Finance Committee, 25 Jan 2005

Meeting date: Tuesday, January 25, 2005

Official Report 239KB pdf

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Civil Service Effectiveness

Item 2 is part of the process of identifying issues that we might want to highlight to the Westminster Public Administration Select Committee for its inquiry into civil service effectiveness. I am pleased to welcome to the committee John Elvidge, who is the permanent secretary to the Scottish Executive, and Sally Carruthers, who is the Executive's director of change and corporate services.

We asked for an expanded briefing from the Scottish Parliament information centre on initiatives at the United Kingdom and Executive levels. Members have a copy of the SPICe paper. We also have a submission from John Elvidge. I understand that Margo MacDonald might attend part of our meeting, so we have a name-plate available.

I invite John Elvidge to make an opening statement, after which we will proceed to questions.

I do not want to take up much of the committee's time at the beginning. It is a pleasure to be here and to have the opportunity to contribute to your work. It is enormously important that the Public Administration Select Committee at Westminster should have input from Scotland on such issues, because the distinctive set of issues here needs to be explored and could easily be overlooked in the committee's work.

The Finance Committee has set out the breadth of the territory that we could cover, which is one reason why I will not give an account of all that territory in addition to the written evidence that I gave the committee to start us off. It would be more productive to focus on the subjects that are of most interest to the committee. I would rather let the committee lead the discussion on the matters that it thinks are most important.

I suspect that your Whitehall colleagues were asked whether they wanted to make a submission to the Public Administration Select Committee's inquiry. Does the Executive expect to make a submission to that committee or to have input to a civil service submission? What issues would such a submission be likely to highlight?

No decision has been taken that we should supply evidence. If we submitted evidence, we would focus first on the distinctive needs of the devolution settlement in Scotland and the explicit expectations of how government will be conducted that underpin that settlement. We would emphasise the need for the Government and the civil service to operate distinctively in Scotland in ways that respond to the needs of the political framework in which we operate and we would describe some of the ways in which the operation of the civil service in Scotland differs from the model with which the committee at Westminster is more familiar.

We have five and a half years' experience of operating in the devolved settlement. Is that process settling down? Will you identify issues that have arisen in those five and a half years that it might be sensible to highlight?

I would probably not use the phrase "settling down", because that is not what I would like to happen. Broadly speaking, I believe that slow adjustment to some issues took place in the immediate post-devolution period. Adjustment has started to accelerate as understanding of what the devolution settlement means in practice has grown. It is difficult to adapt an institution to a new reality until the nature of that new reality has begun to settle and become clear. The picture that I would present is that we are currently in a period of accelerating rather than decelerating change.

I would draw attention to the expectations of engagement with the Parliament and civic Scotland that are an integral part of the devolution settlement and to the way in which we have sought to respond to that. I am not sure to what extent those are differences in kind, but there are certainly considerable differences in degree from the experience at Westminster and Whitehall.

I would want to ensure that people in the south understood that the model with which they work, of a highly fragmented system of strongly independent entities in the shape of different Government departments, has never quite been the model in Scotland and has become less the model here. Here, we have more of a sense of a single organisation functioning than there is in the south, where a series of entities try to construct a relationship with each other. That leads us to pursue a series of behaviours and arrangements for running the civil service that try to build the coherence of the Executive as an Administration.

I would also take the opportunity to draw out some of the differences in practice of which I am conscious and which the select committee members would otherwise be unaware of. I referred to one of those differences in my submission and said that, early on, we sought to accelerate the process of openness by adopting generic external recruitment for the senior civil service rather than simply relying on post-by-post external recruitment, and link that to some of the things that I have been saying.

Thank you. I am sure that we will get into staffing issues later. I refer you to the Prime Minister's speech on reforming the civil service last February when he spoke about "a smaller strategic centre" interfering less and releasing resources for front-line delivery. We know that Executive staff numbers have grown since devolution and that the bulk of that growth has been here in Edinburgh. What plans do you have for making the core Scottish Executive smaller and more strategic and how will that be linked to efficient government?

That is a good example of two processes that start from different places. In the context of the Whitehall civil service, the value of a range of co-ordinating bodies at the centre has long been questioned. That is related to the idea that it is beneficial for strongly differentiated organisational cultures to grow up in each of the Whitehall departments, which are linked quite lightly by some common principles.

We do not start with the rather large central infrastructure that Whitehall civil servants have, nor do we start with the presumption that our objective is the reinforcement of separate cultures and employment practices. The analysis is different in Scotland, and, in the phase that we have just gone through, we felt that we needed a slightly stronger centre to drive consistency of change and behaviour through the organisation. In our most recent work with stakeholders, one of the negative factors to which they drew attention was still the inconsistency of their experience of different parts of the Executive, so we have evidence that the work that one wants a centre to do is by no means complete.

Some aspects of capacity building in the Executive have also led us to develop the nature of the centre, such as the evolution of the policy unit into a strategy unit and a delivery unit to provide stronger focus on strategy and delivery. Our analysis is different in a number of ways.

To take a different perspective on the matter, the way in which the organisation will adapt itself to the budget settlement for the next three years implies, as far as I can judge, some reduction in the total number of staff that it employs. We have said that in finding the sources of that reduction we will focus efforts more heavily on the central parts of the organisation than on those that are directly customer facing. However, "customer facing" is a term with which one needs to be careful in the context of the Executive, because one of the Executive's distinctive characteristics is that it is not, by and large, a direct delivery organisation, so, when we talk about being customer facing, we tend to mean facing groups in society and our partners in delivery—such as the local authorities or the health boards—rather than facing the individual customer. That is our definition of front line, in so far as that language is helpful. We are trying to ensure that we focus particularly on the opportunities for proportionately greater reductions in the centre than in the rest of the organisation.

I am not sure that I altogether follow that. In the earlier part of your answer, you said that you were strengthening control at the centre to ensure consistency—I understand that strengthened strategic units have been created at the centre—but at the same time, you seem to be arguing that the delivery focus is being strengthened. Is there a contradiction between those two approaches? In what you said at the beginning, there seemed to be a business model of centralised co-ordination, but there is obviously a different business model, which you could adapt, of departmental or sub-departmental autonomy. I just want to be clear about where we are headed.

The apparent contradiction occurs because the centre is not uniform. We are developing some bits of what would be called the centre to create additional capacity. Typically, the capacity that that creates involves relatively small numbers of people. At the same time, we are looking hard at the bits of the centre that employ quite large numbers of people. The human resources function is a key example of that. Substantial numbers of people are employed in Sally Carruthers's directorate and we are looking especially hard at such areas.

Common sense comes into this. If one wants to make changes in an organisation, it is more productive to consider coherent areas that employ large numbers of people with a broadly similar function than it is to consider areas that employ small numbers of people. The changes that one needs to make to save a body in a small area tend to be much more significant than the changes that one needs to make to save a body in a large, coherent area.

I am interested in the interface between the management approach that you describe and the system of political accountability that it sits alongside. The theory of cabinet government is of ministerial accountability within defined portfolios. The traditional model of civil service organisation in the departmental structure down south reflects the notion of ministerial accountability. If control is to be co-ordinated from the centre, rather than exercised at departmental level, does the system that you describe go against the traditional notion of ministerial accountability?

I do not think so. The system reflects the strong emphasis on a collective approach that, as I perceive it, the First Minister and the Deputy First Minister wish to bring to the conduct of the Executive.

I am conscious that I am beginning to walk along the boundary of speaking for the First Minister and the Deputy First Minister about their beliefs on how the ministerial team should operate, so I am being cautious, but it seems to me that the First Minister and the Deputy First Minister have built an approach to ministerial responsibility that makes it appropriate to give attention to stronger capacity to support collective activity by ministers. Therefore, I would describe what we are doing at the centre as a response to the way in which the style of ministerial government has evolved, rather than as something that is distinct from it.

I want to ask about the recruitment of externals and about people within the civil service being seconded to gain experience. I think that your written submission quantifies to some extent the number of externals who have been brought in, although I would like further clarification. How many existing civil servants—especially at senior level—have been seconded or been allowed to gain expertise as an explicit extension of skills development?

If you will forgive me while I scrabble around for numbers among my papers, I can give you that information. In the written evidence that we submitted, we say that the volume of secondments in both directions is now roughly four times what it was in 1998-99. While I keep looking, I know that I can help you by telling you that there is a rough balance between inward and outward secondment, and by telling you that the most recent annual figure is 340. That gives you a rough idea of the number of staff moving in and out. I can also tell you that the annual number of secondments has been going up in steps of 40 to 80 and that we can work back over a period of five years. However, as you will gather from my shuffling of papers, I am having trouble finding the chart that gives me the precise numbers.

Perhaps you could write to us with the information. We are particularly interested in secondments at senior grades.

I will try to do a bit of mental arithmetic and pull the numbers together. The arithmetic implies that, over five years, something in the order of 400 to 500 people have experienced a spell of external secondment. Do not hold me to that arithmetic, but that is how it seems to me to work out.

We move on to the changing to deliver programme, and the obvious question is: what has changing to deliver delivered so far? Do you have measurable targets and what progress are you making towards them?

As I say in my submission, changing to deliver is, first and foremost—although not exclusively—a programme of cultural change. It is intrinsically difficult to find measurable overall indicators for such a programme, but we can break it down into a series of areas in which progress is measurable and I have tried to do that to some extent.

If improved leadership is one of the programme's objectives, staff experience of the quality of leadership is one of the measures that one should use. We have not yet managed to construct a series of measurements on that, although we have begun the measurement process and I have quoted the resulting figure in my submission. We know that that figure benchmarks well against other organisations, but we also want to be sure that we are making progress in driving it up in the Executive.

With outward focus, stakeholder assessment is clearly the key measure. If one aspires to being outward focused, the recipients of the outward focus must be the best judges of whether that is being achieved. We have started the series of measurements on that to enable us to find the evidence, and we can see that aspects of the evidence are positive. Questioning included an explicit question to external stakeholders about the movement that they had perceived over time, and the answers to that question tell us that the majority of stakeholders perceive significant movement in the direction in which we need to go.

One needs to disaggregate progress in that way. As I say in my submission, the aspect of progress that is, in many ways, the hardest to measure is effectiveness. The point of the programme is to be better at doing the job, and to measure that, we have to consider performance on the Executive's range of responsibilities in the round. There is no obvious, sensible way of aggregating performance across a wide range of functions into a convenient single measure; one needs to consider progress against the various bits of activity, and that is where the raft of performance information that is the bread and butter of our exchange with the committee comes into play.

I will ask about the professionalisation of the civil service, which has been discussed south of the border and in Scotland. How far has that progressed? What measures and targets can be used to examine that progress? In the speech to which I referred earlier, the Prime Minister indicated that there should be an end to tenure for senior posts. Do you agree? How would that be achieved in practice?

I will start at the end of those questions and work back. I agree with the Prime Minister, as do the civil service management board and all my permanent secretary colleagues. We have introduced changes to bring about the end of tenure. We have created a changed framework for management of the senior civil service in which we have re-established a clear understanding of how long we expect each individual to spend in their post, with a target of lengthening the average time that people spend in post to reach a norm of about four years. However, that is no more than a guide; the needs of individual posts must dictate judgment.

We have also made it clear that at the end of that period, the responsibility is on the individual to demonstrate that they have the capabilities that merit another post. That is a significant shift of emphasis in the system. We have constructed a framework for discussion with individuals about their capabilities so that, as they approach the defined end of their period in a particular post, there is a structured discussion about what their aspirations are for what they will do after that post, how those aspirations match with their skills and capabilities and how they might succeed in taking their career on to another post. It is explicit that if skills and capabilities do not match another post, some other solution needs to be found, which will include a look at a range of opportunities outside the organisation.

We need to be careful not to lose sight of employment law. Employment law does not allow us or anybody else to dismiss a person without our being able to demonstrate that there are no jobs within the organisation that the person is capable of doing.

It would be wrong to give the impression that the system has become one of self-contained short-term postings. That is not the nature of our employment relationship with staff. This is more Sally Carruthers's area of professional expertise than mine, but my advice is that in a large and complex organisation such as the Executive, it is likely that if one attempted to use short-term contracts, they would be found to be a legal fiction and effectively unenforceable. We have moved as close to the creation of a new framework as the dictates of employment law allow. That has been a significant change in how the senior civil service is managed.

I return to the first question, on professionalism. One of the ways in which the Executive is distinct from the traditional model of a Whitehall Government department is that we have for a long time had a much higher proportion of professionally qualified people in our staff than is the norm in the average Whitehall department. Therefore, we start from a different place. In recent years, we have concentrated on raising the incidence of professional qualifications in parts of the office where doing so is most obviously directly relevant to the job. We have, for example, paid particular attention to the procurement function; more than 90 per cent of procurement staff now have a recognised procurement qualification.

Almost all our information technology staff have a basis for recognition of their professionalism. IT is a field in which it is a challenge to find a suitable qualification framework, particularly because quite a lot of our staff who work in that function are at relatively junior levels. We need to consider and assess the quality of people's professional experience.

In human resources, we are at an earlier stage in the journey. I invite Sally Carruthers to talk about that. Sally and her deputy, as director of human resources, are professionally qualified in human resources.

As John Elvidge said, corporate services is one of the larger teams and has around 650 or 700 people. Primarily, we offer HR, IT, property, estates and facilities services. I also run the change to deliver programme, which includes business planning.

In IT and other services, we already have vast numbers of professionals and we have a constant stream of people coming in from the outside to support that. In HR, we have a fair number of people who are qualified and who have been qualified for some time. However, there is a difference between people who have qualifications and people who have HR experience that has been gained in a different environment and which we might want to use or blend in. In the past couple of years, we have when possible brought in individuals who have not only HR qualifications, but key experience that they might not have been able to gain in the civil service or the public sector. We do not simply need to bring in professionals; we must ensure that the people who are in post have the opportunity to qualify and constantly re-qualify to keep up to date. We also need to use secondments to get staff to go outside the organisation to look at life, to operate and to deliver in different environments without breaking contracts.

We are doing that in HR and, increasingly, in the facilities and estates services, particularly in respect of health and safety, in which we need professionals. We have been into the market to get professionals and we are out in the market getting more, particularly in occupational health. Again, we are not simply saying that what is in place is not working, but are getting a mixture of qualification and experience to build what we need for the future.

The convener asked about how we can centralise—forgive me, I am not sure that I like that word—and ensure consistency in drive and approach by managing from the centre, if only for a period, while we also consider whether we can work with fewer people in HR. The work can be done with fewer people—we are considering aspects of the work of the centre that have been driven by large numbers of people in the past and we are asking whether there are other ways of doing that work that are just as effective and efficient but which can be done for less money. We must consider how to make that happen, while remembering that we have a responsibility to look after our employees in a way that ensures that we get progression and change from which we benefit, both financially and in terms of effectiveness.

At the same time, we must ensure that the people who are involved have jobs to move on to, that they are being retrained or professionalised in that core activity or that they can take their place elsewhere in the organisation. HR is not only adopting an electronic human resources system, which we are in the middle of buying in; we are also considering how we offer the Scottish Executive and its agencies a more efficient and effective HR service that costs less money. We have done much work on that in facilities and estates services, in which we have saved significant sums in the past two years through examining core activities, what we need to pay for them and what the most effective way to operate is while retaining the business. We have staff whom we need to look after: it is not simply a case of throwing out one thing and bringing in something new from outside.

I will return to models, which I mentioned near the beginning of the meeting. The model that you describe of centralised co-ordination and professionalised specialist services is often associated with a reduction in the autonomy of professionals who operate close to the point of delivery or policy development. Is a risk associated with that model? The people who know best what is happening in health, justice or what have you are, in a sense, being governed by a central notion of how things should be, rather than being given the responsibility to develop appropriate services or support in line with their direct understanding of the improvements that can be made. Is the mechanism that you describe a way to establish conformity at the expense of responsible autonomy?

In general, I would say that it is not. The role of the centre is not intended to impinge on how departments go about day-to-day delivery of their business. The major exception to that might be the finance function, to which I will return.

In the areas that we have just discussed, the role of the centre is facilitation; that is, ensuring that people have the tools to do the job, rather than telling them how to do their job. The organisation's job is to supply people with IT systems that support their activity, with a flow of staff that enables the job to be done and with finance systems in which they can work and deliver. None of that implies that the centre interferes in how people do their jobs. Much of the direction of travel is about creating flexibilities for people when it is feasible to do so.

I must draw distinctions. One of the Executive's strengths is that it works from common IT platforms, for example. Our colleagues in the south would give rather a lot to have our advantage of running a system of government from common IT platforms, instead of a number of them. Commonality is a strength.

In HR, we are increasingly trying to create a range of flexibilities that relates to how people assemble teams to undertake particular jobs. I will not leave procurement out because there is an important balance to be struck. On the one hand, there is what we might call a policeman role. There is a rather thick forest of controls and requirements in procurement that people cannot be free to cut through. There is an advisory and policing function that is necessary to ensure that people act in accordance with procurement best practice and law. On the other hand, there is the need to ensure that people are free to make procurement decisions that are right for the business.

Finance is different. As I have said, the situation relates in part to provision of common systems and tools for the job. As with IT, the existence of common systems across the Executive should be a source of strength. However, the finance function differs from the others in that the balance between facilitation and intervention is much greater. It is part of the finance function to challenge the judgments of people in individual operational areas. That flows from the relationship between the finance minister and his or her ministerial colleagues. Intervention of a kind is an explicit part of the function. Generally, however, the emphasis is on facilitation. If you would like to go further down that road in relation to HR issues, I will hand over to Sally Carruthers, who will speak about that.

Rather than do that, we could talk about modernising government. Jim Mather would like to ask about that.

What results have been achieved by the modernising government initiative?

The modernising government initiative is quite broad. One of the headlines that we would point to is the creation of an e-procurement system that has been externally widely praised and which is expected to play a significant part in the efficiency savings that the Executive uses to live within its budget, and in the delivery of high-volume savings across the Scottish public sector.

To what extent has procurement been transformed? Have processes been cut out or streamlined? Do you have a quantifiable saving that has either been planned or has emanated from that?

Yes. I think that we saved £600,000 in the most recent year and that our target is to save £2.4 million by 2007-08. If you give me a moment, I will scrabble around in my papers and confirm that.

Those are not big numbers, so we need not bother too much. How does the modernising government initiative link to the changing to deliver programme and the efficient government programme? How is that triangulation triggered? What benefit accrues from having the three elements in operation?

The modernising government programme is an important feeder for efficient government. Some of the changes that are being built through modernising government, such as the e-procurement system and the common smart-card system that the 32 local authorities are collaborating on building for use in Scotland and which might open up considerable efficiency savings in their services—

Coming from an environment, as I do, in which focus and clarity is everything, I would like to know what we gain incrementally from the three initiatives. Could we pack them together into something that is clearer to understand?

We can improve the linkages between modernising government and efficient government. Efficient government is, first and foremost, a set of firm targets. As I said, one needs to see modernising government as a feeder to that, but modernising government is also a programme for funding activity in which one cannot be certain of the scale or the timescale of the benefit. It is about developing new techniques and testing concepts. There is a clear articulation, but one is a framework for precise financial delivery and the other is a programme of piloting and testing the ideas that might help in achieving those things. We are getting a clearer focus that the things that should have priority in the modernising government context are the things that are most likely to contribute to the efficient government agenda. In that sense, we see them increasingly as two stages of a single process.

Even given that, your written submission essentially examines the stakeholder's view of the civil service and the civil service's view of itself, in terms of how it gets on with management and the level of internal performance. Does the senior civil service put any effort into viewing the performance of budget recipients? At the end of the day, most of the money is spent by recipients of budgets rather than by you directly.

Yes, we put in quite a lot of effort. That is not to say that more could not usefully be done. There is a distinction between changing to deliver and efficient government. The latter is all about measurables and how business is delivered. As I said earlier, changing to deliver is essentially a cultural change programme; it is about the Executive, while efficient government and modernising government are about the public sector as a whole. There are important distinctions between that natural pair—modernising government and efficient government—and changing to deliver, which is not naturally part of the same framework. Obviously, in the round one believes that by changing behaviours one improves effectiveness, but linking cultural change in a precise way to effects in terms of finance or delivery is inherently difficult, as you will acknowledge.

You will forgive me if I say that it looks to me as though clarity, focus and passion for efficiency have been lost in the plethora of initiatives. Given the passion that you obviously have for the job, what is the prime inhibitor that you have to overcome in order to maximise the efficiency of government?

The prime inhibitor is a general reluctance to consider change of certain kinds. At this point, the change that I would particularly focus on is willingness to work together across organisational boundaries to develop common solutions. We are at an early stage of winning people over to the merits of that approach in terms of what it can deliver in improved efficiency and, on the other side of the coin, the lack of threat to the important aspects of separate identity that going down that road involves.

I will take my cue from the permanent secretary and state that I thought that his distinction between changing to deliver and efficient government in that answer was helpful. The first piece of good news is that I have only one question on efficient government, which I will leave until later. The other piece of good news around changing to deliver is that, although I am about to ask for some data, I do not really want an answer at the moment. It simply helps if one puts such requests in the Official Report when the committee has before it the officials who are leading the programme.

We gave you an incredibly wide brief and you have given us a similarly wide response that touches on staff morale, professionalisation, secondment and recruitment. You have given a full description of what you are doing in terms of processes and programmes in all those areas. However, the role of the committee is scrutiny not of the minutiae of the programmes, but of outcomes. I think that you have made the case cogently this morning that there is, for reasons of size and scale, no point in our trying to replicate what is being done elsewhere. The only relevant question is whether, as a result of our different approach, which is suited to Scottish needs, the outcomes are broadly similar. I would like data on changing to deliver because that will help the committee to ensure that we are not being in any way unfair to the Executive as we try to pursue the matter.

On staff morale, you make some helpful observations in the paper and have benchmarked us in relation to the rest of the United Kingdom. Those observations are encouraging, so it might be helpful if you could offer us more data on that.

There has been an encouraging increase in secondment, but it would be helpful if somebody three layers down in the organisation could write to us about the total number of inward and outward secondments, dividing the figures into three categories: overall; from the private sector; and at senior civil service level, both overall and from the private sector. I would like to see those figures because we all know that, although Parliament is increasingly engaging with civic Scotland, we engage less with the business community. The permanent secretary also knows that, from questions that I asked in the autumn, it appears that we have fewer than 20 people from the private sector on internal secondment and fewer than five at senior civil service level. Parliamentary questions are not the way to ensure that that issue is fairly represented, so I would like you to write to us with those figures and also—as you have done on staff morale—to indicate whether that is broadly in line with what is happening elsewhere in the UK. I found, to my embarrassment, that the questions that I was asking were being answered by my brother, so I decided not to pursue them.

On recruitment, you mention in the paper that 48 per cent of new appointments to the senior civil service in the Scottish Executive are external recruits, which is extremely encouraging. However, I am confused about the difference between new appointments and total appointments. Perhaps you could write to us to say how many of the total appointments to the senior civil service in the Scottish Executive were external recruits.

From the parliamentary questions that I asked, I know that, last February, the Prime Minister boasted that a fifth of director-general posts are now filled by people who are brought in from the outside and that the proportion is increasing. I have no idea where we stand in relation to that, but it would be useful to have some indication of that.

I am completely persuaded of the case for a unified civil service. One of the points that you make in the submission is that it provides an opportunity for inward and outward secondment across the border. It would be useful to know whether we are continuing to attract civil servants from the rest of the UK to Scotland to develop their experience and our experience. There is genuine anxiety that devolution makes that more difficult.

On professionalisation, it is encouraging to read in the submission:

"A substantial proportion of the Executive's staff hold [or are working towards] a professional qualification relevant to their work."

Again, I would be grateful if you could provide us with data on the total number of staff who have professional qualifications. As you say, the picture in Scotland is better than that in the rest of the UK. How many senior staff have professional qualifications? It will not surprise the permanent secretary that, as he said, finance is a different and difficult issue because of the sort of salary premiums that people command in the private sector. It would be helpful if you could disaggregate the finance professional qualification area and give us an indication of what your hopes are.

I would hate my recent parliamentary questions to be misconstrued as being about differences at departmental level between approaches north and south of the border to professional qualifications in finance. If the Executive could think about how it will assist our inquiry with regard to such outcomes, we would be less likely to misrepresent what is being achieved, and the focus would be taken off inappropriate scrutiny of programmes and be moved on to outcomes. That would mean more productive evidence taking from others who might seek to comment.

I shall leave it at that; I wanted my data request to be noted in the Official Report. I hope that you will appreciate that that is not something that we could put in an individual parliamentary question. I shall stop there and leave my two questions until much later in the meeting. I am sure that the permanent secretary and Sally Carruthers will want to comment in general terms.

I think that that was a request for a further submission, but I shall give John Elvidge the opportunity to answer those questions that he can answer.

There is nothing there on which we cannot provide some useful data. The member will recognise that the answers to some of her questions will depend to some extent on data keeping by others; I do not know how successful we will be in getting access to those data.

I will no doubt say this when we submit the evidence, but I also mention it now. The general shift from our being a rapidly expanding organisation immediately post devolution to being an organisation in which the rate of expansion has slowed right down—we are probably switching into a period of contraction—will have an effect on the time series of some of those figures.

I agree. By all means, the Executive should take the opportunity to reflect on the way in which the coming of devolution made for a different world between 1988-89 and 2001, 2002 and 2003. If it is helpful for you to say that you do not want to have five-year time series data and that you would prefer just to compare the past two years, when you thought that you could draw breath once we got into the second session of Parliament, I think that that would be acceptable to the committee and would make our consideration fairer.

I want to explore some of the issues around transferability. As you know, that subject was touched on in our relocation report and there could be consequences for the Executive's relocation policies.

On page 4 of your submission, you comment on the relocation report and state, with reference to non-departmental public bodies:

"This separate position arises from the principle of appointment on merit through fair and open competition, as regulated by the Civil Service Commission."

However, the guidance that is produced by the Cabinet Office states:

"The sponsor department will want to suggest that the staff of new NDPBs adopt the principles of the Civil Service Code. This is a full, comprehensive document which covers a whole range of issues concerned with working in the Civil Service."

The guidance also states:

"If the Department decides that the NDPB will appoint its own staff, it might be useful for the NDPB to replicate, or follow closely, the recruitment systems in place in the sponsor department. It should be noted that staff should be recruited on merit on the basis of fair and open competition."

How can those two statements be reconciled?

The more that NDPBs are able to satisfy the conditions around fair and open competition, the more that one aspect of the problem is minimised. If the civil service commissioners were to give their permission, one could, in some circumstances, allow the staff of a particular NDPB—it is important not to talk about NDPBs as if they were the equivalent of the civil service, because they form a wide range of separate employers, each making its own decisions about such things—to be appointed in a particular way. Part of the purpose behind the code's pushing people in that direction is not only that there are elements of good practice that we think it would be beneficial to transfer, but that if one can narrow differences, one can make it more likely that such a problem can be resolved in some circumstances. Therefore, I think that there is consistency.

I add two important caveats, the first of which relates to practicality. It would be wrong if this discussion were to raise unreasonable expectations. An organisation that is likely to contract—as the Executive is—is unlikely to be in a position to provide employment for people from outside it, even if that were possible in theory. This is probably not a practical discussion for the foreseeable future, but a discussion on issues of principle. To put things more crudely, we cannot provide jobs that we do not have to anybody from whatever source. Another dimension is the need to recognise issues around treating different external employers and their staff equally. I invite Sally Carruthers to speak about that.

We will pull some more threads into the discussion, as there is no simple and easy way through. The organisation is saying that it knows what it has ahead of it in budgetary terms for the next three years, and what that means for the numbers of people whom we can employ and for an organisation in which the turnover of people is less than 3 per cent. We do not have a reasonable drift of people out, which many other organisations have—we have a static workforce. We also face, quite rightly, very good targets on diversity, which must be met by 2008. With such things against us, and understanding that that means that we must deal with professionalisation and diversity and that our own people probably must be redeployed internally, there is a place for bringing in the question whether we can take people from another organisation, but doing so must fit in with other criteria that we must meet.

If jobs have changed as a result of technology and we are redeploying or helping our own people to gain qualifications to move to another part of the Executive, for example, we have an absolute obligation as an employer to try to find an alternative for them. That must be our first call. Equally, under civil service codes, we need to consider what is happening elsewhere in the civil service. If we look beyond at NDPBs—which, as John Elvidge said, are not some large, single mass sitting out there, but disparate employers—and we are going to make an exception, criteria must be fulfilled that say that there is a genuine job for a person in the business, and that that job is available and will not displace somebody who is already directly employed by us on contract. In addition, if we agree that we are willing to have such a relationship with a particular NDPB, we must consider where that might place us in terms of the call on us that other NDPBs and other employers might have under employment law.

In all of this, we are dealing with human beings. As employers, we all recognise the need to try to look after our own people and each other as well as we can, but the issue is not as simple as saying that we can make promises or judgments about whether we will be able to absorb people at this point in time. As John Elvidge said, to some extent the question is now academic, but it will cease to be so further in the future. The issue is tied up in the question of how flexible the business of the public sector is and how much people are able to move within it. I think that we are starting to consider what are the sensible decisions that will best look after our business needs and the individuals who work within them, but I will not pretend that I think we are there yet.

There are examples of people transferring successfully. For example, Scottish Homes was an NDPB but it became an executive agency. Given the recent comments on the record from the Minister for Finance and Public Service Reform, who expressed surprise that we had so many NDPBs, it may well be that we follow the route that has been taken in Wales, where some NDPBs have been subsumed back into the Welsh Executive. People in Wales must be facing some of those staffing issues at the moment in bringing people into the Executive from organisations such as the Welsh Language Board. Obviously, there must be experience in other Administrations of bringing in staff from NDPBs.

I think that you are right. I do not know enough about the situation in Wales to be able to comment, but we will be down there in a couple of weeks' time to see that.

Forgive me if I sound like I am splitting hairs, but there is a difference between absorbing an NDPB in its entirety, whereby the organisation becomes part of the whole and everybody in that organisation is moved from one set of contracts into the civil service, and the situation that I think we are referring to, whereby the relocation of an NDPB results in people being displaced. However, like you, I recognise that people are people and that they come up against the same difficulties.

Presumably, the differences in recruitment processes between the NDPBs and the civil service have been overcome when NDPBs have previously become part of the civil service.

I take the point. Directionally, I understand that we are pushing towards at least looking at that to see whether it is achievable. However, as John Elvidge said, I think that the issue is not on the table at the moment.

Finally, has there been any study of the impact of relocation on the effectiveness of the civil service? I know that we are quite early on in the process, but there has been concern that the relocation of Scottish Natural Heritage—which is an NDPB rather than part of the civil service—will result in the loss of specialist staff. Has there been any examination of how the experience of relocations so far has affected the operation of the civil service?

As you said, it is early days. We are closer to having evidence for situations in which the Executive was the relocating organisation. For us, the primary example of that, not least because the agency's effectiveness was more easily measurable but because it was the largest of our relocations, is the Scottish Public Pensions Agency's relocation to Galashiels. Because that relocation involved a process business, it is relatively easy to get a handle on the relative efficiency with which the process was conducted. It is too early to draw firm conclusions from that, but provisional evidence suggests that the SPPA suffered no loss in effectiveness once the transition was complete and that we might be beginning to see an improvement in effectiveness. The perception is that the relocation has created access to a good-quality labour pool for conducting the agency's business. It is encouraging to have a stable labour pool.

We are tracking the situation, but it is too early to say that we have enough evidence on effectiveness to be conclusive. Generally, the situation has to be tracked business by business in terms of the performance measures of each one. Part of our approach is that every relocating organisation should track the effectiveness of the business after its relocation. That approach, in part, rests on the hypothesis that, once the inevitable disruption of the transition has been overcome, getting access to different labour markets will allow us to achieve better long-term effectiveness in those businesses.

The SPPA is located in the heart of my constituency, so I acknowledge what you say about the good labour pool there. As the agency has been operational there for a year, I am slightly surprised that you have not been able to monitor the situation more closely than by relying on the picture that you have got. Perhaps you could come back to us on that.

I, too, have a question about transferability. How many civil servants from UK departments have moved from south of the border to the Scottish Executive over the past five years?

I think that that forms part of the information that we will provide in response to Wendy Alexander's question. I do not have that information just now. I have an overall picture, however, that there was substantial movement into Scotland in the early years of devolution. That has levelled off over time. We should be able to give you some precise numbers on that.

You will report on internal transfers, rather than recruitment to new posts.

Yes. Occasionally, people from the rest of the civil service turn up in our external recruitment processes, but I am not 100 per cent sure that we will be able to find them among our data.

You have referred already to the Scottish Public Pensions Agency, which a number of us have visited. I think that that is an example of a successful relocation process. There appears to be anecdotal evidence that some other attempted relocations have been less successful or are experiencing significant difficulties. The Accountant in Bankruptcy immediately comes to mind. At what point do you say that the task of maintaining operational effectiveness is so compromised by your inability to take staff with you that a relocation is no longer worth doing?

In a sense, there are two answers to that. The question of at what point, and whether, we think that the conduct of the business will be compromised forms an important part of the initial relocation assessment. We have drawn considerable comfort from the experience of the Scottish Public Pensions Agency. As I am sure you are aware from your visit, we operated the agency on a twin basis for the transitional period, conducting some of the business from a residual body of staff who stayed in Edinburgh. We managed the transition over time. That model should be applicable to a number of relocations. At the outset, an assessment must be made of whether the business will continue to be able to deliver throughout the relocation process. The question is first asked at that point.

There is then a second question about the point at which, even if one acknowledges that there will be some disruption, one believes that one should be able to come out the other side and get back to normal functioning. It is important to make that judgment and then to decide whether the period of time that that will take is acceptable. One needs to make two time judgments: will the business continue to operate to an acceptable standard immediately, and over what period of time should one's aspirations for improved performance begin to kick in? When should one expect to see the results of those aspirations if the relocation has been a success?

In the committee's scrutiny role, our interest is likely to be made clear when a decision is not carried through, or when a decision is made to pause for thought at a particular point because the concerns are such that the relocation cannot be continued. It would be interesting to try to envisage in advance the circumstances in which a disruption to business would become so serious that relocation could not be pursued. You are aware that the committee is interested in relocation issues, so perhaps we could continue that discussion.

Another dimension has emerged in evidence. Highlands and Islands Enterprise, in its contribution to our inquiry into growth, made the point that it saw the boundaries between different public service employment patterns or structures as barriers to sensible location and management policies across the sector. Perhaps I am paraphrasing too much, but HIE seemed to say that a more unified public service would make more sense in the Highlands where people could move more freely from local government to enterprise agency to civil service employment, and where services could be provided on a public service basis rather than by individual elements of the public sector. Do you have any thoughts on that proposition, particularly in the context of the more rural parts of Scotland such as the Highlands?

In general, there is a tension that becomes clear if we focus on the introduction of executive agencies in the civil service at the beginning of the 1990s. At that time, the analysis was that the existence of too uniform a set of employment conditions was inhibiting the effectiveness of various businesses in the public sector and that such businesses needed to be freer to vary their staff's terms of employment so that they were well matched to the operational needs of the business. Recent analysis has taken us in the opposite direction.

Secondment, which is particularly important, is the pragmatic way in which we can overcome the differences in employment conditions. People simply carry their home employment conditions with them as they move between organisations. The question is whether it is really necessary for people to inhabit a single employment structure—if they can take a base employment structure through periods of employment in a variety of organisations, is that distinction critical?

Having, at an earlier stage of my career, merged two organisations that had different conditions of service, I would say that that was one of the most time consuming and yet not obviously productive management tasks in which I have ever been engaged. We should not lose sight of the enormous diversion of effort that would be required to construct and negotiate a single framework of employment across a range of organisations. That is a base, pragmatic point, but it is burned on my soul from experience.

I feel the same about local government reorganisation.

As you know, the committee has taken a strong interest in efficient government and in the status of inter-Governmental agreements on the issue between Whitehall and Edinburgh. The UK spending review indicated that the Scottish Executive had jointly agreed to and embarked upon an efficiency programme that was as ambitious as that which was planned in the rest of the UK. If the Scottish Executive's policy position on that were to change in any way, would there be any need for you to inform either Whitehall colleagues or the Treasury?

I do not think that there would be a need to do that. In practice, it is hard to imagine that there would not be some communication on the matter, but if the question is whether, in the strictest terms, such a change would require permission, the answer is no.

Has such an exchange happened on the spending review commitment? Would the nature of such a policy change be made public?

There has been no such discussion of a policy change, because I do not think that Scottish ministers would perceive that there has been any policy change since then. There has been a process of growing elaboration of the plans on both sides and a building of mutual understanding of the different ways in which the two Governments are going about the process, but there has been nothing that resembles a statement to the effect that we had intended to do this, but we now intend to do that.

If you were sitting around the permanent secretaries management board and you were asked whether the Scottish Executive's policy position remains that we have embarked upon an efficiency programme that is as ambitious as that for the rest of the UK, would you say that, as you understand it, that remains the position?

Since you put it in that context, I would point the permanent secretaries to the commitment that we made in "Building a Better Scotland" that our ratio of running costs to programme expenditure will not at any point be less than 25 per cent better than their ratio of running costs to programme expenditure.

I will not pursue this uncomfortable topic any further, although I note that that was not the nature of the commitment that we gave. In fairness, you have been very frank, so let us leave it there.

Sir Andrew Turnbull, the head of the home civil service, announced in October that the old label of generalist will no longer be relevant and that three professional categories are essential to civil service business; those categories are policy expert/analyst; operational delivery; and corporate services. What does that mean for Scotland? What degree of commonality with, or divergence from, that arrangement will there be in how we might do things in the future? I am trying to ask whether that is a UK-wide understanding of how policy operations and professional expertise are organised, or will it apply only to England and Wales, while we do something different?

I have accepted that arrangement as a broadly sensible way in which to progress the commitments to professionalisation with which we were working, but some significant differences will be needed in how we operationalise that very broad concept. The most significant of those differences probably relates to the middle category of operational delivery. When colleagues in the south talk about that concept, they are referring to the work that is undertaken in the Department for Work and Pensions, Jobcentre Plus, the Inland Revenue and HM Customs and Excise, where hundreds of thousands of staff usually deliver a common service to a very large customer base. The Executive has no businesses of that description.

However, the Executive has an area of activity in which the distinction between what is operational and what we might call the policy making and delivery business of Government is real. My best example of that is probably the Scottish Prison Service. No one would sensibly argue that those who are employed in the Prison Service are in the same business as are those who develop policy and plan legislation. We will need to evolve a way to give meaning to that concept that is relevant to the businesses that we are in.

On the rest of the stuff, we will be able to occupy more of a common framework. I will not bore the committee with details, but one must take a view one by one on whether many detailed aspects would be sensible for us. Beyond the broad concept, the question is how we plan to operationalise that arrangement sensibly here.

A tiny addendum in the supplementary paper would help. We accept your points about the different functions in Scotland.

I will pursue Wendy Alexander's point. During the spending review period, what was the level of consultation between the Treasury and the Executive about the language that the Chancellor of the Exchequer would use in his statement about the impact on Scotland of the Gershon cuts?

You are taking me into territory that is difficult and in which the honest answer is that I do not know. I might have fragments of information about that, but I cannot answer the question authoritatively, because I am simply not privy to the conversations that may take place between the chancellor, the First Minister and any other ministers.

So those were political conversations rather than conversations between Treasury officials and the Executive about the potential impact on 20,000 jobs in Scotland.

They were ministerial discussions—I make the distinction between ministerial and political discussions—rather than discussions that were conducted at official level. I think that I am safe in saying that much.

I do not wish you to be unsafe in anything that you say.

The Deputy Minister for Finance and Public Service Reform gave us evidence on the impact of decisions resulting from Gershon that were taken in Scotland by another UK department. The minister's written evidence—I think that I quote it correctly—said that no "clear or consistent" approach could be determined in UK departments' plans for civil service jobs in Scotland. At the meeting at which he gave evidence, I said that my constituents should not be asked to judge between a DWP job in Galashiels that is under threat and an SPPA job that has just been created. As the Scottish Executive is part of the UK civil service, what discussions have you had around the table that Ms Alexander placed you at with the other permanent secretaries? Have you been booting them up the rear and telling them that they need to get their act in order, because they are putting at serious risk the good work that the Scottish Executive is doing on relocation?

There is discussion among permanent secretaries about how we can make the arrangements for people to move between one civil service employer and another work more effectively, so that the consequences of decisions are better managed. However, decisions about the size of the various departments of the UK Government are not essentially managerial decisions—they are ministerial decisions. My permanent secretary colleagues and I are concerned with managing the consequences of those decisions, rather than debating their merits. I will put that in less civil-servantish language. It is not for us collectively to debate the size of the Department for Work and Pensions—that is a decision for the UK Government. We try to manage the consequences of that decision, by treating the civil service loosely as a common employer.

You have already said that there is not much space in the Executive, because of the contraction that you anticipate.

Exactly. However, the contraction may affect local labour markets more variably than our main areas of employment in Glasgow and Aberdeen, especially if there is further relocation to an area that is affected by the changes in the UK Government.

As you and the First Minister have said, one benefit of being part of the UK civil service is the interchange that exists and the close discussions that you have with colleagues at the same level in other departments. Who in the civil service is speaking for Scotland if you are operating an approach that is unarguably good and is not predicated on job losses—we listened closely to Sally Carruthers, who said that we are dealing with human beings—but your colleagues at the same level in other departments, who have employees in Scotland who are our constituents, are not operating on the same basis? There are serious question marks and a Government minister in Scotland is saying that there is no clear, consistent approach. Where is the interchange in the civil service that would allow you to say, "You need to get your act in order, as you are dealing with members' constituents."

We are discussing with all parts of the UK Government its approach to relocating jobs out of the centre. There is a distinction between the total number of jobs that it aspires to have—it would be wrong for us to seek to influence that decision—and where those jobs are located. There is an obvious interest in Scotland in our having as many jobs as exist located here. We have a team that is putting to departments across the UK Government the case for maximising the number of jobs that they locate in Scotland. At that level, we are actively engaged in bringing consistency to the view of Scotland in a process that, to be fair to the UK Government, is still evolving. Therefore, I am not sure that it is surprising that at the moment one cannot see the kind of consistency that one would hope to see when there is a finished product.

Let me take you back to some of the questions with which the convener began the discussion, about civil service staff numbers, this being Burns day and facts being chiels that winna ding. I wonder whether I can get you to talk a little more factually about the way in which the number of civil servants has risen in the Executive in the five and a half years since 1999. How has that number increased?

It has increased by 33 per cent, give or take a percentage point, over that period.

What does that mean in numbers?

The core of the Executive currently stands at 4,457—at least, that was the figure at 31 December. You would like to know the 1999 number, for the purposes of comparison, but I have not done terribly well on finding the various numbers that I know that I have with me. I will have a quick look for that number in my papers, as I know that I have it. [Interruption.] I would be happy to supply it in writing.

If we can get it in written form, that will be fine.

In broad terms, there were around 3,000 civil servants originally and there are around 4,500 now.

The figure of 3,000 sounds too low. Ah!—I have found the number. The number was 3,500 on 1 April 1997.

And it has now risen to 4,500.

Yes. It is just short of 4,500.

That is an extra 1,000 civil servants in that five-year period. What does that say to us about the efficiency and effectiveness of civil servants in Scotland?

It says that the job has changed considerably over the period. I have no affection for referring in this context to the growth in the number of parliamentary questions and items of ministerial correspondence, clear though that growth is, because that gives a misleading impression of the core job of the organisation. Although most of our staff are employed at levels where that activity is a significant part of what they do, the task has expanded in various other ways. Probably the most notable change is in the degree of engagement that is expected in Scotland in the process of developing and implementing policy. Put simply, it is much easier—although by no means better—to do such things inside the walls of an organisation than it is to do them through a very inclusive process. Although I have no doubts about the merits of engagement, it is an extremely time-consuming, staff-intensive process.

Can you put a costing on those extra 1,000 civil servants? How much is the increase in civil servants costing the taxpayer in Scotland?

I am certain that we can provide that figure, but I cannot do so right here and now. We could consider what has happened to the administration budget, but the costs of employing staff are only one part of the administration budget. An important part of the story is that we have been bearing down heavily on a range of other costs, so the total spend has not risen to the extent that it would have risen if we had employed additional people without tackling other elements of the cost base.

You would accept, I suppose, that in relation to the governance of Scotland it is fair to ask how much more expensive the civil service is in 2005 than it was in 1999, when we began the process. Do you accept that?

That is a perfectly reasonable question to ask and it is easily answered at the level of the administration budget. Personally, I would argue that one should not single out an individual element of the administration budget, such as the number of staff, because that is not the way in which people manage organisations. One makes trade-offs between different costs to get to a result. It is probably more sensible to ask how the total spend has gone on administration than to ask how the spend has gone on directly employing staff, because that is one element of a mix of delivery.

Will you extrapolate a little further? In some of your answers, you referred to the number of civil service jobs in Scotland eventually contracting. Will you quantify that and talk about the target number that you hope to get down to?

Ministers are quite clear that they do not have a job reduction target. I have said to the trade unions that if we can find a way to live within the administration budget without reducing the number of staff, we will do that. The minister's decision is not predicated on the belief that there are more staff than are necessary to do the job. The reality is that if we reduce the number of staff, some activity will have to cease to enable us to continue to deliver the higher-priority aspects of the business. Ministers do not have a job reduction target and neither do I. When I finish the discussions that will take place with the unions during the next few months about the possibilities for reducing other elements of costs, I will certainly have reached a conclusion about what needs to be borne on staff costs and how that is likely to translate into numbers. However, that is different from setting out with a target.

I began my questions by saying that we are trying to get at the facts. Obviously, any Government or Executive wishes to disseminate the facts as it sees them and to communicate with its publics, various as they are. However, one aspect of the burgeoning number of civil servants that has come under criticism is the growing number of information officers and media people—spin doctors, in fact. Can you tell us the difference between the number of information officers and public relations people who are employed by the Executive now and the number in 1999?

I will be able to tell you. The number is larger, certainly.

Double? Treble? Quadruple?

You are testing my memory of the number in 1999. I have never had any particular reason to focus closely on the number of such staff that we employed in 1999. If you wanted me to guess, I would guess that the number has doubled rather than trebled or quadrupled, as a broad order of magnitude. However, that needs to be seen in the context of changing patterns of engagement between the Executive and Scotland. We regard those staff as being in the business of communicating. For example, the team plays a substantial part in the development of the content of the website, which is a constant information resource. The maintenance of such a resource is not the activity that we normally think of when we think about the day-to-day activities of media relations staff. If you are asking whether I think that the increase is out of step with the change in nature of the business, that is a different question. However, I shall be able to tell you the difference between the current figure and the figure in 1999.

As well as providing the numbers, will you give details of the extra sums of money that are involved in employing those people?

I will try to do so. In principle, that should be possible. However, although I have talked about the overall management of the organisation, the way in which we manage individual bits of the organisation does not involve giving them separate budgets for staff and other running costs. The disaggregation of figures that are not used for management purposes might present me with some challenges, but I will try.

You say in your submission that the senior civil service pay regime is "wholly performance related". Will you say a bit more about that?

The starting point is clarity about what that means. There is no system of automatic pay progression. For every member of the senior civil service, a decision is made every year about whether they will get an increase in pay and what any increase will be. The decision on what the increase should be is taken by reference to the person's performance during the past year. The assessment distinguishes between a person's contribution to the specific objectives of the area in which they work and their wider contribution to the organisation. The rewards system distinguishes between a pay increase that will be consolidated into pay and carried forward and bonuses that are not consolidated into pay. We have moved towards a system that links increases that are consolidated into pay with the contribution to the wider organisation—activity that is thought to have a lasting benefit to the organisation—and that links achievements in a particular year with non-consolidated bonuses. The fact that someone achieves something in one year and earns a bonus for that year does not mean that their pay increases in perpetuity.

I smiled quietly at what I construed to be a reluctance to give a direct answer to Jeremy Purvis's first supplementary question. Today is Burns day and the words of Burns spring to mind:

"Here's freedom to him that wad read,
Here's freedom to him that wad write!
There's nane ever fear'd that the Truth should be heard,
But they whom the Truth wad indite!"

The "Consolidated Resource Accounts for the year ended 31 March 2004" state:

"The Scottish Executive policy requires that all suppliers' invoices not in dispute are paid within the terms of the relevant contract. The Scottish Executive aims to pay 100% of invoices, including disputed invoices once the dispute has been settled on time in these terms."

In your submission you refer to improvements in making payments. However, the consolidated resource accounts show only a modest improvement last year, from 68 per cent to 77 per cent, against the target of 100 per cent, although Executive agencies appear to be achieving well over 90 per cent. Why is the performance of the core Executive departments so much worse than that of the Executive as a whole?

The committee knows that there is no doubt that we stumbled over the introduction of a new accounting system, which brought our performance in that important area well below the level that we would regard as acceptable. The fact that that change in accounting system affects the core Executive departments and does not affect the other organisations is at the heart of the difference. I think that I said in my submission that, for the most recent month, we are achieving 94 per cent of payments within 30 days. We acknowledge that it took us longer than we would have liked to return to acceptable standards of performance. There was a failure of management planning. The heart of the problem is that we underestimated the need for staff training in the new system. It has taken us longer than we would have liked to get back into a position that stands comparison with that of other organisations.

Many criticisms were made of the role that some members of the civil service played in the building of the new Scottish Parliament. What steps have you taken to ensure that such a financial fiasco will never be repeated?

That takes us on to the professionalisation agenda. When Mr Kerr was the Minister for Finance and Public Services, he set out in full the steps that we intended to take that we had not already taken. As I have said, we have expanded our central procurement function and ensured that more than 90 per cent of the staff there have procurement qualifications. In so far as the problems with the Holyrood project related to procurement expertise, we have significantly increased our capacity in that regard.

We have said that it is clear that communication between officials and ministers could have been better in a series of ways. Mr Kerr's statement set out the steps that we are taking to remedy that. We have also said that in future we will ensure that we get right the person specifications for particular posts—if it is correct to draw the inference that we might not have done that in relation to the Holyrood project.

Those three measures represent the broad thrust of what we are doing. The most important of those has probably been the building up of a centre of excellence on procurement, the wider use of the gateway process to monitor major projects as they progress and the increased professionalisation in the procurement function.

We have two final areas of questioning, one of which relates to the section of your submission that deals with the main findings of the staff survey. Although a number of positive factors are identified, a number of areas in which improvements could be made are highlighted. For example, many staff feel that

"key strategic discussions are not undertaken in a transparent and accessible way"

and only half of them believe that

"there is effective leadership from the Senior Civil Service".

Moreover, a significant number of staff feel that they are not valued, that good use is not made of resources and that the Executive is not communicating effectively enough with the public. Given that you have recognised that improvement is required in those areas, how do you intend to go about making such improvements?

The results of our survey provide the raw material for a series of essentially local dialogues. The work that we have done tells us that on most of the matters in question—with the possible exception of people's experience of leadership, on which our programmes to improve the quality of leadership should have an impact—the opinions of our staff are not susceptible to the taking of single actions for the whole organisation. People who are experts in the field tell us that interpreting the survey is a challenge because what individual respondents take the question to mean is a complex question. That is why benchmarking, rather than looking at the absolute values, is so important.

We have agreed that, at a disaggregated management level at which a senior manager is typically responsible for leading a team of 30 or 40 staff, the raw material of discussion should be what can be done to improve things. For example, on the feeling-valued question, the results have been getting better year on year in the years that we have been doing the survey; nevertheless, one would like to see that number getting higher. Our experience of going through the process suggests that a series of local things must be tackled to create the sense of feeling valued.

On the transparency of strategic decision making, the answer lies partly in the business planning process and the degree to which staff at all levels are engaged in that. One must remember that, as with most organisations, most of our staff are towards the bottom end of the organisation and the strategic planning of activity tends to take place towards the top end of the organisation. Therefore, creating ways of engaging staff more in that and making it clear to them is a matter of the way in which we operate the business planning system and draw them in. What is vital to us is that every member of staff understands the contribution that they have to make to the Executive's objectives and how their bit fits into the bigger picture. That is why we are anxious to tackle the business planning system.

I thought the juxtaposition of the apparently high job satisfaction that you are getting from the survey—the fact that people feel that their jobs are interesting—with other issues that essentially need to be addressed by better staff management was interesting. I wonder whether you feel that interpersonal management skills within the civil service need to be given a higher priority, as far as your managers are concerned. The process of bringing people along and making them feel valued must become part of the changing-to-deliver culture.

I feel very strongly that changing the balance between the way in which we value leadership and management skills and the way in which we have traditionally valued individual intellectual ability and job-related skills is an important part of the development of our leadership agenda. The staff survey is a valuable tool for helping us to do that.

I acknowledge that your point is important. However, the contrasts to which you draw attention are an interesting example of the challenges of interpreting a survey of this kind. I think that most people would argue that staff saying that they are highly motivated and enjoy their jobs is evidence of a leadership process that is working. In that case, it is not unnatural that staff should focus instead on the other things that they might like to see in the behaviours of those responsible for leading and managing them, and their critical comments may be a reflection of that. None of that is intended to sound complacent. We have been driving all the indicators up year by year and it remains my objective to continue to do that, particularly for those where the scores are lower.

I have a supplementary question. Many staff do not seem to feel that key strategic discussions are transparent and accessible. Do you accept that a recent senior civil service appointment was made to the Executive but that unfortunately the post was not advertised? That does not seem particularly transparent.

I will comment in general terms, because there is an important absence of information here. We organise the allocation of people to posts of that nature by subjecting them to competition to test their ability to fill a range of posts. That process would certainly have operated in such a case and there would have been a full external competition to test competence for a post of that nature.

We do not hold competitions for every individual post for reasons of efficiency. Competitions to fill posts are time-consuming and slow down the ability to adapt to changing organisational priorities. We continue to believe that, in operational terms, the creation of a pool that has been tested in competition and the allocation of people from that pool to particular jobs achieves the right balance between competition and transparency on the one hand and the effective conduct of business on the other.

Was making the appointment on that basis the best way to boost staff morale, rather than making a much more public appointment?

I do not have a shred of evidence and I have never seen anyone else produce a shred of evidence that staff morale is an issue in this debate.

From reading the staff survey, one could argue for more information officers to solve that problem and I am sure that Mr Brocklebank would agree.

I ask Ms Carruthers whether she has an indicative cost for introducing the e-HR system.

The project cost in its totality, which includes a new payroll that we had to introduce, is just under the £7 million mark. Although that sounds horrific, we have to see e-HR not as a single system but as a way of delivering a service over time, with fewer people and a huge amount more management information to allow managers to make decisions faster about who they employ, how they employ them, how we deploy people and the cost of doing all that. At the moment, we run HR with 26 independent IT systems. That means that, much of the time, people are desperately trying to pull information together into one place, but e-HR will give us a single system.

We also run HR for a substantial number of the agencies and the new system will allow us to work much more easily and flexibly with them. I assure members that although that big figure sounds dreadful, the system is running along project lines, it is being gatewayed, it is on target and on budget.

The new system is not just about HR, it is also about how one has information available about the people one employs, what they are doing, what they are capable of doing, what it costs and using that information to deploy them throughout the business. It is also about paying and training them efficiently and having information available to do that. Our payback costs are currently projected to get us to a payback in around four to four and a half years' time. I might be out of date, so I would prefer not to be quoted absolutely about that.

I accept that people might think, "Gosh, that is a huge amount of money to spend on something that is not directly policy related." Its linkage is that it allows managers who are running the sharp end of the business—which is about policy and working with ministers—to have available the staff and competences that they need and the ability to deploy them. We have that at the moment, but the system is massively manual and therefore fairly slow.

I am grateful for that context, but could you provide more information on how that fits in to the efficient government review? Under "Identified efficiencies in portfolios" and the heading "Administration", the sub-heading "Building a Better Scotland: Efficient Government—Securing Efficiency, Effectiveness and Productivity" states:

"We currently have plans to save £8m through … e-HR systems",

which are costing £7 million. Could you provide information on how that fits in to your planned savings, and how much realised savings it will bring about? I am aware that you want to bring in the context of reducing other systems, but that has to have a financial saving, otherwise I am not sure how it can be captured in the £8 million.

My final question is to the permanent secretary. Would you be able to manage a separate Scottish civil service without a reduction in effectiveness?

The honest answer is that I do not know. Since it is not the policy of Scottish ministers or the UK Government to have a separate Scottish civil service, I have not invested either my own time or that of the organisation in examining the question. I could not possibly give you a properly considered answer.

I have a final, broad question. We are all aware of a number of underlying demographic trends, such as the increasing number of old people, the statistics on health expenditure in the last years of people's lives, and some of the issues that come out of education, with which you are familiar—the burgeoning needs that are being identified. One of the things that devolution has found hard is taking long-term, strategic, difficult decisions. Undoubtedly, as the financial envelope that surrounds us tightens, we will have to become better at that. How will the way in which you are trying to modify the civil service allow it to assist politicians to do that better—to identify what needs to be done, to offer people the correct choices, and to promote the greatest possible awareness of the implications of making different choices?

The short answer is by creating points in the organisation where there is responsibility for doing that thinking, and by combining the skills of civil servants with external skills to conduct that thinking. One of the developments of the past year or so has been the development of a strategy unit to drive longer term thinking about the context of policy making in Scotland. Alongside that, work is being developed on long-term financial planning, in collaboration between the performance and innovation unit and our finance group. So we have two converging streams of work—one on context and one on financial planning—that should between them greatly enhance our capacity to take decisions in the knowledge of likely circumstances 10 to 15 years hence. Capacity has not been strong in that area, but we are taking significant steps at the moment to increase it.

Obviously, these are issues of particular interest to this committee. How can we be factored into that process in terms of information and, perhaps, scrutiny?

This work is at an early stage. Some of the factoring in must be a matter for discussion between you and the Minister for Finance and Public Service Reform, but I would have thought that there was scope for sharing the output of the work at critical stages. In the nature of the process, there are likely to be reasonably extended periods of examination of evidence that crystallises from time to time. I would have thought that the committee could be involved around the points of crystallisation. Further, although this would be more a decision for the minister than for me, I would say that the committee could be involved in gathering the inputs to that process.

In that case, it might be appropriate for me to write to the minister on the assumption that discussions would take place between you and him. Certainly, a number of us would be interested in having better information about how those framing questions are being asked and answered. Perhaps a discussion of those broader issues that relate not to immediate policy decisions but to the direction of policy over a period of years to come would be useful.

We have exhausted our questions, so I thank you for coming along and subjecting yourselves to this process. It has been useful and we have got a lot of helpful information out of it.

We are genuinely grateful for the opportunity to explain many things about which there is often a lack of information. We will happily comply with all the information requests that we have agreed to.