FTP

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.



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