Official Report (Hansard)

Session: 2007/2008

Date: 14 May 2008

COMMITTEE FOR HEALTH, SOCIAL SERVICES AND PUBLIC SAFETY

OFFICIAL REPORT
(Hansard)

Public Sector Jobs Location

14 May 2008

Members present for all or part of the proceedings:
Mr Mitchel McLaughlin (Chairperson)
Mr Mervyn Storey (Deputy Chairperson)
Mr Roy Beggs
Mr Simon Hamilton
Mr Fra McCann
Ms Jennifer McCann
Mr Adrian McQuillan
Mr Declan O’Loan
Mr Peter Weir

Witnesses:
Mr Ralph Garden ) Scottish Government

The Chairperson (Mr McLaughlin):

Good morning. Thank you for joining us.

Mr Ralph Garden (Scottish Parliament):

Aside from your delightful traffic, I had quite a pleasant journey.

The Chairperson:

It can be a daily hazard. At least the weather is good.

Mr Garden:

I can relate to both sides of this subject, as I currently head up the division that runs the Scottish Government’s relocation policy, and I was formerly the chief executive of an agency that was relocated.

There have been two phases to the relocation policy. Under the Labour Government from 1999 here was a strong propensity to relocate jobs away from Edinburgh. The feeling was that the Scottish Government was too concentrated in Edinburgh. The original policy used property breaks and the creation of new organisations as a trigger, and public bodies had to make a very good case to stay in Edinburgh. There was also a parallel small-unit relocation policy. The two drivers for that policy, in a somewhat uneasy balance, were efficiency factors — whether things can be run cheaper elsewhere — and social factors — whether relocation can drive improvements to deprived areas and the economy. There was always a tension there, which comes out in subsequent reports.

The policy has been subjected to two reviews. In 2004, the Scottish Parliament’s Finance Committee reported that there were some good things in the policy, but little consistency. In 2006, Audit Scotland reported on the policy. Its report is useful, and I can provide members with copies. It summarises what has happened and comes to the same conclusions — in slightly more temperate language — as the Finance Committee. It basically found that there had been some successes, but that there was no great coherence to the policy, and that the criteria were not entirely clear for any individual case.

The new Administration were elected in 2007, and they took the opportunity to review the policy. They felt that it had not achieved very much, and there was no evidence that many of the relocations had achieved anything at all in social terms. The relocations had been expensive and had caused all sorts of grief to the organisations that were relocated, the people whose jobs were hauled from underneath them, and so on. Therefore, they produced a revised policy, which centres on efficiency and nothing much else. If relocations are deemed necessary and we can get secondary social benefits out of them, we will go for them. The expectation is that, while there will still be some relocations, they will probably be fewer in number.

The drivers will remain the same. The Scottish Government expects all public bodies to have asset-management strategies to deal with property holdings and the question of relocation for business reasons — such as if there are better staff elsewhere, or Edinburgh is just too overheated. We have announced the new policy — which will soon come into operation — and are collecting asset-management strategies from organisations; we will progress from that point.

Mr O’Loan:

When I read your paper, I was surprised. I had believed that Scotland had a good model for this and that the Scottish Government were committed to the project. That plays well with the Scottish Government’s desire to govern Scotland in ways that suit Scotland and their belief in spreading the benefits of service across the country. Decentralising jobs seemed to be an integral part of that policy.

Therefore, for them now to say that there were some gains but no coherence and little social gain, and to adopt a policy with an emphasis on the efficiency of public services as the essential criterion in decision-making, seems extremely different to the previous policy. Furthermore, it conflicts with the Assembly’s current thinking.

It is extraordinary that you report little social gain. After the relocation of a significant organisation to a particular place, were there no visible economic gains or any perception that it is beneficial for a town to gain a public body?

Mr Garden:

At the beginning, there was a strong multi-party commitment to the policy, for very much the reasons you have given. Although some individuals favoured certain parts of Scotland, there was cross-party agreement that a relocation policy — moving jobs out of Edinburgh — was a good thing.

Ministers would agree that we have not conducted sufficient research on the social gains issue. However, I was involved in the relocation of the Scottish Public Pensions Agency to Galashiels, which is 35 or 40 miles south of Edinburgh. Research on that relocation was commissioned by the local council and Scottish Enterprise, and, although it was not definitive, there were many positives. Approximately 300 jobs were created, to the benefit of the local economy, having moved about 200 of them. Apart from that, there is anecdotal evidence. Eight jobs were relocated to Tyree, which is an island off the west coast. The hypothesis is that it is difficult to get money off the island, so it is bound to have a local impact. Tyree has a population of about 150.

Many relocations have occurred within the central belt — many of them to Glasgow. We must consider business continuity in our method of relocation. The major tension between efficiency and social considerations is because of business continuity — where staff do and do not want to go. The correlation between areas of social deprivation and areas of desired relocation is poor. We have to consider how to maintain services while satisfying the substantial number of staff who want to relocate.

The policy has always had that tension, and, because it has been dealt with on a case-by-case basis, the tension has tended, more often than not, to be tackled in efficiency terms. Few Ministers will allow services to fall apart, because that would not make them dreadfully popular.

I think that you are right. We have not done enough research to say firmly that there is no benefit. However, we have not managed to find any so far. Indeed, the two big reviews carried out by our own Finance Committee and Scottish Audit have been very sceptical.

Mr O’Loan:

The idea of moving small elements out to carefully chosen places is quite interesting.

Mr Garden:

We have retained that.

Mr O’Loan:

Is it too much to say that the big project has ground to a halt or slowed down dramatically?

Mr Garden:

It has slowed down. The new Administration have reversed a couple of moves to Glasgow that were planned, as they felt that the business cases were not convincing. The new Administration also have a commitment to not create any redundancies. That immediately makes these things very difficult. However, you can understand why they would not want to create any redundancies.

Mr Hamilton:

One of the interesting things about the relocation of public-sector jobs in Scotland is that many of the jobs moved out of Edinburgh went to Glasgow. They moved from the second major city to the biggest city in Scotland. That is the converse of what some suggest should happen here.

It is fair to say that no Departments or Department headquarters have been part of this relocation —

Mr Garden:

One Department has moved.

Mr Hamilton:

Where did it move to?

Mr Garden:

It moved to Glasgow.

Mr Hamilton:

Therefore, it is mainly units or agencies that have moved. We are obviously talking about fairly sizeable agencies —

Mr Garden:

It has mostly been operational bits and pieces that were not dreadfully close to Ministers and were not able to plead — rightly or wrongly — the need for continuous contact with the wider structures in Edinburgh.

Mr Hamilton:

That need for constant contact, as you describe it, has been a major factor in deciding all of this?

Mr Garden:

Indeed; that has decided who has moved and who has not.

Mr Hamilton:

Has that been almost a trump card?

Mr Garden:

I think that you could reasonably say that.

Ms J McCann:

In relation to relocation, there are personal benefits to individuals as they do not have to travel long distances to work. There is also the benefit of building a localised economy in the region that an individual Department is relocated to. There is also a social aspect. Was any thought given to specifically targeting an area of long-term deprivation and disadvantage in order to boost the economy of that area?

Mr Garden:

To a great extent, the answer to that question is no. It began with the bodies themselves, and the trigger was when a body needed to move. Only afterwards did we look at where that body might move to, and social deprivation factors were included at that stage.

My own view is that you can take relocation policies in either direction. However, you cannot essentially sit them in the middle — which Scotland did for eight years — and expect it to really work. It would be possible to craft a policy around the principles that you are suggesting, where you start off with the places that you need to relocate to, and then begin the work of relocation. However, the big difficulty is maintaining business continuity and keeping services running during the move. If you have decided where you are going to go, you may be able to find ways of gradually moving jobs while maintaining the integrity of your services.

A medium-sized body could be moved to a specific location — that is what we did with many of our bodies. We relocated Accountant in Bankruptcy to a distinctly deprived area, and two people out of 105 moved there. It was an area just south-west of Glasgow, which is probably our most deprived area with significant population. The business continuity difficulties are enormous for the body that is moving.

Ms J McCann:

You do not think that that is necessarily a bad thing to have a policy that would —

Mr Garden:

Everybody started from almost exactly the same position that Northern Ireland is in now. Your centre of administration is almost certainly the most overheated place in the country. Getting jobs out of that area should benefit the recruitment and retention of staff and help to start or support fragile areas of the economy.

Many people are still in that position, although they do not have any evidence that what was done worked at all well. My advice is to choose one or the other. Our present Administration have opted for straightforward business-advantage criteria, making sure that things work as well as possible. If social benefits result, then that is fine. We expect to experience some relocation and some social benefits. However, as John Swinney said, if social benefit is being targeted, a system that is a damn sight more likely to create social benefits should be used.

Mr Weir:

I am sorry that I was few minutes late for your presentation. When you talked about the unit of eight people relocating to a remote island, it sounded like the plot of ‘Hamish Macbeth’ rather than a jobs policy.

I can see that there is potential social benefit. However, is any economic boost not somewhat illusory? There is a certain degree of stimulus for the area where the staff are relocated to, particularly because those people will need additional services, spend money in local shops, and so on. Is the flipside of the coin not that a hole is created in the economy of the area which those people are taken out of? At best, there may be a redistributive effect, but does it not create an economic see-saw?

Mr Garden:

There is some strength in that argument. However, Edinburgh is pretty overheated. It is difficult to recruit, particularly for clerical jobs, where there is competition from big banks and insurance companies. They can probably pay more than we do. It is difficult to recruit there, so we do not experience a hole in the economy by taking small or medium-sized numbers of jobs outside Edinburgh. Glasgow has quite large areas of deprivation, so it is quite rational to move jobs there. That is one of the places that scores reasonably high.

Mr Weir:

Northern Ireland is much smaller than of Scotland; Belfast is much smaller than either Glasgow or Edinburgh. Regarding the analogy of a city’s being overheated and having a mixture of slightly more affluent areas and large areas of economic deprivation, would it be fair to say that Glasgow is a closer analogy to Belfast than Edinburgh is?

Mr Garden:

I think that that is probably correct. Edinburgh is one of the boom towns of the UK. Neither Glasgow nor Belfast can claim that yet, much as they might like to.

Mr Weir:

With one exception, it has not been entire Departments that have been relocated, only agencies.

Mr Garden:

It has mostly been agencies and non-departmental public bodies (NDPBs).

Mr Weir:

There is also a political consideration. Presumably, nobody around the Cabinet table wants to be the exile who has been sent to a different part of Scotland and is out of touch. Is part of the thinking also to avoid duplication? For the sake of argument, a Department could be picked to be located a long way outside Edinburgh. When we took evidence from the Republic of Ireland, we found that when different organisations were sent outside Dublin, there was still a need for a core unit in the capital city, or close to the Parliament or Administration. There is the danger of duplication.

Mr Garden:

We do feel some of that. The people based in Glasgow spend quite a lot of their time on the train. However, we have a 45-minute train service between the two cities, and the two offices that are used are just five minutes from the stations, so the communication is about as good as it will ever be for two distinctly separate places. Nevertheless, the more senior people complain bitterly on occasion about having to spend far too long travelling to Edinburgh for single meetings with colleagues or Ministers.

Mr Weir:

So there are central units within each Department based in Edinburgh?

Mr Garden:

The Glasgow-Edinburgh dumbbell situation is so much more effective in those terms than anything else would be in Scotland. In England, for example, much of the Department of Health is in Leeds, and officials spend a substantial amount of time in London, so they have much the same pattern.

Mr Beggs:

The new policy focuses on organisations going through major change or looking for new accommodation. Those organisations will have the least costs associated with relocation. Is that the primary reason for choosing those organisations?

Mr Garden:

Most organisations going through change will have to make changes anyway, so it is natural to consider them. If they are making fundamental changes, they may as well do it properly.

Mr Beggs:

Your submission refers to a huge variety of savings and costs, from a saving of £33,000 to a cost of £45,000 per job. Can you tell us about the positive features of the organisation that managed to save public funds and the negative features of the organisation that cost £45,000 a job to move?

Mr Garden:

One of the successful ones was the one that I did myself, which was to move the Scottish Public Pensions Agency about 35 miles south. The drivers for that move were, first, that we had a very cheap initial rent of a building that we had to get out of — you have a sort of gift for anything you do. The rent was going to double in Edinburgh anyway; that was part of the situation. We also thought — and this was borne out in reality — that there was quite a strong driver in terms of staff. There were a lot in the pay range of £15,000 to £17,000 — generally not highly paid. There is strong competition with banks and building societies for that level of clerical, processing staff. The two drivers for cost savings were the fact that the staff, on average, are a bit better in the Borders and turn over less — there could also be some staffing reductions — and the staff will be much happier with what they are paid. There was also the fact that we had property savings. Adding those up gives you the figures that we are talking about over 15 years.

The least successful relocations tended to be those where the staff were more senior, and replacing them was almost not an option. They had to be bribed extensively in some form or another. Our real drama was Scottish Natural Heritage, which was moved to Inverness kicking and screaming — you may have heard about that. Scottish Natural Heritage is a specialised body, the staff have been there for a long time, and there are not many other people in the country who do what they do. Moving them was a distinctly expensive operation. It all comes down to how organisations can deal with their staff or how they can be replaced. I do not know whether an easy way could ever have been found to move that body.

The feeling was that a body such as Scottish Natural Heritage should not be in the middle of an urban capital; it should be out somewhere with its customers — hence the Inverness decision, although, as all the reports show, based on efficiency factors, it was not the recommended decision.

Mr Beggs:

Your counterparts in the Republic of Ireland recently gave evidence to the Committee that, in their case, no financial assistance whatsoever was given to staff. In your experience, what sorts of packages have been offered to individual staff members to encourage them to move?

Mr Garden:

We paid relocation costs to anyone who moved. For those people who commuted, we made up the cost difference by paying them excess fares. That could be taken as a lump sum to buy a new car, which is always an attraction. Those were the two main forms of relocation costs.

Mr Beggs:

For how long were those commuting costs paid? Was it for two years?

Mr Garden:

It started at three years and ended up at five, which was on the generous side.

Mr Beggs:

You talked about the relocation of small units. One of the issues that has arisen in other places has been the critical mass that offers senior staff confidence in their career progression. Has that been an issue with regard to the size of the units that have been moved?

Mr Garden:

The small units were all very small. Only one of them had a staff complement in double figures. We have simply accepted that critical mass will not be reached in respect of career progression at any sensible level in those units.

Mr Beggs:

What about the other bodies and units that have moved?

Mr Garden:

It is a developing issue. Those moves did not happen all that long ago. However, because so many have taken place around Glasgow, and not too far from Edinburgh, we can achieve progression by having people move within the collection of bodies. We will have difficulties when we start moving people much further than that. Those sorts of difficulties have occurred in the Health Service.

Mr F McCann:

I take it from what you are saying that, to make an impact from a social and economic point of view, rather than move a section, it is better to move a Department.

Mr Garden:

There is probably some evidence that the better the quality of the jobs that you move, the more likely you are to make an impact and create career structures in the area. The evidence suggests that if you move flat, middle- to low-level organisations, that is what you will get and that is what you will keep.

Mr F McCann:

In a discussion some months ago, we heard that there has been an impact on the quality of life of people living in areas of Glasgow with high unemployment and social deprivation.

Mr Garden:

Although there is not enough solid research on the subject, our feeling about Glasgow is that what has been moved there represents only a drop in a bucket. It represents 1,500 jobs in a city whose hinterland is home to the best part of two million people.

Mr F McCann:

If you move 1,500 jobs into an area of high social deprivation —

Mr Garden:

That is obviously very welcome, but there are all sorts of things going on at the same time that make it hard to notice. The ability to pin anything down to those jobs is limited. The way it was done meant that a fair number of those jobs were serviced by people commuting from Edinburgh. We must be honest: that will not do much to tackle social deprivation. Many people already commute, daily, from Glasgow to their Government jobs in Edinburgh. Therefore, one of the first effects that we get when we relocate jobs is that people merely shuffle around. There are some environmental benefits.

Mr Storey:

How does the new policy address value for money, taking specific consideration of indirect benefits — such as rural development and environmental issues? For example, relocation from Edinburgh to Glasgow does not do anything to reduce congestion.

Mr Garden:

We have not had to address that yet, and I suspect that it will be too difficult. The environmental benefits will be marginal. However, it is important that the relocations are handled in as environmentally friendly a manner as possible. Any new buildings that are constructed should be environmentally sound. The environmental benefits accruing from relocation to rural areas are limited. People tend to use their cars, because there are few viable alternatives. That is the reality of life in Scotland; I am sure that it is the reality of life in Northern Ireland, too.

Mr Storey:

It is.

The Chairperson:

Sometimes we do not even have that option.

Mr Garden:

We are aware that we have taken half a step backwards on some environmental concerns. However, there is a great deal of goodwill towards making some of those things work.

Mr McQuillan:

The nearest bus stop to my house is four miles away and the nearest train station is 12 miles away. Therefore, the car is my only option, barring a particularly long walk.

You said that the Scottish Executive relies on Departments to identify organisations that are suitable for relocation. Does that not cause strife among Departments, with some parts moving to Glasgow while other parts remain in Edinburgh? Surely, it is also a handy way of getting rid of people that you do not want.

Mr Garden:

We only relied on Departments to a very limited extent. Most of it was triggered by a property break — an organisation about to be thrown out of a building; a new organisation being set up; a major reorganisation taking place within the Department; or bodies being brought together or split up. Those are the pragmatic triggers that have always prompted reviews of location.

It has always been policy that bodies should run themselves in the most efficient way possible. That includes occasional assessments of whether the body is situated in the right location. As I said, if a body thinks that its difficulty in recruiting staff is due to its location, a change of location should be considered. Such factors could be a driving force behind a lot of relocations, although I am sure that many of my colleagues would move heaven and earth to ensure that it did not affect them directly.

The Chairperson:

You have relatively few concrete examples of how the broad policy delivered value for money — however that is calculated. Would the outcome have been different if economic redistribution was a core policy objective, linked to efficiency, continuity and communication?

Mr Garden:

It is very difficult to say. It would have been much easier to have had a core objective that stated that a large chunk of jobs would be relocated to a particular deprived area. However, that would be terribly difficult in a political sense, because you cannot have very many of those areas. Some requests to relocate must be refused, and that will involve some fairly big and difficult decisions. Almost inevitably, 80% of your Members will be against whatever decision you take.

My personal opinion is that you must either follow the line we took, or clearly adopt the position that the decisions are being driven by social factors and that the other issues will be made to work, particularly business continuity. That might mean operating a lot of bodies from two centres for quite lengthy periods of time in order to prevent their services from falling to bits.

The Chairperson:

You mentioned the Glasgow and Edinburgh dumbbell. Many people might think that the relocation policy does not benefit or affect them. If efficiency, business continuity and communication were the policy drivers, they would almost constitute arguments against disrupting current practices. If economic redistribution were seen to be the policy driver, and a strategic approach taken to managing change, that would demonstrate that interventions were not being made for the sake of headlines, and the balance would be shifted gradually and progressively.

Mr Garden:

I maintain that you should be able to do that. However, you must polarise either to a policy that is based on the removal of social deprivation, or to one that is pretty clearly based on efficiency. You must not kid yourselves that you can easily have both.

The Chairperson:

I can see that.

Mr Garden:

Our evidence demonstrates that you almost certainly cannot. It is too easy to write a policy stating that you will have both; in our experience, the two conflict quite strongly.

The Chairperson:

That was helpful, and you have been candid and direct. I am not sure whether our Research Services have had access to that Scottish Audit report you mentioned. Is it possible for the Committee to have a copy?

Mr Garden:

Your working party has had access to all that information. Nevertheless, the Committee may have anything that I have.

The Chairperson:

If it is in the system, that is grand.

Mr Beggs:

Did you mean the Department’s working party or the Committee? Can the Committee have it?

Mr Garden:

You must guide me on that.

Mr O’Loan:

Sir George Bain might have that information, but we would like it as well.

The Chairperson:

If the Workplace 2010 working group has that information, I will request a copy on behalf of the Committee.

You have been very helpful; thank you for travelling to help us with our task.

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