Public Audit Committee

Meeting date: Thursday, October 6, 2022

Official Report 648KB pdf

---

Scottish Government Relationships with Public Bodies (Progress Review)

In our first evidence session this morning, we will consider “Progress Review of Scottish Government Relationships with Public Bodies”. I am pleased to welcome the Scottish Government witnesses in the committee room. Paul Johnston is director general communities; Mary McAllan is director of Covid recovery and public service reform; and Catriona Maclean is deputy director public bodies support unit.

Colin Beattie, who is the fifth member of the committee, is joining us remotely. I will bring him in shortly.

I invite the director general to make an opening statement, after which we will have questions. We have copies of the review report that was produced for you and your response to the recommendations in it.

Thank you very much. I am grateful to the committee for the opportunity to discuss the Scottish Government’s relationships with public bodies and the implementation of the report.

Public bodies play a vital role in the delivery of public services in Scotland. They make a huge contribution to the delivery of better outcomes for people throughout this country. They employ approximately 225,000 staff, and they spend around £22 billion of public money each year. All of that emphasises the need for clear and effective engagement between the Scottish Government and our public bodies.

In March last year, I commissioned a short review of the Scottish Government’s relationships with public bodies. The review report was published alongside the Scottish Government’s response on 28 February this year, and all 14 recommendations were accepted by the Scottish Government. I am happy to update the committee on the progress that has been made with implementation.

The permanent secretary attended this committee in February and committed to a session with his executive team on the implementation of the recommendations across the Scottish Government. I can confirm that that meeting has taken place and that I was in it. We discussed and agreed the next steps to secure the implementation of the recommendations.

Each director general now has responsibility for the relationship with the public bodies in their area, and we are all working on the recommendations with our own leadership teams and connecting with the chairs and chief executives of the bodies in our areas, with a view to ensuring that the recommendations deliver the progress that is needed and maximise the contribution that our public bodies make to delivering better outcomes. We are taking stock of progress more formally in our quarterly assurance meetings.

The recommendations include some that relate to important aspects of procedure, such as clear and up-to-date framework agreements and arrangements for the escalation of risk, but they also relate to important behavioural aspects of the role—to the need to build open and trusting relationships, to have regular dialogue, and to support our leaders in public bodies to learn, connect and, ultimately, excel in their role.

As portfolio accountable officer for social justice, housing and local government, I have responsibility for the relationship between the Scottish Government and public bodies such as Social Security Scotland. I am happy to describe the arrangements that are in place to ensure effective engagement between the Scottish Government and what is now a very significant agency that delivers social security support to people throughout Scotland.

I am joined by Mary McAllan, who is director of Covid recovery and public service reform, and Catriona Maclean, who is deputy director in Mary McAllan’s area. Catriona Maclean leads the team that is focused on implementing the recommendations and providing support to sponsor teams and public bodies throughout Scotland. I am grateful for the work that she and her team are taking forward in collaboration with sponsor teams and public bodies. It is very much a team effort that is focused on ensuring that our public bodies operate effectively to secure the outcomes that they have been tasked with delivering.

We are keen to hear the committee’s views today on the implementation of the report. We appreciate the committee’s focus on this important area. Thank you.

Thank you, director general, for that opening statement. We have quite a number of questions that we want to put to you. They cover much of the ground that you outlined in your opening statement, which was helpful. I turn first of all to Craig Hoy.

Good morning. Mr Johnston. I have some technical questions on governance and accountability. Bearing in mind that the review is quite technical in nature, they probably follow that theme.

The review notes that portfolio accountable officers are not responsible for the performance of a public body, but it makes it clear that the Scottish Government will work closely with the body and that interventions that cross the normal lines of accountability are possible and are made as a formal decision of the portfolio accountable officer. Are there guidelines and criteria on what would trigger such an intervention? Can you bring to our attention any recent such interventions?

The role of the portfolio accountable officer is ultimately set out in the Public Finance and Accountability (Scotland) Act 2000. It is absolutely correct that, as is set out in the report, each body will have its own accountable officer, who will be directly accountable to Parliament for the efficient and effective discharge of their functions.

It is the portfolio accountable officer’s role to liaise with the accountable officer and others in the body concerned. The report that we have in front of us sets out the need for clear processes and procedures around identification and escalation of risks. Before we get into that, there is a prior need to ensure good engagement between the Scottish Government and the bodies, but what we are doing in the implementation of the review is ensuring that there is added rigour around those escalation processes.

In particular, we are asking each portfolio accountable officer to ensure that, at the formal quarterly assurance meeting—which is typically attended by internal audit, Audit Scotland and non-executive directors—there is a look at all the bodies in the portfolio and, in effect, an assessment as to where they are all at in performance and delivery.

I can confirm that, in the area for which I have responsibility, that assessment is now under way and none of the bodies in my area is at a particular point of escalation. The overall process is one that we are very much still developing. We are bedding it in but, as the permanent secretary said when he gave evidence, our expectation is that we will be able to confirm by the end of the year that the implementation of all the recommendations is in hand.

Recommendation 1 states that portfolio accountable officers should ensure that sponsor teams work with public bodies and their accountable officers to make sure that their roles and responsibilities are as clear as possible. Can you provide an update on the progress that has been made on implementing that recommendation throughout the Scottish Government?

Yes. That is captured in most cases in the framework document between the body and the Scottish Government. That document should always set out the roles and responsibilities and it should be kept under regular review.

Catriona Maclean’s team has been liaising with portfolios and sponsor teams right across the Scottish Government to share good practice around some of the framework documents we see that we think are particularly crisp and clear, all with a view to building up a comprehensive register of all the framework documents. At present, most of the bodies that require framework documents have got them in good shape, but there are some that are still under development. We want to see that being fully comprehensive.

Ms MacLean, can you give us an example of that good practice? What things do you typically look for?

I will add to what Mr Johnston said. Until now, there has been a generic framework document, but we have developed documents for the different types of public body, including agencies and non-ministerial offices. That nuance was not there before, so we have created some bespoke documentation, because there are different responsibilities depending on the characteristics of the public body.

The framework documents take the responsibilities that are laid out in the public finance manual and set them out clearly so that people understand their responsibilities. An example of good practice is that each public body adheres to the model framework documents. We are in the final stages of refreshing the documents at the moment, but the draft documents are available for public bodies to use at the moment. They should be finalised by the end of this month.

If a public body is not adhering to the framework, it has to say why. Framework documents are an opportunity for sponsor teams and public bodies to look at the documents, consider what they mean for their responsibilities and consider how they interact with each other. Every public body should do that, and, as Mr Johnston said, they should review the process regularly. We would anticipate that that would normally be done on a three-year cycle.

The framework documents sound pretty integral to the whole process, but paragraph 4.9 of the review described examples of where the roles and responsibilities of both parties are not always understood, and it says that the way in which the Scottish Government works with public bodies in practice does not always follow the expected lines of accountability. What steps can portfolio accountable officers take to ensure that what should be happening is actually happening, and that the document is a living, breathing entity?

You asked for some specific examples, and a number come to mind. I have to say that, at times, the framework documents have been revised and updated when things have not gone so well, in particular in the light of the scrutiny of the predecessor to this committee. I was a witness to your predecessor committee to speak about Bòrd na Gàidhlig. That is an example of a body whose arrangements have been clarified and strengthened. I could point to a current, up-to-date framework document to show that, and it has been good to see more recent audit reports recognising the clarity that now exists on the role of the body and its relationship with the Scottish Government.

I can also point to the framework documents that exist between the Scottish Government and Social Security Scotland and those that exist between the Scottish Government and the Scottish Housing Regulator. Those bodies are very different in size and scale and the framework documents would not be expected to be the same for those bodies, but I am looking for clarity as to what the body is there to do and how it will interact with the Scottish Government.

Recommendation 7 deals with how regular contact between sponsorship teams and boards should be. What do you see as an appropriate level of contact and what form would that take? How can we avoid repeats of situations similar to those involving Bòrd na Gàidhlig and the Crofting Commission?

We have thought a lot about that issue, and the report is quite helpful because it does not suggest that there should be a one-size-fits-all approach or that a Scottish Government official should sit in on every single board meeting. There must be regular contact and dialogue between the sponsor team and the public body.

The report recognises that there will be occasions on which Scottish Government officials—and, at times, ministers—will attend board meetings. That might happen when the body is looking at its overall strategy and forward plan, but we need to ensure that we have good engagement with, but not interference in, the important role that bodies are set up to carry out.

I welcome the conclusion of the report that sponsorship teams will not routinely attend every meeting, but that, if there are concerns about a body, there could be a point of escalation when it might be appropriate for the sponsor team to be much more present and visible at its meetings. However, there should be clarity as to why that would happen and the duration of it.

There has to be a balance. Undoubtedly, the Scottish Government has been accused of being too distant when things have gone on in public bodies, and at other times it has been accused of being too interventionist. The report is helpful in giving us some guidance as to the balance.

09:30  

Is there a risk that you are focusing on the bigger organisations, whereas the examples where the wheels have flown off have involved smaller organisations? Are there particular types of intervention that you should deploy in relation to smaller organisations that may be more reliant on boards rather than on civil service staff?

If I can be candid, your observation absolutely resonates with my experience. The times that I have been before your predecessor committee have often been in relation to our smaller bodies, so I do not think that it follows that the amount of effort that the Scottish Government puts in depends on the size of the body. We know that there can be issues if a body does not have sufficient skill and capability to cover the whole range of its functions. That is why some of the recommendations in the report about the need to be quite careful about the creation of further small bodies are useful.

I am about to turn to Colin Beattie. Before I do that, I must observe that Mr Johnston has invariably appeared before us or our predecessor committee when things have gone wrong and when section 22 reports have been conducted by the Auditor General. This morning, we are outside the eye of a crisis and are keen to have an evidence session that allows us to understand how things work now. That is why we are interested in hearing more about where things are going right.

Colin Beattie is joining us online.

We are looking at the review in the context of many years of governance failures in various bodies, of which sponsorship was a significant element. That is an area of real concern.

In the area of capacity and capability, I was alarmed that the report highlights that there is a significant churn in staffing, that many staff who are in sponsorship at the moment are inexperienced and that many posts are vacant. Whatever good ideas you have about going forward, until those posts are filled and you have trained people who understand sponsorship and can take part in the governance process of those bodies, you are going nowhere.

The report was written some months ago. What is the position now? How significant a capability challenge do you have at the moment because of the deficiencies that the report highlights?

To respond first to what the convener said, I would be delighted to say more about the successes of our public bodies. There are many successes: I have already referred to Social Security Scotland, which is the biggest body within my area. I am proud of the achievements that it is making. It is an example of really robust engagement between the Scottish Government and the body concerned.

To turn to Mr Beattie’s question, we have good capacity in place in the Scottish Government team to ensure effective connection and engagement with what is an important new agency in the Scottish public sector landscape.

I recognise the report’s point. There has been a great deal of churn in roles during recent years. The Scottish Government has had to pivot enormous resource towards dealing with the Covid-19 pandemic. At times, we have expected staff from right across the organisation to stop doing what they were doing and move into that emergency response. Even this year, we have moved around a significant number of staff to deal with issues such as the cost of living crisis and our response to the war in Ukraine. Both of those issues have required a lot of staff movement in the areas that Mary McAllan and are responsible for.

Nonetheless, we are asking each portfolio to ensure that they have teams in place that can perform the sponsorship roles effectively. Part of what we are doing is offering support and training to sponsorship teams. Some sponsorship teams are new and some have real depth of experience, so there is a mix but, whether the teams are experienced or new, they are availing themselves of the training offer that Catriona Maclean and her team are putting in place.

The committee will be very conscious of the resource constraints that we face in Government and across the public sector at the moment. Therefore, we are also looking at how we ensure that, in portfolios, we have good expertise in sponsorship but, potentially, with fewer people in that role than has been the case in the past. For example, some of my colleagues are looking at whether we can pull together those sponsorship functions into more of a hub model, so that we get deeper expertise in the sponsorship of bodies right across the portfolio.

I hope that that helps with the question, but I acknowledge that ensuring that we have enough people with the right skill and capacity is a challenge.

You did not actually answer the question. A year ago, the review highlighted the issues of staff churn, inexperience in sponsorship work and the fact that many posts were vacant. I asked you what the position is now with regard to that specific situation. It was described in the review as a significant challenge to capability. Has that challenge gone away?

There is still a challenge in terms of vacant posts, because there are issues around the affordability of filling every post. That will vary from portfolio to portfolio. In my portfolio, I am content that I have people with the right skill and experience to do the sponsorship role well. I am sorry if my answer was not clear enough. My answer to your question is that it is for us in the central unit to offer support and training, and that is what we are doing, as new people come into the role. Catriona Maclean can say a bit more about that.

With regard to the support and training, we have introduced lunch-and-learn sessions for sponsor teams and we have run eight sessions focusing on different parts of governance and responsibility. On average, about 77 people from different sponsor teams have attended those sessions. Sponsor teams are also able to come along to the accountable officer training events that we run for accountable officers. In addition, we have initiated a sponsorship round table, where sponsor teams can come together to share good practice. We feel that all of those things are supportive of sponsor teams and help them to have better capability and understanding.

As we have been engaged in that overall programme of work this year and have been developing products to support staff, we have been doing so with the sponsor teams—experienced and inexperienced—and our public bodies. That whole process has been really positive in helping people to understand their roles and responsibilities, and that has been a positive outcome of engaging with sponsor teams.

If I, simplistically, compared today with a year ago, where would I see improvements?

I can point to a number of examples of where you should see improvements. In my area, I point to the strong engagement that sponsor teams have with the bodies in the social justice, housing and local government portfolio. We have seen that endorsed in audit reports, most recently around the performance of Social Security Scotland, because of its engagement with the Scottish Government, its clarity of purpose and its delivery of benefits for people across Scotland. That would not be possible without the really clear and robust sponsor arrangements that are in place between the Scottish Government team and the agency. That is one specific example.

I have already referred to Bòrd na Gàidhlig as another example where improvement was required, and we can now point to clarity in the formal processes and procedures as well as the good relationship between the sponsor team and the body concerned.

However, if I tried to quantify the number of posts vacant, the number of staff who were inexperienced in sponsorship and the percentage volume of churn, where would we be today compared to a year ago?

I could take that away and try to give the committee more information on it. I do not expect, and I do not think that you would expect, that I will come back and say that we have far more people doing the work because, as ministers set out in the resource spending review earlier this year, we expect that the overall size of the Scottish Government will return to pre-Covid levels and we have expectations about the public sector workforce as a whole. Therefore, I expect that overall numbers will not be more. I am looking for capability and skill to be built and enhanced through the programme of work that we are describing.

It takes time to train people. We cannot do it all at once. However, we are probably four fifths of the way through training the sponsorship teams in the Government in the new methods to which Catriona Maclean referred. We will have to see how effective that is.

Another important thing is happening. As Paul Johnston says, we are and have been in a situation of a lot of flux that has had to be responded to. There have been inexorable requirements. However, I would describe the situation that we are now in not as “static” because that sounds negative but as a return to normality. People are expected to stay in post for a certain length of time. It has to be said that the requirement to move and, therefore, to some extent, the opportunities to move around in Government are less at the moment because we are responding to the fact that we are in a difficult situation in terms of costs, as all the public sector is.

In combination, the training, the greater length of stay in an area and the fact that we are encouraging sponsor teams to reinforce each other—that is the hub process that Paul Johnston described—are all part of the response to the matter but we cannot achieve the goal in a day. We are taking our time to ensure that people get the help that they need to be aware of what they need to be aware of and we are trying to do that as quickly and comprehensively as we can. Some of the background circumstances in the Government are probably helping us in a way that, in the previous two years, they possibly did not.

Recommendation 8 states:

“Portfolio Accountable Officers … should review the capacity and capability needed in their teams to ensure that relationships are being managed well”

and so forth. The Scottish Government agreed that capacity and capability should be reviewed, and the work was scheduled for 2022.

What progress has been made on that? Is there a date attached to the delivery of that work? How far on our way are we with portfolio accountable officers reviewing the capability and capacity that is needed in their teams?

I will pick that up. As you say, Mr Beattie, we have identified 2022 as the period for implementation. In the portfolio for which I am responsible, I have done work on capacity and capability with my team and am satisfied that we have the capacity and capability that we require. It is not that staff are not stretched—they are. We will keep that capacity and capability under review in the quarterly formal assurance process meetings to which I referred.

My fellow portfolio accountable officers are doing the same. They have all been asked to complete the initial review of capacity by the end of the year, so I would be happy to follow up with the committee as that is done. Some are considering changing the sponsorship model to more of a hub model rather than individual teams, particularly those who have a number of bodies with related functions. In those circumstances, you can see why, rather than small, disparate teams, a single team that takes sponsorship as a whole might be a good way to go. I am part of discussions at our executive team on the different models that are being considered for sponsorship.

09:45  

I will just follow up on Colin Beattie’s questions. It would be useful for us to understand what the vacancy rate is now and what it was at the time of the report.

I am also interested in the fact that sponsor roles are not seen as “sexy”—somebody says that in the report; I am not sure that it is the view of the report. I am not sure what that means. People in sponsor roles are in bands A to C. The salary range starts off in the low £20,000s in band A, but goes up to about £76,000 in band C. Are you having difficulty in attracting people to the higher-paid posts or to the lower-paid posts? Where is the problem in that spectrum of pay grades?

Mary McAllan or Catriona Maclean may want to say more, but I, too, noticed that comment in the report. Certainly, the sponsor teams that I work with recognise how important that role is. There is no general issue of not being able to get people to fill sponsor team roles.

As Mary McAllan has mentioned, in recent years, a lot of people have moved to what could perhaps be described as emergency areas, whereas part of the sponsor team role is a regular, perhaps more patient, persistent and on-going engagement, to ensure that public bodies are operating effectively and are well run. I cannot speak for whoever made that comment, but perhaps that was the sort of thing that was in their mind.

In my area, I do not see a difficulty with the recruitment of teams into sponsor roles at bands A, B or C. As you will appreciate, a number of roles and responsibilities are relevant to each of those. At band C, I expect to see really active engagement with the senior leadership teams in the public bodies concerned. Those important relationships can help to get the job done.

However, we can respond to the committee with more granular information about where we are at with vacancies.

Thanks. That would be helpful.

I move on to another area. A couple of minutes ago, Mr Johnston, you said that fewer people are carrying out the role and that it is about how that workload is managed. However, at the same time, new public bodies are being created.

I am interested in the railways, for example—I refer members to my entry in the register of members’ interests. As I understand it, under the structure from 1 April this year, Scottish ministers act through Transport Scotland, which has oversight of Scottish Rail Holdings, which in turn has oversight of ScotRail Trains Limited, and—who knows?—after this weekend, maybe the Caledonian sleeper will be added to that list. How does that relationship work in practice? I know that it is not within your directorate, but I want to understand how the sponsor arrangement operates when a new public body is created.

From the outset, when a new public body is created, there should be close engagement between the Scottish Government and that public body. That has been my experience with the bodies that I have had responsibility for in the past, including, most recently, Social Security Scotland, which has been in existence for only a few years. You could expect to see a very close engagement at the outset.

Normally, the Scottish Government officials who have a role in the initial round of recruitment are responsible for drafting a lot of the initial documentation that will govern the relationship between the body and the Scottish Government. In time, as a body matures and—we would hope—becomes more stable, we get into more of a business-as-usual relationship.

However, on your point about new bodies, I will make two points. First, many of the bodies in the Scottish public sector landscape are put in place by the Parliament. Often, we are responding to what the Parliament has deemed appropriate in the public sector landscape.

Secondly, I welcome recommendations 2 and 3 in the report. I recognise that, ultimately, whether a body is created is a matter for ministers and the Parliament. However, speaking from my experience as an official, it is sensible that there should be a presumption against new small bodies, and a requirement that any new body should involve a full business case and an expectation around shared services. We are working on that at present to ensure that there is a control framework in the Scottish Government, so that when a new body is proposed, a series of checks and tests must be undertaken to ensure that, for example, alternatives have been considered—do we need this body, or could an existing body undertake the functions—and, if it passes that check, whether it has to have its own finance, human resources and information technology services, or whether it could share those with other bodies. In implementing the review, we seek to ensure that there is a greater and more stringent series of requirements before new bodies can be created.

It would be interesting to understand the process in relation to the establishment of Scottish Rail Holdings and whether that is classed as a small body. I do not know how many people it directly employs, for example.

There is a tension here, is there not? I picked up something else from reading the report. In paragraph 4.11, an interviewee encapsulated what they thought was necessary, which at first I was quite attracted to, but then I thought about it a bit more and I have another comment on it.

In that paragraph, the interviewee says that it would be useful to set out

“what you can expect from us”

and

“what we expect from you”.

I thought that that was a neat encapsulation of the issue, although when I reflected on that a bit more, I thought that it sounded a bit like a master-servant relationship—it did not sound like a partnership of equals.

One thing that we come across in section 22 reports is a blurring, a confusion and an unclear sense of where roles and responsibilities lie. Paragraph 4.4 warns that

“Establishing a separate body and then managing it too closely risks undermining the benefits of separate status.”

First, do you agree with that analysis? Secondly, how do you see that in relation not only to Scottish Rail Holdings but to other bodies that are being created to deliver public services under the auspices of the Scottish Government and maybe at the instigation of the Scottish Parliament?

I am sorry, but I am not able to provide you with the detail around the establishment of Scottish Rail Holdings. That does not fall within my area, but I am very happy to connect with my director general colleague and ensure that the committee gets further information on that promptly.

I am also interested in paragraph 4.11, and I had highlighted the suggestion that you had highlighted. I thought that it made sense. I went on to highlight, halfway through the paragraph, a comment that gets to the heart of the issue:

“What is important is that officials in SG and each public body have a shared understanding roles and responsibilities.”

The report goes on to describe the need for good collaborative work between the Scottish Government and the public body on what that framework document looks like. It should be a collaboration; one should not be more important than the other or be telling the other what to do. There should be clarity on roles and responsibilities.

The report does not say that each framework document must look a certain way and it is not prescriptive about what each paragraph must say; rather, it says that each framework document must be the result of good collaborative engagement, resulting in a crisp and clear description of what the body will do and what the Scottish Government will do. That is what we want to see more consistently across the piece.

I will bring Willie Coffey in shortly—I just have a final question first. This might be for Catriona Maclean to answer. To some extent, you described the difference between the public bodies unit and the public bodies hub, which is alluded to in the report and on which there is a related recommendation. Can you comment on where that lies?

I am also interested in understanding this: you described how you are 80 or 90 per cent of the way through training people in sponsor roles in the Scottish Government. To what extent are you involved in the training of the members of those boards, and the people in agencies outwith central Government who are oftentimes involved in making operational and strategic decisions for the non-departmental public bodies and agencies and so on that they are on the boards of? Will you tell us a bit about the extent to which you have a training programme or have any other interaction with those people?

I will focus on the latter aspect first. We have a governance hub that all board members can access and that has modules on different governance arrangements, strategic decision making, how to manage difficult relationships and issues such as that. We are building on that hub, which is available to all board members and to the senior teams in public bodies.

We also run training courses for new board members; in fact, we did one about four weeks ago. Audit Scotland, the Commissioner for Ethical Standards in Public Life in Scotland and colleagues from the equality unit attend that training event to explain the responsibilities, as does the public bodies unit, which helps people to understand their responsibilities as accountable officers.

We also run accountable officer events, which bring together accountable officers from public bodies. Again, we go through a number of different programmes on that day, where people can access information on a wide range of issues for which they are responsible.

We have to remember that responsibility to ensure that its board members are trained and undergo an assessment of their performance also lies with the body itself. That is also important.

In our board event, we encourage board members to ensure that they ask their body for training and that they are clear about their responsibilities—and, if they are not, to engage with their chair. We also encourage an informal network of buddying for new board members and encourage them to engage with more seasoned members of their own board or other boards so that they have some sort of informal mentoring programme.

That is what we put in place to give training to our board members who are delivering their role in Scotland.

In relation to the public bodies unit, my small central team tends to be a co-ordinating team. We focus on providing advice and support across Government and to public bodies, as I described. However, as Mary McAllan described, we are keen to extend those tendrils to bring in people from across other sponsor teams to share what they have learned, what good practice they have seen and where things have not gone well.

For example, I know that education and justice bring their chief executives together to look at section 22 reports to see where there have been difficulties and how they can learn from those difficulties in a more controlled environment, rather than in the heat of the moment when things have gone wrong.

We were conscious that the Auditor General had said that it was difficult to assess relationships. It is not about when things are going well but about when things are not going well, as that is usually when the stress test occurs. To respond to that, we have created a number of desk-top exercises that we can play out in real time with sponsor teams and the senior teams in public bodies so that they can test how they would respond to a crisis but in a safe environment. So far, we have done that with two public bodies. We have taken feedback on how they found that experience to refine our process and make that available across the DG families more broadly so that they can implement that with their public bodies.

Thank you—that is very helpful. I have other questions in my head. However, because of the time constraint that we are under, we could maybe set those out in writing for you to follow up on to get a bit more—as I think that Mr Johnston described it—granular detail on some of those areas. That would be helpful to the committee.

10:00  

Good morning. I welcome Paul Johnston back to the Public Audit Committee—hello again.

I will broaden out the discussion a wee bit and talk about things such as management standards and project management quality standards. The sponsorship arrangements and toolkit—if we can call it that—are crucial and it is important that they are clear. Reference was made in the report to sponsor teams not being seen as “sexy”, but somebody also described sponsorship as a “black art”. Usually, that tag is used when there is a lack of clarity about any process and only a few people know how things work. Therefore, I am very hopeful that the work that you are doing will make sponsorship less of a black art and much more visible and usable for people.

Alongside the sponsorship toolkit, huge importance is, surely, placed on the public bodies, which spend all the money—£22 billion—that you mentioned at the outset, to embrace recognised quality management standards to deliver the thing that they are trying to do.

Over many years, the committee has seen numerous examples in that regard. I remember i6, Disclosure Scotland, the national health service IT systems and many other IT systems. The common message and theme for me and other members of this and predecessor committees is the lack of embracement and adoption of recognised management standards. However, there is a success story in Social Security Scotland, which you, quite rightly, mentioned. Could you talk a little more about that important aspect that should enhance and complement the sponsorship toolkit? For me, that is the embracement of management standards within the public bodies that serve Scotland.

I absolutely agree that that is vital. Sponsorship should not be something mysterious; it should be about ensuring that there is clarity about what a body is there to do, whether it is delivering and how the body will interact with the Scottish Government. To that extent, it is straightforward, but you are right that that does not quite cover everything.

Like you, time and again, I have seen the crucial need for real rigour, discipline and audit scrutiny, and for expertise to be secured and brought in when public bodies are embarking on major developments, particularly digital developments. Over recent years, successive audit reports has been taken on board, which is ensuring much stronger practice.

As this committee will have heard, we have real clarity as to the gateways that digital developments must go through. We have greater scrutiny and oversight of digital capacity and capability.

I cannot do much better than cite Social Security Scotland in a bit more detail. I was at the agency’s offices in Glasgow all day yesterday. I met a number of teams and saw how they are processing adult disability payments now. That huge exercise in agile development has been undertaken over recent years. It has drawn on very significant expertise, to ensure regular scrutiny and oversight, including from auditors. The great thing is that the project is now delivering—the applications are flowing in and they are being processed. That robust underpinning has been absolutely vital. Sponsorship takes us part of the way but, as you pointed out, it does not take us the whole way.

Would you say that Scotland’s public bodies have a duty to embrace those standards? I do not think that there is a requirement on them to embrace project management quality standards, management frameworks or whatever you want to call them. Should we ask them to embrace those standards? Many do, and some of the smaller organisations probably do not have the capacity to embrace some of those standards, but should we ask them to do so? Should we raise the bar a bit to require public bodies to embrace the standards that I am talking about? Over the years, my experience has been that, if we do not have those standards in place, there is little chance that we will deliver anything on time or on budget. What is the view on requiring public bodies to embrace those standards?

There are a lot of clear expectations on them around the standards that they must adopt. I would always start with the law—in particular, the Public Finance and Accountability (Scotland) Act 2000—and the duties that are placed on accountable officers to ensure, in the first instance, that money is spent in a way that is effective and delivers value for money. The latter aspect is where we can see the need to adopt tried and tested standards that will ensure that every pound spent is spent effectively.

Perhaps Mary McAllan will want to say more on that.

I was just going to say that the Scottish public finance manual is the guide book. Clearly, there is a lot of risk and concern when large amounts of money are being invested.

My experience, which until recently has been mainly in the economic space, is that the Treasury models are utilised and the recommended business case processes are followed. They might not be followed for very small investment but that is the expectation for anything significant. On economic bodies, I give the example of Scottish Enterprise, which has its own audit and risk committee and is well set up to manage such projects. I have not had experience of managing IT. However, in general, the whole of government, probably across the United Kingdom, is recognising that we need to move more into a precise management focus when we are dealing with high-risk issues.

Lots of work has been done on project management, improving people’s capacity in that respect and training them properly. In my experience, that is the case—at least for large projects, some of which might involve £70 million-odd of investment. I am thinking of the example of the National Manufacturing Institute Scotland, which is a model case that has followed Treasury guidance.

There is good practice out there, but I suppose your question is whether it is consistent. It should be, because the finance manual is there to guide people on how they should approach such matters. I go back to Paul Johnston’s point about portfolio accountable officers, the relationship with the chair of the body concerned and ensuring that those processes are being seen through.

Even the most optimistic of us would not say that the committee is unlikely to see another example of a project that has gone wrong. Usually, when the committee or the Auditor General opens the lid and looks in not only will sponsorship arrangements be pointed at but quality standards management arrangements will be seen to be lacking.

I would like an assurance that, going forward, the discussion that we have had, and the other suggestion that I put to you on project management, will be embedded into the thinking of all organisations. I say that in the hope that we will not see a regular recurrence and a procession of organisations that have not embraced such standards and processes coming before us. What assurance can you offer the committee that progress is being made towards that aim?

I would be happy to take that one away and work with my colleagues who are portfolio accountable officers. I do not want to make a commitment that I cannot follow through absolutely. I would also want to see precision about what we could commit to on standards that would be appropriate across the whole range of bodies. If I may, I will take that question away and respond more formally on what we would be able to commit to.

Good. Thank you.

Finally, we turn to questions from the committee’s deputy convener, Sharon Dowey.

Good morning. Recommendation 13 states that the

“Public Bodies Unit should ensure that coaching and/or mentoring support is offered to the chief executive of every public body, particularly newly-appointed chief executives and those facing challenging situations or intense scrutiny.”

In its response, the Scottish Government indicates that it will increase the support that is provided to chief executives as accountable officers, including by developing a coaching and mentoring system. Will you provide an update on the progress of that work?

I am glad that you have mentioned that one, because I was struck by what the report said about the profound mental health impact that some issues in public bodies can have on those who are involved in such roles. We recognise the duty that we have to do all that we can to provide support.

Catriona Maclean has referred to many aspects of the support offer, which includes an offer of peer mentoring, but she might like to say a bit more about that.

It is right that the accountable officer training gives not only technical training but mentoring support for individuals who choose to avail themselves of it. We also have the Scottish Leaders Forum, which provides support in that space as well. There is a new programme of work for the forum, which accountable officers and newly appointed chief executives would be able to access.

My unit also provides bespoke training, if individual chief executives require that. We do that informally in discussion with the sponsor teams. A key element is that anyone who is newly appointed to the role of chief executive could expect and would receive support from their portfolio accountable officer, who would ask them what level of support and assistance they require and would guide them towards their chair to ensure that there is a good understanding between chair and chief executive of what support is needed to ensure that the newly appointed person is able to get up to speed as quickly as possible and feel supported to undertake their role.

So they are all fully aware of what help and support is available.

Absolutely.

The final recommendation—recommendation 14—states:

“Identify two experienced team leaders with a good understanding of public body governance issues to take up post in the Public Bodies Unit ... and review what additional staffing would be required to create a Public Bodies Hub to coordinate improvement work on sponsorship and Ministerial appointments and provide a first point of contact to sponsor teams on all public body issues.”

In its response, the Scottish Government said that it recognised the need to resource the delivery of the recommendations from the review and that it would decide how best to address that recommendation, given the current challenging fiscal environment.

What progress has been made on appointing two experienced team leaders to the public bodies unit to provide additional capacity for development, support and challenge, and on the review of the level of additional staffing that would be required for the creation of a public bodies hub?

I recognise that resourcing continues to be very constrained, but we have tried to give priority to that work, because we recognise the importance of the theme that we are dealing with. Catriona Maclean can give us some specifics on what the resourcing looks like just now.

We have had an uplift in resourcing within the public bodies unit, which has been helpful and welcomed. We are focusing on the development of the hub in this final quarter. As we said at the start of the process, it is a year-long programme of work.

In this final quarter, we have identified people who have experience across Government and are experienced in sponsorship. Our aim is to draw them together. Ideally, what we would like to have is almost a rapid response team that would be available when issues emerged. To go back to the capability issue, other sponsor teams could call on that team when they faced something with which they were not familiar and ask whether anyone had any experience. That team would become almost a first point of contact or a rapid response team.

We will be focusing on that in this last quarter; we are at the beginning of a process on that. Part of this year has been about developing products and processes, and a lot of next year will be about ensuring that those continue to be embedded into the system, but having the formal accountability process in place is a significant change in how sponsorship is assessed.

10:15  

To answer Mr Coffey’s point, we are considering how we measure success. The issue will always be that, where relationships form part of a process, there will be unpredictable or unplanned events—things that we will not be able to anticipate. We are trying to get upstream of those, in order to reduce their frequency and seriousness. In some respects, you will, I hope, see less of that in the public space. Much of my work requires things to be done behind the scenes, so that people do not end up in front of the committee. That is a huge ambition. It is not a one-off but a continuous process. People, circumstances and risks will change, so we must always keep moving forward.

You said that there has been an uplift in staff. Are you fully manned in that area? Do you have the two team leaders in place?

We have dealt with that in a slightly different way. We have augmented the team at band C level. We have two team leaders in place, but we have also looked at the skills and attributes of the team and allocated work in a way that plays to the strengths of its members. That is why I feel confident that we will deliver all the recommendations by the end of the year, as the permanent secretary assured the committee that we would when he appeared here.

For how long have the team leaders been in position?

One has been in position for a considerable period; the other has been acting in that position since April or May and has been formally recognised over the past six weeks.

My concern is about whether the deadline will be hit. Recommendations 1, 2, 3, 4, 5, 9, 12, 13 and 14—nine of the 14 recommendations—mention that support will be needed from the public bodies unit. How confident are you that you will hit your target of meeting all the recommendations by the end of the year, given that it seems that recommendation 14 is key but has not yet been tied down?

As I have just said, I am confident that we will meet our targets by the end of the calendar year.

By the end of 2022?

Yes.

Okay. Thank you.

In the end, the test will be how many section 22 reports are brought before us by the Auditor General and whether Mr Johnston has to come before us to defend a situation that arises from failed sponsor arrangements. We have found it really enlightening to hear about the work that is being done to prevent recurrences of those. What I take from the evidence that we have heard is that you are looking in detail at instances in which things have gone wrong to learn lessons from that and to build those lessons into the training that you give to the people who are responsible for ensuring good relationships between sponsor departments and public agencies, non-departmental public bodies and so on.

We are out of time. We would like to follow up on some areas to get more information from you. You have not withheld anything from us; it is just that we have run out of time to get some of the detail that we are looking for.

I thank Paul Johnston, Catriona Maclean and Mary McAllan for their evidence. I suspend the meeting to allow for a changeover of witnesses.

10:18 Meeting suspended.  

10:22 On resuming—