FTP

Public Accounts Committee Legacy Report

On the last day of the last States meeting of the 21012-2016 term I presented the legacy report of the Public Accounts Committee. I have been proud and honoured to represent the Committee for 4 years and believe it is in a better place than at the start of the term. My speech is below.

 

Sir, I am pleased to present the legacy report of the PAC for this term. It is not my intention to go through the contents of the report given this late hour both in terms of the time of day and with respect to this meeting. It is a comprehensive record and members are only being asked to note it after all – and more on that later.

What I will do is focud on just 3 aspects of the report and then look to the future.

 

The present Committee had only just put its feet under the table when we were informed of a fraud committed against the States of £2.6m. In fact it was just a month into this term. This States has often been blamed for that event. However, sa I stated at the time the Committee published its report into the states of financial controls and risk management at the time, this was an incident waiting to happen.

Reports produced int he past, including those of previous PACs has, for whatever reason, been ignored. I am pleased that this States has acted on the findings of this PAC’s report which reflects the understanding particularly of the CM and PSD Minister of the time and the T&R Minister, in particular, as to the seriousness of the issue, as well as the pressure from the Committee to ensure our recommendations were acted upon.

Our second report on financial controls demonstrated the improvements made. However, the Committee is concerned that the focus on risk management will be lost as attention turns to public service reform. It is therefore critical that the Scrutiny Management Committee monitors developments closely.

I would no like to turn to the FTP, which has dominated much of this term. The Committee ha spent a considerable amount of time reviewing progress, or otherwise, of what was one of the most significant programmes of work ever undertaken by the States of Guernsey. The Committee took various approached in order to cover off various aspects of what was a complex area.

The Committee on a regular basis called in the T&R Minister and officers for updates as well as having a direct input on improving reporting for the Policy Council. The cost/benefit review which looked at the largest projects in the FTP acknowledged that savings has been made and found evidence of some excellent initiatives but expressed concern over some of the calculations and, more importantly whether certain savings would indeed be sustainable. And in addition, the Committee fought vociferously and successfully against the payment of commission to the consultant in respect of a transfer of £650k from general review to the Guernsey health service fund as it did not represent a saving to the taxpayer.

Finally, in relation to the FTP and subsequent to this report, the Committee held a public hearing where it questioned the T&R Minister and States Treasurer principally on the legacy of the programme and lessons learnt. More particularly on the transformational aspects.

I would like to thank the Minister for his openness at that hearing and I would recommend that the Hansard record be read by those involved in the Public Service Reform, both politicians and officers. I want to see public service reform work. I think we have a great opportunity to make it work but we need to understand lessons learnt.

Much of the Committee’s work as, by necessity, to be undertaken behind the scenes, this has included developing a more robust annual audit and accounts production process, providing greater value for money for the taxpayer as well as providing advice and recommendations which have considerably improved the States of Guernsey’ financial and resource management policies and procedures.

The last are I would like to focus on is post implementation reviews. Sir, recent headlines implied that projects undertaken by this States has been wasteful. However, I think it is important  to make clear that several projects we looked at took place in the previous term and one, the airport terminal , over a decade ago. There has been a significant improvement in the management of projects since then. However, it is true that lessons do still need to be  learnt and money is still being spent unnecessarily. It is for that reason that the Committee recommended that the Policy & Resources Committee in the next term look at placing PIRs in the public domain.

Before ending, I would like to leave a message for the future SMC.

 

  1. Firstly, work together as a team. It has been a pleasure working with a bunch of intelligent people who have worked together, can have robust conversations, but listen and respect each other’s views and come to a consensus. The PAC has certainly demonstrated that it can be done. We live in a consensus system and it is as important for the SMC as it is for every other Committee of the States. I just hope that continues in the next term.
  2. Secondly, don’t follow your own personal agenda. This will be even more important to be aware of where the whole scrutiny function is concentrated in just 3 Deputies and 2 Non-States Members; and
  3. Thirdly, Remember that what you want is to make government perform better. That can mean a balance between making a quick headline and working behind the scenes to make things happen. A recent report into the effectiveness of Westminster select committees in the last term stated that whist some committees took the big bang approach, they did not necessarily produce long term improvements. In fact it can lead to the bunker syndrome. A balance needs to be struck.

 

Sir, finally, and without wanting to make this sound like an Oscar acceptance speech, I would like to thank all those members of the Committee during this term. It has been a realtievely stable committee with changes only arising from the untimely death of Alderney Rep Paul Arditti and the departures of Deputies James and Le Clerc for an easier life on HSSD. I thank everyone for the positive contribution they have all made.  I have been honoured to represent you in this Assembly.

There is an old adage that says, It should be noted that if you have something to note, then note it. Do not note that the item you wish to note should be noted. With that in mind, I ask members to note this report.

FTP – end of programme report

The States debated the FTP following it’s closure in October 2014. This followed the PAC’s review as per my earlier post.  My speech during the debate is set out below.

Sir, on behalf of the Public Accounts Committee, I would firstly like to pay tribute to all those across the States of Guernsey who have made significant contributions to the FTP process. Specifically to those individuals on the shop floor of the organisationwho have invested vast amounts of their time and effort in supporting this initiative over the last five years.

As the largest financial programme of this, or any other States, this Public Accounts Committee has been closely monitoring developments. The Committee continues to believe that the core principles of the FTP programme remain sound, as I have stated previously,running a fiscal deficit albeit as a consequence of funding our capital requirements,is not sustainable and the States must seek to return to a balanced budget. The FTP was a significant tool in the quest to achieving this specific aim.

However, the original vision of the fundamental spending review was focused on a cultural transformation throughout the States. Financial change being one of the key areas in the suggested first phase. The requirement for increased financial discipline through a cultural transformation is still needed today,as it was in 2009, and the Committee believes it is even more necessary now, with the increasedexternal scrutiny arising from the multi-million-pound bond issue late last year.

Now, I would firstly like to focus on the financial details of the FTP contained in he report. Members will be aware that the recent report issued by the Public Accounts Committee that analysed nine major projects of the programme that representing 35% of the total claimed savings. In that report the Committee has made a number of specific and broader reaching recommendations, and we welcome the T&R Minister’s public recognition and broad acceptance of the key findings. As such it is not the Committee’s intention to cover these in any detail within this statement, rather just a very brief summary where they directly relate to this report.

We note the Policy Council Report acknowledges the financial rules were not documented,nor widely communicated,at the start of the programme, and the Chief Minister has addressed this today. This led to the level of uncertainty surrounding some of the claimed savings that prevailed afterwards. It is the

Committee’s belief that this was unacceptable for such a major programme, and wishes to emphasise again that it is essential that clearly defined rules are in place before the commencement of similar cross-departmental programmes in the future.

Now the Committee’s position on the inclusion of the £650,000 relating to visiting consultants is well known,and summarised well today by Deputy Gillson, and we note with interest that this figure is now classified within the Policy Council’s Report as an internal transfer. However, similar concerns arise from the effective transfer of costs to Aurigny,as part of the air subsidy project. Whilst not specifically against the contract, the understanding of those within the FTP team was that internal savings were not within the scope of the programme. At the very least they were certainly against the spirit of the rules. Now one of the Committee’s most significant areas of concern is the non-evoking of an advantageous contractual clause,relating to the use of the cost of capital.

Significant capital costs could have been considered when calculating the net savings for a project. The decision not to use this clause to minimise a saving, and by definition the reward fee,does appear at odds with the premise of financial restraints of the FTP.

 

Now moving on to future transformation. The original plan to deliver the 107 initial opportunities through seven work streams can hardly be claimed to have been an overwhelming success, as the Policy Council’s own report acknowledges. Indeed the key focus on a holistic delivery mechanism, and the drive away from silo mentality, may have been compromised in the 2012 re-boot of the programme. The concentration on annual targets for individual Departments resulted in a focus on short term tactical savings rather than truly transformational change.

The three recommendations of the Fundamental Spending Review Phase Two Report were to:

  1. establish a States’ transformation programme,
  2. articulate and communicate a vision for the States of Guernsey and,
  3. three embed a sustainable way of working.

Within the details of the first recommendation the FSR Report states that the financial change programme should be initiated whilst and I quote:

‘The organisational structures are established to enable the integrated transformation programme.’

The T for transformation is an area that still requires further effort. Now one of the key cornerstones of the third recommendation,to embed a sustainable way of working, was the implementation of internationally recognised accounting practices. An area the Committee has constantly championed. While the States resolved in 2012 to phase in resource accounting and budgeting and authorised T&R to use a fundamental spending review fund to enable it to happen. Three years later this has not happened. That is not acceptable, and consequently I will be laying an amendment against the SRC second policy letter,to ensure that under a new Government structure the move towards generally accepted accountancy standards takes place, and I will speak more on that in a couple of weeks’ time.

With regard to next steps,within such a sizable programme as the FTP issues are bound to arise. We would therefore call upon the T&R Minister, and the Chief Minister,to ensure that the lessons learnt from the years of working within the FTP, from the fundamental spending review through to today are acknowledged and embedded within the chosen future direction. In terms of identifying lessons learnt the Policy Council’s end of Programme Report, whilst an extremely useful and informative document is self-reflective by its very own nature, and being largely written by Capita, for which they will have been remunerated. The Public Accounts Committee has actively encouraged Policy Council to agree to undertake further reviews connected to the FTP,and in particular,and probably most importantly, that of the SAP and Shared Transaction Service Centre.

We understand this will commence within the next couple of months and are grateful to the T&R Minister for responding to our request that it is competed by the end of the year. We also welcome the Chief Minister’s statement today that there will be a full closure report on the FTP. Something again the Committee has requested. The Committee will continue to focus on aspects of the FTP Programme where it believes it can add value within the bounds of PAC’s limited resources. The Committee still requires assurance that all identified savings have been pursued to their fullest, those savings made are being appropriately monitored, the legacy of the investment in to the Project Management Office and transfer of skills in the consultants has been successfully embedded in the organisation,and finally that further programmes embrace the need for changed management if cultural transformation is to be truly achieved.

The Chief Minister referred to adjustments being made to savings subsequent to their being banked,it is essential this Assembly continues to be kept informed of these changes.

In conclusion, in terms of financial transformation is the work finished? Well clearly not, and the Chief Minister, give him his due, has made that very clear today. Irrespective of whether savings should have been included in the first place,it is clear than an increased level of ongoing monitoring is required if we are to be assured of their sustainability, and if we are to fully reap the benefits of the significant investment into the Programme. Public Accounts Committee wishes to be assured that ongoing, robust monitoring of the claimed savings will be undertaken, calls upon the Chief Minister to commit to providing detailed performance monitoring through the annual budgeting report.

The management of change and performance within the whole organisation is going to be increasingly important for a truly effective and efficient service provision to the public to be maintained on an ongoing basis. Cultural transformation will be key, but at this stage the Committee is concerned that there is no substantive link to what happens next. The Project Management Office has been disbanded and there does appear to be somewhat of a vacuum. The Committee, and I hope any future Scrutiny Management Committee that supersedes it, will continue to take a keen interest in monitoring developments, as given the high cost of running the Financial Transformation Programme we can only be sure of value for money if you know that what began in 2009 is sustained,and indeed built upon over the next five years and beyond.

FTP – PAC Review

In May 2015 the Public Accounts Committee published its Report into the financial costs and benefits of a sample of major claimed savings within the Financial Transformation Programme (FTP).

 

The PAC acknowledged KPMG’s finding that the savings were largely validated and the chosen Consultant (Capita) was correctly remunerated for the work undertaken. However, it was concerned that KPMG could find no evidence that the relevant financial rules, necessary to determine how savings should be calculated, were fully documented at the start of the FTP. The uncertainty that this caused resulted in the size and nature of the approved savings being potentially open to question.

The PAC was pleased to note that KPMG did acknowledge a number of examples of good practice; most notably the SSD’s Claims Management project. However, evidence of truly transformational change within government was limited. Also of concern were KPMG’s comments on the need for ongoing monitoring. Unless that is done it will not be possible to be certain that the savings banked to date are truly sustainable.

The report from KPMG presented an independent financial analysis of the major projects within the FTP process. The findings confirmed that significant savings had been made but the lack of clarity, caused by the absence of clearly defined and communicated financial rules until late into the Programme, wa and remains a significant concern for the Public Accounts Committee. In addition, the findings raised fundamental questions around the level of genuine transformation that has been achieved.

Links to the reports below. The KPMG report is quite technical and very comprehensive. The PAC covering report is more accessible for those with a non-accounting background.

PAC covering report

KPMG report

‘Fake’ FTP Saving

I was delighted that after much debate, public and media interest, the Policy Council agreed to seek to withdraw the fees paid to Capita totalling £42,000 in relation to a transfer of funding from general revenue to the Guernsey Health Service Fund. This really should not have been allowed to go on for so long. It was clearly not a saving to the taxpayer and did not follow the spirit of FTP.

States Accounts / ‘Fake’ FTP Saving

I made the following speech on the States Accounts in July 2014. This is when the issue of the ‘fake’ FTP saving of £650k was raised.

Sir,

3 weeks ago we sat here having 4 extra days set aside to consider the future organisation of the States’ affairs. Yet, I find it concerning – and somewhat disappointing – that no specific time is ever put aside to debate the current organisation of the States’ financial affairs as presented in its annual accounts.

That aside, on behalf of the Public Accounts Committee, I should like to start by saying that these accounts will help the PAC to determine its priorities within its forward work programme, keeping in mind the limitations of it’s resources.

However, I should like to focus attention for the purpose of this debate  on 3 key points that have arisen from an initial assessment of the information contained. Namely budgets, FTP and pay costs.

Budgeting

The Committee was pleased to hear the recent statement from the T&R Minister about the need to move towards zero-based budgeting. PAC has been calling for this for quite some time and consider this a matter of some urgency.

Indeed it is the Committee’s view that this should have taken place before the FTP process began. This may have prevented the need for a 5% vacancy factor and reduced payments to Capita if nothing else.

At a time when consideration is being given to whether taxes need to go up, we need to make sure we have a greater understanding of how we are spending taxpayers’ money.

As such, zero-based budgeting will be meaningless until such time as the States Accounts are prepared under generally accepted accounting principles and are more transparent as a result. I remind the T&R Minister again that the States approved funding for this exercise in 2011.

With that in mind, I refer members to the columns within all the main income and expenditure accounts headed ‘Original Budget’ and ‘Total Authorised’.

Nowhere in the accounts is there a clear and definitive explanation as to why we start off with one budget and end up with another. I believe, as does the Committee, that there should be a clear reconciliation between the original and the final authorised budget for each department within the accounts. This would provide a clear line of sight to each department’s uplift during the year –  together with the rationale.

I will demonstrate using HSSD by way of an example. Apologies Deputy Dorey but what has happened in that Department serves to demonstrate how a fair amount of activity has occurred which is not fully referenced in the accounts. This despite the fact that the Assembly is being asked to approve a stated overspend of £306k, not against the original budget of £108m but a total authorised budget of £112m.

However, before I start, I should like to state that the Committee is pleased that improvements recommended in its report on the ‘Financial management within HSSD’ have been made. We’ve seen ongoing communication between HSSD and T&R at Ministerial and Senior Officer level, addressing ongoing issues such as the drawdown of £0.8m from budget reserve, for what is described as an ‘exceptional circumstance’.

Now, in terms of the HSSD budget. With the exception of the uplift for staff, which is accepted practice across the States,  together with the already mentioned drawdown for the ‘exceptional circumstance’, we note from Deputy Dorey’s statement earlier in the year that there was an uplift in the HSSD budget of £0.8m to support the cost of severance payments and an agreed uplift with T&R of £1.3m.

Therefore, together with the acknowledged £0.3m overspend, it could be considered that there is a £2.4m variance from the 2013 budget to the eventual outturn.

We have no further information as to why T&R have agreed an uplift of £1.3m-in fact, none of this information appears in the accounts.

How can we Deputies approve the final overspend figure if we can’t be certain how that figure has been arrived at?

By way of an aside, we also question the inconsistency of treatment of the voluntary severance payments. Whereas those Departments who were able to absorb the costs of voluntary severance did so, HSSD have effectively been given a credit.

FTP – 650K:

 I would now like to discuss the FTP and at this point ask members to turn to page 61 which shows the FTP targets and breakdown for HSSD.

Members should be aware that the Public Accounts Committee has serious reservations about the inclusion of an FTP project referenced as ‘Visiting Consultants charged to Health Insurance Fund’ totalling £650,000.

The Committee has spent several months trying to ascertain from the Policy Council why this item is included as a saving. To all intents and purposes this is just a budget transfer, a bookkeeping entry, as there are no net savings within public expenditure.

From the information received by the Committee, it would appear that the rationale for accepting the proposal was that the Guernsey Health Service Fund, which is being charged, rather than the general reserve, could absorb the £650K whilst remaining in operational surplus and without any additional contributions.

It was clear that there was a level of hesitation in supporting this proposal at the time and the PAC requested that Policy Council revisit this particular proposal to ensure that the rationale for inclusion was valid in both the letter and spirit of the FTP criteria.

The PAC, whilst noting that due process has been followed, is disappointed that these savings have remained within the FTP Portfolio of savings and attributed to HSSD.

For the sake of clarity, the PAC does not query the rationale of the transfer, only that it is included in the FTP and that Capita have received c£40k in fees as a result.

On a related point, we see that HSSD’s outturn for last year was £112m, the initial 2014 budget is £104m. The FTP target was originally set at £6.1m, then reduced to £4.7million. It is evident that HSSD’s 2014 Budget and FTP savings target remain a serious challenge and there is clearly a significant risk of a major overspend occurring in 2014, as already brought to the attention of the Assembly.

We do acknowledge the recent efforts being made to make savings and thank Deputy Dorey for meeting with myself and Deputy Harwood last week, which gave us a useful insight into the approach being taken on a number of matters.

However, it remains PAC’s considered position that until a fundamental review of the overriding Health and Social Care Model is undertaken, the question of ‘Value for Money’ from the overall Health and Social Care spend across those departments involved in its provision, cannot be assured.

I should like to make it clear that the PAC is calling for an overall Health & Social Care model review – not just a review of HSSD – this would include patient and financial pathways covered by HSSD, SSD, MSG, GPG, St Johns and the 3rd Sector. The regulation of Health & Social Care and the promotion of Public Health must also be included within this Value for Money review.

As long as a modular review approach is being pursued, we find it hard to see how we will ever gain assurance that we will ever see a point where HSSD will meet its financial targets or know what those targets should be.

With the FTP drawing to a conclusion at the end of this year, we would ask the T&R Minister to consider whether funding for any such a review could come from the various Funds created specifically for this kind of purpose – Fundamental Spending Review Fund or Strategic Development Fund.

Pay Costs / Recruitment & retention of staff:

 I would now like to talk briefly about pay costs, or more specifically the States of Guernsey Employees Pension Scheme.

With a growing pension liability the PAC questions why the scheme has not been closed to new members. We believe that given such action was taken in the private sector 10-20 years ago and more recently to the States Members pension scheme, there is little justification in keeping the door open.

Whilst the horse may not have bolted yet, it is building up a sweat and I would argue that the door needs to be closed now before it runs away from us and we can’t keep it under control.

 Finally, I would like to finish with one question for the T&R Minister.

The main accounts of the States of Guernsey are not currently drawn up under generally accepted accounting principles, or to give it its abbreviation, GAAP, but those of some of the other States’ entities are.

Members may be aware that these are exciting times in the accountancy world – from 1 January next year  those accounts produced under GAAP will now need to conform to a new accounting standard known as FRS102. I would therefore like the Minister to advise whether work has commenced to ensure that all entities will be in compliance with FRS102 by the time of reporting of the 2014 accounts.

Financial Transformation Programme

The Progress towards thte Financial Transformation Programme was debated at the February 2014 States meeting. I spoke on behalf of the PAC on various aspects of the FTP and announced that we would be reviewing the tendering process and business case for outsourcing Beau Sejour and Footes Lane, the voluntary severance programme and payments made to Capita, amongst other things.

Sir,

On behalf of the Public Accounts Committee…

 

The Committee would like to emphasise that it believes that the core principle for the FTP remains sound.

 

Running a fiscal deficit, albeit as a consequence of funding our capital requirements, is not sustainable and we must seek to return to a balanced budget. The FTP is a significant tool in the quest to achieving this aim.

 

Members may recall that in the January 2013 Assembly, it was resolved that the Policy Council, not only provide the Assembly with a specific Annual Report, but also that the Public Accounts Committee be provided with a report of quarterly progress.

 

We are pleased to be able to confirm that 4 such reports have been received by the Committee which have enabled it to effectively monitor progress through 2013. Senior Officers of the FTP Office have also attended meetings of the Committee in order that Members could seek clarification on a number of matters. There has also been extensive communication at officer level seeking further information arising out of the quarterly reports and those meetings.

 

We would like to thank the Minister of Treasury & Resources and his Senior Officers for responding to the requests for additional information in a professional and timely manner.

 

Indeed I would like to thank my Officers for the work that they have done with the FTP Office to help develop these reports and those for the Policy Council.

 

 

It now appears from our latest report that the £23m savings forecasted in the Billet have been surpassed. Almost all Departments have exceeded their individual targets with some £6.5m having been claimed in the last quarter of the year. The Committee acknowledges the hard work that has gone into achieving these savings, for which Departments should be congratulated.

 

However, it is evident that the balances remaining for 2014 remain a challenge and the Committee believes that some Departments will not be able to reach their targets for 2014 and therefore conclude that achieving the total FTP target of £31 Million would require some departments to realise savings beyond their original targets.

 

It should be noted that the reports received by the PAC are retrospective in nature and do not provide detailed information on the future projects within the programme, nor does the report before us. As such the Committee is not able to determine whether the savings plan for 2014 is robust and would welcome further details from the FTP Office.

 

We also note that a significant portion of the savings for 2014 – some £4m – are scheduled to be ‘banked’ in the latter part of this year. Clearly there is an inherent risk that the momentum gained in 2013 is not sustained throughout the forthcoming year and we call upon Ministers, members of Boards and Senior Officers, to continue their strong leadership whilst striving towards the end goal.

 

 

The Financial Transformation Programme is a major initiative, with over 200 individual savings lines. As such, it would not be possible for the Committee to undertake a full and comprehensive review of every aspect of the Programme.

 

However, as I mentioned earlier, the Committee has sought clarification on a number of matters throughout the last year. Without wishing to get too technical, one area on which we are seeking to obtain more information is in relation to the apportionment of savings to departments and allocation of costs for various cross-cutting projects, such as SAP. At this stage, whilst we understand what has been done, we do not agree with some of the approaches taken.

 

In addition, the Committee also feels it is essential that the voluntary severance programme, which was an FTP project, is given proper financial scrutiny. The Committee will therefore consider the merits of further analysis of this individual project.

 

Scrutiny of the four reports we have received to date has shown that some of the benefits claimed have been reduced due to double-counting or deemed to no longer be recurring savings. This, perhaps ironically, increases the confidence of the Committee in respect of the validity of the reporting.

 

However, in light of the scale of the FTP Project and its importance in reflecting a fundamental change in the culture of fiscal discipline within the States, the Committee believes that there is enough evidence to call upon the Minister of Treasury & Resources to acknowledge the need for an independent audit of the claimed benefits up to the end of 2013 to assure PAC and the Assembly that these savings are valid and sustainable.

 

In this regard, I must stress that it is the mandated role of the Committee to provide a level of financial scrutiny rather than be responsible for the assurance of the validity of all the claimed benefits; though the Committee would be willing to work with the Minister and his Senior Officers in the scoping of any such audit.

 

 

With regard to the future, the Committee will continue to focus on further aspects of the Programme where it believes it can add value, within the bounds of PAC’s limited resources.

 

With that in mind I will set out the areas of work on which the Committee will be concentrating over the next few months; over and above the scrutiny of the quarterly reports that it will continue to undertake.

 

I can announce that the Committee has begun a review relating to the proposed outsourcing of Beau Sejour Leisure Centre and Footes Lane facilities. Unlike other major projects within the FTP, where the benefits will take time to be realised, this project has been completed. The review will evaluate the business case and the tendering procedure, with a clear focus on establishing whether these processes culminated in the best value for money option being pursued.

 

The Committee will continue to have a keen interest in the costs of the Project, particularly the remuneration arrangements between the States and Capita (and its predecessor, Tribal). It has already undertaken preliminary work in reviewing the contract. However, it is also clearly essential that the process by which remuneration is paid to Capita is verified appropriately and this is one of the areas that PAC will be considering further.

 

We would also call upon the Minister of Treasury & Resources to ensure that there is a comprehensive closure process to the FTP beyond the end of the implementation phase of the programme; this aligned with best practice within programme management. The management of the savings and lessons learnt are critical if we are to fully reap the benefits of the significant investment into this programme.

 

It is acknowledged within the Billet that there are major projects in motion whose benefits will be realised beyond 2014 and it is necessary to ensure that these are completed in a systematic and timely manner. The Committee will take a keen interest in monitoring the developments within this area.

 

 

We believe that it is still not apparent from the information that we have that the ‘non-financial benefits’ of the FTP have been fully realised. The ‘T’ for transformation is an area that also requires further analysis and would welcome full details in the final annual report.

 

As such, we note with interest the sections within the Billet related to an ‘integrated transformation programme’ – this being alluded to within the original report from Tribal in 2009. The management of change & performance within the whole organisation is going to be increasingly important if cost savings are to be maintained on an ongoing basis.

 

The work of the States Review Committee is referenced and we would encourage any proposal to have sufficient degree of flexibility to embrace any change in the future organisational structure.

 

Finally, the Committee has witnessed through the meetings it has had with Senior Officers of the FTP Office, the way in which the programme has matured and developed over time. We would therefore call upon the Minister of Treasury and Resources to ensure that the lessons learnt from the years of work within the FTP – from the fundamental Spending Review through to today – are acknowledged and embedded within the chosen future direction.

 

 

 

It will be important for the whole organisation to commit to building on the strengths of the current programme and to work together to fix any shortcomings as, regardless of the fact that the 5 year term of the FTP comes to an end this year, changing the way the States thinks and acts is a continuous process, as this Assembly noted last year.

 

The Public Accounts Committee endorses this principle and looks forward to receiving the report from the Policy Council setting out its proposals for the future.

 

The next 5 years are going to be as important, if not more important, to get right than the last 5, if the States really is to achieve true and lasting transformation that serves the people of Guernsey effectively for the coming years.

 

Primary School Closures

I took an active part in the campaign against the closure of St Andrew’s Primary School. It was a tough battle but I was honoured to be part of a fantastic team of people who worked so hard to try to save their wonderful school.

Sadly,  it all came to nothing and we lost the debate. It was really lost before the debate took place but no-one involved in the campaing could have done more. That result was utterly depressing. St Andrew’s is at the heart of the Parish and a little bit of Guernsey history is being destroyed as a result.

This was not about the quality of the other schools. I have personal experience  of St Martin’s school and know what a great school it is, both my children having gone there. It was all about retaining a sense of community and also, the fact we did not believe the figures provided by the Education Department actually stacked up.

Time will tell who was right.

This was the longest speech I have made to date, but it was essential that I put across the reasons why the schools should remain open. Due to its length I have added it as an attachment.Education Final

2014 Budget

I spoke as Chair of the Public Accounts Committee in relation to the 2014 budget.

Sir, I will be speaking firstly on behalf of the Public Accounts Committee and subsequently as an individual Deputy. I should just advise that the Committee have identified a number of areas within the budget that may be worthy of review and will be considered as part of its forward work programme. The comments that I make now focus on a few points that the Committee believe should be brought to the attention of Members at this stage.

 The Committee recognises that the budget is set within the parameters of the Fiscal and Economic Plan and acknowledges the current review of Guernsey’s personal pax, Social Insurance, old-age pension and benefits systems and that this is the explanation for whythis Budget contains no significant short-term changes.

 

We note that the Treasury and Resources Department have taken into account the forecasts in the Guernsey Economic Overview issued by the Policy Council in September and which predicts growth during the second half of 2013 and into 2014 Based on the projected increase in confidence within the market. However, the Committee would question whether  an anticipated RPIX of 3.3% for the whole of 2014 is overly optimistic especially bearing in mind that RPIX has not reached this figure in the last 4 years and that it would require a significant jump in a very short period of time from the current 2% to enable the average to maintained at 3.3% for the next year. Therefore, whilst not wishing to be pessimistic, the Committee would like to express a certain amount of caution.

 

In addition, there appears to be no explanation as to why an estimated figure has been used when referencing increases in taxes and duties for next year at the same time that the Social Services Department have used the RPIX figure of June 2013 and indeed the Treasury & Resources Department have used that figure for personal income tax allowances. Whilst this may be consistent with previous years, the Committee is concerned that the disparity between the 2 rates – an increase of  57% from the June 2013 to the estimate, highlights the shortcomings of the current system of determining taxes, pensions and benefits.

 

Turning to the income forecasts within the budget, the Committee is concerned that the forecasted increase in revenue through income tax may be overly optimistic.   The fact that our overall position is £10 million worse than predicted can primarily be explained by the drop in income, much of which is attributed to the fact that the extension of the zero-10 band to fiduciaries has failed to reach the level expected. However, there is no explanation given as to why this is the case. Is it due to the flaw in the modelling or because the Tax office is too busy to send out assessments, or a bit of both?

 

The Committee is not convinced that the Treasury & Resources Department is focussed on the income stream. Bearing in mind that the whole underlying purpose of the FTP is to remove the structural deficit, and presumably this will be the case for any future transformational programme, and Departments are making difficult decisions because they are being told that expenditure must be contained to match income, the Committee believes that the Department must live up to its side of the bargain and do what it can to both improve its forecasting and modelling and its income collection procedures.

Turning to the Future Organisational Transformation, or ‘son of FTP’, the Committee acknowledges that  it is important that the lessons learnt and knowledge and skills gained from the FTP process should not be lost. However, it needs to be convinced as to the merits of retaining the central office and the costs that this is entails

 

The Committee is pleased to see that the Treasury and Resources Department believes that a review of  Grants, subsidies and loans is required. This has been an area of concern already identified by PAC within its future work programme and would welcome the opportunity to discuss the scope of this review with the Department.

 

On a related matter, the Committee would like to acknowledge and thank the T&R Minister for the commitment to amend section 8 of the States Trading Companies Ordinnace 2001 to enable the accounts of Guernsey Post and Guernsey Electricity to be debated, rather than placed as an appendix to the Billet.

 

Both a review of the terms by which grants, loans and subisdies are provided, and the need to ensure the accounts of states trading entities can be fully debatedare necessary to ensure that there is an appropriate level of oversight to all those parties – including the 3rd sector – who receive funds from the public sector.

 

Finally, it was evident to the Committee that, beyond the headline changes to taxes and duties, this report is at best difficult to navigate and at worst completely impenetrable. Incentivisation is considered within the section on expenditure proposals, whereas future transformation is considered under a heading of financial position. There are various headings relating to reserves with budget reserve and capital reserve considered in one section and contingency reserve and strategic development fund, effectively a reserve, in another.

 

The Committee therefore requests that the Treasury & Resources Department consider the need to make future reports more accessible to the general user to ensure greater transparency and help taxpayers better to understand how the States of Guernsey uses their money.

 

Support for FTP Amendment

Here is the short statement I made in support of Deputy Fallaize’s amendment to the FTP in June 2013.

 

Sir, Deputy Fallaize has already made it abundantly clear how vague and woolly accountability is in terms of the FTP and it’s not the only part of the States of Guernsey where this is the case.

Only yesterday we had the Chief Minister making a statement about the reporting lines of the Chief Officers – who appear to be accountable to both their Boards and Chief Executive. We also have a situation where the finance staff in each Department have a reporting line to the States Treasurer, as well as, presumably, the Chief Officer of their Department.

Even those of us who are not particularly religious understand the meaning behind  Matthew Chapter6 verse 24.

“No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.”

And that’s even before we start talking about political versus operational accountability.

It does seem that accountability in the States of Guernsey is a bit like musical chairs and the person accountable is the one still standing when the music stops. It’s perhaps no wonder that the question of accountability has been discussed frequently by the Public Accounts Committee.

 

It is for that reason I second this amendment.

Accountability and FTP

Below is the speech I made in the January 2013 States’ meeting in support of Deputy Fallaize’s amendment, which I seconded, to ensure lines of accountability in relation to FTP were clearer.

Sir, Deputy Fallaize has already made it abundantly clear how vague and woolly accountability is in terms of the FTP and it’s not the only part of the States of Guernsey where this is the case.

Only yesterday we had the Chief Minister making a statement about the reporting lines of the Chief Officers – who appear to be accountable to both their Boards and Chief Executive. We also have a situation where the finance staff in each Department have a reporting line to the States Treasurer, as well as, presumably, the Chief Officer of their Department.

Even those of us who are not particularly religious understand the meaning behind  Matthew Chapter6 verse 24.

“No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.”

And that’s even before we start talking about political versus operational accountability.

It does seem that accountability in the States of Guernsey is a bit like musical chairs and the person accountable is the one still standing when the music stops. It’s perhaps no wonder that the question of accountability has been discussed frequently by the Public Accounts Committee.

 

It is for that reason I second this amendment.



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