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Sauce for the goose?

January 2, 2016

Here’s a tale of central government apparently insulating itself from risks it expects other parts of the public services to take, without making that clear, or meeting any scrutiny along the way.

In August 2012, the Scottish Government announced with considerable hype that it was “simplifying” student support from 2013-14. Despite that, by 2014-15 the actual cost of running the Student Awards Agency Scotland had risen by nearly two-thirds, compared to two years before. The number of students receiving support rose by 3% over the same period.

Below are what the annual budget figures have set out for SAAS operating costs, plus what has been more quietly done by way of in-year top-ups, using  spring and autumn budget revisions (all figures in £m).  Very striking here is how different are the spring budget revisions, which ought to reflect as closely as possible the expected outturn, from the figures initially put to the Parliament for 2013-14 and 2014-15.

Striking also is how substantial budget revisions are subsequently ignored:  annual budgets consistently present the unrevised figure for the previous year as the baseline. So the 2015-16 baseline in the most recent draft budget is given as £10.3m, reflecting none of the top-up of 2014-15 to £15.1m, which the Parliament eventually voted for last spring. Technically, the budget is proposing a one-third cut from where things are but (a) that isn’t how it looks and (b) on past form, neither is that likely to be the real plan. But it might be. Or maybe a smaller cut.  We can’t tell.

2012-13 2013-14 2014-15 2015-16 2016-17
Annual budget Draft 8.7 10.3 10.3 10.3
Final 8.4 8.7 10.3 10.3 ?
Autumn/Spring (in-year) revisions 10.3/11.7 10.7/15.1 11.7/? ?/?

Here’s the actual spending the SAAS annual accounts record (£m again).

2012-13 2013-14 2014-15
Staff 4.804 6.824 8.418
Other administrative costs 2.863 3.675 4.949
Amortisation and depreciation 0.976 1.004 1.007
Total 8.616 11.503 14.374
Staff costs breakdown:
Salaries and wages 3.888 4.414 5.289
Social security costs 0.247 0.281 0.34
Other pensions costs 0.629 0.724 0.847
Agency staff 0.22 1.425 1.942

The most recent SAAS accounts explain what is behind the rise (p10):

Having focused on resourcing our front line customer service
during 2013‑2014, this focus on capacity building has continued
into 2014‑2015 but with a greater emphasis on strengthening
our back office functions and reviewing the overall shape
and structure of the Agency. This has required us to run two
significant recruitment campaigns for administrative and entry
level management staff and we’ve strengthened the senior
leadership capability within the Agency with the recruitment
of three new executive posts at SG C2 grade. In doing so,
we have now created four Director posts designed to better
reflect, in particular to our external stakeholders, the scope
and responsibility of these roles.
Elsewhere, the accounts attribute some of the increase in non-staff costs in 2014-15 to one-off relocation costs.
I want to stress at this point that this extra spending sounds potentially well-justified.  SAAS has had troubles in the past: delayed payments in 2012 led to high-profile  political fuss and  a review. That review found that
SAAS has insufficient resource in core functions
and that
Resource was undoubtedly a serious constraint. The Review heard that
SAAS had requested additional resource in 2010 and battled hard to avoid a proposed operating budget cut of 10%-15% in the same year. We do not doubt that the context of public sector financial pressure suppressed active consideration of the need for a major “step change” investment in SAAS capacity and capability to match emerging expectations. At the same time, we struggled to find evidence that the shortfall between resource demand and resource supply had been articulated clearly and escalated sufficiently.
and that
Permanent staffing should be augmented through exploring outsourcing (Processing, Contact Centre and IT)
Things have been much smoother since, a relocation happened last year without any evident problems  and the agency is generally (it’s my impression) well-regarded by the people who deal with it.

 

But these figures draw out two important points.  First, achieving good public services costs money behind the scenes.  At a time of squeezed public spending, what get called back-office functions are often seen as an easy source of savings – until something goes wrong.  The management of police call handling feels like an obvious recent case in point.

The case of SAAS seems to illustrate that the value of investing in administration is more likely to be recognised in some contexts than others.  Student support has  a coherent,  articulate, relatively advantaged set of users able to generate a sense of urgent problems (another factor the review noted was the role of social media in generating awareness and concern about late payments):  many other services are not so lucky. Also,  where administrators do not work alongside professions attracting political kudos – police officers, doctors, nurses, teachers (etc) – perhaps their essential contribution is more  likely to be recognised. Watch out for manifestos written as though various professionals don’t need adequate support from less sound-bite friendly workers. Last, the importance of investing in administration appears to be recognised more  readily for public services that report direct to Ministers than those which do not.

The other thing  illustrated here is how poor scrutiny is of the day-to-day machinery of government.  The rising cost of administering the student support system has received no serious attention in the last couple of budgets.  Nor has the Parliament complained about the annual budget figures being presented to it by the Scottish Government failing to reflect autumn revisions or now being well adrift from what is actually being spent. Put briefly, the budget figure of £10.3m for 2016-17 is 28% less than actual spending of £14.4m in 2014-15.   The autumn revision for 2015-16 of £11.7m is different again from both of these.  None of this is set out clearly anywhere or the implications discussed.  That all feels unsatisfactory.

I have only just come across these figures, by accident, and  was hesitant about posting them, because  a story of rising administrative costs easily becomes a knock-about political issue, worth a day or two’s headlines and grief for the officials involved: provoking that is emphatically not the intention here. But I do think these numbers tell an important story about the cost of providing decent public services and the selectivity with which that is recognised, while illustrating how poor the bread and butter scrutiny of government is in Scotland and how the government contributes to that situation.

There was a chance here for government and parliament to promote a debate about how running public services to the standard users expect can sometimes mean investing in the sort of jobs routinely dismissed as bureaucracy. But that debate’s not happening and that’s to be regretted. Instead, with local tax remaining frozen and income tax powers parked, local government  and other bodies seem assumed able to pare to the minimum their administrative and support functions,  while protecting their more  politically interesting “front-line staff”.  Central government is taking no such risks with public services on which Ministers have recently felt the immediate heat, it turns out.

Sources

Budget documents

Budget revisions
SAAS accounts

 

 

 

 

 

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