Finance Committee, 02 Mar 2004

Meeting date: Tuesday, March 2, 2004

Official Report 129KB pdf

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Public Sector Jobs Relocation Inquiry

I open the Finance Committee's eighth meeting in 2004 and welcome the press and public. As usual, I remind people to turn off their pagers and mobile phones. We have received no apologies from members in respect of today's meeting.

The first item on our agenda is consideration of a briefing paper that has been produced by the Scottish Parliament information centre to help us with our inquiry into relocation of public sector jobs. Members will remember that we agreed our approach to the inquiry at our meeting on 3 February, and that we asked SPICe to produce some background research, particularly on relocation policies in other countries. Ross Burnside, who prepared the paper, is here. I notice that he has a bottle of water from Sidcup with him.

It is straight out of the tap.

Ross Burnside can answer any questions of clarification. I open the meeting to members who wish to raise issues from the paper.

The paper is very good; it goes into some detail about what various countries do and how they have handled public sector jobs relocation. I found it interesting that in almost every case—whether it is the United Kingdom, Ireland or elsewhere—the aspirations of the country, in respect of how many jobs it wanted to disperse, were never quite fulfilled. Some of the figures are quite interesting. Under the Flemming review, 95,000 posts were recommended for relocation but it turned out that only 22,000 were relocated. Under the Hardman review, 78,000 posts were considered but only 10,000 were relocated. It is interesting that when we consider the Irish experience, despite all that we have heard about how successful it was, we see that there was a lot of criticism of what went on and that the voluntary aspect did not work as well as we have been led to believe. From what I have read, it looks as though Ireland will not meet its target, although it is early days. It is interesting for us to consider that everyone had the same aspiration—to move people out from centres—but that in every case that proved to be much more difficult than had been expected.

I do not have much to add to that. The members who are going to Ireland might want to meet Opposition members and unions to follow up on some of the criticisms that are raised in the paper, which were taken largely from press articles. It is important to get a balanced perspective and to consider the pros and cons of the Irish model.

I am keen to explore whether there is any experience from the case-study countries to suggest that there is a higher level of staff retention when organisations move to more rural settings. Do such benefits accrue to movements in the longer term?

The only thing that I can point to on that question is the report that was produced by Experian Business Strategies Ltd, the consultants who will, I believe, come to give evidence at some point. Experian did a study on previous UK relocations and considered staff retention and turnover, and found that it is easier to keep lower-grade staff.

The paper is self-explanatory; everything that I have been able to find is in it. When the committee gets Experian along, it might be worth probing it on the point.

Can I take one more bite at the cherry? When we have seen relocations take place, as Ted Brocklebank pointed out, there has historically been a desire to hit target levels, but there has always been underperformance. Are there any indications that the advent of new technology such as broadband and, even better, slick video communications might enable relocations to go to a totally different level?

My guess, based on previous evidence, would be that that would be the case, but I am not sure. It probably makes sense to say that that will be the case in the future.

The paper is useful—a couple of things come out of it and there is also something that the committee should take forward. First, we should develop some of the aspects of the Irish experience and consider the criticisms of it. We got an interesting impression of that from the witnesses last week, and we will be able to test it in a forthcoming meeting.

My second point arises from the comment on page 17 of the briefing about

"the recent report ranking Edinburgh as a candidate location for some of the 20,000 jobs"

that the UK government plans to disperse. I do not think that the committee has considered that in much detail, but it is an interesting aspect. If our inquiry considers the dispersal of UK Government jobs out of London and the south-east due to overheating in that area, some people will lobby for those jobs to be dispersed to Edinburgh, but the Executive takes the view that Edinburgh is overheating and that jobs should be relocated from there. There is a domino effect in relocation and it should be part of our work to consider how that is managed by the Scottish Executive and the Scotland Office.

We should consider—the briefing does not address the matter because of the remit that the committee set itself—agencies that operate in Scotland and have considerable devolution in their operating practices. They may be UK Government departments—for example, the Department for Work and Pensions, the Ministry of Defence and the Inland Revenue. I am interested in the current practices of such agencies in Scotland: if they are relocating or centralising jobs because of cost efficiencies or other factors, does that run counter to the Scottish Executive's work? That concern is not within the scope of our inquiry, but it would be useful for us to consider it. In the end, it might equate to the same number of jobs and might affect the rural areas to which we want the Government to relocate jobs. That might involve a further desk exercise by the committee, which would be to get in touch with the agencies to inquire about their practices. I know that some of them are restructuring.

Following our previous discussion on the matter, I wrote to the Treasury to ask how the Lyons review will impact on the Scottish Executive's approach to relocation, so that we can get a sense of how the UK Government operates in the context of relocation.

One of the things that struck me in Ross Burnside's briefing paper, and in the evidence that we took last week, is that we should consider operational issues within agencies as well as the dispersal of agencies. It seems to me that there might be relocation opportunities in the way in which agencies work. We should consider the matter in that way rather than on a case-by-case basis, which is how the Executive has been seen to consider it until now. That might be more employment-friendly, as far as existing employees are concerned, and it might deliver equally good or better options in terms of net employment transfer—we need to pay attention to that.

Such consideration may influence the inquiry's format a wee bit. Ross Burnside's paper alludes to the matter, but does not deal with it. Perhaps more work needs to be done on considering not only the relocation policies of other Administrations and the UK Government's and Scottish Executive's relocation policies in specific instances, but the scope for Government and Executive agencies to spread jobs about more than they do at present. As Jim Mather said, the use of different forms of technology and different methods of working could make that more possible than it has been.

I was very interested to read Ross Burnside's briefing paper—I am always interested in reading SPICe briefing papers—which is very useful. I thank Ross for his effort.

The paper includes a section on criticisms of the policy in Ireland. However, one could argue that there are many plus points or advantages in the Irish model. I want to run through those and to ask whether Ross Burnside agrees that the Irish policy has an advantage over the Scottish Executive's policy, which certainly appears to be the case.

With respect, I do not think that it is for Ross to agree that—he is providing us with advice. Ultimately, the decision about whether to agree or disagree is a matter for the committee.

Perhaps I could just ask for Ross's comments, convener, on the plus points of the Irish policy, because the paper has a section marked "criticisms of the Irish policy", but there is no section marked "advantages of the Irish policy." The first point, to which I think the paper alludes, is that the Irish policy is based on the principle that those who relocate will be volunteers rather than conscripts. Is that correct?

Basically, I listed the information that the Irish Government provided to the committee. The section on criticisms is based on press articles and acts as a counterbalance to the information that we received from the Irish Government.

It appears that the Irish policy does not involve—of necessity—compulsory redundancy costs because volunteers are used rather than conscripts. Therefore, by and large, people are not kicked out of their jobs as they are likely to be in, for example, the Scottish Natural Heritage move. Is that the case?

There is a voluntary nature to the Irish model.

That means that it does not use compulsory redundancy: people are not told to move and then made redundant if they do not move. Is that what you discovered?

I think that it is for us to discover that when we make our trip to Ireland. I want to be clear about the kind of exercise that Ross Burnside has done. He has gathered in a paper the Irish Government's published information on relocation—which, I presume, advocates its relocation policy—and he has highlighted points that people have raised in criticism of it. We are undertaking an exercise in which a number of committee members will go to Ireland to ask those who are directly involved how the Irish relocation policy works. Therefore, rather than ask Ross Burnside to answer that question, we can ask it of the people whom committee members will meet when we go to Ireland.

Obviously, I am looking forward to doing that and I am pleased that the committee agreed with my recommendation that we go to Ireland, just as I am pleased that the committee considered the issue in the first place on my recommendation. Our going to Ireland will be an example of the committee doing a useful job. I am hopeful that from the trip will emerge clearly the massive advantages of adopting the Irish relocation model as opposed to the expensive policy—which, in the case of SNH, is subject to serious criticism—that the Scottish Executive has applied in its period of office.

I want to draw attention to something else. I was interested to see in the section on criticisms of the Irish policy that the Irish, too, appear to have made nonsensical decisions. Mr Sean O'Riordan asked why the new Department of Community, Rural and Gaeltacht Affairs headquarters was at Knock airport, which is nowhere near a Gaeltacht area. He also asked:

"Why is the Department of the Marine being moved to that well-known seafaring county, Cavan?"

I do not know Ireland, but I assume that Cavan does not have a coastline. Therefore, odd things are happening in the Irish relocation policy.

The thought occurred to me—the Executive has clearly wrestled with this—that the logical place to relocate a marine department or an agriculture and fisheries department would be Aberdeen, because it is the heart of the fishing industry and much of the communications in agriculture happen there. The BBC, for example, has located its agricultural department there and so on. Obviously, Aberdeen is not an area that particularly needs jobs, and it seems to me that that is one of the problems that we get into when we want to disperse functions. Perhaps the logical place in which to locate certain offices does not need the jobs. Therefore, as in the Irish case, we end up sticking jobs in places where it is not logical to do so but which need jobs. That does not seem to answer much of what we need from agriculture and fisheries departments. All the skippers and fishing representatives trail up and down to Edinburgh, but the logical place for them to go would be Aberdeen. It would be logical for certain people to move from Edinburgh to Aberdeen to be on hand to deal with fishing matters. However, I presume that Aberdeen will never be considered as the place to site a fisheries department.

Actually, the Food Standards Agency Scotland went to Aberdeen, so I do not think that Aberdeen has completely missed out. Decisions were taken in the past to locate certain functions in Aberdeen.

On the criticisms of the Irish policy, it is extremely useful to have them because if we are going to Ireland to talk to people about the policy, we must know what has been said against it so that we can question the policy properly.

My recollection of history is somewhat different from Fergus Ewing's: I recall that a large number of committee members were concerned about relocation, partly because we had had our ears nipped by constituents. It certainly was not just one member's suggestion that we should consider relocation or take evidence in Ireland. Fergus Ewing's comment is not a correct representation of what actually happened.

I commend Ross Burnside's report because he has highlighted the problems in other relocation policies. There is perhaps no such thing as a perfect relocation policy. I am certainly not going to Ireland with the idea that the Irish model must necessarily be transported to Scotland and implemented here. We want to find out what the best model is and to consider proposals with an open mind. We will take evidence and assess what is good and what is not good in each model.

I enjoyed reading Ross Burnside's paper. It struck me right away that the Irish policy was typically Irish. Ted Brocklebank said that the Irish had not achieved what they set out to do. However, they had no intention of achieving what they set out originally to do. They had high aspirations, but they also had low and realistic expectations. They aimed high, realising that they would not get large numbers of people to move to a certain area, but they were happy with the numbers that they got. We can learn a lot from the Irish. Instead of wiping out a department and moving it as a whole, we could move it piecemeal and move sections here and there. Fragmentation might be a better way forward than our current approach. I hope that the committee delegates who go to Ireland come back suitably enabled to help us alter our thinking on this side of the water.

An important issue that has not been raised directly is the Irish practice of moving some very senior jobs to different parts of the country. The outcomes in Scotland appear to suggest that middle and lower-level jobs move while the top layer of the civil service rarely seems to move. It will be interesting to plot the mechanisms by which the top layer avoids movement. One could be cynical about some of the ways in which that has been done. I suppose that genuine issues are involved in moving top-level civil servants away from the seat of government and in managing that effectively. There are downsides in terms of people travelling all the time because of the necessity of making face-to-face contact. However, we must explore—not only in our own practice but in that of Ireland—the advantages and disadvantages of moving sections of the upper tier of the civil service away from the seat of government. I presume that that will be considered not only in policy terms but as an organisational calculation of time, efficiency and so on.

Perhaps the issue could be considered not only in the narrow context of government, but in the context of how commercial organisations, for example, operate with multicentre arrangements. For example, many large firms operate with headquarters in Glasgow and Edinburgh and possibly in Aberdeen, and they find ways in which to work efficiently. How efficient is the Scottish Executive and, more generally, the civil service in working in such ways? Organisational practices that relate to the administration of governance in Scotland might be considered as an aspect of the exercise. Perhaps there is another dimension that should be taken on board.

I have a suggestion to make. I am impressed by the paper, which is very good, and would like it to be more widely circulated in the longer term so that local authorities and local enterprise companies can enter the debate. It would be particularly useful if Scotland and the UK were benchmarked against other countries so that we knew the proportions of civil servants from senior grades through to lower levels who are based in the centre or near the seat of Government, how many of them are not based in the centre, and relocation targets. That would give us a mechanism by which to learn and find out about best practice and trends over time, especially as new technology that we have the chance to befriend kicks in. There is a chance for the country to have a more even spread of civil service jobs.

We have had a good discussion about Ross Burnside's paper. The committee thanks him for his work. Members have probably given him potentially more work to do as a result of issues that they have raised.

I will read the Official Report of the meeting.

The next stage for the committee's inquiry is the various case studies. The clerks will liaise with the appropriate members about the timetable for and the format of those. We will return to the issue once the case studies have been undertaken.