That takes us to item 4. We are slightly ahead of schedule. I welcome Alastair MacNish, the chairman of the Accounts Commission; Caroline Gardner, the deputy auditor general; David Pia, the director of performance audit at Audit Scotland; and Gordon Smail, senior manager at Audit Scotland. I should explain to the witnesses that I am standing in for the convener, who is in transit, having been delayed by the vagaries of the railway network.
I am the chairman of the Accounts Commission and Audit Scotland. As the chairman of the Accounts Commission, I am responsible for taking an overview of the performance of local government in Scotland. I will say more about that in a minute or two.
I am the deputy auditor general. I am responsible for all our stakeholder reporting on behalf of both the Accounts Commission and the Auditor General.
I am a senior manager in Audit Scotland. I am responsible for local government audit and put together the report that we are going to talk about.
I am director of performance audit. I am responsible for leading the work on the local government sector in Audit Scotland.
I am the secretary to the Accounts Commission.
I thank the committee for giving us the opportunity to share some of the issues arising from the local government overview report for the year ending 31 March 2003. I will briefly outline the role of the Accounts Commission and its responsibilities.
You mentioned that there has been a reduction in the number of adults using libraries to 24 per cent. Has that been offset by the extension of library provision from books alone to computers and the internet? Is there any perception that the statistical decline is being addressed by libraries' attempts to broaden service provision?
There has most certainly been a reduction. Even taking into account the change in usage, there has been a clear downward trend over a period. The level of funding that the councils give to the library service is important in terms of maintaining a balance. However, there will be a transfer across. I ask David Pia whether we have any information on that.
The figures quoted refer only to the borrowing of books. The performance indicator covers that aspect of library services; it does not cover the other aspects that Mr MacAskill mentioned.
Are there performance indicators that cover those aspects? Given the direction in which libraries are going, we should perhaps change the indicators.
The performance indicators that we use are kept under constant review. We discuss with the relevant stakeholders which are the most appropriate indicators to measure the various services that councils are providing. The issue that you mention is being discussed with them at the moment. You will appreciate that there are obvious difficulties in finding a good, simple, numerical measure for the services that you mentioned.
I declare an interest, in that I am the chair of the Scottish Library and Information Council.
As you know, that has been a trend for the past five years. In the past two years, we have highlighted that trend in the overview report. The Accounts Commission and Audit Scotland will examine that aspect closely, as it is important. If the balance has changed for good reason, that is fine, but it would be worrying if use of one service increased while the use of another—the borrowing of library books—dropped dramatically. That will be part of our examination in the coming year.
Is there overall information about spending on new books? Do we have a Scotland-wide picture of that?
We do not collect data on spending on new books. We are trying to develop indicators that tell us something about performance—what one gets for the money that one spends, rather than how much money is spent.
With regard to making an evaluation of value for money, would you take into consideration factors such as the quality of the library stock?
Such factors will play a significant role in the best-value audit. When we examine individual councils, we will be able to compare the levels of spending and whether there has been reinvestment in the library service. That will be much easier under the best-value regime. In future, we will be in a far better position to give you definitive answers on each council area.
It is on the best-value aspect that the interesting work will take place in the next three years. We accept that the number of books lent by libraries has decreased over the years but we have never examined the ways in which the service has developed to ensure that it is as up to date as possible. I am well aware that a significant number of young people get compact discs, tapes and DVDs from libraries, and those items are significant investments for young people. They are not all about leisure, as a number of them aid young people's education. We must consider the matter in the round. It would be crazy for libraries to stock up with every single brand new book if no one went to libraries to borrow them. On the other hand, it appears from some of the data that there is a growth industry that has not been captured. How will that be reported in the best-value audit, given that each council will do the work differently?
In the best-value audit, we are looking for evidence that a council has decided for itself what it wants its library service, or any other service, to achieve. It would be quite reasonable for a council to say that it wants to hold spending on books steady but to invest in access to information technology or different formats of information, as long as such investment is based on discussion with local people about what they want from their library service and the council is clear about how it will measure that it is delivering what people want in practice. The Accounts Commission can also use the evidence that comes from the best-value audits of individual councils to say that there appears to be a common problem with library services, refuse collection or any other service and ask Audit Scotland to do a study on that service throughout all 32 councils. The two bits of work feed off each other, and that will happen increasingly.
So there will be a link to the best-value audits, and we have your assurance that further work will be undertaken in an area if there is a pattern throughout Scotland.
That is the great advantage of the overview report—it is not about specific councils but is a general report on trends in Scotland. That is why it is possible to pick out key messages each year, which is a huge advantage to any group that is examining specific areas. The best-value audit will strengthen the overview report.
I will pick up on something that Caroline Gardner said. A common and important theme both to Audit Scotland and to the committee is that you are looking to see that the authority is acting appropriately—I am paraphrasing badly—and operating within its policy. I will tease out a little further the distinction between policy and the audit process and, by way of illustration, I will take a different area: education.
The single most important issue is the need for councils to have a clear policy. That sounds simple, but it is important for a council's education policy to be clear and transparent. At council level, audit and scrutiny play an important and invaluable role in relation to occupancy levels and so on; unless audit and scrutiny are robust, we fall between two stools. It is very important that that audit and scrutiny take place and the overview report expresses concern about the levels of audit and scrutiny in some council areas and the information that is available to council audit committees.
Considering local authorities in Scotland from a national perspective, there are areas of conflict between them and there are also areas in which they try to co-operate by sharing services. Conflict could come from transport and planning matters, for example. Is there a need for any legislative or structural change to allow local authorities to co-operate more when it would be in their shared interests to make savings in common services, or should there be a change that would allow a brokering of agreements when actions that clearly impinge on a neighbouring authority are taken without overall arbitration, such as in transport and planning matters?
We do not need to change the legislation. Community planning is vital for the future in terms of overlap and working at council or agency level. That work will continue.
How is the public consulted on best value in local authority services?
The Accounts Commission spent a lot of time considering that issue as the new responsibilities were coming in. On the one hand, community engagement is central to best value. We have to ask what local people want from services, how services can best be delivered and whether best value is working in practice. On the other hand, councils have to do that work and the Accounts Commission was wary of stepping on the legitimate responsibilities of councils.
The main reason for that is because resources are scarce and we have to be careful. Going into a council would be a last resort, so we hope that councils will be able to show clearly that they have carried out those consultations.
I will ask about contracts under the public finance initiative and public-private partnerships, which are of growing significance to many local authorities. The overview report says that the current value of such contracts in school projects is £2.5 billion. Given the growing amount of activity in that area, will you give us an indication of the role that the Accounts Commission is taking in, for example, monitoring how practice is developing, learning lessons when they need to be learned and sharing such experiences?
As you know, we carried out a fairly full review of the first 12 PFI/PPP projects in the education service in Scotland, which was highly publicised at the time. I think that that was about 18 months ago.
It was two years ago.
We are now following that with a further study, which will examine how our recommendations have been implemented; it will also examine the additional PPP contracts that have now been signed. We cannot go any further than we have gone today, but PFI/PPP contracts are a major issue for the Accounts Commission, and we will report back, in public, as soon as we have carried out the review.
On education issues, how does the Accounts Commission have regard to Executive policies when developing its performance indicators? For example, does it take into account the Executive policy on sustainable rural development when developing its PIs for local authorities?
As Caroline Gardner said earlier, the statutory PIs are developed in consultation with local authorities and other inspectorates, so any indicators or policy on sustainable development from the Scottish Executive or the Parliament would be considered in that context. If we felt that we were able to produce a PI that was robust, we would discuss it with local authorities. Our discussions with them to try to agree PIs tend to go on at length. There is a danger that we might suddenly have 250 PIs, so if we add a new PI, we try to remove one. Otherwise, the administrative base becomes claustrophobic and a blockage is created.
We have a range of criteria for our PIs, such as that a PI should be clear whether a change in performance is good or bad and that PIs should be based directly on information that councils need to manage their services and on national standards rather than local standards so that comparisons can be made between different council areas. I do not think that we have a PI on sustainable rural development at the moment, but if we did, we would tap into the national standards. David Pia might want to add something to that broad description.
I will add only the general point about PIs that they are indicators, not measures, of something. They must be seen in context and, often, understood in relation to other indicators. I know of Rhona Brankin's interest in sustainability and rural schools. The statutory PIs produce data on school occupancy levels and we draw attention to drops in occupancy levels, but we do not suggest that that means that such schools are inefficient or should not be retained. There is no such implication, and we recognise that councils may have to take into account wider considerations when they make decisions.
Sustainability is obviously important to Executive policies, so how is the broader concept of sustainability woven into the PIs?
I believe that councils take the issue very seriously. It is one that they consider and on which they try to come up with a clear policy. However, there will always be grey areas in the middle, for which we need to develop indicators—as far as we can—to help to judge how a council is achieving. That is not easy to do. We need to work at it, which we will continue to do. There is no yes or no answer to the question.
If I may, I will comment on that point before I ask my question. There are plenty of examples of good practice on sustainability and even more examples of good theory on the subject. It is a matter of urgency for councils to get involved in the issue to an even greater extent that they are at the moment.
First and foremost, councils have a considerable way to go to get anywhere near the target of 25 per cent by 2006. I believe, as does the Accounts Commission, that a significant additional injection of capital funding is needed if councils are to get close to the figure. Considerable money has been allocated and councils are now progressing with their usage of the allocation. We are currently in discussions about a study of that area, for which we will come up with the parameters shortly.
I did not mean to suggest for a minute that £50 million is a lot of money. It is less that £2 million per council and yet they have to achieve a huge target. You are quite right in the observations that you have just made.
I want to pick up on the fact that the money that was allocated was ring fenced. A significant amount of money is ring fenced year on year for specific projects. How will you ensure that you can track the money from the Scottish Executive through the council to service delivery? How will you measure the best value of the spend for communities in each council area and for the Scottish Executive?
Ring fencing is a big question. Different views on the benefits and disadvantages of ring fencing would be expressed across the Scottish local authority community. Tracking the spend from the Executive to council level is something that we can do with reasonable confidence. Our external auditors are well aware of the issue and are conscious of the amount of money involved. Over the past five to 10 years, significantly more money has been ring fenced, particularly in education and the like. The external auditors track it down and report back on it in their report on the accounts of the council. I am confident that we do that. I hope that some of the best-value techniques will bring out the smaller levels of spend, but some of it will not be apparent. We are talking about a 20-week best-value audit, so there will be areas on which we have to make a risk management judgment.
I am interested to hear what the Accounts Commission does. That fact that it publishes information is interesting in itself. However, I would like to know what happens when councils spend above their allocation in a particular year. I am thinking of grant-aided expenditure for social work. The Education Committee has considered child protection issues and has become aware that councils often spend above GAE in a policy area.
For 10 seconds, I will wear a different hat. In my previous life in local government, I found that different departments fought religiously for their GAE if they were spending under it and did not say a word if they were spending over it. Putting my Accounts Commission hat on, I reiterate that this is a policy matter for councils. The important point for audit and scrutiny is that spending is identified and transparent and can be challenged. We are pleading with all local authorities to ensure that corporate governance is robust, clear and useful for determining future service provision in each council area.
I thank Mr MacNish and his colleagues for their attendance, evidence and fortitude in answering our questions.
We have been constrained in raising issues with the Accounts Commission, on the assumption that the agenda was tight and we needed to move on. If we have 10 minutes in hand, there are issues that we could usefully pursue with the witnesses who are here.
Having discharged the witnesses, I am reluctant to recall them.
That is very good of you.
We have been very gentle.
We are in some difficulty because we are awaiting our convener, who is in transit. A suspension might have provided the convener and deputy convener with an opportunity to change places. However, if members still have questions to put to Mr MacNish and his colleagues, they should do so. We are not constrained by time. My suggestion was simply a courtesy to the next set of witnesses and might have allowed for some clerking musical chairs. Members should indicate as soon as possible whether they have questions. If not, I will let Mr MacNish go.
I would like to ask about the way in which the Accounts Commission works with other bodies such as Her Majesty's Inspectorate of Education and the care commission that deal with quality assurance issues in local government. That is an increasingly important issue.
To date, one of the major successes of the Accounts Commission and Audit Scotland has been the way in which they have worked together with other agencies such as HMIE. We are now working more closely with Communities Scotland and work closely with the Auditor General on health and so on. We are also now working more closely with social care agencies. The relationship has worked well to date. Under best value, it is important that we do not duplicate effort and that we use the best practice and information that we get from other agencies. To date, there has been no conflict about our role. Conflict may come—that is one advantage of the commission's being totally independent. If we were not happy with the level of co-operation between agencies and the commission or if an agency such as HMIE were in conflict with us, as an independent body we would have the right to make our reports. Co-operation makes our lives an awful lot easier, because it allows us to produce succinct reports on time.
We think that we have a good understanding with all the inspectorate and scrutiny bodies about how our roles fit together: they are complementary, but they are not the same. For example, HMIE examines the quality of teaching in ways that we could not—and should not—duplicate, because we do not have the skills to do so. The inspectorate might inspect professional development aspects of education authorities while we might examine elements such as financial management to ensure that there is a single, joined-up approach to the inspection.
Joint working is also useful in planning the best-value audit for each council area. For example, if HMIE had produced a report on a council three years ago, it would not make much sense for us to carry out the best-value audit now. We try to marry the two aspects, because such joint working eases the flow of information.
I presume that you regard it as important that councils do not feel that a massive number of people are descending on it to examine its approaches to best value, quality assurance and so on; that they see that the process very much goes two ways; and that they feel engaged and do not find the audit to be too much of a burden.
It might seem strange, but we broke new ground last summer by meeting all the council leaders and chief executives at four venues to explain how we would carry out best-value audits for each council area. It was important that the audit did not become another paper mountain and that the councils were able to give us succinct evidence of what they were doing in their council area without creating any further bureaucracy. The commission is aware of the danger of duplication. Indeed, one can reach a point at which officers cannot deliver services because they are constantly filling in forms. We are trying hard to avoid such a situation in every area. All the same, we require certain information to carry out external audit work.
I am reassured by the fact that some of your comments have pre-empted my next question and, in particular, that you understand the importance of not creating another paper mountain. Scottish local government and the public sector in general are enormously concerned about the sheer volume of audit, inspection, regulation and so on that is taking place. I am pleased that, without being provoked, you made it clear that local authority officials should not be diverted from providing services in order to carry out audit work.
I do not think that it would be of any great advantage to the committee if I were to stray into an area that is not our responsibility. We work very well with those agencies with which we work. It would be folly for me to say that I would like many more agencies to be created, as we can cope with only a certain number. However, speaking from practice, what I have experienced in my two and a half years as chairman of the Accounts Commission is a good and fruitful relationship with the agencies, which has been constructive at all times. I promise you that, if it was not constructive, we would be the first to cry foul. We are not here to pay lip service to what I and the commission passionately believe is the quality of service that local government delivers to communities across Scotland.
On the theme of managing relationships and boundaries, an increasingly important relationship for local government is its relationship with the health service. We are all aware that many issues arise both nationally and locally from the lack of coterminosity between the two. I do not think that any of us would want to wade into suggestions of redrawing the map or undertaking big structural reforms for the sake of it, but do you have any comments on how that relationship can grow and develop with the maximum amount of time spent in delivering effective joint working and joint services and the minimum amount of time spent in managing all the different relationships with different authorities—which, in some cases, can involve as many as five or six local authorities within one health board area?
The community planning legislation will help in a statutory sense, as health boards and local authorities now have a statutory duty to work together. The Accounts Commission's joint working with the Auditor General is vital in that context and has been especially useful in relation to youth justice, special educational needs children and so on. As time moves on, because we are measuring the best value per council, more and more of our performance-specific work will be done jointly with the Auditor General. It is already clear from our forward work programme for next year that joined-up working will be of most benefit to our reporting.
As there are no more questions, I thank Mr MacNish and his colleagues not only for giving evidence twice, but for entertaining us last week. I suspend the meeting for five minutes to allow our witnesses to come and go and to allow members to take a comfort break or replenish their coffee.
Meeting suspended.
On resuming—