concept of double running. To me, it means—


Morris Fraser: : It does not mean double the staff. The AIB had taken on a new role, so the office went from having just under 80 staff in Edinburgh to 140 staff in North Ayrshire. That is not because there are two people doing every job; the staff are taking on more work. The original estimate for moving was in the region of £7 million. That is what it would cost to do the whole thing—recruiting, training and double running. The AIB has published figures to show that it managed to do all that for about £4 million. The saving in rental could be about £500,000 every year, which is, as David Robb says, the biggest variable. We fully intend to publish all that information in the evaluation. Audit Scotland will no doubt be very interested in it.

David Robb mentioned the timescale over which we can judge efficient government and best value. If we judge those over a two-year period, it will look like £4 million is being spent to move 140 jobs. Over 10 years—


The Convener: : When will you be able to publish that information? If the publication date is a long way away, will you be able to publish an interim evaluation? I would make the same argument for SNH. When can we have an interim evaluation of the costs associated with its move?


Morris Fraser: : In the case of SNH, that will be when the costs are known. There is currently a lot of talk about the various component parts as they emerge—which is quite right. However, SNH has not yet moved into its building and I do not think that it would be right to make an estimate for something that might not happen. Having said that, we would certainly be pleased to inquire about that possibility.


David Robb: : We can certainly look into the matter in the cases of both the AIB and SNH. I suspect that a certain amount of the information is already in the public domain. If it would be helpful for us to gather that together and to speak to both organisations about how much information they are willing to share at an early date, even on an estimate basis, we can consider doing that.


The Convener: : We could perhaps have a letter from you using those two examples, if members are agreeable to that.


George Lyon: : We will get a letter to you, according to what information is available.


The Convener: : Yes—to give us an update. That could cover the operational costs of double running, if that is what is happening, as well as any industrial relations issues in relation to SNH. That would be particularly useful.


Mark Ballard: : There is also the information about the rental cost, which would seem to form part of an argument for relocation within Edinburgh or away from George Street. I would be interested to know more about such rental figures.


George Lyon: : The comparative rental figures are important. They underpin many of the arguments.


Derek Brownlee (South of Scotland) (Con): : Before I move on to the main thrust of my questions, I want to ask about the list of 500 potential sites. Presumably, the list is not capped at 500.


George Lyon: : No, it is not.


Derek Brownlee: : Presumably, the list is a living document. Is it available publicly? Will it be published?


George Lyon: : It is not yet public, but we intend to publish it. We are working with councils and local enterprise companies on the valuations.


Derek Brownlee: : Is there a date by which it is due to be made publicly available?


George Lyon: : I think that, as soon as the work is completed, we will make public all the grey areas. Some of the information will already be in the public domain; it is no secret that a lot of work has been done by local enterprise companies and local councils to identify sites—for example, in Inverclyde. That sort of information is in the public domain already.


Derek Brownlee: : I will come on to the main thrust of what I was going to ask, which concerns the business improvement aspects of relocation. The paper with which we have been presented discusses relocation as a "trigger" for reviewing more fundamental issues around how services are provided. It mentions

"space utilisation … the use of new technology"

and so on. Would you apply that only to bodies that are coming up for review for relocation, or is it happening right across the Executive?


George Lyon: : At the moment, the trigger is lease break. Some small units within the Executive are being identified as candidates for relocation. The Procurator Fiscal Service and the administration of the housing grant scheme for crofting communities are two organisations that came to mind. The efficient government exercise and best value might provide us with opportunities to identify other bodies that might trigger the process. We are trying to work out how best value and the efficient government exercise can play into the policy. Doing so might provide us with other opportunities to consider relocations.


Derek Brownlee: : If I have correctly picked up what you have said, there will not necessarily be an on-going review of the space utilisation of bodies across the Executive whose leases are some years away from coming to their end, for example.


George Lyon: : Once the evaluation is done, the benchmarking work might provide us with an opportunity to consider bodies across the Executive. That opportunity will be discussed at that point. There may be opportunities to reconsider how we approach the policy and to look at how that will impact on bringing more parts of the Executive and its bodies on to the relocation policy agenda.


Derek Brownlee: : I want to pick up on the point about rents and the Accountant in Bankruptcy. If double running—or whatever one wants to call it—is set aside, savings in rents would seem to be a good example of how relocation can deliver lower running costs. The section of paper FI/S2/05/30/1 that deals with the comparative study states:

"Efficiencies through relocation are more easily delivered in the English context as not only are accommodation costs higher in London than other parts of England, but the increased staff costs associated with ‘London weighting' in salaries also means operating from regional centres can create staff cost savings."

Is not the situation in Scotland comparable? Is what is said simply not the case? It is true that moves from Edinburgh can result in reductions in accommodation costs. I assume that there must also be potential savings on staff costs.


George Lyon: : We should consider the context of that part of the report. A London weighting is applied to the salaries of all civil servants who work in London. As a result, there will be direct savings when there is relocation out from the centre as well as the added benefit of lower accommodation costs. There is no Edinburgh weighting and so no direct read-across for Scotland.


Derek Brownlee: : But in the light of what you have said about Kilwinning, it does not seem correct to say that it is easier for departments that move out of London to make savings on accommodation costs than it is for Scottish Executive bodies that move out of Edinburgh.


George Lyon: : Rental values in and outwith Edinburgh are different, so moving outwith Edinburgh would be a benefit, but the comparison was between the salary levels.


Derek Brownlee: : The comparison is with the Gershon review. The Gershon targets might not be directly comparable with the Scottish targets, but the paper clearly states:

"Efficiencies through relocation are more easily delivered in the English context"

and it mentions accommodation costs being

"higher in London than other parts of England".

Surely the statement simply cannot be correct.


George Lyon: : A combination of accommodation and staff costs is involved.


David Robb: : We apologise if the wording is misleading in any way. The problem lies with the "not only … but … also" phrase. It has been clearly established that there are differences between rents in the different cities and rents in other parts of Scotland, so it is possible to achieve efficiencies in that respect. However, as the minister has said, the sentence tries to draw out the fact that a salary gradient exists in the public sector in England that does not exist in Scotland. I apologise if that is not clear.


Derek Brownlee: : Are not potential savings on staff costs through relocation being considered, even though people have the same salary when they move from Edinburgh to Glasgow or wherever?


George Lyon: : Benefits might be achieved such as those that the Scottish Public Pensions Agency has achieved—it has reported greater output. There can be such benefits.


David Robb: : Sometimes there can be hidden savings through reductions in staff turnover.


Derek Brownlee: : So, it is an efficiency thing. I guess that a saving through staff turnover could be described as an efficiency saving in the broadest sense of the term. However, there is not necessarily a cash saving in moving the posts, because the posts will be remunerated at the same level in Edinburgh as they would be wherever else in Scotland they were relocated.


George Lyon: : It is the same; the salary system is negotiated at the UK level.


Jim Mather: : I am keen to explore the reporting side, as I think we agreed that it is not unreasonable to expect pretty fulsome reporting. Over time, I would like the situation to develop such that we can see not only the total number of jobs that have been moved but the total relocation cost, average relocation cost per job, percentage of staff that were retained and the number of jobs that were taken up by local people. Perhaps the definition of local people who are looking for work should include people who return to an area such as Tiree to take up a post or who were on the island for six months before the relocation took place. What is your feel about your ability to give us that level of data?


George Lyon: : I hope that the evaluation will provide that level of detail. It is important that the committees of the Parliament are able to scrutinise whether the policy objectives are working. I am thinking of the socioeconomic benefits and the efficient government agenda.


Jim Mather: : Equally, it is not unreasonable to expect to see, over time, the number of jobs that are relocated being reported as a proportion of total civil service and NDPB jobs. That would give us the chance to see how material the policy is. The data should be reported in a way that shows the impact of the policy on the 200 locations. That level of reporting would allow us to see which locations are doing moderately well and those that are falling behind.


George Lyon: : I hope that the evaluation will produce some of that information for us to be able to use.


Jim Mather: : That is entirely positive. I welcome that.

The other issue that I want to explore is the comparative international study, which is to be applauded. I would be interested to see a comparison of the volumes that are being achieved elsewhere. I note the Irish example, which is stepping up to 10,500 jobs, but acknowledge both the problems and the totally different climate in which the numbers are being achieved.

Once we have the data, we can have a proper evaluation of the different climates and relocation costs. Is that the intention of the study? Will it drill down to that level of detail?


George Lyon: : I hope so. At the end of the day, it will inform our decisions on whether to make changes to the policy. Committee members have put forward the strong view that we should adopt the Irish approach. I hope that the evaluation and the comparative study will give us the evidence to allow us to make the correct decision on any changes to our policy. Although I am open to change, I want to see the evidence before we make any further progress.


Jim Mather: : Do you have any plans to make the policy a little bit more competitive? I suspect that parts of Scotland would welcome the chance to present their attributes, such as lower property costs, better ability to find adequate candidates, higher retention rates and so forth and the ensuing lower recruitment and training costs.


George Lyon: : I understand that local authorities and local enterprise companies are already doing that to provide evidence that their area is a good place to come to and should be prioritised as a candidate location for the next round of relocation. That work is also very important.


Jim Mather: : I will just go back and complete the cycle, minister. Let us take the situation of a relocation in which the cost per job is way out of line, as is the figure for staff retention—it is much lower than we would have hoped. What steps do you plan to take to identify and publish the lessons learned and to tell us what will be different in future?


George Lyon: : The evaluation process and the Audit Scotland work will highlight some of the concerns that the committee has on the matter. When I return to give the committee an update in six months, we can discuss the issues further. Audit Scotland's work is due to be completed in April, so we will have that. We hope to be in a position to inform the committee of the evaluation.


Jim Mather: : The key to facilitating that discussion is a document that gives us the cost data.


George Lyon: : Yes. I am happy to agree that that is the right way to proceed. We need the evidence to back up what has happened.


Mr Andrew Arbuckle (Mid Scotland and Fife) (LD): : Will the minister explain what is—to me at least—an apparent contradiction? You have told us your policies and your reasons for relocation, yet a new public sector body, Scotland's Commissioner for Children and Young People, has been established in Edinburgh and the office of the Scottish information commissioner has been established in St Andrews, which has a high employment rate. Does the public bodies unit discuss the establishment of new bodies?


George Lyon: : That is a matter for the Scottish Parliamentary Corporate Body, because those organisations are creatures of the Scottish Parliament. I understand that Audit Scotland and the committee have considered that matter.


Mr Arbuckle: : We will return to that.


Dr Murray: : At the moment, lease breaks trigger relocation exercises. You suggested in answers to earlier questions that you were thinking of broadening that. Would you consider relocating organisations and selling buildings that are owned by the Executive or agencies to realise assets? That is one way in which the Irish fund their relocation policy.


George Lyon: : That is one approach. As I said, the introduction of best value throughout the public sector and the efficient government initiative allow us to consider such opportunities, which might bring into the evaluation process other organisations that would otherwise not be available to us because they have no lease break.


Dr Murray: : You might sell Victoria Quay in the long run.


George Lyon: : I am not sure whether I could go as far as that.


Dr Murray: : Another issue that arose from the Irish experience was transferability. The Irish handled some staff churn issues by transferring people between the civil service and NDPBs. The Executive has taken that on board and produced a list of NDPBs whose staff may be transferred. Is that list comprehensive? How were organisations put on the list? I ask because Scottish Enterprise is not on it. Is that because you do not want Scottish Enterprise to be on it or because it is not likely to relocate?


Morris Fraser: : The Cabinet Office published an invitation to NDPBs to apply to be on the list. The list that we have is the Cabinet Office's list of the bodies that have applied so far. If Scottish Enterprise is interested in being on the list, it will apply.


Dr Murray: : Is that not a little unfair? It means that the management decides whether the workers can transfer.


Morris Fraser: : That is exactly right—that is how NDPBs work. The management, the board and ministers all have something to say, and I have no doubt that staff are consulted.


Dr Murray: : However, staff of organisations that decided that they would not go on the list could be disadvantaged. They could lose the advantage of having the possibility of returning to the civil service if appropriate vacancies were available.


Morris Fraser: : Absolutely. However, the answer that the Cabinet Office would give is that, to achieve transferability, it must ensure that people have been recruited in roughly the same way as the civil service recruits, as that provides a level playing field. Individual staff could probably not answer for that.


The Convener: : In that case, is there an argument for the Executive offering NDPBs guidance on applying to join the list? It seems anomalous that Highlands and Islands Enterprise has opted to join the list whereas Scottish Enterprise has not.


George Lyon: : I am willing to reflect on that point.


Dr Murray: : Do you know whether staff who transfer from an NDPB will transfer with continuity of service?


George Lyon: : That is the intention.


Morris Fraser: : We are pressing the Cabinet Office for guidance on that.


Dr Murray: : I appreciate that it is a UK Government issue.


Morris Fraser: : We are very aware of the issue.


Mr Swinney: : Is the public bodies unit's only function to deal with relocations or does it have a wider remit?


David Robb: : I am trading here slightly under false pretences. Nowadays my division is called the public bodies and relocation division, to signal the fact that responsibility for relocation policy has moved within the Executive. Previously, the public bodies unit had responsibility for policy on arm's-length bodies, the public appointments process and ethical standards. Eighteen months ago, we added the relocation team, so our proper Sunday name is the public bodies and relocation division. We still look after all those subjects.


Mr Swinney: : How many civil servants are involved in the relocation side of the business?


David Robb: : There are six in the team and there are some virtual members.


Mr Swinney: : Virtual members? Are they virtually located somewhere?


David Robb: : We draw on expertise from colleagues in economics, in human resources and in estates and property. We have a number of people who assist in particular reviews.


George Lyon: : A number of the staff are sitting here in the audience.


Mr Swinney: : We are delighted to welcome them. Are the virtual members located in another part of Argyll and Bute or is that just a conspiracy theory? Is there a budget for the relocation unit's total activities?


David Robb: : I cannot, off the top of my head, break down what the relocation team costs, but I can tell you the total budget for the division.


Mr Swinney: : It would be helpful if you could supply that.


The Convener: : In the earlier discussion, there was a debate about costs and effectiveness. Does the relocation approach that you are moving towards take adequate account of the savings framework that you have adopted, travelling through from Gershon, about saving back-office costs and merging organisations? How does that fit with the approach that you are trying to take?


George Lyon: : That plays into the approach that we are taking.


The Convener: : How? Can you give us any examples of where relocation has been linked to a Gershon-type savings framework, and where savings have been clearly identified?


George Lyon: : We have some examples of that.


Morris Fraser: : There are a couple of relocation projects. I suppose that the best example would be in Dundee, where the Scottish Social Services Council and the Scottish Commission for the Regulation of Care were located under the relocation policy. They went to a particular building, where they are considering using Gershon-type back-office sharing, as well as sharing facilities with three other parts of the public sector in another bit of Dundee. Essentially, Scottish Enterprise, Communities Scotland and various other bits of the public sector are all getting together to share, at the very least, meeting rooms and reception and so on. That is an example of a relocation that has led to consideration of wider issues.

The idea of sharing back-office facilities and reducing costs is also now explored in each location review. In future, where possible, we would consider more than one body at a time in a location review. Again, the idea is to drive out some sharing and efficiencies.


The Convener: : In other words, you might consider a sort of clustering of relocated bodies. Is that linked in with the targeting approach that you are discussing with some local enterprise companies? Is clustering part of that thinking?


George Lyon: : One issue that is being explored in developing the policy is where the clustering approach could bring benefits.


The Convener: : It is not in any of the documentation that we have seen. It would be quite interesting for the committee to get that information.


George Lyon: : I undertake to provide the committee with information on that.


David Robb: : We might include in that a report on what is happening with some of the environment bodies. Stimulated by the decision to move SNH headquarters to Inverness, there have been active discussions among a number of the bodies in that portfolio and in that geographic area about the possibilities for greater co-operation. There is an initiative called on the ground, which is considering environment-related bodies throughout Scotland more widely. We would be happy to provide further information on that if that would be helpful.


The Convener: : There are no further questions from committee members, so I thank the minister and his officials for coming along today.

Item in Private

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The Convener: : The committee must decide whether to take its draft report on the financial memorandum to the Scottish Commissioner for Human Rights Bill in private at its next meeting. Are we agreed to take the item in private?

Members indicated agreement.


The Convener: : I wish my colleagues a happy Christmas and look forward to seeing them bright and happy in the new year.


: Meeting closed at 12:31.