We move on to consider item 2, which is to take evidence from the unions on efficient government, including civil service reform. The committee has agreed that it wants to continue monitoring the efficient government initiative; it has also agreed that the issues about civil service reform that were raised with John Elvidge on 25 January should be further explored. Does anybody have any opening remarks to make, or shall we proceed to questions?
I will make some brief opening remarks and pick up on some of the points that we made in our submission. I know that my colleagues in the civil service unions will want to respond in detail on civil service reform.
Thank you, Grahame. We will look carefully at the identification of savings and at how money will be reallocated. That is part of our central purpose as the Finance Committee.
I do not believe that it would. Indeed, the evidence that FDA, along with the other civil service unions, submitted directly to the Westminster Committee of Public Accounts dealt with that issue. Although it might be more possible in Scotland and Wales to conduct such an exercise and to have a single public sector, it would be impossible in England because of the sheer size of the sector. However, we believe that such measures would be as organisationally difficult to achieve in Scotland. I think that the permanent secretary to the Scottish Executive said in his evidence that he did not want us to spend years renegotiating terms and conditions throughout the Scottish public sector and wasting valuable time, instead of looking in more detail at other issues on which we could make greater progress and trying to break down the barriers that exist.
The convener poses an interesting question, but the idea goes way beyond what I have always thought of as the Scottish Parliament's purpose, which is to legislate. The suggestion that somehow the Parliament should take on board the administration of all those functions runs contrary to the concept of the Parliament.
The question did not contain the presumption that the Scottish Parliament should take over local government. It was about having a single public service system for employees.
The committee probably accepts that reorganisations always have problems—they are a pain. However, what Mr Caldwell said contained a contradiction. I think that he said that he welcomed the breaking down of barriers but that he did not want to break down all the barriers and that he wanted to keep some. Is that a fair assessment?
We do not have an issue with the mobility of people across sectors—from the civil service into other parts of the public sector and vice versa. The senior civil service increasingly has private sector secondments, which we welcome. However, the division between the civil service and the rest of the public sector in providing support for Government should be retained. The core civil service should remain because of the advice that it provides directly to ministers and the support that it gives the Administration.
You support the present arrangement not because the transition to another system would create problems, but because having the separate systems is desirable.
That is correct. However, I am aware that several organisations support moving to a single public sector. I simply pointed out that we take the same view as the permanent secretary does. If such a move were seriously on the agenda, one consequence would be interminable negotiations to harmonise pay and terms and conditions in the sector. The national Council of Civil Service Unions believes that it is sensible to have the barrier—that is probably the wrong word; I mean separation—between the civil service and the rest of the public sector and that difficulties would arise if the proposed change took place.
The permanent secretary gave in his evidence the strong argument that retaining a UK civil service in which people can transfer between different parts benefits the Executive's work. We strongly support that. We supported that on the Parliament's establishment and we still support it. Many interchanges take place between the various parts of the UK civil service to bring expertise and skills to the government of Scotland. They would be lost if a single public sector structure in Scotland was adopted, because that would remove the UK civil service link.
You anticipated my next question: what would be the advantages and disadvantages of a separate civil service for Scotland?
My answer to the question might not be helpful, but I will try to answer it anyway. An MSP's researcher recently met me to discuss the problems that trade unions would have if a separate Scottish civil service was created. The answer that I gave him is the answer to the convener's question. The burden of proof is on those who believe in a separate Scottish civil service to argue why that, rather than a change to the current system, is needed. Many people argue for a separate Scottish civil service to undertake functions that the civil service can already undertake or could undertake if current practice were changed.
Although I am sure that I do not need to, I point out that most civil servants who are based in Scotland are still directly accountable to Westminster, rather than to the Scottish Administration.
I will return to the earlier question about a Scottish public service and link it to an extent with local government and health service issues, which I ask Matt Smith to deal with. Several new developments have taken place in social work and health care, such as the establishment of the community health partnerships. Proposals have been made to bring people together with new management structures. From a trade union point of view, how will that work? I seek your comments on the balance between efficiency and disruption in having to renegotiate or develop common conditions of service.
Obvious difficulties arise, primarily in relation to conditions of service. Service delivery can be very smooth, but the employees involved can be in a difficult position. For example, people from local government and health service backgrounds who work together through the joint future scheme may do similar jobs on different rates of pay. That issue has yet to be resolved and requires much more discussion. However, that shows that the opportunity for cross-working among services is available at present without the major structural change that I assumed that one of your earlier questions hinted at. Such an approach can happen, although it creates difficulties, which we need to resolve as soon as possible. Nevertheless, the service can be delivered.
Sometimes we ask a question just so that witnesses can put their views on the record.
Do members of the unions that the witnesses represent believe that the efficiency developments can result in improvements in services, or do they think that there is a cuts agenda?
There is undoubtedly fear of the threat that the initiative might create. Our members lived through many years of attacks on public servants by previous Administrations—I am not talking about the current Administration. There was a view that somehow public servants do not contribute to the well-being of society, although the opposite is the case. We have witnessed many changes, so there is fear. The approach could be positive, but that positivity—if I may use the word—would be helped if, as Grahame Smith outlined, the right conditions were set, so that there was a guarantee that there will be no compulsory redundancies and an understanding that human resource issues will be properly addressed. Many people who are involved in public services are concerned not just about the future of their jobs but about pensions, about which there is currently a big debate. Such issues are very much to the fore and there is uncertainty.
Members of the committee will understand that we represent democratic organisations and would not be engaged in the efficient government initiative at a strategic level or locally if our members thought that there was a different agenda. We are aware of our members' concerns and fears. As Matt Smith said, the right conditions must be in place. It is not just about giving an assurance that there will be no compulsory redundancies; it is about involving public service workers through their unions in early decision making about service change and putting in place arrangements for training, staff development and other such matters, which can take account of the fears that people rightly have when the way in which they work changes and services change.
I draw committee members' attention to the submission from PCS, which indicates that a note from our meeting in December with the Deputy Minister for Finance and Public Service Reform has just been agreed. The note goes a considerable way towards substantially reassuring civil servants that the Scottish Executive will not take the Gordon Brown approach to efficient government and say, "Here's the jobs target; we'll come to efficiency later", but will ensure that when savings can be made the money will be reinvested and reallocated to other parts of, for example, the Scottish Executive, local government or the health service. When we publish the note for our members next week, it will reassure them about the approach that the Executive is taking.
Wendy Alexander wants to come in at this point.
I see smiles all round, because committee members and witnesses know that efficient government has been a recent hobby-horse of mine. Grahame Smith's introduction was very helpful, because talk of crowding out is entirely misplaced in the context of Scotland. The issue is how we efficiently spend resources. Eddie Reilly was very persuasive in saying that the case has not been made for having a distinct Scottish civil service and Matt Smith made a helpful point about the fact that front-line members of Unison often want work reorganisation so that bureaucracy can be eliminated.
Do you have a question, Wendy?
Yes, I am getting there.
I think that the process will start in five weeks' time.
It is five weeks—thank you.
Many of our members in the Department for Work and Pensions are very anxious about the fact that they might be served with a compulsory redundancy notice in the next six months. I assure Wendy Alexander that those workers do not regard being handed a compulsory redundancy notice as "ambitious", nor do they understand that the front-line services that they provide to the most vulnerable people in society in Scotland need to be swept away into remote processing centres, so that the current Chancellor of the Exchequer can balance the books. The first duty of all the witnesses who are here is not to political parties but to the members that we represent and I am in no doubt that our job is to fight for our members' jobs. Had there been proper consultation and discussion with civil and public service trade unions prior to the Chancellor of the Exchequer's announcement to Parliament, a different approach might have been taken not just by the unions but by the chancellor himself.
The committee should be aware that, in addition to our meetings with the committee today and with Scottish ministers previously, we had a meeting with the chancellor last November at which we raised a number of those issues about the different attitudes that are coming across.
I have one follow-up question.
That was less a question than a statement.
We are talking about large-scale transformation, and any such transformation requires incredible sensitivity—for which I am not renowned. We experienced that with best value. If we consider the trajectory of best value in local government, we see that it started off with what one might fairly call initial scepticism, occasional hostility and absolute nervousness but those attitudes shifted, depending on how well the new regime was introduced. A critical element in that shift was engagement with staff and employees. We saw examples of how that was done in different places. However, the outcome of such initiatives needs to be demonstrable to the public as well as to the employees. One problem is that we assume only that different parts of government need to speak to one another, whereas we also need to think about the wider public's view, and experience, of public services.
I am tempted to suggest cutting back on private finance initiatives as a way of making great efficiency and cost savings but, having made the point, I will not go down that political route this morning.
Frank McAveety asked for examples. When there was talk of outsourcing the facilities management function from Scottish Executive main about two years ago, the unions made a proposal for a business improvement plan that ended up shedding something like 30 or 40 jobs. The plan involved no compulsory redundancies, was implemented over a manageable timescale and resulted in a substantial saving of millions of pounds for the taxpayer.
One example of good practice is the centralisation of support services in the health service. Part of the reason why the unions bought into that is that the health service has a sophisticated range of partnership working mechanisms that enable people to engage in that initiative with confidence that it can make progress.
To a large extent you have anticipated the question that I was going to ask; however, I am keen for the other panel members to chip in. Generally, I am interested in the concerns that you might have about the search for efficiency improvements and the effect that that might have on the quality of service that is provided; on ease of access for users; and on making the working environment more rewarding and stimulating for existing staff members.
Ease of access for users is a concern that we have flagged up in other areas. Often, although an allegedly more efficient system—resulting, for example, from the introduction of new information technology—may be helpful and cost effective, it cuts off the link between the individual and the service, which is important in the provision of public services.
On the technology issue, how effective are the current arrangements in ensuring that there is a reasonable balance between efficiency, value, quality and equality of access? In particular, has there been any involvement of staff and unions in departmental business re-engineering, using technology and external experience in a positive way to change radically and streamline business processes rather than simply to automate the existing processes, thereby making the operations as good as they can be? That goes back to a point that Grahame Smith made earlier.
I could not comment on that. My colleagues may, through the engagement of their unions' members, know of examples of that happening.
There is not enough recognition by public sector employers—I am talking not about John Elvidge specifically, but about my experience of some senior civil servants in the Scottish Executive—of the fact that trade unions and workers should be involved in partnership at a strategic level, not just at an industrial level. Too often, the employer limits the agenda to industrial relations business or the effects of their decisions on staff or workers. Not enough recognition is given by the employer to the fact that they ought to engage the trade unions and workers at a strategic level in decisions that are made. However, we have recently got agreement that the Scottish Executive main bargaining unit can have more direct access to departmental management boards, so that we can discuss such decisions at a more strategic level.
In practical terms, what can be done to improve the arrangements for involving unions and staff in the development of strategy, especially in the refocusing of resources in line with some of the valuable stuff that we got last year from Nicholas Crafts and the Allander series of lectures? Nicholas Crafts made the point that public services can be a key driver for and a key component of national competitiveness. What could we do to focus efficient government at a more strategic level with heavy union and staff involvement?
At the meeting that I mentioned—which is one of the three meetings that are scheduled—I hope that we will discuss how the unions can engage with the efficient government process, not least because we want to see where the money will be reallocated as much as you do. We want to see what effect that reallocation is having and whether the money is going to the right area to have maximum effect.
We have recently established the Scottish public services forum, which gives the unions an opportunity, through the STUC, to engage with ministers at a strategic level on issues across the public services. As we mentioned earlier, that is the route that we have identified to enable us to have strategic engagement on efficient government. However, as has been mentioned, it is important that we begin to identify opportunities for engagement in the various portfolios as well as engagement at a workplace level across the work streams that are identified in "Building a Better Scotland".
Have you done any research on leading private sector employers that have carried out strategic activity involving staff at an early stage and other public service entities—perhaps in other jurisdictions—that have done that? Are there any role models that you can cite to ministers and senior civil servants?
As part of that dialogue, we produced a document that was based on desk research into a range of surveys of practice among private sector employers that had shown massive increases in productivity, for example, as a result of partnership working. Unfortunately, that did not convince the private sector employers that there was something in it for them if they engaged.
We have covered some of the ground that we wished to cover, particularly on the issue of front-line staff versus back-office staff, but I believe that Andrew Arbuckle wants to come in.
I have two short questions. First, do the witnesses feel that the Executive's savings targets are achievable? Secondly, if employers and employees could reach ideal negotiating and strategic levels, would the witnesses be inclined to shift the targets up or down?
On the first question, we have probably not been engaged to a sufficient level of detail to determine whether that is the case. We have given a commitment to engage constructively to achieve efficiencies, but we cannot comment on whether the targets are achievable. Whether or not a more detailed involvement on the part of the unions could produce additional targets is a hypothetical question. Such engagement might result in the identification of areas in which we think the targets are overambitious, as well as of areas in which productivity improvements could be made.
If we were able to achieve the level of partnership and engagement that we have suggested we should achieve, we could have joint targets at some future date. However, we are not there at this stage.
It is important to bear in mind the fact that efficiency savings often do not directly relate to staff cuts. A considerable amount could be done in relation to the amount of money that is spent on private sector consultants in public services. We would like to consider that issue in relation to the Scottish Executive, in the same way that Matt Smith would want to consider it in relation to local government and the health service.
We now move to the subject of performance pay.
That is the convener's cue for me to ask the question that I was meant to ask earlier. Grahame Smith has helpfully answered the question about whether the unions are opposed in principle to centralisation. You pointed out that there is a willingness to consider centralisation where it seems appropriate in the health service and in other areas.
I will deal with the second issue first. Performance-related pay has existed in the civil service for decades. That has led to changes, by negotiation, to performance management systems and so on. The most recent change was in August 2000, when a new performance management system was introduced.
Is an equality pay audit part of that negotiation agenda for the autumn?
An equality pay audit?
Yes.
There has been a second equal pay audit. After repeated efforts, the unions were eventually given the information just a few weeks ago and we have been invited to submit views to the Scottish Executive. I have not yet had the opportunity to see that information, but such audits are done as part of the regular pay auditing process.
You said that you have difficulty in getting ministers to pay the rates that you think your members deserve to make their pay comparable with that in the private sector. Have you a rough idea of how much might have to be added to the Scottish Executive budget if it were prepared to pay those rates?
We have no idea at the moment. We are about to commence the pay level survey. My point is that we cannot constantly be recruiting people. The Scottish Executive is a flagship employer, which looks for the best people to do the job and deliver the service. When pay for the value of their work falls significantly behind the private sector and other parts of the public sector, as the unions believe that it has just now, there will be a retention problem. People will leave and go—
I was not going to argue the point. I was just asking whether you had a rough idea of what it might cost.
We do not know as yet. I expect—
You would share that figure with us when you—
The pay level survey has not yet been commissioned, but I expect that it ought to be reporting by early to mid summer. Certainly we want to be transparent about our position as soon as we gather all the evidence.
In its efficient government document, the Executive says that it will
I think that they mean the same thing. Another part of our written evidence says that our union engages in 20 sets of pay negotiations with Scottish Executive agencies and NDPBs. If that work were to be centralised because only one minister claimed the remit for all those pay negotiations, and if there were only one central set of pay negotiations that left some flexibility for different organisations to match their needs, that would create a saving. We want to have an input to senior civil servants about the areas in which we believe the front line of the Scottish Executive is under-resourced. As well as the financial resources, the human resources would be able to move within the Scottish Executive to improve the level of service that the Scottish Executive or any other part of the public sector gives to ministers or to the taxpayer.
In asking that question, I was thinking more about local government because the minister seems to imply that in the two or three years to come, councils should use some of the efficiencies that they can gain to keep down increases in council tax. That means that they are passing on the benefits of efficiency savings to the taxpayer either by reducing taxes or at least by not putting them up as much as they could do. That is not the same as investing the efficiency savings in the expansion and improvement of public services, which is what you said. What do you think of the minister's approach? Do you think that it is valid, or are you unhappy that savings could be used to keep down increases in council tax?
I do not want to get involved in the debate about the funding of local government, which is a separate debate that is on-going. However, there is the pressure that you suggest. The efficient government document makes the assumption that money has been lost to local government as a consequence of the settlement. If any area of public service in Scotland is under pressure as a consequence of this and other activity, it is local government. I have concerns about what the future holds two or three years down the line. I would be very concerned if efficiency savings were used merely to address problems with the means of funding, rather than to address the needs of services. You raise important issues, but they are part of the debate about how public services and local government, in particular, are funded in Scotland.
My question is about external appointments, to which reference has already been made. It can be an advantage for someone to bring a set of different experiences that might shed a slightly different light on a problem. However, as Eddie Reilly said, people may come in feeling that they are superior to the people who already work in public service, which makes it difficult for them to engage with staff. I understand that there is in Scotland a smaller percentage of external appointments than is the case south of the border. Should there be more external appointments to the civil service? What are the benefits and disadvantages of such appointments?
As I said, we have no problem in principle with external appointments to the civil service—to the senior civil service, in particular—if such appointments are made for the right reasons. We believe that the skills that are required are, in the main, already in the civil service. Where there is a requirement to recruit specific skills that are lacking—in procurement, for example—we have no problem with external appointments' being made. However, it should not be assumed that there are no professional skills inside the civil service. In Scotland, we are about to engage in the debate on professional skills in government that Sir Andrew Turnbull of the Cabinet Office announced recently. Eddie Reilly made the point that there is a debate to be had about training and development of people who are already in the service not just at senior level, but below that.
There is a general issue of skill shortages in Scotland. This may be a leading question in the circumstances, but one reason why people join the civil service is the good pension scheme, which makes up for the fact that pay is often not very good. However, there are proposals south of the border to change significantly the public sector pension scheme. Do you have a view on how recruitment to the civil service might be affected if that advantage were removed?
Obviously, we have fears about the proposals. You are right to suggest that civil servants and other public servants have over many decades tended to take blows to their pay levels, compared with those of other workers, but they have sought comfort in the fact that when they reach 60 they can at least retire with a reasonable pension. However, it is interesting to note that the average civil service pension is not £20,000 a year, as some people think it is, but about £3,500 a year. That gives members some idea of civil service pay levels.
Elaine Murray is right to suggest that the pensions issue will have an impact on recruitment. If we go back to the Scott report, which the Thatcher Government commissioned, and to other reports, we see that civil service pay has been depressed because of supposedly better pensions.
We have uncorked a bottle on a subject on which we could talk for several hours.
I should perhaps declare an interest as someone whose civil service pension will mature after 2013.
I want to ask a final question. The efficient government initiative implies some kind of cross-sectoral co-operation—at least in terms of back-office arrangements, which we have already talked about. We have heard evidence from the Highlands of practical examples of getting tasks done through co-operation among different public sector organisations.
Yes, broadly, but the changes will not come about because of efficient government; rather, efficient government will come about because of the changes because the changes are taking place anyway. The efficient government initiative may make it easier for that to happen—if the initiative is successful—but to be successful it must take on board employees' needs. Unless conditions are safeguarded and assured, many difficulties will lie ahead.
As Matt Smith said, long before the efficient government initiative was launched we were promoting the idea of public service networks to identify opportunities for cross-sectoral co-operation in various public services.
Are you saying that, instead of having the efficient government initiative as a financial driver, there ought to be a service-development driver?
I would argue strongly for that.
At that point, we conclude our questions. I thank all our witness for coming along and for responding to questions. As we discussed during the questions, we will get additional information from you.
Meeting suspended.
On resuming—
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