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.

 



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