Jon Buckland, Chief Officer of the Commerce & Employment Department, speaks to Chamber of Commerce members on “The States Financial Transformation Programme”

April 20th, 2010 by Jon Buckland

Mr President and Members of chamber thank you for your invitation to present to you this lunchtime on the States Financial Transformation Programme and give you an update on where we are in the process, how we are progressing and what we are intending to achieve. As residents and representative of businesses who receive and fund services you are likely to have a keen interest in how the States operates.  Today is an opportunity both to communicate how the States plans to improve the value for money offered by its services and to get your input into the process.  I hope that by the end of my presentation you will all have a much clearer understanding of how the States is implementing the Financial Transformation Programme and the Value for Money workstream in particular.

The States debate in October last year gave the green light for the programme, now the savings identified in the Fundamental Spending Review have to be delivered from within the States and approved the Financial Transformation Programme.  The Financial Transformation Programme, which I will refer to as the FTP, is the vehicle to deliver an essential £31m reduction in the base Budget of the States of Guernsey after five years.

The FTP is being led by the Transformation Executive, which comprises:

Mike Brown, Chief Executive – Chair of the Transformation Executive

Nigel Lewis, Deputy Chief Executive – Deputy Chair

Bethan Haines, Chief Accountant – Programme  Director

Dale Holmes – Chief Officer, Treasury and Resources

Simon Elliott – Head of HR and Organisational Development

Alistair Bisson – Deputy Programme Director; and

Ian McPherson, Tribal – Consultant

There are seven workstreams now looking at the 107 opportunities identified in Phase of the Fundamental Spending Review and these are:

  1. Property and Asset Management
  2. Human Resources
  3. Finance
  4. Procurement
  5. IT
  6. Grants and Subsidies
  7. Value for Money

The Value for Money workstream is working to directly achieve two objectives of the Financial Transformation Programme – to deliver efficient and effective services, and to embed a value for money culture across the States.  It is, therefore, a crucial element of the programme and I have the good fortune to be the State of Guernsey worksteam lead for this project and for the remainder of my talk I am going to concentrate on what we call the VFM programme.

Lets tackle this head on – what do we mean by value for money?

We are very clear about what we mean by value for money – and the working definition that we are using is simply:

‘value for money’ means that public money is spent on quality services that deliver what citizens need, or on what is legally necessary, with the least required time, effort and spend.

There are three strands to the States-wide Value for Money programme:

Firstly there is what we can call the overarching VFM project which will be delivered across the lifespan of the programme through pilots in every Department and the aim is to increase departmental efficiency through the improved availability and use of spend and performance information.

Underneath this umbrella we have 23 Specific projects identified in the FSR which we will pursue through to at least a full Business Case which will be considered by the Transformation Executive.  These will be delivered on a phased basis independently of the main VFM project and the aim is to reduce baseline budgets and improve service value for money. I am not going to read out all 23 projects now as I have already given you too many lists already, but it includes for example the annual subsidy to Beau Sejour, the Bus Service, acute needs and complex care at HSSD – so all fairly uncontentious?!

Finally the third element of the programme considers wider operational efficiencies which are additional projects not part of the FSR but emerge in delivering the workstream and will be identified through work done in the VFM_A or through officer requests.  This is key because we don’t want to just limit ourselves to what was in the FSR, at the risk of ignoring other good opportunities. We want to be a resource for all.

The main VFMA project will deliver a States-wide approach to measuring and monitoring value for money across all Departments and services.  In particular it will focus on:

  • Developing better information about how services spend money and how they perform through a defined set of key indicators;
  • Using this information operationally, to judge and monitor the value for money that public services offer to citizens and to the business, as well as strategically to set Departmental and States-wide priorities based on an understanding of what services currently offer, and how cost-effective they are; and
  • Delivering operational efficiencies in both the short-term and long-term, through proactively identifying ways to sustain or improve the value for money of services.

The aim of all projects delivered by the workstream is to sustain or improve the value for money offered by public services in Guernsey and referring back to our definition, In every case, ‘value for money’ means that public money is spent on quality services that deliver what citizens need, or on what is legally necessary, with the least required time, effort and spend.

The work is a key business enabler but will also deliver a reduction in baseline operating budgets.

The Fundamental Spending Review (FSR) identified £7m of savings within the Value for Money workstream to the baseline operating budgets of services through generating income from new sources, raising additional income from existing sources, and making operational efficiencies.

In addition to reducing the baseline operating budget of the States, this work is also a key business enabler.  Departments will benefit from improved control over performance and spend, through the development of an enhanced evidence base, key performance indicators and a methodology for conducting value for money assessments and integrating them into strategic plans.  This will allow Departments to proactively measure, monitor and manage the value for money of public services that are offered to citizens both now and in the future, and will lead to:

  • A more accountable public sector, which can transparently evidence the performance and spending of its services to citizens, as well as how effectively this contributes towards strategic priorities for Guernsey;
  • More efficient and effective public services, as senior managers will have the evidence and information they need to be in control of the things they are accountable for, and can proactively manage how money is spent and the quality of service delivered to citizens;
  • Better financial management of public services, as strategic decisions about what services to offer and at what level can be taken based on a firm understanding of citizen needs and available budgets;
  • More effective strategy and policy-making, underpinned by evidence and metrics that can inform decisions about how services currently perform, what is realistic for the States of Guernsey to deliver, and how this can be translated into day to day operations; and most importantly
  • A culture of value for money within how the public sector operates in Guernsey, delivered through a common approach to gathering and using spend and performance information, and a collective language for sharing individual approaches and successes between Departments.

Those are the objectives – how we will achieve them?

This work will be delivered through a series of waves over the five years of the Financial Transformation Programme.  Each wave will contain a set of value for money pilot projects within individual services and across States Departments.  By delivering this work in waves, we are intending to foster and embed a consistent approach to value for money, using the direction, guidance and support of Departments.  Delivering the work through the waves will also allow us to refine our forecasts of future benefits and required resources to ensure they are sufficiently accurate before commencing each wave.  The first wave will involve seven pilot projects which are either existing opportunities identified in phase two of the Fundamental Spending Review or new areas where Departments want to improve value for money.

The outputs for each value for money pilot that will deliver the above outcomes will be:

  • A defined set of spending and performance indicators, that can be used to measure service value for money as an evidence for future decision-making;
  • A template for collecting and reporting this information at a management team level on a regular basis;
  • A judgement of the value for money of the service using the information identified above; and
  • The identification and, where relevant, delivery of a set of opportunities to sustain or improve the value for money offered in the service.

Thankfully I am not doing this alone and I have a core team from Tribal Consulting who are now working closely with various departments and their staff as additional resources to help progress the various projects.  Since the end of last year we have been working with a number of Departments to help them tackle specific issues and I will briefly describe what we are doing within the VFMA project.  You might be able to anticipate the initial reaction from a Department when the VFM team approach them – but I would like to make two observations from my experience to date:

Firstly – every Department has co-operated and worked with us so far; and

Secondly, having given us an opportunity I have been delighted to see how quickly the Departments have recognised the professionalism and added insight that the Tribal Team have brought to the process – it is a credit to Tribal Team that I feel they are perceived as part of the Departmental teams and are adding value.

So let me talk about some of the work we have been doing in the past few months.

With the Health and Social Services Department we are looking into opportunities to make savings on off-island acute-care and complex needs placements without detracting from the quality of care.  In both cases, we will review the referral process and the current range and type of provision then identify alternatives that offer the same standard of service at lower cost.  The Department’s spending on off-island provision is increasing beyond its budget and is not sustainable in current financial circumstances.  Just to illustrate this point spending on off-island provision for complex needs has increased from £4.3m in 2005/6 to £9.25m in 2008/9 in 2008/9 – CAGR of 21%.

The Department needs to explore the opportunities to rationalise its off-island provision, including moving to fewer providers to get a better deal and taking advantage of savings offered by the NHS (both due to its cost compared to the private sector and its internal market).  This work will deliver savings while preserving standards of care, enabling the Department to deliver off-island services more efficiently.  The outputs of this work are:

  • A review of existing off-island provision of both complex needs placements and acute care treatment;
  • Recommendations to change or consolidate off-island provision that will deliver savings without lowering the standard of care; and
  • Implementation of our recommendations and an enhanced evidence base to allow the Department to better monitor performance and spend in the future.

As a result of this work, the Department will have:

  • Reduced spending on off-island providers;
  • Rationalised its range of providers and realised the potential savings offered by the NHS;
  • Assurance, through benefits monitoring, that it is getting good value for money;
  • Maintained its standards of care;
  • Improved contract management and reduced the time staff spend processing invoices; and
  • Clarified the services offered off-island.

We are also helping the Royal Courts decide what indicators best measure how its services are performing and to use the resulting evidence base for business planning.  Over the last year, the Royal Court has developed a set of strong business plans for each of its core functions, with clear aims and objectives. The next step for the Court is to develop the key performance indicators which will evidence whether or not it is meeting those objectives, and the Value for Money workstream team has been supporting them to define and collate the right sets of appropriate measures for all Royal Court functions.  Even within the first month of developing key performance indicators for the Court’s Administration team, this work has helped to confirm through evidence the perceptions of the senior management team.

Whilst anecdotal evidence suggested that courts activity has risen over the last few years, there has been no available evidence to support this and feed into budgetary planning activities.  However, by collecting and analysing data on the Court’s invoicing systems, the value for money team has developed a measurement to quantify and display the increase in court activity and identified opportunities to improve the process and generate efficiencies.

This data can now be used along with other key performance indicators to help develop the right forward objectives for the service based on a firm understanding of current demand levels.

Similarly we are working with the Culture & Leisure Department to identify how Beau Sejour can optimise the services it offers in order to save money.  It currently receives an annual subsidy of £750k a year from General Revenue and we are actively exploring ways in which we can reduce that subsidy and not just simply through increasing prices and charges.  From the work to date I am hopeful that we can cut the subsidy – although not through a single silver bullet, but through a series of smaller changes which cumulatively taken together will help to reduce the subsidy through operational changes that do not need political approval.

Many of the changes that we are going to recommend on most of our projects are simply operational issues that wont require political endorsement, they will be decisions taken by the Transformation Executive and the relevant Departmental management will have had a say in the development of the recommendations through their membership of each project’s steering group.

In conjunction with the Environment Department we will produce a clear vision for how the bus service should be delivered in the future to build into the upcoming contracting process.  The aim is develop a strategy for what the service should look like that reflects value for money both for customers and for the Environment Department, and we are helping them build that and prepare an evidence based recommendation.

The Home Department and the VfM Programme will work out how best to measure performance and cost in Criminal Justice, and how to use this information to deliver efficient and effective services.

In the final strand of this initial phase of work we are working with the Guernsey Registry to assess the value for money it offers and identify any actions it can take to sustain or improve its value for money.

We are also preparing for the Wave 2 projects and later today I will be kicking off a project with the CoFE from Education and the GTA University Centre to develop KPIs and explore the scope for operational efficiencies with the two organisations working more closely together.

You will have noticed our work covers a wide range of very diverse service areas in depth – virtually anything the states does can be part of our programme.  This makes it very interesting and very exciting , but at the same time the most challenging of the workstreams as you have to get to grips with acute care for one meeting, Leisure the next , and then into another meeting about running a bus service.   Neither the FTP, nor the VFM workstream within it and certainly not me bring technical subject matter expertise to these areas, but rather we look at how each area operates through A value for money lens, to work with each Department using their knowledge, bringing in subject expertise from Tribal if needed (e.g. with HSSD) supported by our principles, methodologies and processes.

I hope I have whetted your appetite but I don’t want to raise your expectations in terms of what I can tell you at this stage of the programme.  I am not about to tell you what changes we are recommending – these will be matters for the Departments to introduce when they have signed off on them.  It would not be fair to announce them publicly today in this forum.  What I can say is that in the main we are talking about operational changes which don’t require political approval.  This is not the same as if the VFM team recommended that Beau Sejour should be privatised, which I hasten to add it is not going to recommend, then that clearly would be a political decision requiring a states report and a debate.

I am going to conclude in a moment, but a common theme that has become apparent to me as I have been working on this project is that the states as whole needs to act more corporately and sweat  all its assets more effectively – be they our physical assets, our people or our information. And also whilst the overall process is branded as the Financial Transformation Programme what we are doing is introducing a culture shift and a new mindset within the States.  The clue perhaps is in the title of the Transformation Executive – this is really a change process and it will take some time.

At the outset I said that I wanted to use this as an opportunity to inform Chamber of what the FTP is all about and how we are delivering it and the VFM programme in particular and hopefully I have achieved that.  I did have an ulterior motive as well and I wanted to use this as a fishing expedition.  Many of you sitting in the audience will be customers of the states and will have your own experiences of dealing and observing how the civil service performs. I have already spoken to businesses to test ideas we have identified and if any of you have ideas or suggestions as to areas the VFM team should be looking at I would really appreciate hearing directly from you.

And finally I am delighted that I am joined by Bethan Haines and Alastair Bisson, the SoG’s FTP Programme Director and Deputy Programme Director respectively who are in the audience today and joining us for lunch.  I hope I have given you food for thought and that if they are sitting on your table you will be able to quiz them and find out more over lunch.

In the meantime thank you for listening and I trust that this has been interesting and I look forward to taking any questions you may have for me later this afternoon.

Jon Buckland, Chief Officer of the Commerce & Employment Department, listens to a question from a member of the Guernsey Chamber of Commerce

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