Efficient Government
The fourth agenda item is to report on our recent site visits for our efficient government inquiry and to note and discuss if necessary a short briefing paper from Arthur Midwinter and correspondence that has been received from the Minister for Finance and Public Service Reform.
Before we discuss the site visits that we made last week, I will clarify a matter. Forth Valley NHS Board, which committee members visited on 7 June, has been in touch with us to clarify the position that it outlined to members on procurement. In the Official Report of our meeting on 14 June it is said:
"The health board could see no further benefits from linking its purchasing with that of other public bodies, because many of its requirements are specialised."—[Official Report, Finance Committee, 14 June 2005; c 2687.]
Forth Valley NHS Board would like us to record that it works with other public sector bodies and that it regularly meets councils, the police, the Scottish Environment Protection Agency and Scottish Enterprise. The board sees limited opportunities with them, but it shares when there is benefit in doing so. For example, in that regard, the board is considering facilities and estates expenditure; it has also participated in a Scottish Executive e-auction for personal computers. However, it is true that the bulk of the board's requirements are specialised. In relation to those, it works with other health boards under the best procurement implementation programme.
That was just a bit of clarification. Alasdair Morgan will now give his report on the visit to Scottish Natural Heritage.
On 28 June, Andrew Arbuckle, Ted Brocklebank, Elaine Murray, Ross Burnside and I visited Scottish Natural Heritage, the offices of which are currently in Edinburgh. We met the chief executive, Ian Jardine, and other staff, whom I thank for their co-operation.
SNH has been asked to find £2 million of recurring efficiency savings by the financial year 2007-08, against the background of a budget of £61 million. However, in that period, the present budget will rise to £69 million, which will make it more difficult to show the efficiency delivery, because the organisation will have to show that the £2 million saving has moved from one part of the budget to another and, I presume, from support services to direct services. SNH has set up an internal audit process to assess whether genuine savings have occurred and whether the money has been redirected in a way that would not have happened anyway as a result of the £8 million increase in the budget.
SNH told us that it has always had efficiency plans, which in the past have produced savings of about £1 million a year, although they have not always been cash-releasing savings, which are the type of savings that we are talking about at present. SNH felt that the new targets will make matters more difficult and that it will have to work harder to produce the savings. Savings could be made as a result of opportunities that arise out of the relocation of the organisation, which will increase the number of people who leave. It was stressed that no specific posts have been identified yet, but about 36 posts might go.
The organisation feels that there is scope for joint working with other bodies that are sponsored by SNH's sponsoring department—the Scottish Executive Environment and Rural Affairs Department—for example, to share offices, procurement or information technology facilities. Interestingly, that has not really been done in the past, but it is now felt that the lead from SEERAD on the idea will make it happen. We were told that SNH might be able to merge some of its existing contracts, for example on mobile phones, into single suppliers. Another way in which savings could be made relates to IT. In the past, when various IT operations have been set up, an interface between them has not necessarily been put in place which, I must admit, struck me as a little strange. It is felt that there is scope for introducing such interfaces, thereby freeing up staff time. When we asked whether all those measures would have been taken in any event, we were told that they would have, but that the efficient government plan had created more pressure, which was a good thing. However, the encouragement to work with other bodies within SEERAD is new.
Given that SNH will retain the £2 million, once found, we asked where it will go to. We were told that, in effect, it will be spent on dealing with new legislative requirements on the organisation, such as the requirement to create the Scottish biodiversity strategy. When we asked how SNH will demonstrate that efficiency savings are being made, we were pointed to the audit operation that has been set up. To quote, we were told that the organisation needs to create a "credible storyline". I am not sure whether in retrospect that is the phrase that the organisation would want to use, but SNH will have an audit trail to show that savings have occurred. The body's internal audit department is involved in all discussions on the matter.
Although the relocation to Inverness is not part of the efficient government programme and is to be funded by a totally separate grant, it is going on at the same time. We were told that, of the 260 staff who are based in Edinburgh, 200 have refused to move, 35 have confirmed that they will move—although that may increase to about 40—and the remainder will leave via natural wastage. It is anticipated that, as we heard earlier, the relocation to Inverness will cost about £27 million in the short term, although SNH is not yet clear about how much it will get for the buildings that it owns in Edinburgh and Inverness. Clearly, the amount will depend on the planning consents that are available for replacement uses, but SNH hopes that at least £2.6 million will come from that.
Do the other members who were on the visit wish to make additional comments?
It struck me that, given that SNH is getting rid of two buildings in Edinburgh, that estimate of £2.6 million is remarkably low. Alasdair Morgan is right that SNH stressed that the figure was pitched low because it is not known what planning applications may go through—certainly the building that we visited is listed—but even so, it seems that the figure is pitched very low.
I will report on the visits to Scottish Enterprise and Glasgow City Council on Tuesday 21 June, which I carried out with Wendy Alexander, Frank McAveety, Jim Mather, our adviser, Arthur Midwinter, and our senior assistant clerk, Judith Evans. We are grateful to both organisations for their hospitality and their open responses.
Scottish Enterprise claimed that its business transformation project has delivered average year-on-year efficiency savings of 5 per cent, which it has reinvested in front-line services while maintaining, or improving on, target delivery. Staff numbers have reduced by about a quarter over the period of that project. However, it should be borne in mind that significant investment was made in Scottish Enterprise to deliver the savings, so they must be balanced against that. We must also consider the figures carefully to avoid any prospect of the numbers being rolled up. Scottish Enterprise's experience is that accurate baselines are critical to the process, particularly in measuring time-releasing savings. That raised concerns among members in the light of the delay in the production of the Executive's efficiency technical notes on such savings.
Scottish Enterprise argued that focused and knowledgeable leadership is vital to the process. The organisation has used consultants to fill gaps in the knowledge of senior management and it now seeks to use that knowledge to introduce further developments. Given that similar gaps in corporate governance and change management expertise may exist throughout the Scottish public sector, the efficient government unit should perhaps consider ways in which the gaps can be addressed—perhaps organisations that have gone through the process could transfer their expertise elsewhere. Discussions about the potential for sharing support services are on-going. Scottish Enterprise is actively addressing that issue with other bodies.
Glasgow City Council has undertaken a range of efficiency reviews throughout its organisation and has initiated significant staffing shifts and shared use of human resources services, which have resulted in the redeployment of about 100 staff within the organisation. Concern was expressed about the sustainability of redeployment in the longer term. It was noted that the costs that are associated with, for example, retraining people for front-line services such as teaching tend to be high.
The council reported a lack of clarity about the extent to which savings that arise from efficient government fund and procurement initiatives can be retained for reinvestment in the council's budget. The council has saved about £20 million per annum for the past five years through such exercises, all of which it has reinvested. However, the Executive's requirements lack clarity. The council also reported that it did not receive information from the Executive on the exact level of expected savings until after it had set its budget for the year, which was a difficulty.
Finally, the council expressed concern that the Executive was in the process of consulting on whether grants from the efficient government fund should be repayable. That is an issue that the committee might wish to take up.
Some general issues also came up. It was suggested that the Executive's definition of efficiency savings does not capture the full range of work by public sector bodies in analysing work processes and redirecting funds to key priorities. It might be helpful to have more discussion of what precisely constitutes efficiency savings and a broader discussion of the processes that are associated with developing efficient ways of working. In that context, the knowledge transfer between public sector bodies seems to have been largely ad hoc and based on personal contacts. As I said when talking about Scottish Enterprise, the Executive's efficient government unit may have a role in extending and formalising arrangements.
Unsurprisingly, cultural issues are more difficult to address than processes. The key drivers appear to be the motivation to do the right thing and the desire to avoid the potentially unpleasant consequences of a lack of action. The importance was stressed of being able to get quick wins and of being able to demonstrate the benefit of efficiencies not only to budgets but to staff, the public, customers and clients.
The issue also arose of whether, as people go further down the route of finding efficiencies, it becomes more and more difficult to find them. Local government felt that it had been driven down a path of seeking efficiencies over an extended period and that it would therefore be less easy to secure benefits in future.
Scottish Enterprise reported that robust monitoring processes are essential for success. Meanwhile, Glasgow City Council reported that there is as yet no agreed reporting mechanism for local authorities and no target date for the completion of an agreed mechanism. Glasgow City Council has therefore developed its own mechanism. Some concern was expressed that other local authorities should be working on developing similar processes.
Effective government arrangements—including agreed targets and individual responsibility for delivery—played a key role in delivering efficiencies. That ties in with what Professor Michael Barber said in his presentation to the committee earlier in its inquiry. We will want to look into that.
The report of Glasgow City Council's finance director, setting out how efficiency savings were to be achieved and what their impact would be, seemed to Arthur Midwinter and me to represent good practice. I propose that we circulate Glasgow's documentation to all councils and health boards and ask them to send us their versions.
That is all that I wish to say. Do any members wish to add anything to my report?
We discussed the possibility that the moves to rationalise and streamline Scottish Enterprise were not radical enough and could be even more radical. We also discussed the possibility that the streamlining of procurement could in fact have a perverse outcome and could damage Scottish economic growth. There might be scope within procurement to help Scottish businesses. Perhaps joint ventures among Scottish businesses might sharpen a product that could then be sold to a wider community.
There was disappointment with the answer to the question on when the transformation process would result in an improvement in Scottish competitiveness. The committee was told that it would be 10 to 15 years before we knew. The word "disappointment" is a euphemism.
We will note all our reports and move to the second section of this agenda item, which is to consider Arthur Midwinter's briefing paper on which savings have been included in budgets and which have not. We are grateful to Arthur Midwinter for shedding light on difficult issues. We can also consider correspondence from the Minister for Finance and Public Service Reform. Members will note that the clerks sought clarification from the Executive and Audit Scotland. That additional clarification is contained in the cover note that goes with Arthur Midwinter's paper and the correspondence with the minister.
Do you wish to add anything to what is in your paper?
Professor Arthur Midwinter (Adviser):
I would welcome the chance to say a few words—because of the speed at which things are changing, the correspondence that is going on, and the numerous comments in the press. I hope that members will find it helpful if I take them slowly through my report and through some points that I would like to make about the minister's letter.
My report distinguishes between what I would call cash reducing and cash redirecting. The report further confirms that there is an even greater disadvantage to local government. Two thirds of cash-reducing savings—money that is lost from the budget—has been lost by local government, with 33 per cent of the Scottish budget. That issue is touched on in the minister's letter. I want to say something about that and about the minister's response on the measurement of growth in output. The area is complex; if members wish to interrupt as I go through it, please do so.
The committee should not be misled by the assertion that local government's share of the savings is only 22 per cent. That is a transparent case of statistical spin, which has been achieved by including £600 million of unidentified savings in productive time with the existing cash savings. Those cash savings are all that we have looked at up to now. We do not know what the £600 million savings will be. All our discussions with the Executive have been to do with the £900 million target for cash-releasing savings. To include that £600 million is not defensible.
Local government has had a disproportionate share of cash-releasing and cash-reducing savings. That is the issue. Indeed, when Dr Andrew Goudie, the head of the Scottish Executive Finance and Central Services Department, spoke to the committee in November, he said that it was important to compare like with like. To include productive-time savings that are not yet identified is not good practice.
Dr Goudie said that ministers had been focusing on the robustness of cash-releasing proposals. I agree that we should compare like with like. We should not obfuscate the situation. I am sure that, if it was allowed to do so, local government would willingly exchange £200 million of cash reductions for the softer targets of productive-time savings.
I want to make a brief comment on the remarks of the president of the Convention of Scottish Local Authorities on my most recent report for the committee, which were issued in a press release that I regard as being partisan and containing uninformed criticism. Mr Watters claimed that the efficiency targets for local government are not based on guesswork. Mr Watters must have access to a different set of efficiency technical notes from mine and the committee's.
The financial assumptions that underpin the targets, and the consequences of meeting those targets, are still unclear. It is one thing to support the principle of improving the efficiency of the public sector, as the committee has always done—indeed, it has encouraged the Executive to take the same approach—but it is another thing to suspend critical judgment on the practice. COSLA's support for the Executive's approach is at odds with the serious concerns that have been expressed to the committee by other council leaders in meetings. The picture that we get from them is different from the picture in Pat Watters's remarks. Concerns are still being expressed about the impact of cash reductions on services, jobs and council tax levels. People are still concerned that they will not be able to achieve 2.5 per cent even when they have made fairly substantial savings. The reality is that local government has had to bear a disproportionate share of cash savings. However, that is only consistent with its declining share of the Scottish budget since devolution.
Another point concerns the minister's explanation of the 5 per cent growth in output. The explanation is complicated and comes at a time when the Executive has published its response to the Atkinson review. I will try to explain things as simply as I can.
We asked how the 5 per cent growth target was arrived at. The target was for a 5 per cent increase in what was called "frontline public services". For the benefit of members who are being pushed by the press to comment on this, I should say first that the current coverage of the efficient government issue in The Herald is not by the paper's parliamentary correspondents, who have reported developments accurately and diligently. The coverage is by a journalist called Martin Williams and is described, pretentiously, as the annual "public sector audit". It attacks the Executive for not delivering what the efficient government initiative was never intended to do, which is to cut back the size of the state. Nothing in our documentation about efficient government suggested that the exercise was intended to do anything other than to redirect resources in the public sector. I am aware of no statement from the Executive that the efficient government initiative was an exercise in cutting the state or bureaucracy.
The efficient government initiative is concerned with improving the productivity of the public sector; it is not concerned with its size. We need to make that clear. Mr Williams's figures are repeated today in the letters column—11,000 jobs at a cost of £1 billion would work out at 100 grand a head. I do not know many public sector workers who receive 100 grand. The average income of workers in Scotland is about £20,000. As opposed to being based on the actual costs, the figures have been arrived at by dividing the growth in the salary budget by the 11,000 extra staff. Those figures are wrong and should be corrected.
That brings me to Mr McCabe's response to the convener, which—although members might not think it—is linked to that newspaper coverage. The minister's response to the query about the 5 per cent output growth is, in my view, inadequate. He offers the national accounts approach, which the Atkinson review has been trying to revise. Amendments have been made to the way in which public sector output is measured in Whitehall, but they have not been implemented in Scotland where we still use the conventional index of input equals output—the cost of the inputs is the value of the outputs. In the public sector, one moves to the price as charged as the value of the outputs.
That means that we are not talking about budget outputs, which is what concerns us. The national accounts approach is an aggregate measure for economic performance; it is not a suitable measure for our purpose. The Atkinson review report says that the national accounts approach seeks to
"aggregate indicators that can form part of the National Accounts, not complete tool kits for the management and audit of government activities."
That is the exercise in which we are engaged. Atkinson recognises that national accounts estimates are macroeconomic in focus and should not be used to measure Government performance and service delivery, which are separate, although related, issues as regards the problem of measurement.
The Executive is still using the model of input equals output. If one applies that model to the 5 per cent figure and the impact of the efficient government initiative, the minister appears to say that the 3.5 per cent real growth has been added to the £1.5 billion of savings to deliver the 5 per cent growth in public sector output. The problem with that is that, because of the way in which the national accounts model measures output, the £1.5 billion will add nothing and its effect will be totally neutral because input equals output and all that the Executive would be doing would be redirecting the money. The minister did not answer the question.
As we have a new committee member, I restate that what we need is a baseline of outputs for the service in the most meaningful sense with regard to teachers, policemen, social workers, the number of crimes that are dealt with, the number of students who are taught, or whatever. We need real output measures that are relevant to the savings that we are talking about, not an aggregate figure that has been produced for another purpose. The committee and Audit Scotland have both pointed out that we need cash baselines for the savings and output baselines for the impact on redelivery.
I am sorry that that took so long, but I felt that I needed to go into the details because of what was in the correspondence.
In your helpful update, you distinguished between cash-releasing and cash-redirecting savings. You say that £319 million is for cash-redirecting savings, because it is the money that comes off the budget. Where does the £411.7 million come from and how does it relate to what the Executive said? I do not have the efficiency technical notes with me.
I have given you an update on my previous report, in which you might remember that I discounted the £90 million from Scottish Water as not being part of the departmental expenditure limit; that is why my totals differ from the Executive's. If the savings are not in the DEL, they cannot be redirected therefore they do not count and should not be included.
The £319 million is made up of the £201 million from local government, the £90 million from health and other small amounts, such as the £10 million from prisons. The £411 million to £412 million are targets that the partners are free to retain and redirect. In some cases, the cash has been lost; in others, it has been left with departments.
You mentioned prisons. The head of the Scottish Prison Service, Mr Cameron, said recently that the efficiency savings could be achieved only through looking at potential privatisation. Is there any basis for that in the figures that you have in front of you?
I read those comments, which were surprising. There is no mention of that matter in the efficiency technical notes. The notes suggest that a review of current practice might be necessary and that that would be dealt with slowly and in negotiation with the union, in the normal way. The technical notes do not mention privatisation, and I am not sure that the idea is consistent with the notion of an efficiency saving as defined in the current exercise.
What about the volume of cash that the prisons have received in the current spending review period?
There has been a significant increase in the prisons budget in the current spending review—I think that it was 29 per cent over three years. That makes it a little difficult to be convinced of such a statement without having further evidence that privatisation might be necessary.
In that context, the Scottish Prison Service has met its output target. I presume that it has grown by more than 5 per cent a year on that basis.
I assume that you mean in the numbers of prisoners.
Is the implication that the 5 per cent target from the efficient government document kicks in right away? That would be 5 per cent in year 1, which would be compounded in year 2 and so on.
Yes. It is difficult to judge, because the Executive has not answered the question properly. The earlier efficient government document to which you referred says that the 5 per cent comes from the real growth in the spending review plus the efficiency savings. I was confused when the answer came back from the Executive that that was based on the national accounts model, because I could not see how the £1.5 billion could be taken into account. We need to clear that up, but the assumption is that there will be 5 per cent growth a year over the three years.
Is that 5 per cent each year?
Yes. I would expect to see 5 per cent growth in outputs as opposed to a cash fix.
I have a question about process for the convener and then two questions about the detail for Arthur Midwinter.
The clerk prepared a helpful note on process, which asked where we are a year on from the publication of the spending review. We expected the efficiency technical notes some time in the autumn, as was comparable with what happened elsewhere, and we are now three months into the period in which the savings are meant to be made.
We have neither a baseline for the cash savings nor a baseline for the time-releasing savings. The letter from the Executive is disappointing; it does not even give us a timetable for either the cash baseline, as agreed after discussions with Audit Scotland, or the publication of the time-releasing savings. I seek the convener's guidance on whether it might be worth simply writing to the Executive to say that we regret the fact that three months into the three-year savings period we do not have an agreed baseline for either element of those savings.
Perhaps this is a question for Audit Scotland, as the convener mentioned: how is it possible to audit time-releasing savings if the baseline is not established in advance? I genuinely do not understand that. Last week, we heard from Scottish Enterprise that it is not possible. I am not an expert on the issue, which is clearly a matter for Audit Scotland. Is it possible to audit time-releasing savings, if three or four months into the process the baseline is not established? I see from the minister's letter that less than half of the efficiency technical notes for time-releasing savings have gone to Audit Scotland. That is the only issue that I want to raise about the process. I seek guidance from the convener on whether it is worth our sending a letter asking whether there is a timescale for the publication of the baseline for either dimension of the planned savings.
From the final paragraph of my letter of 25 May, you will see that I have asked when information will be made available to us. I anticipate that, following today's discussion, we may send a further letter to the minister. I am sure that that will include a request for information. We may also express concern about the speed at which information is being made available.
We have identified the baseline as an important issue. However, when seeking a baseline, which we absolutely require, we need to be able to convince the Executive that a baseline is necessary for it to be able to conduct the exercise. We need to become involved in a process of constructive engagement and to ensure that we are not just checking that the Executive has done what it needs to do. We must continue to engage positively with the Executive, as we have done until now, to ensure that it gets the benefits that we all want.
When Susan Duffy and I met the efficient government team, we asked it specifically about how baselines for outputs will be developed. The minister's letter suggests that the Executive will correspond directly with us on the subject. It can be in no doubt that we regard baselines for outputs as crucial. I was interested to see that the Treasury's efficient government technical notes guidelines stress the need for clarity on baselines. I do not think that that point is made in the guidelines for Scotland.
The minister's letter states:
"The targets were based on what was achievable in each sector, not allocated on a pro rata basis, and as health and local government are the biggest providers of public services … it is understandable that they potentially have most scope for making efficiencies."
Health and local government have the most scope for making savings in cash terms, but an interesting divergence in approach has emerged. We now know that the choice has been made that less than 1 per cent in savings should be sought from the interesting triumvirate of the enterprise, environment and transport portfolios, whereas more than double that percentage should be sought from the health, local government and justice portfolios. Clearly, that is a choice. We have not had the chance to have a dialogue about why it is appropriate for double the percentage of savings that are sought from enterprise, environment and transport to be sought from health, local government and justice. The pro rata approach of asking every department to aspire to the same target has been taken elsewhere. I am happy to leave that issue on the table for the next time that we take evidence from the minister, once the time-releasing savings have been published.
When the minister was last here, I asked him specifically why some departments appeared to be getting off more lightly than others. I am not sure that we were given a clear response, but I have been conscious of the point that Wendy Alexander makes and have made it to the minister.
My final point is a question to Arthur Midwinter. The paper that you have submitted to the committee today contains some new and interesting information. You refer to savings being "built into budgets", which effectively means that they have been top-sliced. As the paper explains, those savings are not available for redistribution in the budget from which they come. We are now clear about the fact that, of the £740 million of cash-releasing savings that the Executive has specified and that we know about, £319 million is being top-sliced. Of that, £291 million is being top-sliced from health and local government, so 90 per cent of the top-sliced money that cannot be spent in the same budget will come from those two areas. Has any explanation been offered in discussions of why 90 per cent of top-slicing should be in health and local government and only 10 per cent should be in all other portfolios?
From discussions that we have had, it seems that there is an appreciation in health and local government that we need to move resources from the back office into the front office. However, people do not want resources to be moved from their back office into someone else's back office or front line, if those resources are top-sliced. Has there been any discussion of why 90 per cent of top-slicing is in health and local government, whereas in general other departments seem to be able to hold on to their efficiencies and to redistribute them internally towards the front line? Do we have any indication of what is driving that decision?
No. It is suggested in the correspondence that the top-sliced money has been reallocated to other Executive priorities. It would be useful for us to know where the money has gone, but we do not know. I think that it became part of the pot that was available for allocation, along with growth moneys. The Executive has not yet been able to say to us where the money went.
If we know that £319 million has been top-sliced back to the centre and that £291 million of that sum came from health and local government, it would be appropriate for us to find out where the £319 million went.
We could pick up on the point that Arthur Midwinter makes in paragraph 6 of his report. We could ask the Executive where the money has been realigned within portfolios and, generally, within programme budgets and to demonstrate the extent to which it has been realigned towards front-line services.
Given that we are three months into the period of the review, I presume that such decisions have already been made. Perhaps the money is still lying at the centre, but it should be possible for us to get a relatively early response from the Executive. As the money has been reallocated, we should ask the Executive, for reasons of transparency, to tell us where it has gone. Some of it may have gone back to health and local government, but we cannot know that until the information is published.
I do not know whether I want to say this any more, but is it the case that organisations that are more obviously likely to find procurement savings have been targeted with the biggest cash savings?
No. Procurement is included under cash-releasing savings, but it is not included under top-slicing. When we visited Glasgow City Council, we found that its savings total of £20 million included about £4 million on procurement. For practical purposes, the council was using procurement as a way of reaching the target for cash savings, rather than in order to realign money to services.
The council was referring to its target, rather than the Executive's.
Yes, but its target just happens to be in line with its £20 million share of the £168 million in savings that are expected from local government.
I have a brief technical question, which may have been answered. When some of us were preparing our speeches for last week's debate on efficiency, we were slightly thrown by the fact that Tom McCabe's letter indicates that the health portfolio is now expected to contribute about £525 million of savings. We had always expected savings to be in the region of half that amount. I gather that the figure to which he refers includes time-releasing savings. Is that correct?
I guess so, but we have received no information.
Is this the first time that you have seen the figure?
Yes. The minister says that
"these revised figures are not yet in the public domain",
so we have not been told about them. I assume that the figure for health includes some time-releasing savings, but there may also be further cash-releasing savings.
We have to try to encourage that out into the public domain. I would like to see a timeline, with the date and the cash-reducing and cash-redirecting savings that were allocated from particular budgets—later on, let us also see where they were redirected to.
We have logged with the Executive our desire to know where the money has gone.
Remember, the figure started off at £500 million. It then became £650 million and then £745 million.
We will not get the final picture until all the time-releasing savings—
We should ask the Executive how all of that has evolved and where it will eventually end up. I am totally with you on the baseline outputs, especially now that we have the additional moral authority of Audit Scotland's enthusiastic support for the concept. On Audit Scotland, is there anything that we can do to accelerate its scrutiny of the efficiency technical notes? Tom McCabe's letter says that it is
"unlikely that the Efficiency Technical Notes will be ready for issue much before the end of July."
Surely that means "not the end of July".
To be fair, we pressed those issues with Caroline Gardner at our previous meeting and she assured us that Audit Scotland would turn the efficiency technical notes round as quickly as it could. Our encouragement should be directed towards the Executive rather than Audit Scotland in that regard.
I think that July is optimistic.
That is really what I am saying—I may not have expressed it all that well.
Audit Scotland said that it needed a minimum of eight weeks. According to its letter, it has six of the efficiency technical notes, so, as there are 13 departments, it has about half of them.
I am concerned about the health portfolio comparison with local government that has been highlighted. I suppose that the question needs to be put to ministers whether, in making those comparisons, they are saying that local government will not be expected to make any time-releasing savings.
I think that Susan Duffy asked the Executive about that in correspondence.
Yes.
Has it responded? Is it expecting local government not to make time-releasing savings?
The response says that the Executive would hope for limitless savings.
Professor Midwinter, you talked about wanting to see a 5 per cent growth in output. The Executive will make out that it has put in £1.5 billion to the input side. I understand your argument that that is not the way in which one would measure efficiency at the front line. Did you mean a 5 per cent growth in the numbers of police, teachers and so on?
And crimes dealt with. The difficulty is that, conventionally, some people would regard staffing as an input, but in a large number of the local government services the staff are the service. The teachers and the social workers are part of the service—they are not just staff in the input sense. In the paper that Ross Burnside and I are preparing for the away day, we will consider whether we can develop a further list of the things that would make sense to us for the big services that are available. There is a lot of information on operations carried out and patients dealt with in consultation and so on, so we should be able to get staffing numbers and some measure of output. The Atkinson review has considered that as well, in trying to develop more service-related output measures.
We are dealing with that rather than with a budgetary—
Rather than with a cash figure. The great danger in using the national accounts approach is that, in the normal course of events, some of the 5 per cent growth may go on things other than output and services, such as staff costs. We need an accurate picture.
We cannot quantify time-releasing savings in terms of staff because, by definition, the number of staff will stay the same but those staff will have more time to do other things. There must be measures of output if we hope to measure time-releasing savings.
I do not envy them their task.
I have a question about end-year flexibility, which was mentioned in Thursday's debate—I am conscious that this is the last time that we will have Arthur Midwinter in front of us. One of the points that the Government made was that this year's end-year flexibility is considerably less than it was in the previous few years. It struck me that this is the first year that we have had the central unallocated provision, which is £262 million. Does that in any way impact on the comparison between this year's end-year flexibility and that of previous years?
I will have to check back and write to you.
That £262 million was clearly not around in previous years. I am conscious that it is money that is not voted on, so perhaps we could have it checked out.
I will check it out. Should I pass the information on to every member of the committee?
Yes.
There seem to be no further questions. I will respond to the minister's letter by asking for further information. We will trawl through the Official Report and try to formulate the questions to maintain our trajectory. We need to schedule a meeting with the minister in September. Ideally, the meeting should take place after we have had a chance to consider the time-releasing savings, so we do not necessarily want to ask the minister to the first meeting after the recess; we probably want to meet him when the information is available and Arthur Midwinter has had an opportunity to go through it.
If the report on time-releasing savings comes out during the summer, can it be sent to the committee?
Members will get the information as we receive it. However, it is important that we scrutinise the information in a measured and proper way.
I am aware that the draft budget will come out in September and I wonder whether the committee will want to see the minister twice or to have separate meetings for each subject.
I do not think that we will see the minister about the budget until November, so we can take a wee bit of time on that. We will certainly want to see him before then on efficient government. I thank Arthur Midwinter.