I welcome members of the press and the public to the 25th meeting in 2004 of the Finance Committee. I remind people to turn off all pagers and mobile phones. No apologies have been received.
I thank the committee for hearing from us once again. The budget submission before the committee today will for the first time cover a full year of running in the new Parliament building here at Holyrood. It is therefore in many ways a benchmark year against which subsequent expenditure trends can be measured.
I turn first to staff pay and staffing in general. What is the trajectory of staff numbers? How has the number of staff been affected by the period of double running? Is there likely to be a reduction in the number of staff once they have completely moved into the new set-up? What mechanisms do you anticipate bringing forward by way of best-value reviews within the Parliament? I appreciate that now might not be the best time to do that work but, in the context of considering the budget projections for next year, I am anxious to encourage you to consider how the efficiency of the organisation should develop.
I will ask Paul Grice to deal with the detail of that question.
There has been a steady, although gentle, increase in the number of staff over the piece. We are carrying about 60 temporary or fixed-term staff. Many of those posts are in areas where we face uncertainty. There was a peak in demand over the move. I anticipate that some of those posts will be dispensed with in due course. On the other hand, there are new pressures. We have to reconsider security requirements in the light of recent events. There is a significant likelihood that we will need additional security staff. We also have to keep a close eye on what it takes to manage an increase of about 600,000 or even 700,000 visitors on the number we had up the road. That is a massive new demand on the business. We are also looking at opportunities to generate revenue, both through tours and through the shop, to try to offset that.
The budget that we are considering is for 2005-06. This is a personal point of view, although I suspect that it is shared by the committee. I think that we would want there to be a proper breakdown of the processes that you are considering with a view to achieving best-value reviews and of how staffing numbers and the disposition of staff are managed. That is clearly a matter for the SPCB in the first instance. It would be inappropriate if the transitional staffing costs that were associated with getting up and running in the new building simply transferred into a kind of stabilised staffing system without some budgetary scrutiny of that process.
The process is subject to very significant scrutiny. As you rightly say, it is really a matter for the corporate body. We have a clear approach to budgeting. We have zero-base budgeting each year. In other words, when I go round the various directorates, we start from a zero base. They have to bid up each year and there is no question of just carrying things forward historically. The costs associated with migration are separately identified and funded. Where we were not sure that the posts would be continued, they have been established on a fixed-term basis so as to give flexibility.
Schedule 2 of the document that is before members sets out some of the predictable trends, with the indicative forecasts for 2006-07. Remember that we are taking out migration and double running as non-standard costs, so they are shown separately. You can see the trend from the approved budget for 2004-05, minus those bits, to the budget bid for the forthcoming year and on to 2006-07. That gives a reasonably clear comparison, as far as possible.
I appreciate that. Under staff pay, we are given an aggregated figure, with an incremental uplift. Although I understand the reasons for that uplift, I suppose that I am seeking a breakdown that shows how that process is being managed through a cycle of change.
You must remember the background to the matter. The office holders are independent and were established in various ways under parliamentary authority, so to some extent decisions—budgetary implications aside—are ultimately decisions for the office holders themselves. However, we have a process for meeting them; I and corporate body staff met the Scottish information commissioner and the Scottish public services ombudsman to go through those issues. Those offices are at an early stage of establishment; I do not think that full-year costs come through in the current budget in either instance. We discussed where they established their offices and whether there are common issues in relation to services such as payroll support and auditing and how those issues relate to what the SPCB does. Some common information technology stuff is being worked up by Alice Brown in particular—information systems are being made available to the other commissioners, and there is scope for common working in such areas. I am bound to say that there are fewer of those areas than I thought at first because the different offices are reasonably distinct in a number of ways, leaving aside the issue of where the offices are located. We have had useful discussions on a number of issues and I hope that they will bear fruit over the course of the next year as the offices are established and we can see where we are going.
As the convener noted, we have only a degree of influence. We cannot control the commissioners' work load or the decisions that they take in terms of how they discharge their functions. There have been detailed discussions with my finance team and Robert Brown on behalf of the corporate body. Of course, it is entirely appropriate for commissioners, especially where they are accountable officers, to appear before the Finance Committee to justify their bids. The corporate body envisages a range of control mechanisms. As you know, the system does not go live until January next year so it is difficult for the commissioners, especially the information commissioner, to anticipate exactly what the demands will be until then.
I will bring in Ted Brocklebank in a moment, but first I will be indelicate and say that I have some concerns on the matter. On the information that is in the public domain, we are simply given a line that says that the commissioners and ombudsmen have a 7 per cent uplift and a budget line for that. There is no supporting information on that expenditure to allow us to examine value for money or the opportunities that might exist for economies between the various organisations. A number of issues to do with transparency and scrutiny need to be battened down but that cannot happen on the basis of the information that we have.
If it would be helpful, I am certainly happy to go back to the individual commissioners and invite them to submit direct to the committee more detail on their budgets for this year and next year. We are all in new territory. We are not here to argue the case for the commissioners; the corporate body acts largely as a conduit and it is for the commissioners rather than the corporate body to defend their decisions and judgments. They are not like non-departmental public bodies, where there is a ministerial power of direction, but are independent office holders. The corporate body has no locus to tell them how to discharge their functions. It has asked some pretty pertinent questions but, at the end of the day, there is a relationship between the individual commissioners and the Finance Committee in defending their budgets. I am more than happy to arrange for them to submit more detail on their budgets, either via the corporate body or direct to the committee. It is entirely proper for the committee to ask the individual commissioners to come before it, should the committee consider it appropriate to do so. As Robert Brown said, there is a balance to be struck between the independence of the offices and the role of the corporate body, and the corporate body is keen not to overstep the mark.
We have a protocol of operation with the commissioners, which deals with what happens when we agree that things are okay and what happens when there are issues. If we were significantly unhappy with aspects of a commissioner's budget, it would be our job to report that to the Finance Committee and say, "They have put in a bid for another £1 million but it is not justified in our view." The Finance Committee would then have to arbitrate. However, that has not been the position up to now and the corporate body is comfortable with the situation.
I do not want to pursue the matter too much further, but there is an issue here and we need clarity. The negotiations and discussions between the commissioners and the corporate body do not take place in the normal scrutiny setting. We need to find a mechanism that allows those discussions to be brought into the normal scrutiny setting and produces open information about what is going on. It would be a nonsense if the Scottish information commissioner in particular was seen to be not accountable to the Parliament in some way.
My questions are not directly related to the role of commissioners and ombudsmen, although it might be useful for the committee to know that I recently met Kevin Dunion to talk about his decision to move to St Andrews and he is more than happy to appear before the committee. Indeed, he would welcome the opportunity to explain his judgments.
Not off the top of my head.
Can you give me a ballpark figure? I am wondering what savings there will be, given that we have moved to a new home. How much did it cost?
I think that it would have come to hundreds of thousands.
Per year?
Yes.
Would it be possible for you to come back and—
Absolutely. I am sorry that I do not have the figure at my fingertips, but we have a precise figure.
Would Ted Brocklebank clarify which figure he is looking for? There were, of course, a number of buildings that made up the parliamentary complex at that time: the Assembly Hall, the George IV Bridge buildings and the building in St Andrews Square.
It would be useful to have the figure broken down to show how much was spent where.
I can give you a total rental figure but, as Robert Brown said, it covers quite a number of buildings.
We have a figure of £800,000 for four months.
Is that for all the buildings?
That is for St Andrews Square and all the buildings at the Mound including the Assembly Hall. However, it will be possible to give you a breakdown.
By my terrible arithmetic, that is about £3 million per year. Is that right?
Do you mean the total for the whole estate?
Yes.
Yes, that would seem about right, but we can confirm that quickly.
As a follow-up to that, you mentioned the cost of restoring the Assembly Hall building. Do you have that figure?
The figure is £660,000, I believe.
Is that a one-off payment to put the building back to how it was before the Parliament went in?
Yes.
Not quite—it will be considerably improved on from when the Parliament inherited it. It is what is called mode 4, so it is a combination of how we had it and how it was before. Essentially, the desks have been taken out and there is extra seating, but the horseshoe shape has been retained. It is a considerable improvement on the condition that the building was in when the Parliament inherited it.
I have a question about maintenance. We all know about the problems of escalation of costs of the building, but we now look around at the large number of windows in this place and the huge greensward outside. Presumably, there is an on-going budget for maintaining those. I should have thought that cleaning the windows will be a bit like painting the Forth bridge—the job will never be finished.
There is a budget for cleaning the windows. The cleaning budget for 2005-06 is £658,000. That relates not just to windows, but to the whole complex. There is a variable regime, as some windows need to be cleaned more frequently than others. As members will have seen already, to access some windows in the towers cleaners will have to abseil using ropes—that is the technique. Other windows can be cleaned far more conventionally. We are also examining carefully the frequency with which windows will need to be cleaned. Clearly, the building must be clean and must look good, but I am keen not to spend any more money than is necessary. We need to review the matter carefully over the first year or so, to determine a regime that strikes a balance between expenditure and keeping the building in the condition that we want.
How do the contracts work? Do you put them out to tender on an annual basis?
All the contracts are let through a competitive process, usually for between three and five years. At the end of that period, they are retendered in line with normal Government procurement policy. Where there is uncertainty, we have secured contracts based on a variable amount, so that we do not pay for any more cleaning than we need.
Do the same conditions apply to the landscaping contract?
There will be a maintenance contract and a regime to cut the grass and maintain the hard landscaping.
I have one final question.
That is about six questions so far.
It is a minor related question. Earlier this year, there was a story about problems related to the grass. The story suggested that it had had to be stored for a long period and that it was dying or could not be resuscitated. What happened on that?
The story was as accurate as many stories that emanated from the source in question, which is to say that it was not accurate. If members look out of the window, they will see that the grass is quite healthy. As members know, we hit our deadline—which is why we are here—but there had to be some shifts within the programme. For that reason, some of the plastic pallets of grass had to be stored, but as far as I can see it is growing very well.
Robert Brown mentioned national insurance costs. Did you say that those would be met by the Treasury? Surely you did not mean that.
I was referring to the increase in pension contributions for staff—not increased pensions, but the increased cost of pensions in the current climate. I think that all civil service-type positions across the country are affected.
Robert Brown is correct to say that this is a common issue. The cost that we have identified is £750,000, which has been met in full by the Treasury. It is a cash transfer, rather than a net cost.
Is it a recurring item?
From now on, the cost of contributions will remain at the higher level. It has risen from an average of about 13 per cent to 18 per cent.
Will it be met by the Treasury on a recurring basis?
It will come out of the Scottish consolidated fund, but the fund has been increased by the amount that is needed to make the payments.
I return to the issue of the commissioners, and I will try not to be delicate. You indicated that someone, perhaps the Finance Committee, might have to arbitrate; you certainly used the words "arbitrate" and "Finance Committee" in the same clause. At the end of the day, who says no to these people? Regardless of what the relevant act of Parliament says, someone must control their budget and say, "You are not getting any more."
The bottom line is that Parliament, through the committee, has that right. We are in relatively uncharted territory. I have personal experience of sponsoring NDPBs. Ultimately, ministers have the authority to say, "Don't do that," and to direct bodies not to do things if they cannot afford it. That power does not exist in relation to independent commissioners. They are deliberately set up with independence and are required to make their own judgments.
I will provide members with a small example. The original budgets that we received included contingencies for each of the commissioners and ombudsmen. We believed that that was not appropriate, because the contingencies would simply be absorbed into other things. For that reason, any contingencies are held by the corporate body as part of its overall figures. The commissioners were happy with that approach and accepted the rationale for it.
Every public body in the history of the planet has probably had its budget cut at some stage because whoever was in control of it thought that the body was not as efficient as it could be. The chances are that the same will apply to the commissioners in due course. It is easy to say that Parliament should do the job, but I am not entirely clear about what the mechanism would be. Clearly, Parliament as a plenary body would find the task difficult. Would the Finance Committee have to decide whether a commissioner was getting too much money? We cannot lodge amendments to budget bills—only the Minister for Finance and Public Services can do that—so how would the system work?
We must all work within the legislation. In his preamble, Alasdair Morgan made the important point that those who control the budgets of public bodies occasionally take the view that those bodies are excessive; I have been involved in that process in the past. The problem in this case is that the corporate body does not control the commissioners' budgets. It would need statutory authority to do so.
On this occasion, I am not trying to put the heat on the corporate body. However, I wonder what the process would be if we ever reached the point that I described. It is not clear to me how it would work.
I will make a suggestion. We are in uncharted territory and, to be fair to Alice Brown and Kevin Dunion, they have offered to give evidence to the committee. It may be worth our while to write a detailed protocol that sets out the process so that every stage is clear. We have aimed to do that and could work with the committee to establish such a protocol. I would be happy to pursue that.
It might be sensible for representatives of the various commissioners, the corporate body and the Finance Committee to meet and thrash out a mechanism. The committee could then decide whether it was content with the approach that was suggested.
I would be happy to pursue the matter. The commissioners were set up individually, and the role of the corporate body in relation to them is not the same in each case. It would be helpful for us to establish a protocol. Above all else, I would like to be happy that the committee feels that it has the best handle on the situation. I am happy to come back to the committee with some thoughts after I have consulted the commissioners.
If one compares the sums of money that are spoken about with departmental estimates, they are relatively small beer in the overall scheme of things. It is a question of getting the mechanisms right; thereafter, issues will emerge from year to year.
There is a lacuna in the principle of scrutiny and we need to ensure that that is dealt with.
I find it intolerable that you say that you have no control over what the commissioners spend but you give them an extra contingency fund of 7 per cent. I find in life that if one gives someone a percentage increase, it will be gobbled up somewhere along the line. We live in a time when the Government is trying to tighten up all expenditure and to cut back on total expenditure. What authority did you have to make that 7 per cent increase without asking Parliament for permission to do so?
The 7 per cent does not represent an actual spend. It says in our submission that that increase is
You are not showing a great deal of faith in the legality of the commissioners' decisions if you have to build in 7 per cent for legal challenges. Surely you could have looked for a 7 per cent reduction in the costs that you anticipate because the commissioners' decisions will be so perfect.
Other people who deal with the commissioners in one form or another might or might not take that view. We live in a litigious age when people challenge all sorts of bodies; it is conceivable that that might happen in this instance. The 7 per cent contingency fund is a legitimate and prudent inclusion in the budget and it might or might not be called on.
In your submission, you have broken down the revenue costs into property and running costs. You say that the property costs include an estimated £4 million for the rates on the building. It would be interesting to know whether that figure was correct and when we will know the actual ratable value of the building.
Those costs are not typically for pay or the building; they would be for training and various other costs related to the building. Putting aside the maintenance of the fabric and salary costs, the running costs account for all other expenses including, for example, printing, stationery and other contracts. A whole bundle of issues is covered. For example, we learned lessons when the print contract was last retendered. There were issues about the printing of committee reports, which were costing us more than I thought they should, so we were able to get a better deal when we retendered for that contract. That shows that we have reasonably good control over some of those matters.
Do you feel that you can continue to drive down those costs over the next couple of years?
Absolutely. To return to the convener's earlier point, we face uncertainty in demand and we have to adapt to that. However, I assure the committee that efficiency and effectiveness genuinely matter to us. They have done so far and will continue to do so. It is difficult in the current period to have planned efficiency reviews, but we want to do them and I will look at all those costs over time.
What about the ratable value of the property? Are you confident that you will know how much the rates will be?
Discussions are under way to establish the ratable value. We will probably know what the assessor will put the value at initially in early November.
The other point that I want to ask about is the information technology budget. I notice from the figures that £3 million has been allocated for each of the next two years. What do you anticipate will happen in the development of IT that will require £6 million?
There are periodic technology refreshes. As members know, we are going through a technology refresh in local offices at present, so the money would cover that kind of thing. I accept fully that it is a round number—I want to interrogate it more precisely when we come to finalise those matters. That allocation is to cover a technology refresh both here in Parliament and in members' local offices. It seems to be a reasonable budget estimate, but as we move through the migration period, I will examine the allocation more closely to see exactly what we are using.
I am interested in the revenue item in your submission, given that we have now moved into this fantastic new attraction. Why does the revenue drop off in 2005-06?
Do you refer to income?
Yes.
I have two comments to make about that. Our projections for income have generally been conservative. I hope that we will, through the shop in particular, be able to generate additional revenues. As you no doubt know, the corporate body took a decision that paid-for guided tours should simply wash their face; that is the current position.
I accept that totally.
The first point is fair. At the end of the day, we need to assess whether we have had value for money in the outputs of our expenditure. The corporate body would normally do that through its annual report. When we put together future bids, I will be happy to consider whether we can include that suggestion so that the committee will at least get the headline outputs to help it judge. What was your second point?
The second point was about benchmarking the costs that we incur against other legislatures.
I am interested in that in the context of the convener's initial point. When we consider best value, one other method is to consider benchmarking; we are considering benchmarking with any comparable organisation. There might be some public sector organisations against which we can benchmark in some respects and in terms of some services.
What would be the impact and how would you cope if the mooted 2.6 per cent efficiency saving was foisted on the SPCB and the SPCB had to find the £1.8 million saving that that 2.6 per cent would represent?
It is hard to say. The best approach is to examine services and to undertake the reviews that the convener talked about, rather than just to slice off the top—I have experience of that. If members wanted not only to maintain the high quality of parliamentary service that I hope we deliver, but to deal also with all the new demands on us, it would be extremely difficult to deal with just a straight cut.
How will the ratable value be assessed? Is a parliamentary building required to pay rates to a local authority? Is a benchmark issue involved?
The answer to your second question is yes—at least, nobody has given me a reason why we would not be required to pay rates. At a previous committee meeting, Robert Brown made a point that it is worth having on the record. The money that would be involved would circulate in the Scottish block; it will not be like VAT, for example, which flows out of the Scottish block. The money will go into the pool and be redistributed among local authorities. It is a cost to the corporate body budget line, but not to the public purse. It is important that that point is clear.
What has been said is right. An obvious comparator for the building is not available. A wide range of ratable values for the building is possible and the £4 million that we have cited is probably at the low end of that range. It is fair to put down a marker for rates.
The subject is difficult. I appreciate that Paul Grice said that the money recirculates at one level in the public sector. I would be interested to know precisely how it would recirculate and whether it will simply go as a business rate into a general pool that is available for all local authorities.
That is my understanding. The money goes into a pool and is redistributed on a population basis throughout the country.
The Parliament should have some interest in the process.
We are happy to have all the support that we can obtain in the process. Other unique buildings exist, but there is only one Parliament building.
Does Westminster pay rates?
It does.
Does the Palace of Holyroodhouse pay rates? That is another interesting question.
I do not know.
What is the level of staff turnover? What percentage of security staff work on 12-hour shifts for four shifts on and four shifts off?
The rate of turnover is about 8 per cent. About three quarters of security staff work on 12-hour shifts and the rest do day shifts. That is the result of the review that we undertook before we came here to anticipate the seven-days-a-week operation here, under which security staff have much more to do. The huge number of extra visitors also has an enormous impact on security staff.
Any qualified accountant will say that a pattern of four shifts on and four shifts off is the most economical way to organise staff and to obtain the best returns from them, but the Parliament is supposed to be a family-friendly employer for MSPs and staff. I assure you that nothing is more disruptive to family life than four shifts on and four shifts off for 12 hours a day. Perhaps you should reconsider that and make that shift pattern more family friendly.
That is not really a budget issue.
We undertook a thorough review that involved staff and trade unions, which were both immensely co-operative in helping us. The staff are sensitive to the fact that we work in the public sector and that we want to be efficient and to provide a good service. We have struck a balance between the work-life balance and efficient working. The feedback from security staff, of whom I see a lot, is that by and large the four-on, four-off pattern—as John Swinburne describes it—is pretty popular.
We have completed the questioning, so I thank the witnesses for their attendance. As we suggested, we might well consider how we will deal with some of the outstanding matters on commissioners, which include location as well as financial accountability issues. Perhaps we can deal with those with Paul Grice offline.
I am happy to do that.
Thank you.