Transcript Better Resource Management: Leading the Challenge of Best

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Dealing with the cuts….
making the best use of public
spending to improve performance
Introduction and welcome
Steve Mungavin, Head of CIPFA NI
IGNORANCE OF PUBLIC FINANCES
IS NO DEFENCE AGAINST THEM…
Ian James Parsley
Ultonia Communications
POLITICS
“It is possible to be interested in the politics of
elections and in the politics of government and
never have one impinge upon the other.
“In fact, it is increasingly the norm.”
Jason O’Mahony
Brief outline of
STANDARD OF LIVING
CONCEPT OF VALUE
INHERENT PROBLEMS
COMMUNICATIONS
EXPERIENCE
•
•
•
•
•
16 years in business
10 years in public affairs
6 years as Local Councillor
4 years as policy adviser
2 years on public boards
Established Breakthrough NI in 2011
OUTPUT
78%
Northern Ireland economic output
versus UK average, Eurostat 2013
EARNINGS
88%
Northern Ireland average wage
versus UK average, DETI 2014
INCOME
96%
Northern Ireland median household income
versus UK average, DSD 2013
CONSUMPTION
104%
Northern Ireland average household spending
versus UK average, ONS 2013
INTERPRETATION
TRANSFER MARKET
17%
Correlation of club spending on transfers to
final Premier League position, 1997/8-2006/7
PLAYER WAGES
92%
Correlation of club spending on player wages to
final Premier League position, 1997/8-2006/7
SILOS
ENDOWMENT
•
•
•
•
Concessionary fares (£43m)
Prescription charges (£7m-£31m)
Flood payments (various)
Rates freeze (£6m per 1%)
• Rates cap (£12m)
• Public Sector pay increments (various)
• Water charges (£250m)
COMMUNICATIONS
Key distinctions:
•
•
•
•
•
Reductions versus Cuts
Budget versus Spending
Government versus Public
Private versus Big Business
Expenditure versus Value
COMMUNICATIONS
Media Speak
Reality
•
•
•
•
•
•
•
•
•
•
Cuts
Business
Government
Spending
Expenditure
Reductions
Private
Public
Budget
Value
FINANCE
“I have done three things in my life of which I
am extremely proud. I have been a father, I have
lost weight, and I have been in charge of the
nation’s finances.
“The key to all three is the same – you have to
say ‘no’, and mean it.”
Nigel Lawson
We “create understanding”.
@UltoniaComms
/UltoniaCommunications
We run your campaigns,
manage your relationships,
establish your messages, and
edit your documents.
We specialise in innovative
www.ultonia.com courses on advocacy, media
relations and language.
cipfa.org.uk
Avoiding knee-jerk savings:
a strategic approach to public expenditure
cuts in Northern Ireland
Stephen G Mungavin
Head of CIPFA Northern Ireland
cipfa.org.uk
Aim of this session
To explore a longer-term approach
to make the best use of public
expenditure
cipfa.org.uk
Presentation structure




Context and overview
Strategic approach – basic principles
Strategic priorities
Discussion – Q&A
cipfa.org.uk
Context and overview
 Nearly 10 years of ‘efficiency savings’
 Non-ring fenced resource DEL reduces
from £10,232.6M to £10,019.5M in
2015/16
cipfa.org.uk
Ministerial Departments
Base
(£M)
Budget
(£M)
%
197.6
187.3
-5.2%
99.9
89.9
-10%
1,943.7
1,849.7
-4.9%
Employment & Learning
756.2
674.4
-10.8%
Enterprise, Trade, Investment
184.2
194
+5.3%
Finance & Personnel
155.9
139
-10.9%
4,542.7
4,693.1
+3.3%
Environment
116.6
103.7
-11.1%
Justice
1,089
1,024
-6%
Regional Development
335.5
322
-4%
Social Development
653.9
589.1
-9.9%
65.8
65.4
-0.6%
Agriculture and Rural Development
Culture, Arts and Leisure
Education
DHSS&PS
OFMDFM
cipfa.org.uk
Non- Ministerial Departments
Base
(£M)
Budget
(£M)
%
Assembly Ombudsman
1.8
1.8
0%
Food Standards Agency
8.5
7.4
-12.8%
40.7
40.7
0%
NI Audit Office
7.9
7.9
0%
Utility Regulator
0.1
0.1
0%
32.7
30.5
-10.9%
10,232.6
10,019.5
-2.1%
NI Assembly
Public Prosecution Service
Total Planned spend
cipfa.org.uk
The pain is going to get worse
“Looking ahead, Office for Budget Responsibility
projections show that we can expect our Resource
DEL to fall by a further 13% in real terms by
2019.
So, in this year, and beyond, we will have a wide
range of increasing demands placed upon our
public services while we have fewer and fewer
resources with which to meet that growing
demand. It is a situation which demands that
tough, sometimes even undesirable, choices be
made”.
DFP Minister November 2014
cipfa.org.uk
Some fundamental principles
Prioritisation needed
No ‘protection’ of services
Manage public expectations
Avoid political expediency
Avoid duplication caused by the
legacy of conflict
 Identify ‘opportunity costs’
 Reduce the accountability burden





Strategic priorities
cipfa.org.uk
 Rebalance the relationship between the citizen and the
state
 Budget for the medium to long term, and invest
strategically to stimulate economic growth
 The structure of government and the public sector
needs to change to allow services to be provided more
effectively and decisions on funding to be taken at the
right level
 Local public services must be better aligned to maintain
delivery as budgets are cut further
 Financial transparency and accountability are key to
restoring public trust
 The quality of state level financial management and
governance demands urgent attention
cipfa.org.uk
In summary




Don’t just rely on short-term gains
Plan for next 5-10 years
Manage public expectations
Demonstrate leadership at all levels
Refreshment
cipfa.org.uk
Dealing with the cuts – Cost
reduction
16 December 2014
John O’Halloran CIPFA Senior Consultant
cipfa.org.uk
Dealing with the cuts our Approach

Questions for you to answer:
 What is the scope in your organisation for finding
more savings?
 Have you exhausted all the opportunities for
generating more income?
 Will your organisation be able to cope with more
cuts, without drastic surgery?
 Have you a long term plan?
 Have the limits of your current approach been
reached?
 Will the new reforms e.g. Councils be cost effective
– What areas can you focus on

Will it get any easier?
cipfa.org.uk
Dealing with the cuts - process

STEP 1: INITIAL INTERVIEWS AND
DOCUMENT REVIEW

Understanding the Context.

STEP 2: COST & INCOME DATA COLLECTION

Collecting and comparing back-office and front-line services.

STEP 3: ANALYSIS AND FILTERING

Evidence-based information for identifying areas for
improvement. Creating a long list of options, grouped into key
themes. Workshops to “sanity check” and question
opportunities.

STEP 4: PRACTICAL ASSESSMENT

A more detailed assessment of functional operations to
highlight waste, duplication, and over engineered processes;
how improvements will be achieved and the associated extent,
feasibility and order of magnitude of the costs for the required
changes.

STEP 5: SUMMARY REPORT

Overall findings and recommendations.
cipfa.org.uk
A look at overall service performance
High cost in libraries
and sport, could this
be reduced through
charging?
Taken from the CIPFA VfM Toolkit: www.cipfastats.net/vfmtoolkit
cipfa.org.uk
A worked example (Service Level)
Lowest income per
head in Cultural,
Environmental and
Planning
Taken from the CIPFA Income Generation Comparative Profiles: www.cipfa.org/comparativeprofiles
cipfa.org.uk
A worked example
(Function Level)
Lowest again in
Cultural Services
cipfa.org.uk
A worked example (Activity Level)
Low levels of
income across the
board
cipfa.org.uk
Total Cost of Services and Cost per
£’000 Organisation Running Costs
Service
Council
Total Cost
£’000
council
Cost per
£’000
Group
Average Cost
per £’000
Finance
633
62.71
26.25
ICT
1,063
105.28
44.49
Procurement
107
10.59
2.55
Communications 93
9.25
6.27
HR
221
21.88
16.24
Legal
265
26.50
12.58
Estates
318
80.68
33.84
* Estates is Cost/Sq Mtr.
cipfa.org.uk
Total Cost as a percentage of
Organisational Running Costs
Service
Council
%
Lower
Median
Quartile% %
Upper
Quartile%
Finance
6.30
1.80
2.20
2.70
ICT
10.50
2.10
3.10
5.20
Procurement
1.06
0.11
0.15
0.29
Communications
0.92
0.42
0.50
0.88
HR
2.19
1.13
1.52
1.85
Legal
2.72
0.86
0.92
1.78
cipfa.org.uk
Estates - Total Property Costs per
Square Metre GIA
Service
Council £
Lower
Quartile
£
Median £
Upper
Quartile £
Estates
296
103
140
152
cipfa.org.uk
Total Cost of Difference
Service
From
Median
£’000
From Lower
Quartile
£’000
Finance
407
450
ICT
753
851
Procurement
91
96
Communications
43
51
HR
67
107
181
183
Legal
* Figure not available for Estates
cipfa.org.uk
Summary of Potential Savings
Service Area
Potential Saving
£’000
Reduce number of Heads of Service
260
Reduce number of PAs
180
People & Policy
166
Additional cost re three areas above
-100
Reduce number of middle managers
165
Performance and Risk Management
65
Procurement (Based on benchmarking)*
91
Communications (Based on benchmarking)*
43
Legal
13
ICT
200
Estates
N/A
Total
1,083 exc Estates
* May be less depending on review of middle managers
cipfa.org.uk
Dealing with the cuts – Our proposals

Estate and Asset Management
Reducing costs in some of the larger elements of capital expenditure.

Modernise the Workforce
Improving productivity and reduce costs through changing both our ways of working and the
way staff are paid.

Cessation of Discretionary Services
Reducing costs by stopping discretionary/low priority services.

Change Service Delivery Models
Reducing costs by changing the method of resourcing the work, using different form of
organisation to deliver the work – such as outsourcing or social enterprise.

Contract Management Options
Reducing costs by changing how WBC buys services and products and how it manages the
fulfillment of those contracts to get best value.

Rationalise/Change Service Delivery
A mixture of opportunities to change the nature of the services provided and some aspects of
the way they are delivered.

Income Generation
New opportunities to increase revenue income and to maximise existing sources of income.
cipfa.org.uk
Savings – Costs/Benefits
Implementation –
Time/Cost
Cease operation of
Open Air Lido
Housing Options
Efficiencies
Charging for
Sports Coaching
Festival
Licencing
Knowledge
Sharing
Revised
Enforcement
Advertisements
on Website
Ceasing operation
of Community
Access Points.
Highway
verges
Collect more Council
Tax/NNDR
Economic
Development
Loans
Energy Switch
Facilitator
Contract Monitoring
2013 Good
Housekeeping
Corporate Core Costs
Waste
Collection
Income
Council Tax
Increase
Licencing
Changes
Festival ‘Fringe’
Become an
electronic council
Cease operation of Public
Conveniences
2014 Good
Housekeeping
Asset
Commercial
Partnership
Bereavement
Services
Non Statutory
Charge Review
Development
Control Pre
Application
Advice
Potential Benefit
44
cipfa.org.uk
Dealing with the cuts – An outcome



'We engaged CIPFA to take a detailed look at ways in which
we could achieve further savings and identify options for
income generation - in addition to the significant and difficult
steps we had already taken as an authority.
The project used CIPFA's up to date benchmarking
information as a platform for identifying real opportunities
which we were able to take with confidence to both officers
and elected members.
The final report produced by CIPFA's advisers outlines a host
of recommendations for top areas of cost reduction and
income generation, some of which had not previously been
considered, which can genuinely be considered for
implementation in the coming period.'
 Lynton Green, Director of Finance and Information
Services; Warrington Borough Council
cipfa.org.uk
Dealing with the cuts –


'The CIPFA team have essential knowledge and experience of
the savings/income generation opportunities and the political
landscape that is essential to the success of this review. The
team members have a proven track record and have
previously worked with Local Government and are aware of
the sensitivities that surround the savings which need to be
made.
Benchmarking has proven that the alternative supplier will
cost a minimum of £40,000 plus a potential share of any
savings. It is further understood that the alternative supplier
also lacks the statistical data on the public sector and usually
has to request such data from CIPFA.’
Briefing for Members by Director of Corporate Services
cipfa.org.uk
 QUESTIONS
Pauline French
A different model to achieve efficiencies
16 Dec 2014
2
Local Government Context in 2014
“Our country faces enormous
social, economic and
demographic challenges: an
aging population with longer
term care needs; continuing
unemployment combined with
persistent skills shortages; rising
inequality; and polarisation
between communities with
highly variable local economies
and opportunities.”
“The financial context for
our public services has
changed fundamentally in
recent years; all public
services are being required
to deliver with less
resource.”
Local Government Innovation Taskforce, March 2014
SO WHERE IS CROYDON?
CROYDON BOROUGH PROFILE
OUR
OUR
OUR
PLACE
PEOPLE
PROSPERITY
• Our population is getting bigger, more
deprived, more complex and more diverse
• Croydon is a place of social and economic
inequality
Budget reductions – historic record over the last financial
strategy
2010/11
2011/12
2012/13
2013/14
1.07%
0%
0%
0%
Council tax increase
Council tax increase
Council tax increase
Council tax increase
£21.02m
£30.75m
£25.31m
£23.81m
Budget reduction
Budget reduction
£1.66
£0.00
£3.22
£0.65
Budget reduction
£1.80
£1.19
Budget reduction
£2.96
£0.88
Cuts
£15.79
£26.88
£22.32
Income generation
£17.14
Efficiencies
32
Staffing Numbers
4,000
3,500
3,807
3,418
3,018
3,000
2,840
2,500
Overall Headcount
2,000
-21% -17%
1,500
1,000
500
0
December 2010
April 2014
Full-time equivalents
33
The challenge - 2015-18 - £104m 30%
resource gap
Breakdown of the budget gap (£millions)
By year…
15/16
Reduction in
grant, $45
Cost of
capital, $15
Increased
demand /
growth, $15
Inflation,
$25
16/17
0
-10
-20
-30
-40
Reduction in grant
Increased demand /
growth
Inflation
17/18
Outsourcing, the first solution
used in Adult Social Care
Firstly in Residential and Nursing
home care
Then in Home Care (domiciliary
Care)
Adult Social Care successfully
saving money (avoiding the graph of
doom)
• Clear managerial and political vision, clearly
communicated to staff, customers and
stakeholders
• Move away from paternalism, giving control to
citizens
• Savings not seen as “cuts” but are a way of
delivering improved outcomes at a lower cost
• Strong performance and project management in
line managers developing and using KPIs
• Reducing the reliance upon residential and nursing
home care
• Designing support so it is delivered at times of crisis
and not for life
• Maximise telecare and telehealth
• Review contracts, negotiate prices from a position of
understanding the business and the outcomes that are
required.
On top of
Cuts
Efficiency
and Income Generation
The Local Authority Trading Company
Drivers
• Personalisation & empowerment – service users to develop a direct
relationship, to be given money not direct services
• Ability to trade what were public services
• Efficiency reasons – reduce costs, generate surpluses, sell to
others, leverage in the market, spread operating costs, and invest
surplus back into public service
• Market disruption, efficiency gains for all partners
• Innovation
• Inform commissioning and specifications
• Satisfied both a Conservative and now Labour administration
Nature of a
Local Authority Trading Company
•
•
•
•
•
A local authority trading company is a ‘commercial ‘organisation with the
ability to trade
It has shareholdings, but the council holds 100% of the shares
An LATC can act as a business and offer its services to other social care
businesses (such as social enterprises and cooperatives), to other local
authorities, to voluntary sector organisations or, indeed, to small private
sector businesses. These dealings are undertaken on a commercial basis and
without any subsidy or support from the Council
It has a board of directors which make the major decisions
It can make a profit when dealing with other organisations. Any profit could be
reinvested into the new company to develop and improve the services it
offers, and to ensure these remain competitively priced. The board of the
company could also choose to pay a dividend to its shareholder, the Council,
which could help to reduce the level of savings the Council has to make
elsewhere
Procurement Law and LATCs
• Broadly speaking a contracting authority in an EU member state
must abide by the EU Treaty principles of fairness, openness, nondiscrimination and transparency (‘the Principles’)
• However, it has been established in EU procurement law that the
open advertising and tendering rules for public contracts do not
apply where a public body obtains services from ‘in-house’(arms
length) sources. This is the so-called Teckal principle
• Two decisions, one made by the Court of Appeal in England and
another made by the European Court of Justice, clarify how the
Teckal principle operates, and remove any doubt as to whether the
exemption applies to procurements in the UK
Teckal Exemptions
• In Teckal, the ECJ held that a public body could bypass(comply but be
exempt from) the EU procurement rules and directly enter into a contract
with a service provider so long as:
– the public body controls the service provider in question as if it was
that public body's own department; and
– the service provider in question carries out the essential part of its
activities with the contracting authority which controls that entity.
• This decision created what is now known as the Teckal exemption (Brent v
RMP clarifies that the Teckal exemption does apply to public procurement
in the UK)
The ‘Control Test’
Exemption applies when a contracting authority exercises control over a wholly-owned entity
that is ‘similar to the control it has over its own departments and the entity carries out the
essential part of its activities for that authority’
The ‘control test’ can be satisfied even where the entity is set up by several authorities which
have collective control of the entity. Collective control does not require all decision-making to
be unanimous and allows the day-to-day management to be left to a board
Any private participation in the entity will prevent the Teckal exemption applying and
authorities will be required to competitively tender any contract they intend to enter into with
the entity
If a private company acquires even a small stake in the entity, any existing contracts awarded
directly to the entity under the Teckal exemption may be found to breach procurement rules
The development of
Croydon Care Solutions
•
•
•
•
Began trading in March 2011
100% owned by Croydon Council
Now have seven Local Authority partners
Turnover has increased from £6.5M in 12/13 to
anticipated £16M this year.
• Partner Local Authorities are saving an average 30% in
their community equipment spend.
• There for anyone to use, we are the Integrated
Procurement Hub for community equipment.
• Innovated to deliver a new way of working with
Learning Disability, saving on life time service costs.
Delivering average 30%
savings to partners as
client base grows
Equipment Services
£m
18
16
14
12
10
8
6
4
2
0
effciency saving
actual spend
2011/12
0.526
2012/13
0.775
2013/14
1.935
2014/15
5.364
1.227
1.809
4.516
12.516
Growth in business and demand, new partners and demographic
Market Disrupter
Safe test ground
•
•
•
Public service heritage
Commercial environment
Good employer
Lunch
PRIORITISING PUBLIC SERVICES
PRIORITISING PUBLIC SERVICES
POLICE SERVICE OF NORTHERN IRELAND
OF NORTHERN IRELAND
CIPFA PERFORMANCE SEMINAR
BELFAST
16 DECEMBER 2014
67
CONTENTS
1. Background
2. PSNI Vision
3. Financial Overview
4. Current Financial Year (2014-15)
5. Next Financial Year (2015-16)
6. PSNI Impact
68
1. BACKGROUND
•
•
•
•
•
•
•
•
Patten Report – September 1999 – ‘A New Beginning: Policing in
Northern Ireland’
Policing per head population in NI – 3 times more than in GB
From 13,000 Police then to approx. 6,700 today, from 3,350 staff then
to approx. 2,300 today
3,033 Police left through Patten Severance Scheme; 1,891 left through
natural wastage and 4,275 recruited (50:50)
Full-Time Reserve phased out, from 2,900
Policing Board established 4 November 2001
Annual Financial Statements prepared on a Cash Basis then
Alignment financial and operational decision making - devolved
budgets and appointed Business Services Support across the
Organisation
69
Background continued…
CONTENTS
1.• B£151m in savings in 6 years up to end of 2011, above target (Gershon
•
2.•
3.•
4.
•
•
5.
Savings).
Target savings £135m for year to 31 March 2015 (14.7% in real terms)
PFocus maintaining and enhancing front line Police Service delivery and
driving out savings from support functions
FOutsourcing – Catering, Cleaning, Uniforms, Custody Detention,
Property Management and Maintenance, IT, Police and Civilian
Recruitment, Vehicle Recovery, Internal Audit
C
Achieved 30% Catholic Representation within 10 years
Devolution Policing Justice to Northern Ireland took place on 12 April
N2010.
6. P
70
2. PSNI VISION
To help build a Confident, Safe & Peaceful Society
Keeping People Safe
Prevent
Protect
Detect
Policing With the Community
Accountability
Courtesy
& Respect
Collaborative
Decision Making
The Police Service
71
3. FINANCIAL OVERVIEW
Public Spending - Crime & Policing represents <1% of total spend
Source - Guardian
72
NI BLOCK…
73
NI Block: 2014-15…
• Significant Resource DEL pressures
• Reductions of 2.1% agreed in June Monitoring
• Protection for Health & Education
• Welfare Reform penalty of £87m unaddressed
• Further reductions of 2.3% in October Monitoring
Round
• Impact on public services
74
PSNI Resource Expenditure
An analysis of the planned resource expenditure for 2013/14 is shown in the
chart below:
75
4. CURRENT FINANCIAL YEAR (2014-15)
Overview of Police Budget
2014/15
£m
%
Pay related costs
Non Pay costs
640
165
80
20
Total Expenditure
805
100
76
CURRENT FINANCIAL YEAR (2014-15)
Analysis of non pay costs
2014/15
£m
Transport
Accommodation
Telecoms & Tech
Travel & Sub
Supplies, Catering & Pubs
Incidentals*
15
43
38
7
13
49
Total Non Pay costs
165
77
CURRENT FINANCIAL YEAR (2014-15)
– Budget cut 1.5%
[May]
– Plan for a 2.5% & 2.9% cut
[June]
– Plan for a 3%, 4% & 5% cut
[July]
– Plan for 4.4%
[August]
– Budget cut 7.0%
[September]
– Additional funding 1.8% (£13m)
[October]
5.2% = £38.4m
78
PSNI: 2014-15…
Chief Constable set 3 key principles to guide resourcing allocations:
– Principle 1:
The PSNI is committed to keeping people
safe today, whilst acknowledging
statutory responsibilities to investigate
the past.
– Principle 2:
The PSNI is committed to maintain operational
capacity and capability, with officer numbers
(6,963) reflecting the findings of the Resilience
Review.
– Principle 3:
The PSNI is committed to delivering a sustained
reduction in baseline spending by continuing to
invest in enabling technology and processes.
79
Process for Cost Reductions
INTERNAL
•
Annual Intergrated Planning Process
•
Finance Delivery Group
•
Capital and Overtime Working Group
•
ServiceFirst Board
•
Resource Assurance and Challenge Session (Star Chamber)
•
Scenario planning for 2015/16 – 10% and 15% cuts and different police
recruitment numbers
EXTERNAL
•
Northern Ireland Policing Board
•
Department of Justice
80
PSNI: 2014-15…
Target
Local Initiative
Hospitality
Training
Other Staff Substitution
Legacy Staff Substitution
Police Overtime
General Support
Incidental Expenses
Transport Costs
Accommodation Services
Supplies, Catering & Publications
Telecomms & Technology
Travel & Sub
Managed Service
FSSD Specific Savings
Police Staff Recruitment
Police Staff Overtime
Transport
Police Officer Recruitment
Grants
Pension Opt-Outs
POPT
PTSD
Total
DPC
OSD
COP inc HET
SID
Corp Comms
Legal
Com Sec
HR
EBS Pol Snr Mgt FSSD
Other
TOTAL
36,100,000
81
5. NEXT FINANCIAL YEAR (2015-16)
– 1 year only
– Plan for 2.8%, 5.1% & 7.8%
[August]
– Plan for 14.0%
[September]
– Plan for 10% & 15% (£120m)
[September]
– Plan for 8.6%
[November]
8.6% = £60m
82
PSNI: 2015-16…
SUMMARY
Estimated Resource Requirement
Draft Budget Allocated (8.6%)
Initial GAP
£m
687.9
644.4
43.5
PROCESS TO DATE
£m
Reductions
agreed at
Finance Delivery
Group
Star Chamber
Latest Gap
Police Overtime
Staff Overtime
Transport
Estates
Telecom and Technology
Travel and Subsistence
Supplies
Incidentials
Income
Staff Recruitment
24.4
4.2
14.9
83
4 MAIN SCENARIOS
1.
10% Cut and Minimum Recruitment (100 Officers)
GAP
£53.6m
2.
15% Cut and Minimum Recruitment (100 Officers)
GAP
£88.9m
3.
10% Cut and Necessary Recruitment (Maintain 7,000 Officers) GAP
£65.1m
4.
15% Cut and Necessary Recruitment (Maintain 7,000 Officers) GAP
£100.6m
IMPACT OF CUTS UNDER EACH SCENARIO
84
6. PSNI: IMPACT/IMPLICATIONS
IMPACT:
• Fewer Police Officers and Staff
• Fewer Support Workers
• Reduction in Overtime
• Reduction in Support and Enabling exits
IMPLICATIONS:
• ServiceFirst Programme – Re-organisation of Local Government,
Centralisation of Support functions – Change Management Process
• Harder choices
• Focus on present not past
• Managing greater risk
• Less responsive; more reactive service
• Focus on serious risk & harm
• Greater flexibility
85
END
86
Northern Ireland
Audit Office
Value for Money audits in the public sector:
Improvement through Oversight
Sean McKay
Director
Value for Money Division
COMPTROLLER & AUDITOR GENERAL
AAG
(20 Staff)
AAG
AAG
Financial Audit
Certification of
Accounts
Value for Money Audit
Reports on:
Economy
Efficiency and
Effectiveness of
Public Spending
(65 staff)
(35 staff)
Budget: £8 million
Chief Local Govt. Auditor
Audits of
26 District Councils
(25 staff)
Northern Ireland Audit Office
MISSION:
1.
To provide objective information, advice and assurance on
the use of public funds
2.
To encourage:

Beneficial change in the provision of public services;

The highest standards in financial management and
reporting; and

Propriety in the conduct of public business.
LEGISLATION:
The Audit (Northern Ireland) Order 1987
The Northern Ireland Act 1998
The Government Resources and Accounts Act (NI) 2001
The Audit and Accountability (NI) Order 2003.
Importance of C&AG’s
Independence
What is a Value for Money Study

An objective, systematic examination of evidence

Makes recommendations to decision-makers and
to enhance public accountability

Distinct from financial audits, which express
opinions on financial statements

Conducted in accordance with standards.
Financial audit—‘how much’
Performance audit—‘how well’
~12 reports each year,
~try to work to a 12 months turn-around
Wide powers of access and examination
Effectiveness, efficiency, economy
Extensive planning and consultation
Cannot question the merits of policy.
Potential Impacts


Relevant and informing
Encourage learning/enhancing decision making

Improving government with recommendations

Identify Financial Savings

Showing a “footprint” of change and the value of audit

Improve Public Confidence/Governance
How are VFM topics chosen?

Issues Arising from Financial Audit

Assembly Members or PAC Interests

Media or Public Interest

Identifying and Spreading Good Practice

Environment scanning –Marking/Survey
Audit—more important than ever
Pressures:
Current austerity agenda→ public sector doing the same with
fewer resources.
Comptroller and Auditor-General is the principal source of
independent information on the performance of the public sector to
the Assembly and the public.
Audits go beyond assurance C&AG’s focus—‘making a difference’.

How do we make this difference in these times?
Financial Management and
Efficiency
Don’t like to worry you but....



total real terms change in funding over 2011-2015
period ranges from - 9.1% (DSD) to - 20% (DRD)
freeze on public sector pay, pensions changes etc
2010/15 to be the tightest 5 year period for
government spending since (at least) WWII
Primary Care Prescribing



GP prescribing - efficiency savings of £132
million in the four years to 2013-14
Cost of prescribing has fallen by 18 per cent in
real terms since 2006
Volume of prescriptions has risen significantly from 23 million items in 2000 to almost 39 million
in 2013
November 2014
Primary Care Prescribing
However:



If the prescribing costs of local GPs had been in
line with those in Wales in 2013 there was
potential to save up to £73 million
Potential savings of £19 million if all GPs had
prescribed as efficiently as those in the average
performing practice
Scope for further savings of £54 million over a
three year period
Use of Locum Doctors




April 2007 to 31 March 2011 £109 million was paid to
cover short term absences or vacancies within
hospitals
Around £74 million paid to external recruitment
agencies
£35 million paid to doctors employed by Trusts but
working hours additional to those stated in their
contract
We estimate that by containing locum costs to the
regional average of 8 per cent - over £5 million might
be saved each year.
Substitution Cover for Teachers:
Follow-up Report
Cost of substitutes covering for teacher absences had
increased significantly – up in real terms by 40 per
cent since 2000-01, to over £66 million in 2008-09
Impact on learning/attainment
The management of teacher absence and substitution
cover are areas where there improvement and savings
are now starting to be realised.
May 2010
Improving Pupil Attendance



School absence rates equated to around 9 days
missed per pupil at primary school and 13 days
non-attendance per pupil at post-primary school
in 2011-12
In 2011-12, pupils absent from school for no
reason forfeited the opportunity of around £22
million worth of education
More than 80 per cent of cases of persistent
absenteeism not referred to the EWS
Outcomes and Quality
Translating public money into high-quality
services and outcomes for citizens
depends on the capability of public entities
Organisational culture matters and needs
to be carefully fostered
Patient Safety
Reducing adverse incidents that cause, or could have
caused, unexpected harm to patients and clients is a
core task for DHSSPS and HSC Trusts.
Two factors are crucial to this:


the establishment of a culture in which incidents can
be reported easily, honestly and without fear of blame;
and
the ability to ensure that lessons learned from these
incidents are successfully taken on board by HSC
staff.
Patient Safety
Approximately 83,000 adverse incidents are reported each
year by HSC organisations

causes distress to patients, relatives and front-line staff
In the five years covered in the report, DHSSPS had paid out
£116 million to settle claims for clinical and social care
negligence – £77 million in compensation and £39 million in
legal and administrative costs.
Further £136 million estimated to meet the compensation
costs of all the active negligence claims currently in the
system.
Patient Safety
Significant moves to raise awareness among HSC
Trusts of the need to ensure more openness and
honesty when things go wrong.
However, there continues to be under-reporting,
particularly within hospitals.
More needs to be done to ensure an open culture
and to encourage the reporting of adverse incidents
or near-misses as a mechanism for learning
lessons and driving improvements.
Literacy and Numeracy
Achievement




Wide gap between the highest and lowest achieving children
continues to be challenging;
Strong correlation between low levels of academic
achievement and free school meal Only 31.7% of pupils
entitled to free school meals in 2010-11 achieved the
expected level at GCSE compared to 65.1% of pupils not
entitled to free school meals;
Social deprivation appears to have a greater negative impact
on achievement levels in controlled (mainly Protestant)
schools than in their maintained (mainly Catholic)
counterparts; and
Outcomes for boys are worse than those for girls at almost all
levels.
Literacy and Numeracy
Achievement





Effective school leadership vital role to play in
addressing under-performing schools
Key role played by families in assisting children
with literacy and numeracy progression
Identifying and sharing practices
Sharing of data by the Department and its use by
the schools
Data not always used in a timely and effective way
across all schools and sectors
Probity in Procurement
Lack of attention to probity will
undermine accountability and public
trust in the government and the
services procured.
DCAL Capital Projects
Ulster Museum, Lyric Theatre, Metropolitan Arts Centre, Public Record
Office of Northern Ireland, Crescent Arts Centre and Tollymore National
Outdoor Centre


Most of the construction work did not go
according to plan
Delays and cost overruns which resulted in all
seven projects needing additional funding
DCAL Capital Projects



Basic tender documentation not available
Not possible to provide assurance that the award
of the contract worth £10.9 million was in line with
best practice nor that there was proper scrutiny of
the tender process by the Department or its
agents.
Greater care needs to be taken to ensure that
probity is maintained in the contracting process
and that decisions are well documented and able
to be audited
Working together to make a
difference

Make our reports & insights more accessible and relevant

Maximise our findings through presentations at
conferences/attendance at public sector forums

Developing a range of communications channels (e.g. Website etc.)

Sharing our knowledge through new kinds of products e.g. better
practice guides, information pieces, key audit themes

Engaging better with the media

Improving the relevance of our topics by consulting with wide range
of stakeholders
Refreshment Break
Chair’s close