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ODPM Annual Report and Accounts 2003

ODPM Housing, Planning, Local Government and the Regions Committee 1 Jul 2003

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Ms Mavis McDonald CB, Permanent Secretary and Accounting Officer, Office of the Deputy Prime Minister, Mr Peter Unwin, Director, Corporate Strategy and Resources, Office of the Deputy Prime Minister, Mr Rob Smith, Director General, Regional Co-ordination Unit, Office of the Deputy Prime Minister and Mr Joe Montgomery, Director General Neighbourhood Renewal Unit, Office of the Deputy Prime Minister, examined.


Q3 Mr. David Clelland (Tyne Bridge): I suppose if there is a gold medal for numbers of reorganisations your Department would be up at the top with all the reorganisations you have had to go through. Can you tell us what you are doing to ensure this is not adversely affecting staff morale, and whether you are expecting further changes?

Ms McDonald: If I can deal with the staff morale point first, it is just over a year, in fact, since the Office was set up bringing together parts of the former DETR and parts of the Cabinet Office. What we have done is had a consistent programme of trying to create a sense of purpose for the Office and build the new structure around the agenda, and we were helped by that in the fact that when we were set up it was very close to the end of the Spending Review and we had about six weeks to work with ministers on our PSA agreements and negotiate resources for those agreements with the Treasury and that meant we had a quite tight and coherent agenda to explain to staff early on. We had big staff meeting at which the DPM spoke to explain what he wanted to achieve in the Office and how he saw the various functions coming together, and of course he was well known to a lot of members of staff so he reiterated his commitment to the Civil Service and the support he had enjoyed from the Civil Service. Throughout the year we have worked to build on that agenda. We have had a series of activities within the Office to keep staff up to speed with what we are trying to do. For example, when we published the sustainable communities plan we had a lot of staff briefings open to everybody who wanted to come. We had a business planning round which engaged the staff throughout the Office which was led by the board and was reported to ministers before the end of the year which was about the key priorities to deliver against our PSA targets and what that meant in terms of work and the distribution of resources within the Office, and then we tried, I am not quite sure how successful we were, to roll out the results again through a larger series of staff briefings than we have done before and we created an internal business plan for everybody so they can see where their particular part of the Office fits with everybody else's. We have continued to have a series of staff lunches at board level and we have tried also to engage quite a lot of the senior team in the management of the Office as well so the Audit and Risk Committee, for example, has people from all parts of the Office and the regional offices on it. We had a second staff meeting to mark our first anniversary in the QE2 centre three weeks ago, where we had an exhibition which was laid on by the staff themselves to demonstrate to their colleagues what they did in their particular parts of the Department which I think, if I may say so without sounding unduly immodest, was pretty successful. It was completely voluntary; we had well over 1000 people turning up from London and the rest of the country; there was a lot of very positive feedback on it; the DPM spoke, there were workshops which ministers spoke at; and we do get a strong sense of commitment to the agenda of the Office. It has always been a popular place to work because there is a reality about our agenda that people relate to but we are also just completing a staff survey - they will not like everything about us and probably not the management - which will give us a build-up that we call the baseline so we can see what issues of real concern there are and what else we need to work further on.

Q4 Mr. David Clelland (Tyne Bridge): What effect has there been on staff turnover in the last few years?

Ms McDonald: By and large we do not have any sign of a huge exit from the Department.

Q5 Mr. David Clelland (Tyne Bridge): So in comparison with other departments it is above average, is it?

Ms McDonald: Yes. Because of the series of reorganisations we have had commitments for people to be able to move back into the Office or to move to the parts of the former DTI and DTLR and the Fire Service, the Home Office, but we have had a lot of people coming back in and a few going but not too many.

Q6 Chairman: Is this business plan you have for internal purposes a public document?

Ms McDonald: No. It is an internal document.

Q7 Chairman: Is there any reason why the Committee could not see it?

Ms McDonald: I think if ministers were happy to let you see it you could, but I think I need to ask them.

Q8 Chairman: Presumably it will be available to us under Freedom of Information?

Ms McDonald: I am quite happy to check back.

Q9 Mr. David Clelland (Tyne Bridge): How have the re-organisations affected the corporate functions as far as the Department is concerned?

Ms McDonald: When we were set up last year Rachel Lomax and I decided we did not want to spend ages reorganising a centre. We took a very quick decision about which kind of corporate supports we would need separately and those were largely HR and finance at that time. We needed separate HR and finance functions because of the nature of the relationship with the Treasury on things like pay settlements and pay workforce strategies, and the basic way in which the financial negotiations are handled with Treasury expenditure provision. For the other services we took the view that the biggish user would continue to provide the service and the other department would just pay for it, so effectively we set up cross-contractual agreements which meant by the end of September we had most of that sorted and we said we would look again in a year's time whether we wanted to make any changes. We are just completing that process of review and by and large it seems to have worked well. We need one or two variations but we will continue to buy IT support from DFT and they will buy accounting services from us.

Q10 Mr. David Clelland (Tyne Bridge): Can you tell us about the last reshuffle? Has this had an effect on continuity in the Department?

Ms McDonald: It has not had an effect on staff other than that they have needed to brief new ministers, but it has not led to any further re-organisation within the Office itself.

Q11 Mr. David Clelland (Tyne Bridge): So the Department is now fully integrated, is it?

Ms McDonald: I think it probably is, yes. There were two key areas, really, that were quite difficult to integrate. One was the Fire Service which had been in the DETR for a year and which was separately located in a building a long way from everybody else and there had been not much interchange of staff with the rest of the Office, and we brought that team closer to everybody else physically and we have managed to get some movement of staff across the boundaries there. The fire dispute was very unfortunate but one of the positive outcomes was that it really focused a lot of people across the Office and I think if you asked Clive Norris, the head of our directorate, he would say that the morale in his team was much better than it was and they feel much more integrated than a year ago.

Q12 Mr. David Clelland (Tyne Bridge): So there are outstanding issues, for instance, involving pay differentials?

Ms McDonald: No. We were bringing a small group of people to a larger group of people and the ground rules are basically that you do not disadvantage anybody on a move and you would go with the terms and conditions that the main bulk of staff had got, and we have pretty well completed a negotiation of that with an integration for pay arrangements for the headquarters offices with the unions.


Q34 Mr. David Clelland (Tyne Bridge): How many civil servants have moved from the south east to less prosperous areas of the country?

Ms McDonald: I do not know the answer to that. Within the Office itself --

Q35 Mr. David Clelland (Tyne Bridge): In your Department, then?

Ms McDonald: Within the Office people will tend to live and work in the areas where we have the regional offices or our agency, and we have some movement backwards and forwards between London and the other office but not all that much.

Q36 Mr. David Clelland (Tyne Bridge): I am referring to relocation from the centre to the regions. Is there a positive policy on this in your Department? Are you leading by example?

Ms McDonald: Basically our principle is, when we are developing new activities or extending activities that we have already got a responsibility for, then our first choice would be to look to see whether the regional office was the proper front-end arm, and we would build up the function in the regional office in the way in which we have done with the new civil emergency responsibilities, but in relation to our main programmes and the development of those we work very much through those offices in the first instance.

Q37 Mr. David Clelland (Tyne Bridge): Have you examined, for instance, what proportion of staff who are located centrally could be relocated to the regions?

Ms McDonald: Like every other Department we are having a revisiting of that as part of the Michael Lyons' exercise, of which the Office is a co-sponsor with the Treasury, and what we will look at is whether there are any more back-end functions that we can move out, but about a third of the staff are in London, a third in the regional offices and another third in the agencies or offices out of London.

Q38 Mr. David Clelland (Tyne Bridge): It does not sound particularly positive for a Department which has regional responsibilities and is responsible for trying to help disband regional disparities and improve the regions. I would have thought you would be more positive about trying to relocate staff into the regions than you seem to be?

Ms McDonald: There are some things you have to do because of the place where you are. For example, a lot of the headquarters activity tends to focus around ministers and the House, a lot of our programme management, our housing management, is out in the regional offices - our detailed programme management; the Neighbourhood Renewal Programme is in the regional offices, so we try to devolve down in that way very consistently. If we can find anything else that could usefully go to the regional offices as part of this exercise then we will do that.

Q39 Mr. David Clelland (Tyne Bridge): You say if you can find anything else but it does not sound as if you are looking for it. You might stumble across it.

Ms McDonald: It is partly because over the last two and a half years the Regional Co-ordination Unit have had a remit which is to look at what central government functions can be located and co-located in the regional offices to bring together a much greater sense of the impact of the whole of government activities in regions in particular places, so we have been behind a lot of shift there - not just with our Department but others. Rob can give you more details.

Mr Smith: Many of the functions that were originally being carried out by the government offices in 2000 were moving to other institutions in the regions, so a lot of the work around the Post 16 agenda went to the Learning and Skills Councils so there were new posts in the regions for learning and skills --

Q40 Mr. David Clelland (Tyne Bridge): But that was not a relocation; that was a new body set up.

Mr Smith: Yes, but then the sort of staffing in the government offices was maintained and even increased because new functions came from --

Q41 Mr. David Clelland (Tyne Bridge): But it was not increased by people being moved from the centre out. It was recruiting locally.

Mr Smith: We recruited locally but it was increased by tasks moving out from the centre, and the White Paper Your Region Your Choice talked about reviewing a balance between the centre and the regions in terms of departmental capacity, and that is now being followed through with the Michael Lyons review. We are talking to a range of departments about the functions they might put into the regions.

Q42 Chairman: Could you give us a couple of examples?

Mr Smith: Both the Home Office and Defra have increased the numbers of posts they sponsor in the government offices over the last two years, and in Defra Chris Haskins is looking at the whole of the Defra out-reach operation currently and that may well lead to further responsibilities with government offices. We are talking to Chris Haskins about his review.

Q43 Chairman: That is moving someone else's Department. We are interested in action for the people from this Department being moved.

Mr Smith: We obviously represent nine government departments in terms of government offices so we are talking about all departments, but I think across the ODPM business, certainly in terms of delivering a range of fairly new activity including some of the new PSA activities, when we look at the communities and at the Neighbourhood Renewal Unit, there is more business in the government offices as a result of the ODPM's work than there was a year ago when we started.

Q44 Mr. David Clelland (Tyne Bridge): I appreciate that and that is not really the question and in the regions obviously that is appreciated, but we thought that the policy was that the government were looking at relocating a lot of jobs which are done in the centre which could be done elsewhere, particularly because of new technology and IT and everything else. Everything does not have to be located here, and I am not interested in just your Department. It does not sound to me as though there is a mass exodus going on here - just little bits and pieces where you find them.

Ms McDonald: By and large we have not had lots of people going, and we would not expect that. We would expect posts to be created or moved from London to the regional offices or to other locations within regions, and then there would be a degree of local recruitment or transfer between government agencies, other government departments, for example, like Customs & Excise and Revenue which might be beginning to think about whether they retrench so we can move people across, but we are talking to Michael Lyons about the creation of jobs rather than the movement of people.


Q48 Mr. David Clelland (Tyne Bridge): Coming back to London and out of the regions, is there any evidence that the shortage of affordable housing in the south east is affecting the ability of your Department to recruit staff?

Ms McDonald: We are not seeing any shortage of recruits when we advertise for post so to that extent, no. We do know that for some of the most junior staff, if they do not already live in London, they say it is very difficult for them to find places and largely they tend to be looking to share flats and so on in a kind of student existence, but we have some evidence and are collecting other evidence on the wider public sector effect of particularly the recent rise in house prices over the last couple of years.

Q49 Mr. David Clelland (Tyne Bridge): So is there a case for classing civil servants as key workers so they can get some help with an assistance?

Ms McDonald: If you were doing it on income levels then certainly there would be, but I think ministers have said that their priority is key public service providers like teachers and Health Service workers.


Q158 Mr. David Clelland (Tyne Bridge): Mr Raynsford told the Committee last year that actions had been taken to improve your Department's capacity to promote the role of local government across Whitehall. Can you tell us what steps have been taken over the last 12 months to promote a more consistent and prioritised approach to local government across Whitehall?

Ms McDonald: We have strengthened across Whitehall the formal committee machinery under the Cabinet Office to deal with not just local government finance issues but with the whole improvement programme. There is an official level committee that replicates the ministerial level committee and they have now taken a very active part in the development of the CPA processes, the methodology, the refreshing of the usury assessment, and we had a very lively discussion about what should be covered and what should be the strategic areas for the Audit Commission to cover in the roll-out of the district CPA. That is at one level. At the other level, we have strengthened our capacity to relate to individual local authorities. We have appointed, to work within the Regional Offices, a series of local authority relationship managers who follow up with individual local authorities on performance improvement plans post-CPA. They have a responsibility which is to bring back issues, not just to ODPM but to the other departments where it is a particular service which might be of interest to another department that is causing problems. If it is something, say, within a Social Services Department then we would go back to Health and we would be looking for support and assistance in Health in finding people to go and work with the local authority on that particular area.

Q159 Mr. David Clelland (Tyne Bridge): Are there noticeable improvements that have been acknowledged by local government during this process?

Ms McDonald: If you were to ask the LGA they would say they recognise that Whitehall more generally has understood the scope of the Comprehensive Performance Assessment process to have a much better dialogue about what works and what does not work, and what mechanisms can properly be put in place so Whitehall understand the service improvements without sitting on top of the process too much or creating additional inspectorates.

Q160 Mr. David Clelland (Tyne Bridge): The 2001 White Paper Strong Local Leadership: Quality Public Services said, "All government departments will examine, with the Local Government Association and others, the roles, capabilities and potential of the bodies currently providing support for capacity-building in local government". Can you tell us where we are with this review?

Ms McDonald: Following the CPA process we have now set up something called an "Innovation Forum" which works with the excellent authorities and with colleagues across Whitehall to promote best practice in different areas of activity. Again, across the services that local authorities provide, we engage the other government departments in that.

Q161 Mr. David Clelland (Tyne Bridge): Is the Review complete or is it still ongoing?

Ms McDonald: It is probably better to think of it as a continuous process really.

Q162 Mr. David Clelland (Tyne Bridge): How do you assess whether the Improvement and Development Agency is providing good value for money?

Ms McDonald: I would expect the LGA to want to do that as well as us because they have to make the bit for the top-slicing funding that goes to promote those things. What we have been working on with the IDA together with the LGA is the Innovations Forum that we have set up and how their programmes of support - particularly for members of the local government - fit into that. What we want to do next is to make sure that the IDA, the Audit Commission, the LGA and ourselves have actually pulled together and identified which area it is best for each to lead in, but sharing the baseline information we have got between us in doing so.

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