Official Report (Hansard)
Date: 18 June 2008
FINANCE AND PERSONNEL
Performance against Targets in Business Plan 2007-08
18 June 2008
Members present for all or part of the proceedings:
Mr Simon Hamilton (Deputy Chairperson)
Mr Roy Beggs
Dr Stephen Farry
Mr Fra McCann
Ms Jennifer McCann
Mr Adrian McQuillan
Mr Declan O’Loan
Mr Colm Doran )
Mr David Orr ) Department of Finance and Personnel
Mr Jim O’Hagan )
The Deputy Chairperson (Mr Hamilton):
With us today are David Orr, Jim O’Hagan and Colm Doran from the Department of Finance and Personnel. I invite you to give a presentation to the Committee, which will be followed by a question-and-answer session.
Mr David Orr (Department of Finance and Personnel):
I will give the Committee an overview of the Department’s performance in 2007-08. We will do our best to answer all questions, but if there are detailed questions on issues that are outside my immediate area of responsibility, I may need to provide a written response.
The first page of our briefing paper sets out the Department’s keys aims and objectives, with which the Committee will be familiar. The second page is an update on the achievement, or otherwise, of the public service agreement (PSA) objectives. The first objective — PSA target 1 — is to prioritise the use of resources available to Northern Ireland. The very significant achievement in that regard was the agreement of the draft Budget by the Assembly and the Executive in January 2008, which was an involved and detailed process.
PSA target 2.1 relates to the Northern Ireland Civil Service (NICS) in general, and the particular target was to ensure the delivery of efficiency gains of at least 2·5% a year across the service. Our central finance group is collating the returns, and it is of the view that, on the whole, Departments are on track to achieve both the resource-releasing efficiency targets and the non-resource-releasing efficiency targets. In some cases, Departments have indicated that savings might not be realised in a particular area, but they have offset that by additional savings elsewhere. The type of savings involved includes procurement gains, containing inflation and securing additional receipts. Basically, Departments have ensured those 2·5% efficiency gains by living within their budgets.
PSA target 2.2 is to ensure that the NICS, as a whole, operates within administration cost limits for the three years until March 2008. The level for administrative costs is the same as it was for 2005-06, and that target was achieved.
PSA target 3 relates to key reforms to the rating system. John Wilkinson, the chief executive of Land and Property Services, has appeared before the Committee several times, and members will be aware that those key reforms were put in place during the year. Indeed, other rating adjustments were made on foot of the Executive review of domestic rating. I am happy to revisit all those targets in the question-and-answer session.
PSA target 4 relates to ministerial targets for agencies. My view on target 4 is that it was not achieved. Land Registers Northern Ireland achieved all its ministerial targets. The Northern Ireland Statistics and Research Agency (NISRA) achieved four out of five ministerial targets, and the one that was not achieved was the target to sign a procurement contract for the delivery of the 2011 census. Work on that matter is being conducted in conjunction with census authorities in Britain. There has been a reasonably short delay to the achievement of that target, and the agency is on target to meet it by the end of this month.
Land and Property Services did not achieve all its ministerial targets. As members will be aware, it was a significant year for the agency, with its establishment on 1 April 2007. Subsequently, on 1 April 2008, it merged with Land Registers Northern Ireland and the Ordnance Survey of Northern Ireland, so it has been a time of significant change for John Wilkinson and our other colleagues at Land and Property Services.
The briefing paper outlines the targets for valuation accuracy: the target for domestic properties was achieved, but the target for commercial properties was not. The target to include new property in the valuation lists within two months of registration was not achieved for domestic properties. Moreover, the target for customer satisfaction was not achieved, nor was the revenue collection target. All in all, because a number of targets were not achieved, the overall PSA target to achieve ministerial targets was, therefore, not met.
PSA target 5 relates to electronic delivery. The paper includes a brief report on NI Direct and digital inclusion. Good progress was made in the achievement of that target.
There are 74 second-level departmental targets in the business plan: 55 were achieved and four were not. Fifteen other targets were not achieved, but good progress was made, and they were either substantively achieved or will be achieved reasonably early in 2008-09.
Among the successes, procurement savings currently stand at £248∙9 million, as against the target of £250 million. However, the data is still being captured and verified. The savings have to be audited before they are recorded, but we are confident with respect to procurements that we will have reached the target. Guidance on equality and sustainable development in public procurement was agreed by the Executive and signed off by the Minister. I will not refer to progress that has been made on the key reform projects, as Members will already have read that.
I now turn to the four departmental targets that were not achieved. The first target relates to absence management across the Northern Ireland Civil Service. Some members of the Committee also sit on the Public Accounts Committee (PAC), so they will be experts in this field.
The Deputy Chairperson:
I would not go so far as to say that.
Across the NICS, the target for 2007-08 was 11∙2 days, and the expected out-turn is 12∙5 days. Perhaps more pertinently for me, the Department of Finance and Personnel’s own sickness absence was not achieved. The target was 10∙3 days, and we achieved 11∙4 days. That is an improvement on the previous year, but it is still not good enough.
The final page of the briefing paper deals with two departmental targets that were not achieved. However, they were no longer applicable during the year because they were superseded by the Executive’s review of the direct rule Administration’s decisions on the review of public administration, which was launched in July 2007 and final recommendations were agreed by the Executive in March 2008. That meant that it was not possible to make progress on those targets.
With your permission, the final issue to which I wish to refer is not included in the paper, but the Committee will be interested in it — the question of underspend. I can give the Committee provisional results, but they have still to be finalised. The Department’s underspend in relation to resource provision was 3∙1% in 2007-08, which is an improvement on 2006-07, when it was 10∙6%. On capital, the underspend was 4∙6% in 2007-08 as against 18∙3% in 2006-07. Those are reasonably good improvements, but much more progress can be achieved, and we look forward to doing much better than that in 2008-09.
That summarises the report, Deputy Chairman. I am happy to take questions.
The Deputy Chairperson:
Thank you, David. Before I invite colleagues to ask questions, I want to raise the 74 departmental targets — of which 55 were achieved — that you mentioned. You explained how four of those targets were not achieved. I do not expect you to go through in detail the reasons that the remaining targets were not achieved now; however, it would be useful if a brief explanation could be provided. Some targets were “substantially achieved” and some were “subject to delay” for certain reasons. Can you provide a brief note on why that was the case?
Yes, we will provide those details.
I want to raise a couple of points. When did efficiency gains become “at least 2·5% a year” instead of 3%?
Mr Jim O’Hagan (Department of Finance and Personnel):
Those efficiency gains were set out in the Budget and spending review process in 2004.
Therefore, they relate to two different time periods.
I want to discuss your reference to Land Registers Northern Ireland and its achievement of targets. Members were all impressed by the report that Land Registers produced when it attended the Committee. However, corrective to that report is a reference in today’s press to a critical report from the Comptroller and Auditor General on the considerable overrun of costs that relate to Land Registers’ IT systems. I do not see any reference to that in the briefing paper. Can you comment on that?
The Northern Ireland Audit Office (NIAO) issued its report this week. The Department of Finance and Personnel and Land Registers welcome the report’s findings, in which there are pluses and negatives. As the report may be considered by the Public Accounts Committee, it is convention that I should not comment too much on it. Indeed, I am not entirely familiar with the report. Therefore, you may wish to discuss the matter after the Public Accounts Committee has examined the report.
I am sure that we will become aware of the PAC’s consideration of the report, which you may want to examine.
As regards Land and Property Services, you have certainly quoted its failure to achieve its revenue collection target of 98%. In fact, the out-turn was very low. Given that the deviation from the target is so great, I would have appreciated a clear explanation of that in your comments. It is not as though the target was missed narrowly; there was a serious situation, about which other members and I have been concerned, to which we will, undoubtedly, return in order to seek an update.
Ms J McCann:
You mentioned that Land and Property Services did not achieve the revenue collection target that it expected. Much of the discussion on the matter has been centred on the need for a more proactive approach to be taken in order to try to get people to take up rate relief, the target for which was not reached either. The briefing paper states that rate arrears will be a high priority in 2008-09. Will encouragement of the take-up of rate relief also be given high priority, given the financial difficulties in which people have found themselves recently? Obviously, that is a question for Land and Property Services. However, I notice that rate relief is not mentioned in your paper, despite that fact that Land and Property Services also failed to meet the target for its take-up.
Through the Department’s business planning process for 2008-09, it has identified several areas, right across Land and Property Services — particularly in respect of valuation and rate collection — where it will seek to introduce a range of activities to ensure that collections and assessments are maximised and that any relief or benefits are also administered to best effect.
The question is specifically about rate relief. If you are content for me to speak to John Wilkinson so that I can communicate the concern that that should be a priority, I will certainly do that.
Take-up of rate relief will not improve until it is simplified. People are put off by a form of 28 pages.
The Department’s underspend has been much better this year than it has been for many years. What plans are in place to make the figures even better next year?
The principal plan is that each member of the senior Civil Service in the Department has been given an underspend target to achieve of 1·5% or better. It would be better to hit it on the button, spending the entire budget, but we expect each of our people to manage his or her budget to within 1·5%. As those of you who have worked with annual funding are aware, it is sometimes difficult.
I will give two examples. One of the biggest reasons for the resource underspend was not, in fact, an underspend. It is explained by the fact that surplus income, which arose out of property transactions, came into Land Registers. The volatile state of the property market made it difficult to estimate in advance what the income would be. That accounted for almost one quarter of the underspend; in a sense, it was excess income.
One of the reasons for the underspend on the capital side was that, under the HR Connect system, with which members are familiar, a milestone payment was scheduled for March 2008. The contractor had not completed the necessary work to sign off on that milestone, and it would have been wrong to have signed off on it. That payment slipped back to the first couple of months of 2008-09.
The lower percentages can be improved, but I want the Committee to appreciate that that is not because of carelessness or lack of attention. Issues can arise that may throw the figures off course at the last minute.
Land and Property Services missed its target to collect 98% of rates. That was due to computer functionality problems, of which we were made aware at the beginning of this year. Have those issues been resolved? We were also told of the additional costs that were incurred. The Department’s briefing paper also states that there were staff recruitment issues. What were those issues, other than the fact that the computer system did not work?
You are quite right; Land and Property Services experienced significant problems with its computer system. It was a new system that was implemented on the back of the rating reforms. The rating recovery functionality of that system was the element that most affected the collection position last year. I understand that that was not operating in the way in which it should have done and that Land and Property Services was only able to make it operational late in the year. That functionality is now operating and is in place. We understand that the agency has a recovery plan in place to bring back the collection position and make progress and inroads into that during 2008-09. Steps and actions are being taken forward on that.
Was there anything other than the fact that you did not have the system for staff to operate? Were there any other issues involving staff recruitment?
Staff recruitment problems were not linked to the computer system. As you will appreciate, there is always a turnover of staff. There is a central competition for the recruitment of administrative officers and administrative assistants. Land and Property Services had to wait for that process to be completed before it could replace people who have just left. Indeed, the agency was granted top priority in the allocation of staff from that competition.
I am interested to know how much of a delay in recruitment that caused. If there is a bureaucratic mechanism in the Civil Service that prevents vacancies from being filled quickly, that problem should be addressed. It would be useful if you could provide that information to the Committee.
You indicated that the Department of Finance and Personnel did not achieve its absence management targets. The aim of departmental target 2.12.1 is:
“To identify causes of long term absence and to agree appropriate interventions to support Departments in achieving absence management targets by 31 March 2008.”
It was your Department’s duty to identify the causes of absence and to support other Departments in achieving their absence management targets. However, that target does not give a figure for absences that you were obliged to achieve.
Did the Department of Finance and Personnel identify the causes of absence and agree the appropriate interventions? It is not within the Department of Finance and Personnel’s gift to manage small units and ensure that the appropriate personnel policies are followed right down to grass-roots level. The Department can encourage adherence to those policies but, surely, ultimate responsibility lies with individual sections or Departments.
You are right; target 2.12.1 obliges the Department of Finance and Personnel to implement the relevant frameworks and policies, and to support other Departments in meeting their targets. I must hold my hand up and admit that the Department of Finance and Personnel did not meet target 14.1, which was to reduce sickness levels to an average of 10·3 days per person per annum by 31 March 2008. However, the focus has been on the achievement of target 2.12.1. Anyone who was at the Public Accounts Committee on 29 May 2008 will have heard about the efforts that Derek Baker — who has been a witness before this Committee — has made to meet that objective.
Perhaps 2.12.1 is a bad target because it makes the Department of Finance and Personnel over-reliant on other Departments in attempting to achieve its own objective.
I realise that you are trying to help me here, and I thank you for that.
If the Department did not do what was within its gift, I would be very concerned. Did the Department do everything possible within its gift on this matter?
Yes, it did.
Why do you think that the Department has failed?
We are not in a blame game, but the NICS target was missed. The Department of Finance and Personnel has placed a lot of focus on meeting these targets, but there is still work to be done by every Department.
One of the issues that emerged from the evidence session at the Public Accounts Committee was in regard to line managers, individual supervisors, and so on. Do you have a breakdown of absenteeism from all the sections and agencies within the Department of Finance and Personnel to ensure that each line management is adopting the correct policies and managing absentee levels appropriately? If so, can the Committee have that information?
Yes, indeed; we can provide information on the number of staff in each division of the Department who are on a warning; the number of staff who have been dismissed because of unsatisfactory attendance; and the number of staff who have retired on ill-health grounds. That information is monitored by the departmental board.
What about the number of days of absence?
We can also provide the Committee with the number of days of absence in each division of the Department.
The Deputy Chairperson:
That would be very useful. Given its slippage on several targets, it is understandable that a number of members have mentioned Land and Property Services. I have been informed that representatives of Land and Property Services will come before the Committee in September, after the recess. They will talk about the performance and efficiency delivery unit’s work within Land and Property Services but, obviously, that will also focus on some of the issues that have been raised today.
We appreciate your attendance. The Committee will keep you informed of any emerging issues, and members have requested some information from the Department. Thank you very much for your time.