Good morning. I open the 13th meeting of the Finance Committee in 2005 and welcome the press and the public to today's meeting. I remind members and others that all pagers and mobile phones should be switched off. No apologies have been received and all members are in attendance.
Thank you and good morning. I thank the convener for introducing the officials who accompany me this morning.
Thank you very much. On the committee's responsibility, I suppose that we are—perhaps fortunately—not accountable for what the press write. On release of information, there had been an exchange of correspondence and the committee's view was that it would be appropriate to put the information into the public domain because it would inform discussion. We will move on to questions.
First, we welcome the technical notes. The minister's predecessor made it clear that all efficiency savings would be redeployed into front-line services. Is that still true in Scotland?
Yes—that is certainly our intention.
Thank you.
By "the back office" you mean support services. As has been recognised south of the border, perhaps the terminology that has been used has been unfortunate from day one; it has certainly caused some offence to dedicated public service workers when we have spoken about "the back office" and "the front line". There are support services that are perhaps less evident to people who receive services, but they are nonetheless valued services that have valued members of staff. We have been responsible for importing some of that terminology, so we must be careful that we do not send inappropriate signals to people who do very good jobs in the public sector.
I accept the minister's point about not denigrating staff.
The position on the health service is that we acknowledged from day one that we needed a much more rigorous examination of the possibilities. That remains the case. We intend to continue to take a proactive approach to the health service in Scotland and to engage in proactive examination of the possibilities for more cash-releasing savings in order that we can transfer resources to the front line.
My final question is on a different tack. The minister hinted that much of our discussion will rest on what we mean by "efficiency savings". A common definition is used in all aspects of financial accounting throughout the United Kingdom—the national accounts, the definitions of gross domestic product, the standard industrial classifications and resource-based accounting, for example. Why have we not adopted that common definition?
My definition of an efficiency saving is simply this: "the same output for less input", which is broadly the definition that is used elsewhere.
We will come back to the matter, because the use of different definitions means that figures are not comparable. The committee's adviser has made it clear that he thinks that the Executive has embarked on an approach that uses a less rigorous definition. That might not be true, but the difficulty could have been avoided if we had observed the conventions that exist in all other aspects of financial accounting.
Perhaps I can pick up on the point and spin it differently. The approach that appears to emerge from the technical notes offers a mixture of what we might call conventional budget savings and Gershon-type savings. Of the savings that are identified, has the Executive calculated the proportion that falls into the Gershon category and the proportion that represents more conventional budget savings? Would it be realistic or sensible to make such a calculation?
Your question takes us into the territory of semantics, which I mentioned. What matters is whether we are being more efficient and producing the same output for less input and whether we can demonstrate to people in Scotland that we are applying all our efforts to making government in Scotland more efficient.
You suggest that we need to move the conversation on and focus on the matter in hand. We have both been involved in local government and are familiar with the pitfalls and opportunities that exist. Does the judgment call that must be made in any efficiency exercise require consideration of the scale of savings that can be achieved without detriment to service quality? How is that consideration being included in the approach to efficient government savings?
That is a prime consideration. I said that I did not want to get into semantics and the thin line between what is normally expected from good management and what is an efficient government saving. Nor do I want an approach in which we simply promote cuts in service, to demonstrate that we are using fewer public resources. Such an approach would not be efficient government; it would be a blatant cut in services. As I said in my opening remarks, the efficient government agenda is not an agenda that cuts services, but one that makes services more efficient.
In the past, the Finance Committee has criticised the Executive for producing too many objectives and perhaps too many programmes. In other settings in which the process has been adopted, there has been a focus not just on technical efficiencies and how to achieve back-office savings, but on rationalising programmes, which in turn means rationalising objectives. In a context in which there are too many objectives, if some objectives are not delivering as they should, their discontinuation should be considered. Do you regard that as part of the exercise? Are you engaged not merely in a Gershon-type efficiency exercise but in a broader efficiency exercise that focuses on deliverability and outcomes?
Absolutely. When I spoke to the Convention of Scottish Local Authorities at its annual conference earlier this year—I am conscious of the need to stress that efficient government is not just about local government, but about the public sector in general—I made it clear not only that we expect certain things of local government, but that local government should expect certain things of central Government, one of which is that we should lessen the burden that we place on local government by putting forward a diverse range of programmes. We should consider a more outcomes-based assessment of what we achieve on the ground, so it is incumbent on us to rationalise some of the monitoring of local government and other parts of the public sector, in order to ensure that we ask for relevant information and that we do not duplicate requests. All that activity is an integral part of efficient government.
Should you pass on the message to some of your ministerial colleagues—in the context of some of the programmes that they promote—that they should focus on the most important objectives and be prepared, if cash is not available, to sacrifice programmes that are not delivering as they should? The question came up in discussion with one of your ministerial colleagues at the committee's most recent meeting.
Absolutely. When I delivered the message to COSLA I was speaking on behalf of the Scottish Executive, because a variety of Executive portfolios engage with local government. The approach must run right through the Executive. For example, we intend to examine regulatory bodies. Is proliferation of regulation and regulatory bodies imposing too great a burden? Should regulation be rationalised? Do different bodies duplicate work as they engage with local government and other agencies? It is possible that there is such duplication so we need to ensure that we rationalise the approach wherever possible.
I have much sympathy with what the minister said about not wanting to get into a sterile debate about what constitutes the right or wrong kind of saving. However, when the minister launched the efficient government plan in November, the implication was that the plan represented a new initiative. As the years go by, there will be a temptation to ask how successful the plan has been and how it has delivered savings of £X million. Therefore, the Executive should be careful not to include in the plan measures that were to be introduced anyway or that have nothing to do with Government initiatives.
I am greatly encouraged by the fact that Mr Morgan has sympathy for my approach. That cheers me up no end.
Wendy Alexander highlighted the difference between the approach north of the border and that of the UK Treasury. Is the UK Treasury happy with the relatively lower level of savings in Scotland?
The UK Treasury has never phoned me up to say that it is unhappy.
What would happen if it did?
We would have a conversation and I would explain why it should be happier with the world in general.
I simply wonder whether the Treasury has nudged you at all on the comparison between north and south of the border, if greater savings are to be made there than here.
I confirm that no one has nudged me. Obviously, my private discussions with my counterparts in the United Kingdom Treasury will remain private, but I am happy to confirm that I do not feel that I am under any undue pressure from my colleagues south of the border.
I am the only councillor here and want to ask about the large savings—I do not know whether that is the proper word—that are expected of local government. Local authorities are the main front-line service providers in education, community care and transport and the Scottish Executive's "Efficiency Technical Notes" indicate that it is up to them to save where they can. However, does the Executive have a view on whether there are any no-go areas for local authorities, especially in the light of comments that have been made that front-line services are not to be affected? Will the Executive say to local authorities that proposals cannot affect free school meals or anything that comes under public-private partnerships, for example?
There are many no-go areas—I refer to service delivery points. We have clearly said that there should be no cuts in the services that are delivered as a result of the initiative, and we have sent that message to local government. The technical notes reflect our confidence in local government and our knowledge that, over time under the best-value regime, local authorities have—as they have said—saved more than £600 million. The notes reflect our confidence in local government's willingness to embrace a continuous improvement agenda and to produce savings of the magnitude that they have produced in the past. Of course, I say that against a background of local government's receiving considerable increases in public resources. It will be as alive now as it has been in the past to the potential for achieving efficiencies as it receives those resources.
I want to put the question differently. You have set a considerable target for savings that local government is expected to deliver. If it fails to reach that target, will what it is to deliver still be treated as savings? How will you handle that process? Money is to be taken away from local authorities, so if they do not deliver the savings that correspond to the financial targets that you have set, how will things be handled?
That takes us into hypothetical areas. I have expressed our high degree of confidence in local government, which is based on its past performance, so I would prefer to reflect on the fact that we have confidence in it and on our belief that that confidence will be justified.
So local government must deliver.
When Mr McCabe's predecessor originally published the report on projected efficiency savings, I think that £500 million was talked about. I recollect that that went up to about £745 million when Mr McCabe took the tiller and I think that the projected figure is now £900 million. Those sums are considerable. In his opening address to the committee, the minister said that the issue is not whether there will be job cuts, but how best those job cuts will be managed. Can you quantify the job cuts that we are talking about?
No. There are two points to make about what Ted Brocklebank asks. We mentioned £745 million and an aspiration. Earlier, I said that there would be no limit to our ambitions, so we continue to aspire to the higher figure. Perhaps we will confirm later whether we are confident that we can achieve that figure.
I think that Gershon at least mentioned job cuts for England, although I forget the numbers that were mentioned. We extrapolated that we were looking at a considerable number—thousands—of job losses in Scotland if the figures here were 10 per cent of the figures for England and Wales.
A figure was mentioned down south but—as I said—the exercise in question is for the circumstances in which we find ourselves in Scotland. We must be cautious about comparisons between Scotland and south of the border. A reduction of just over 84,000 in posts in Whitehall departments was the target south of the border. Some 72,000 of those posts—86 per cent—would be in departments that have wholly reserved functions. Large transactional services are involved—I refer to the Department for Work and Pensions, the Chancellor of the Exchequer's departments—such as the Inland Revenue and HM Customs and Excise—and the Ministry of Defence. No such posts are available in Scotland and therefore direct comparisons are inappropriate.
So we are not looking at anything like 7,000 or 8,000 job losses in Scotland.
As I said, speculation on potential figures is inappropriate. That is what I thought when we launched the initiative and that is my view today.
You talked about departments that have reserved functions and imply that if there were 70,000 to 80,000 job cuts in England, job losses in Scotland would be nothing like 10 per cent of those figures.
There was no implication in what I said. I tried to be explicit in saying that comparison of what is happening down south and what happens here is inappropriate.
Okay. I will follow up on other issues.
The saving is simply recycled to the front line. If fewer resources are consumed in a support service in an organisation, that organisation's overall budget may not change, but more will be available for the front line in that service.
You seem to offer different versions when you refer to the fire service and the police service. Why are savings on fire grant-aided expenditure not in the budget, whereas savings on police GAE are?
We will need to write to the committee afterwards on the specifics of your question.
Will you also comment on why Forestry Commission, Scottish Environment Protection Agency and Scottish Natural Heritage savings are not reflected in the budget?
I made the point that the saving will not be a reduction in the budget, but a reduction in the costs of support services. The organisation will retain the same budget, but less of it will be consumed in its support service activity and it will have more available for front-line services.
In your report on the common police services, there is much rhetoric about "rigorous" approaches to delivering services efficiently, but no substantial savings are identified. What is the basis of the financial assumption that about £8 million can be saved?
I understand that, for a number of years, the police service has produced an annual best-value report after the end of each year. Therefore, the police service has a track record of showing improvements in value for money; there is every reason to believe that that will continue year on year.
That best-value report is produced by the Association of Chief Police Officers in Scotland, so there is a reference point for what has happened in the past. That report will contain an annual report.
If those savings cannot be delivered, will that mean that the necessary savings will fall on councils and ultimately on taxpayers?
That is a hypothetical question. If we consider past performance—which is fair—there will be no reason to think that the savings will not be achieved. It is obviously open to the committee to choose to take evidence from ACPOS.
I do not want to get into an argument about what is efficiency and what is good management, but why is our definition of what constitutes a saving different from the UK's definition? How can the Executive's proposals be as efficient as those of Gershon when we are using different parameters?
I think that we have already had that question.
Does that not bring the whole thing together?
Can you give me a specific example of how we are using different parameters?
I thought that I had just gone through some specific examples. I mentioned the fire service and the police, for example.
You were not specific about how we are using different parameters. As I have said, our definition of efficiency is to achieve the same outputs with less input. I thought that Gershon used that definition, although I repeat that our efficiency exercise is specific to the circumstances in which we in Scotland find ourselves. If members have other definitions or want to raise specific points, we will try to respond.
We are picking up the fact that there seem to be some significant differences in treatment. As Ted Brocklebank pointed out, the savings on the fire GAE are not in the budget, whereas those on the police GAE are. The savings from the supporting people fund are reflected in the budget, but those from the modernising government fund are not. We have been given no obvious reason for why those apparently similar areas are being treated differently.
The example that you give of the supporting people fund is a good one. There have been a number of studies of that fund's position, both south of the border and here. PricewaterhouseCoopers, which did the study in Scotland, was specific about the potential for savings that exists. It said that more than £50 million a year could be saved in Scotland by keeping the cost of all services to within 20 per cent of average costs. It is not unreasonable to aim for such a wide margin. That assumption was made not by the Executive, but in an external study. It is not dissimilar from the results of some of the studies that were carried out south of the border, such as Eugene Sullivan's review for RSM Robson Rhodes LLP, which was carried out back in 2003. It is not a case of our plucking things out of the air; background work has been done that justifies the approach that we are taking.
What about consistency in the treatment of different budgets?
I am not sure whether I said £40 million or £50 million; for the record, I should have said £40 million.
Arthur Midwinter has a point to make.
It is a point of clarification, which we may take up at official level after the meeting. The discussion has been about comparisons of definitions of efficiency and Gershon, and I would like to clear those matters up.
That is a fair point, which I accept. I accept, too, that the process has moved on. When I took over the portfolio, I outlined the approach that I intended to take on efficiency. I am genuine when I say—as I have said before—that exchanges such as the one in which we are engaged form an important part of the process. Comments such as the ones that have just been made are instructive for us. It is important that we achieve a consistency that allows the process to be more transparent and enables not only MSPs but members of the public to understand it. When it is possible for us to take on board suggestions in that regard, we will certainly do so. I welcome the exchange of correspondence that Professor Midwinter has proposed and I hope that, in it, we will be as constructive as we can be.
I have a supplementary to something that Mr Russell said. In his opening remarks, the minister was right to say that the use of the term "front line" gives rise to problems and that people who are not employed on the front line do valuable work that is essential for the delivery of services to the public. I quite agree. However, Mr Russell talked about savings' being redeployed to the front line. Do you feel that the use of the terms "front line" and "back office" has gone beyond the stage of being helpful and that we should focus on delivering public service, whether that is done over a counter or through the use of a computer?
As, I hope, I have already suggested, such terminology became less than helpful quite some time ago. We are involved in a constant search for better ways of explaining what we seek to do. If the committee can assist with that, I will be more than happy to take on board its suggestions. Although there is no ill intent behind the use of such language, there is a great danger that it could give some dedicated public sector workers the impression that somehow their work is of a lower value than that of others, when it is not.
Would aiming for a higher efficiency savings figure make a substantial impact on jobs and services inevitable, as you suggested in your opening remarks?
That remains to be seen. I do not think that we ever said that our efficient government programme would be a completely neutral exercise. We said that we would do our best to retrain staff if possible, but we have acknowledged that, in some cases, there could be a natural limit to such activity, which might result in fewer people being employed in the public sector. I have said that before, including to our colleagues in the trade unions—although I am not necessarily saying that they warmly welcomed what I told them. We have never explicitly denied that, overall, the efficiency exercise could result in a smaller public sector.
So we could get from £700 million to £900 million to £1,200 million without necessarily having the impact that you mentioned in your opening comments.
I am not clear what you mean.
In your opening remarks, you appeared to suggest that if we were to go down the road of trying to match Gershon—I accept that it might not be possible to draw the same parallels—that would automatically have a direct impact on job cuts. Is the fact that there should be no impact on quality of service a criterion? Is that the dividing line? If there started to be an impact on quality of service, would you move back from making savings?
We would have to be very honest about the approach that we took. If we were aware that the result of our approach was a cut in service, that would be a cut, not an efficiency saving, and it would be incumbent on us to be up front about that. We do not want to go in that direction of travel.
That is helpful, but our problem is that the technical notes do not necessarily make a direct link between the savings and their effect on the stability of, or the growth in, service provision. If the purpose of the efficiency exercise is to change the dynamic of how we deliver public services and get, as you said, best value for the public pound, what measures must you take to satisfy the committee and the wider Scottish public on those issues? The technical notes give me no sense of confidence on that.
I take your point. We will listen to your comment and do our best to build into the technical notes more reassurance that the efficiency exercise will not result in cuts in services.
Will the minister clarify his use of the words "smaller public sector"? Will he help us by clarifying that there is no prospect of cuts in the public sector in Scotland or elsewhere, given that the efficient government exercise is entirely about redeploying resources from the back office to the front office both in England and Scotland?
The exercise is about delivering the totality of public services with fewer inputs. On some occasions, fewer inputs might mean using fewer people, but the totality of the service will remain the same.
Indeed. Therefore, the promise to out-Gershon Gershon was that Scotland would move more resource from the back office to the front office. The committee's query is whether that will indeed happen. We are interested not in cutting services but in whether there is more scope to move resources from back office to front office.
Yes.
Procurement is seen as the basis of quite a number of the efficiency savings, such as the savings of about 1.3 per cent that are assumed in the Scottish Executive's administration budget and the significant savings in the budgets of health boards and local government. How confident are you that the savings that will be possible from procurement have been assessed rigorously? Are those assessments based on what has happened elsewhere, such as in the private sector or in other Administrations?
I am fairly confident that some of our estimates of what we might achieve from procurement savings are conservative. It is important to point out that our approach mirrors closely the approach that was recommended some time ago by the Parliament's Enterprise and Lifelong Learning Committee. When one committee member was in a different capacity, that approach was warmly welcomed. Procurement is an important example of an area in which the Executive has taken on board the steers that came from a parliamentary examination.
I am reassured by what the minister has said. I know that there has been concern that procurement savings might favour larger operators and discriminate against small businesses. Any steps that the Executive is taking to counteract that are certainly welcome.
We have with us an officer who deals specifically with procurement. I will hand that question over to him.
The straightforward answer is that we identify areas in which there will be a change and then measure that change. I will give two key examples of how we do that. First, in situations where there is a before and after state, we can see that the price has been reduced for one reason or another through the procurement process. Secondly, the introduction of e-procurement can streamline or telescope the procurement process or various elements of it.
We run the risk of getting into some anoraky questions.
My point is simply that we can measure the saving that has been made.
I will try not to be an anorak.
We are trialling with North Ayrshire Council a simplified version of that system that will cover all the key indicators. If that is accepted, we will report through our website the figures for those savings, which colleagues will no doubt present in an appropriate means to the committee.
I want to bring the discussion back to a marginally more macro level. The Executive is talking about making savings of £745 million. Net of the savings from Scottish Water, the expected savings are £650 million. However, I am still not totally satisfied that that number stacks up. I have not heard satisfactory answers to whether spend to save, redundancy costs and depreciation will drag that figure down further. Let us assume that the saving will in fact be around £650 million. The people of Scotland want to know what additional outcomes they will get from those £650 million savings. Do we know what outcomes were expected before the efficient government initiative was launched? What will be different if we achieve the £650 million savings? What extra will the Scottish people get for that £650 million?
Fairly often, that will be for the service deliverers at the front line to decide. For instance, if we are able to employ many of the savings that we make in the expansion of certain services—if local authorities are able to decide on a different range of care services to make available to the public they serve, for example—people will benefit from the exercise.
If we were sitting in a corporate boardroom, proposing to move £650 million from less direct spending to more direct spending to move the company forward, we would expect to be told what the money would buy. If £650 million is to be spent, at £130 a head, what will each individual Scot get out of the process?
The point is that we are not sitting in a corporate boardroom; we are sitting in an infinitely more complex set of procedures and interactions between the Executive and a wide range of delivery agents. The situation is not as simple as you have portrayed it to be.
Let us turn the question round, then. Why not pivot in your seat and ask all the delivery agents what they will do for savings through increased outputs? Why not ask them what we are going to get?
We demonstrate that in a number of places in the document—for example, under care services. If the committee does not think that we are illustrating that well enough, that is perhaps something that we need to examine. I am happy to do that.
Let me stray back, if I dare, to the procurement issue. I have two questions, the first of which relates to the savings that are being made. I understand how savings are being made in the procurement process, and that is excellent, but I wonder about the savings on the price of things. It seems to me that, in some procurement, comparing the new contract with the old contract would not necessarily show a real saving. For example, personal computers have tended to decrease in price over the years; therefore, a new contract for PCs could be expected to be cheaper anyway, regardless of whether the procurement is being done in a smarter way. I am a wee bit anxious that we are counting such things as savings.
The unhelpful answer is yes and no: yes, where a saving is localised within a department or agency; no, in the sense that one of the benefits that we are attempting to foster is agencies working together to aggregate demand where that is appropriate and to put in place contracts that serve either regionally or nationally. In those cases, the issue becomes a little more muddy. We can say that benefits have been derived, but whether we can attribute them directly to a specific agency remains to be seen. I leave my anorak on the chair, but there are probably ways of doing that by considering relative demand, or what have you. Nevertheless, there will be occasions on which it is not necessarily obvious that what, for the sake of argument, we might call cost avoidance is happening in one specific entity, as it could be shared across a number of entities.
If it is not obvious to a department that it has avoided cost or saved money, how can it spend that money on front-line or other services?
Let us assume that five local authorities are about to go into the market for the same commodity. That commodity could be anything, but let us say that they are looking for wheelie bins. What has tended to happen, with some exceptions, is that each local authority has gone to the market separately and run its own competition for the same commodity, probably from the same suppliers. That has meant five teams of procurement professionals—who are relatively thin on the ground—all looking for the same thing. The logical solution is to run only one competition to find the same supplier for all five authorities, thereby avoiding the cost of the exercise for four of those five teams. Those four teams do not end up twiddling their thumbs; they look for other commodity areas in which they can apply their expertise. The net effect is that the same number of people are occupied in procurement but the output is increased because the professional expertise is applied to a much broader range of subjects and duplication is avoided.
You have opened up an interesting area that I suspect some colleagues might want to ask about. What are the other four groups who are no longer buying wheelie bins doing, for example? However, let us leave that to one side for a moment.
The new local government improvement service will be a key player in working with local authorities to get the right partnerships and consortia for different goods and services. Since the efficient government plan was published, there has been a new awareness of the scope for getting efficiency not just by being efficient in one organisation, but by looking for alliances and partnerships between organisations. The local government improvement service has made a fast start in getting round chief executives to look for such opportunities, and it will be a key enabler in getting better joint working on this sort of issue.
As Alasdair Morgan has highlighted, procurement policy is an area in which there is the potential to make quite large savings. In the non-NHS category, you state that you expect to make savings in 2007 of £200 million on an annual spend of £3 billion to £4 billion. You are hoping to take 5 per cent out of the procurement cost. However, I would like to explore a contradiction that is apparent to me. If you bundle the contracts up and make the saving, that seems to go against what the minister said earlier about using small, local suppliers. Such suppliers might not have the capacity to cope with the bundled-up contracts and will lose out. Local initiatives such as local food eating might go by the board. Scotland is a small country with many small-scale suppliers, and the minister said that he wanted to open the market up and make it more competitive.
The procurement of locally produced food is a good example. I leave it to Ian Burdon to explain one development that might give you some reassurance.
On the general point that you make, you are correct. Broadly speaking, in considering a commodity, an authority has to ask whether it is appropriate to purchase it nationally, regionally or locally. Various considerations come into that. For example, as there are only two Scottish electricity suppliers, local suppliers do not come into that market.
That last point is important. In relation to our ambitions to grow the Scottish economy, one of the difficulties that we have is that companies in Scotland tend to reach a certain level and stay there. I hope that, through this initiative, we can overcome that difficulty and ensure that more companies in Scotland are prepared to grow.
I have a question for Peter Collings on the numbers that relate to procurement. As I understand it, there is a suggestion that there will be £750 million of cash savings. If you take out Scottish Water, that leaves us with total savings of £655 million. In those savings, we have national health service procurement savings of £122 million and non-NHS procurement savings of £300 million, which comes to a total of £422 million. Is that right? I am just trying to get an idea of the magnitude of the savings that we are talking about.
I think that you are mixing up annual figures and figures that are accumulated over the three years. For example, the NHS savings are £33 million in the first year, which rises to £40 million by the second year and £50 million by the third year.
I understand. What is the figure for the NHS procurement savings?
It is £50 million by 2007-08.
That means that £200 million of the total savings of £655 million will come from procurement.
Yes.
That is about a third. We have been told that Audit Scotland will audit the system for delivering efficiency savings and confirm that the savings have been made. Is that still true?
We have written to Audit Scotland inviting critical comment on the technical notes; we expect to hear from it shortly. I think that the minister wrote to the convener about that the other day. We are anxious to ensure that Audit Scotland is aware of everything that is happening.
The point that I am making is that, in December, we got a commitment that Audit Scotland would audit not only the savings but their deliverability. If a third of those savings will come from procurement, how will Audit Scotland confirm that they have been made? Given that procurement accounts for a third of the specified savings, has there been any discussion with Audit Scotland about whether it is possible to deliver that?
There have been discussions with Audit Scotland and I explained in my letter to the convener the sequence of events. Obviously, Audit Scotland was aware of the political situation that we have been in over the past few weeks. We expect that dialogue with Audit Scotland to continue and we expect it to express its view about how it will best be able to monitor, and express a view on, savings that are achieved.
We have a programme of specific commodities in the NHS that we are targeting. It will therefore be possible for Audit Scotland to monitor the situation commodity by commodity, contract by contract and in terms of volumes and prices. The audit should not be difficult.
On transport, two of the identified items are concessionary fares and rail franchise procurement. In the past, I have asked a number of questions about concessionary fares and have received spectacularly imprecise answers. I have been given a range of anticipated costs but no breakdown of how the costs might be distributed among various operators. However, despite the imprecision in respect of the overall costs of the concessionary fares scheme, a £5 million saving has been identified, which I find hard to grasp. Can you comment on that? The figures seem to be extraordinarily speculative.
We gave a specific answer to the questions that you asked and have tried to deal with the points that you have raised. However, if you think that our information is spectacularly inaccurate, we will have another go at refining our answers in order to provide you with more reassurance.
As far as I understand it, the Enterprise, Transport and Lifelong Learning Department is unable to identify precisely what the concessionary fares scheme will cost, but it appears to be able to identify a precise figure for the amount that it will save, which seems to be inconsistent.
One of the tests that we must use is to ask whether we would be spending £5 million more if nothing had happened. The answer is that we would.
One product of the plan and the emphasis on efficiency might be that more public sector managers look for opportunities to take credit for efficiency savings that they make. There might not have been the same need to do that in the past.
I think that there is a question about whether the public sector managers' badge of achievement corresponds to real and significant change as far as the public sector is concerned. Maybe that is an issue that we need to explore further. I would be concerned about a process wherein managers identified specific items in the budget as savings that have been achieved, without there necessarily being a corresponding benefit. Obviously, that is part of the dialogue that we need to continue to have.
I have sat here and listened to people talking about all the efficiency savings that will be made or that have been made, but I must ask whether anyone has ever thought about council tax, which is a most inefficient method of raising funds for any organisation. Of the total amount that should be gathered, 9 per cent is never gathered. Council tax collection costs 5.4 per cent of the total amount that is raised whereas income tax collection costs only 1.4 per cent of the total that it raises. That has an effect on anyone who pays council tax. Many people of my generation are finding it increasingly difficult to meet council tax increases, which are the result of inefficient government. Do you agree that a system of local income tax would be better than the council tax system?
The member raises a number of points in that question. I will start by reassuring him that council tax is regularly in my thoughts; we think about it quite often.
I do not want to disappoint Alasdair Morgan by failing to come back to the redundant wheelie-bin procurers before we finish. Will the panel spell that out to me again? I think that you said that the redundant wheelie-bin procurers moved on to procure other things somewhere in the system. However, if the overall efficiency target is to make cuts in many areas and not only in wheelie bins, I presume that people will be redundant in other departments as well—there will be redundancies.
Potentially, yes there will.
Potentially?
Yes—potentially. We will not have any more wheelie-bin procurers than we need. I would like to reassure people in Scotland about that; I am sure that they will sleep easier tonight now that they have heard that.
Was not the idea that the guys who were released from wheelie bins would go on to procure something else?
Yes—if it can be achieved. We have said that we will retrain staff whenever we can. However, as I said earlier today and as I have said before, there will sometimes be natural limits on that.
We have the political correspondents but not the sketch writers with us today, but I think that we might read some comments about wheelie bins.
I reassure the committee that the information that the convener has asked for does not cause us concern. Things are sometimes easier to say than to achieve, and considerable work will be required, but I am very happy for our officials to work with the committee and its adviser to look for ways of providing the information.
Thank you.
Meeting suspended.
On resuming—