S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L

P R O C E E D I N G S D A A L T Y N

PUBLIC ACCOUNTS COMMITTEE

TRANSFORMING GOVERNMENT PROGRAMME

HANSARD

Douglas, Wednesday, 13th January 2016

PP2016/006 PAC-TG, No. 4

All published Official Reports can be found on the website:

www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, , IM1 3PW. © High Court of Tynwald, 2016 STANDING COMMITTEE, WEDNESDAY, 13th JANUARY 2016

Members Present:

Chairman: Mr A L Cannan MHK Mr G Corkish MBE MLC Mr M R Coleman MLC Mr D Cretney MLC

Clerk: Mr J D C King

Contents Procedural ...... 65 EVIDENCE OF Hon. J Shimmin MHK, Minister for Policy and Reform, and Mr D Davies, Director of Change and Reform, Cabinet Office ...... 65 The Committee adjourned at 3.34 p.m...... 82

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Standing Committee of Tynwald on Public Accounts

Transforming Government Programme

The Committee sat in public at 2.30 p.m. in the Legislative Council Chamber, Legislative Buildings, Douglas

[MR CANNAN in the Chair]

Procedural

The Chairman (Mr Cannan): Welcome to this sitting of the Public Accounts Committee. I am MHK, Chair of the Committee. The other members are MLC, Geoff Corkish MLC and Mike Coleman MLC. Please turn your mobile phones to silent so they do not disrupt the audio recording. For the 5 purposes of Hansard I will be making sure that we do not have more than one person speaking at once – this applies to the Committee and to the witnesses. The Public Accounts Committee has a remit to consider any financial matter relating to a Government Department, or Statutory Board, as may seem fit to the Committee; also to consider such matters as the Committee may think fit in order to scrutinise efficiency and 10 effectiveness of the implementation of Government policy. In early 2013 we received an Internal Audit report entitled ‘Transforming Government Programme’. On 8th May 2013, we heard oral evidence about this programme from the Treasury Minister, Mr Teare, the Chief Secretary and Mr Dan Davies. On 4th March 2015 we heard from Mr Davies again, and on that occasion he was accompanied by the Minister for 15 Policy and Reform, Mr Shimmin. In September 2014 we received a report from the Internal Audit Division of the Treasury entitled ‘Cost Improvement Programmes Assessment No 1’. In May 2015 we received, from Mr Davies, an update on the recommendations of that report; and in July 2015 we heard oral evidence from Mr Davies with the Chief Secretary and the Financial Controller. And, finally, in 20 October 2015 we received a further written update from Mr Davies. Today we welcome Mr Davies for the fourth time in this Inquiry, and once again we welcome the Minister for Policy and Reform, Mr Shimmin.

EVIDENCE OF Hon. J Shimmin MHK, Minister for Policy and Reform, and Mr D Davies, Director of Change and Reform, Cabinet Office

Q159. The Chairman: Thank you very much for giving up your time today and for the 25 information that you have maintained and supplied to us, particularly the report which we studied in November. Can I just start, for the record, please: could you each confirm your name and job title, and how long you have been doing the job that you are currently performing. ______65 PAC-TG STANDING COMMITTEE, WEDNESDAY, 13th JANUARY 2016

The Minister for Policy and Reform (Mr Shimmin): Good afternoon, Chairman. 30 My name is . I am Minister for Policy and Reform and I took office, I believe, in February 2015.

Mr Davies: My name is Dan Davies; I am Director of Change and Reform in the Cabinet Office. I have been doing this job in several different guises since July 2008. 35 Q160. The Chairman: Okay. I am just going to kick off with a question for you, Mr Davies. In your paper, or the data which you sent on 30th October 2015, you stated that the Transforming Government Programme closed in 2014. 40 When exactly in 2014 did it close?

Mr Davies: Probably round about the April, really, with the creation of the Cabinet Office, I would say.

45 Q161. The Chairman: So the creation of the Cabinet Office brought to an end the Transforming Government Programme and the end of the Business Change Steering Group, as it was known at that time?

Mr Davies: Yes. 50 Q162. The Chairman: Was the closure, or the end of the Business Change Steering Group, something that was formally agreed in the Council of Ministers?

Mr Davies: I believe so. The former Minister for Policy and Reform, Mr Robertshaw, wanted a 55 smaller, more focused group; and he renamed it the Government Reform Team.

Q163. The Chairman: So that was the Government Reform Team. But the Government Reform Team, if I understand what you are saying correctly, effectively just comprises the Cabinet Office as it stands at the moment? 60 Are there any external Ministers? Because in the Council of Ministers’ Business Change Steering Group originally you had the Treasury Minister, a Member from Economic Development, Mr Wild, and a Member from the DOI at the time, which was Mr Ronan who subsequently became a Minister.

65 Mr Davies: Correct.

Q164. The Chairman: But now the Reform Team, does that include any external parties?

Mr Davies: No. It is, effectively, the Cabinet Office. 70 Q165. The Chairman: So it is effectively ... is that the remit?

The Minister: The Minister for Policy and Reform combined with Dan, as Director, and a small team of three – soon to become four – members of staff. I think the explanation of that is that a 75 lot of the work had already been done, as is evidenced in the papers, and therefore a new model of working forward with Departments had already been established.

Q166. The Chairman: Right. So it is effectively the Cabinet Office now? You have taken complete control of that? 80

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Mr Davies: Yes, but that is the political group, Minister. The original Business Change Steering Group – not the officer group – the political group which now meets.

The Minister: The Cabinet Office is, politically, only the Chief Minister and myself; and 85 therefore yes, to your question, there is no further political representation on that group.

Mr Davies: Although the Chief Financial Officer attends the board when necessary.

Q167. The Chairman: Right, okay – but there is no further political involvement. 90 And does the Chief Minister sit with you, Minister, in the decision-making process now, in terms of monitoring the reform?

The Minister: Yes. I think there just needs to be one explanation as well, though, that the amount of dialogue between myself, as Minister of Policy and Reform, and other Ministers has 95 probably been greater than has ever been the case in history. And therefore to imply that this is a one-man show is unfair. The reality is that Ministers talk often with me on issues affecting their Departments and cross-departmental work; so although it might not be in a structure that you would recognise, it is one where that collaboration is critical. And unless we get the support and buy-in of the 100 Ministers, then any progress in transformation is unlikely to take place.

Q168. The Chairman: Fine, which I am sure we would all agree with. But in terms of actual responsibility now, that lies essentially with you and your Department – or your Office?

105 The Minister: Yes.

Q169. The Chairman: Yes. Mr Davies, when you wrote to us in October you gave us a number of objectives for the next year. The first one on that list is the:

‘Creation of a central facility to help Departments, Boards and Offices effectively transform their services.’

110 What do you mean by that? And how does that correlate, given that we have just heard that the Transforming Government Programme has effectively ceased?

Mr Davies: So the central facility is like a small hub, which would be run by my team; and at the moment there are very few experts in Government in things like lean working and service 115 transformation. What we have recognised is that there is a need, there is a gap. So, for example, you have a small team, and within the digital strategy they are keen to make their service digital. The Departments have very little in the way of capacity to actually deliver that change, so what we will do is provide a small team with the support and expertise to actually change their service. 120 So we will bring them into the centre and we will work with them over a period of two, three or four days and we will re-engineer their service ... we will make them ensure that the service is focused on a customer basis rather than the internal processes of Government. We will provide the service, really, to help them change their service.

125 Q170. The Chairman: So who is going to man this team? You said you and ... what? Your existing members of the Cabinet Office? (Mr Davies: Yes.) Or are you going to bring people in?

Mr Davies: No. We are going to work with colleagues in LEaD – Learning, Engagement and Development – which is the internal learning function in the Cabinet Office. We will work with 130 colleagues there to support people with the lean re-engineering of the service. ______67 PAC-TG STANDING COMMITTEE, WEDNESDAY, 13th JANUARY 2016

My team are expert facilitators, so they will support the team in that function; and we will work in that way.

The Minister: If I can add, Mr Chairman, we have trialled a number of things. There is one 135 going on at the moment, which is not highly publicised, but we have seconded two members of staff – one from DEFA and one from DOI – and they are now working with us to achieve an outcome on reducing the energy costs of various Government Departments. They are working under our guise but still fully funded by their Departments. They are collaborating with their peers in other Departments and therefore work is being done more 140 quickly at an officer level from the existing budgets. Or, if there is no budget available for the transformation of that work, there is an energy fund still available that they can apply to. So having tried a number of ways of how do we bring about a bigger level of change ... that is often politically-led but officer-driven. And therefore this team that Dan is talking about, as a central facility we will be bringing in those people from the various Departments as and when 145 needed; but they will not be necessarily a team of people who are fixed just in Transformation. They have day jobs to do; and this is our biggest challenge – that we have got to be seen to be assisting Departments rather than creating extra work for them. But by a collaboration with the Chief Executives and the Ministers we bring people on board, we give them extra skills, we assist and direct with them – and then send them back to their Departments to, hopefully, bring 150 about bigger change.

Q171. The Chairman: So, Minister, these workstreams have been going on now for the last four years under different guises, basically, whether it has been with the steering group or now with the Cabinet Office. 155 Clearly, Government continues to strive to save costs, and energy costs would obviously be a part of that ... but what are the key overarching objectives now for you, as the Minister, in terms of your focus for the Department and for Government? And how do they relate back to Government’s Agenda for Change, the update that was provided by the Chief Minister in July? Also there was the Treasury Minister’s rebalancing strategy that was being outlined at that 160 particular time. How does your vision now for the next six months or so, and what you have got to achieve, tie into that?

The Minister: This will be difficult to try and communicate clearly, so I will try my best. My role as Minister for Policy and Reform covers a number of areas, as you will recall – the 165 Chair of the PSC, but also the Vice-Chair of the Public Sector Pensions Authority. This element of transform and policy reform is one which is a significant part, that requires the work and support of other political and officer people. We are in a position where many of the Government Departments over the last four or five years – before I came to this team, but whilst I was a member of Council of Ministers – are far 170 better at policy now than they have been in my previous 19 years in Tynwald. If you look at most Government Departments you have the Vision 2020, you have a Mental Health Strategy, a Health Strategy, a Food Strategy, Agriculture ... all of those policies have been evolving over the period of time we are talking about in this administration. Therefore, things are constantly improving and moving forward, and a big part of my job working with Dan and his colleagues is 175 to try and form a structure of what is still a relatively new Cabinet Office, to go into the next administration. It is trying to make the committees or sub-committees of the Council of Ministers work ... historically, these were brought in to try and improve policy formation for Council of Ministers, and I believe they are now beginning to bear fruit. So for those who are not aware, you have the 180 Environment and Infrastructure Committee – you are aware of that one, Mr Chairman, as you sit on it. There is the Social Policy Children's Committee; and you have the National Strategy Group. They are committees or sub-committees of Council of Ministers made up of the relevant

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Ministers and officers, where policy formation should be sifted before coming to Council of Ministers. 185 So our role is to try and identify all of those tasks that we are currently dealing with, but also to anticipate the future problems that a new administration will deal with. And also to draw up a list and an agenda for those sub-committees of Council of Ministers, so that we have information necessary for decisions to be made as we move forward. So an awful lot of this work is identifying the areas of potential risk and opportunity going forward in the next administration 190 – and to set up a structure which will best facilitate good decision-making. That will also include a more rigorous level of training for Members of the Council of Ministers, but also Members of Tynwald on their arrival into parliament. It will also include elements of guidance with regard to instruction in those areas which are fundamental. And quite often in the past we have done those things which may be seen as being easy, but not 195 necessarily valuable. We are spending an awful lot of time with Dan and his team, with the Health Department particularly – and my own role within the Public Sector Pensions Authority. These are the fundamentals under which a solution needs to be found, otherwise all of the tinkering at the edges is going to be pointless. 200 So the budget for the Health Department and the Public Sector Pensions – combined with many other important issues – but they are two of the fundamental ones where we are attempting to try and find a way forward ... if not a solution, then at least a clear direction so that both before the next election and after it, people have got the necessary information to make good decisions. 205 The short answer!

The Chairman: Okay. Mike?

210 Q172. Mr Coleman: Having read through the documents, I have to confess that the various names for what has been going on ... I did get a bit confused, I must admit. But down at the more grass-roots level, one of the things which you have been attempting to achieve is centralisation of services. In many of the areas we have information from both the audit, and also from various other 215 places, about just how efficiently that is now operating – and the one thing which every Department says is the least successful is HR. In Health and Social Care we know of job letters going out offering jobs as a physiotherapist when it is actually a psychiatrist. That is the type of thing that is happening – it is the silly stuff (Mr Davies: Yes.) that causes real problems and does impinge upon morale. 220 What mechanisms are you using, other than auditing, to try and improve this – because you must be aware of it?

Mr Davies: Yes. I think our original brief right back from 2010 was more focused on cost- reduction, following the announcement of the reduction in VAT. I think that since the audit, the 225 team in the Office of Human Resources have been working hard to address that, they have put a number of posts in place and I think there is an improvement. I think the example of the Jobtrain – the processing and the appointment of people – is something that we are aware could be done better. From a qualitative perspective I think we could do better on the monitoring and auditing of 230 that.

Q173. Mr Coleman: What will you do to ensure that the quality improves?

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Mr Davies: In effect, the Office of Human Resources is now an operational unit in its own 235 right, and I think some of that should maybe be down to the Head of Human Resources to give you that information and answer that. I can comment with some of the information I have got as I go round Government, but it is really down to him to give you that information on operational improvement, and the way that we make sure that the service is operating as effectively as possible. 240 Q174. Mr Coleman: Can I just go back on that? But who goes to the users to say, ‘Is this working okay?’ I know that they have business managers, but when you are in the meetings with the business managers everything is rosy. But when you just talk to people – and when people answered the audit – they said they were not. 245 So I think that somewhere a procedure needs to be put in place where someone goes along and says, ‘Look, just where are the problems here?’

The Minister: If I can come in? Part of what Dan’s team has done is another staff survey and we are going to genuinely try 250 and look to see how much we can learn from that staff survey. It is the second one that has now been done – with about a 46% response rate, which is improving and is getting quite comprehensive. I share many of your concerns and there has been, in the past, this ability to keep pointing fingers at other people. But by centralising it, it means that Jon Callister, as Head of HR, would 255 welcome the opportunity of coming in and talking to this Committee and any others, because we have gone through such a transformation in that area from the old Civil Service and Whitley Council into the Public Services Commission. We have got pay negotiations currently ongoing and we have got a number of issues with the Public Sector Pensions Authority. I have been unable to get sufficient time and resource with Jon, particularly, to deal with 260 some of the areas I am very concerned about, which are the conduct of staff, the quality and the performance of staff; but also the situation of suspension, complaints, and the way we deal with bullying. And there are members of our staff who have been left for a long time before either their complaints have been dealt with or their discipline procedures have been followed through. 265 We have attempted, with the PSE, to introduce new measures on standardising complaints. But more importantly, taking your point, is actually dealing with the management of underperforming members of staff – be they in my area of responsibility or any area of Government. The things which you are outlining should be ones where we – with responsibility for training of staff – either train, discipline or remove those members of staff who are 270 underperforming in a way which adversely affects the public.

Q175. Mr Coleman: Or, if necessary, revisit the decision to use certain things and certain software – if it is just not working?

275 Mr Davies: Yes, I think –

Mr Coleman: Because the feedback I have had on Jobtrain is that it has moved the work from lower level clerical grades up to very senior managers to do – which is inefficient. I am simply acting as a conduit here. 280 Mr Davies: No, and I think Jobtrain is a great example. I spoke earlier to the Chairman about the central hub, the facility we are trying to plan which helps Departments to do change better. I think that is a great example of something we could have done better, if we had focused on maybe not taking an existing process and trying to make 285 a system fit the old process. So I think that is what was done in effect with the Jobtrain system,

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that we took an existing, fairly bureaucratic, process and tried to make a system fit it, rather than thinking how can we take this process and engineer it better from the ground up, focused on the needs of the customers, the people who use it. I know that the Office of Human Resources has appointed somebody specifically to look at 290 that system and to review it, and to revisit whether or not the software is fit for purpose in that context.

Q176. Mr Coleman: Do you have any timeframe on that?

295 Mr Davies: I do not have a timeframe for that, but we can certainly get back to you with that. I think, more broadly, your point about how do we monitor performance of Shared Services is something which I think the Internal Audit ... the Assurance Advisory Division have just completed an audit of all the Shared Services, and I think that is something they are going to bring to the table. 300 I know that every quarter the Chief Secretary holds a performance meeting with all Chief Officers where the performance of Departments is raised and considered – the performance against corporate targets, performance against the Government’s strategic agenda – and I would like to see the Shared Services’ performance raised at that level.

305 Q177. Mr Coleman: Who evaluates the business managers, who go out and represent – ?

Mr Davies: Business partners. There is an internal appraisal system which you know about – the Performance Development Review –

310 Q178. Mr Coleman: Who does that?

Mr Davies: Well, that is done by their line managers –

Q179. Mr Coleman: What about their users? 315 Mr Davies: Absolutely. I know the Office of Human Resources want to be more informed and led by the needs of their users. I would like to see not just quantitative – how many job appraisals did we do last year, or how many appointments – but actually what do our customers think of how we are delivering 320 services.

Q180. Mr Coleman: My own personal view of it – from what I have heard from two Departments, which are the ones I sit in – is that it needs a 360° review. It really does. It is things like: when we call you, do you call us back within six hours? Are there measures in 325 place to say that when a call is left for you, you will respond within a certain time?

Mr Davies: I think, as well, if you look at context. So if you look at where we were in 2010, most Departments – with a couple of exceptions – had their own HR functions and they were very happy with them. Some of them were very well 330 resourced, quite frankly. I think in 2010 we did not have the issues we have now in terms of stress around staff, because we have got fewer staff and we are trying to do the same – or even more – as we did before. Public expectation continues to increase and as the Minister alluded to, I think there are far more staff-related matters that a central team are trying to deal with. 335 I think they are trying their very best to deliver that service, but I do think we need to get better at doing the day-to-day transactions more effectively, to leave more time to deal with the complex value-add stuff – which is the staff supporting managers to manage staff effectively.

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The Minister: Mr Chairman, what I would like is that those officers who are obviously disappointed in the service that they may be getting, would help us to strive to be better; 340 because some of it will be our fault, some of it will be the departmental fault – and quite often there is the gap in the middle. It is a case of either side trying to point the blame elsewhere. And I did allude to it earlier, that from my point of view we are not perfect, far from it – but we are getting better. We want other Departments to get better and we want to build up a level of trust, which is sadly lacking in a number of areas of officers within Government. If we could 345 actually build up that relationship and trust with officers, so they can pick up a phone and say, ‘This isn’t good enough.’ And with the 360° you are talking about, I will initiate it with my HR people to say, ‘How do our customers view us?’ ... Whether they are our customers who are normally, in that context, internally and within Government. I ask it of Dan and I will ask it of Jon, ‘Could you go out and 350 get people who are going to praise the work that we are doing? Or are we stockpiling and ignoring a number of complaints so that people do not feel we are up to the mark?’ So I will take your points and raise that with them. But I would welcome the opportunity maybe of having such a massive key fundamental to the success of Government as HR, to have that opportunity maybe to come in and take some of your questions with the Director here to 355 answer them. And maybe you could draw our attention to things that we are not hearing firsthand, that we could deal with better.

Q181. Mr Coleman: Maybe that particular Director of HR ought to go out and speak to some of the people who are his users? 360 The Minister: I would like to say, Mr Coleman, that that officer at the moment – in my experience of 19 years in Government – is one of the officers who is performing at the highest level across a range of diverse and complex areas, to the highest of standards; and that is somebody who can be quite critical of officers of Government. 365 I would not like the Committee to be left thinking that he is abrogating his responsibility. I have been enormously impressed with the workload that he is creating; but he does have a team of other people who maybe could get that information as well.

Mr Davies: And just in support of my colleague, there are three main strategic areas he is 370 looking at, at the moment: one is new terms for new starters, there is a significant amount of negotiation going on around that; one is the Public Sector Pensions Authority; and there is the other matter which he is looking at, which is around some of the work on single legal entity. So he is very loaded and, as the Minister said, it might well not be him who goes and talks to the users, but other people. So there is a huge amount of work at a strategic level going on in 375 the Office of Human Resources.

Mr Coleman: I do not think I criticised the individual –

Mr Davies: No, I am not saying, I am just – 380 Q182. Mr Coleman: In fact by suggesting he was the one who went out and did it, it does the exact opposite, doesn’t it? (Mr Davies: Yes.) So I don’t think there was a criticism there – okay?

385 Mr Davies: Okay.

The Minister: I understand and I apologise for being overly-sensitive. We have done a Chief Minister/Chief Secretary Roadshow as well to all staff, at which I attempted to try and make sure that staff across the whole of Government service feel as if their

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390 voices will be listened to. And therefore I am sensitive of the fact that it is easy for me to say those words, but if the practice is not being evidenced then, again, I may be deluding myself in the same way that many of us are occasionally guilty of.

Mr Coleman: The point I made at the very beginning was that it was not just one Department 395 – it was every one of them. And I think that is indicative that something does need to be remedied.

Q183. Mr Corkish: Thank you, Chairman. There will be an agreement around Government that, yes, we do need to reduce costs; and 400 indeed at the 2010 workshop we said that one of the key drivers for change was the urgent need to reduce operating costs. We also said that the changes proposed were therefore developed to provide the fastest implementation. I think the Minister may have answered this question ... but to do that, and to achieve all of those things, you need the co-operation of Departments and individuals. Can I ask how 405 Departments have interfaced with you – as well as you interfacing with the Departments, too? I suppose I am, crudely, saying: are you taken seriously by Government, who have to pull together when that has to be evidenced? How effective do you think you have been in that area?

410 The Minister: If I can start politically, and then ask Dan to consider his words as he answers it. At a political level, the Council of Ministers and Chief Officer Group have never met so frequently – they are regularly sitting together on a Thursday afternoon talking about policy and talking about budgets and revenues; and that has gone on for the last four years. And that, again, is a new area under this administration, to have that level of collaboration and working 415 together. The words are said repeatedly and we all agree, sign up to and share the views of that importance. But there is still a lack of appreciation that that actually does mean the Departments who are saying, ‘Yes, we agree that we should work harder together and better’. And therefore every time that I am getting successes, it is with the Minister being able to agree 420 something at the political level – and then imposing that down upon the Chief Officer. The reality for the Chief Officers is that they have got a service delivery challenge with a diminishing number of staff; and quite often they find it very hard to ... either let go, but more often than not, the unintended consequence of what we might decide politically and actually the impact of whether that achieves the outcome. So if I take one of the fairly well-known political 425 examples, that of the baggage handlers. There has been a view within the political sphere for some time that that could be outsourced – you look at the whole Scope of Government and there are areas where ... why is Government still having direct employment? There was a negotiation going on with the unions on behalf of the baggage handlers, which was to create a better system with fewer staff and was going to save enormous amounts of 430 money. And linked into that we were looking at new terms for new starters, within the pay negotiations. So we had a potential solution, but it has not worked as well as we would have liked. The self-rostering has become a problem because of absenteeism, which means that there is a lack of reliability of having people on the ground. Everybody wanted to make it work, but quite 435 often when we have a political comment saying ‘This is what we should do’ ... the delivery of that can be more problematic. So I think the intent is always there, but the practical delivery of it ... I am very disappointed that we do not appear to have grappled with some of the bigger issues. Another one is the Scope of Government talks about the Post Office. Nine years down the 440 line we are still talking about ... what do we do with the future of the Post Office? We have not

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grappled with some of those decisions because they are difficult and because we do meet opposition internally or externally. So we still have a way to go to get that united front.

Q184. Mr Corkish: Is that because of … how am I going to say this? A lack of power on your 445 part? A lack of importance or acceptance of the roles that you hold?

The Minister: I think that the Chief Minister, on occasions, has been criticised by some regarding the strength of his leadership. But in reality he does not have the power. The power is vested within the Ministers and the Departments, and there is not a right and wrong answer – 450 therefore strong politicians have strong opinions and that is where the difficulty arises. If you were, for example, to privatise or to corporatise the Post Office, I would imagine out of your Committee here you would have a disagreement of views. I do not think there is necessarily an unwillingness to work together to improve things, but there is a genuinely strongly-held view that some of the proposals are not in the best interests of 455 the people of the Isle of Man. So I will argue and fight for what I believe in, as will other Ministers and Departments – and that is why progress at times is very slow. If you have a very authoritarian dictatorship then you can push these things through – but sometimes that is not the best outcome you want.

460 Q185. Mr Corkish: You mentioned earlier the baggage handlers … and I do not know whether you had that down as a priority, and I do not know what the priorities are now. But if that was a priority, have you run up against the same problems in trying to tackle a situation like the baggage handlers? What priorities have you got left? 465 The Minister: I think if, before Dan comes in ... and I am hogging it a little bit, but you will not be surprised by that! We use the term ‘baggage handlers’ – I think they are ‘flight attendants’ ... but there is a terminology which I should more correctly use for them. They are fundamentally critical to the 470 success of the Airport and without them we cannot operate flights. One of the challenges that Dan particularly has is that this is the responsibility of the individual Departments. We can merely assist, we can collaborate, we can work together – but ultimately we are not going to be taking over the role or the responsibility of the Departments. So with regard to that one, my area will be responsible for some of the terms and conditions 475 relationships with the unions, but it is ultimately up to the management and the Department of Infrastructure to deal with the actual operational side. So Dan facilitates ... and we have talked about this. We do not actually deliver many of these things – and if we have not got the support of a Department it is very difficult for us to deliver it. So with regard to the Airport, there has been an attempt to work to find improvements; and we 480 thought we had an improvement but it is not yet satisfactory for all parties.

Q186. Mr Corkish: So does this come back to my original question about how you interface with the Departments, and how the Departments interface with you and respect what you are trying to do? 485 The Minister: Yes, but the last bit before Dan does come in, is that the Departments know their responsibilities better than we ever will, and it would be arrogant of us to go in saying that we know best. What we can do is, as Mr Coleman has done, identify an area that is a problem and we can 490 throw that to the Department and work with them to see if we can make it better. But we are not going to be experts in the field of airport management and delivery, or any other area of Government.

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So we are the facilitators, we can flag up and try and assist, but we will not be able to deliver if a Department feels it is not in their best interest. 495 Q187. Mr Corkish: Sorry one last bit: would you feel, then, because of seeing things from the outside – which is sometimes an advantage from being inside looking out, being outside looking in – would you think that sometimes you will be frustrated in knowing what could be done and what should be done for the best? 500 Mr Davies: I think we are always frustrated –

Mr Corkish: It goes back to the original question, that it is how we interface.

505 Mr Davies: If you look at when this programme first started in 2010, the relationship with Departments I think then, it is fair to say, was confrontational, and it was not supported. And what we were trying to do had been talked about before. I think the first paper promoting Shared Services went in in 2009, and it was roundly kicked out. And I think it was a very confrontational and unhappy start to the programme ... the relationship between the centre and 510 the Departments. I think if you look at the relationship now between the centre and the Departments ... as the Minister said before, the Council of Ministers meets far more frequently with Chief Officers to decide strategic approaches to issues. And I think the approach to change, and the Departments asking for support from the centre from my team – and to the approach of working together 515 more broadly – is like light and day. I think Chief Officers are far more willing to act corporately – far less considerate about their own internal Department and far more willing to look outside. I think we can always do better and I think there are still challenges around particularly, I think, getting the message filtered down. So a Chief Executive and a Minister will sit around a table and say, ‘This is a great idea’; then it goes back and the Directors of the Department say, 520 ‘Okay, we have got to do this’. And then it sort of filters down ... And you often get people at an operational level who can seemingly block a programme. And that is where I think the Minister sometimes can get involved and support and add a little bit of weight. But I think one of the challenges is getting the message translated from a strategic level down to ... ‘This is why we have got to do it’. 525 You can get a thousand reasons why something is not going to work, or is not going to happen ... and it is often because people see it as, ‘Well, that is my job. I can’t change it.’

Q188. Mr Corkish: Do you need help from a higher power?

530 Mr Davies: Which higher power do you have in mind?

Mr Corkish: Well, any higher power within Government that you can rely on. Do you need that, do you think?

535 Mr Davies: I think sometimes you do. As the Minister said, again, at the end of the day the Government system in its current form gives the Chief Minister no power. His only power is to hire and fire.

Q189. Mr Corkish: I am just trying to find out how joined-up we are in the resolve that we are 540 trying to deal with.

The Minister: If I can build on it, Mr Corkish? It comes back indirectly to something Mr Coleman was asking about, which is: it does not matter what we say at the top level if it does not translate down into operational change.

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545 A big part of the HR failure at the moment is to actually adequately train managers in the job of management. It is easy for the public to talk about ‘all the managers’, but the reality is that we have different layers of management within, particularly some of the largest, Departments – so that people are genuinely concerned for their future job security. At times they can be threatened by people junior to them maybe being better than them. But also there is an 550 element that still goes on in some areas, which is quite unpleasant bullying. And you have a whole raft of reasons why things do not get delivered, because there is an active ability for some parties to either not understand, or agree, to that change. And quite often you will find that it is a manager down at an HEO or SEO level who does not report necessarily back to us – as Mr Coleman said – about our failures in HR. 555 Likewise, Government Ministers and Chief Executives are having to try, at times, to work too far down the system. They should be there setting the policy, setting the instructions and the guidelines – and the officers throughout all the different organisations should be carrying out those decisions. But I am afraid it does not take too many people to realise that they can thwart that ambition quite successfully; and that is where the frustration builds. 560 Mr Davies: I thinks it is really interesting actually … We did a staff survey – the first staff survey was about 18 months ago – and we found that when people first started in Government they had a really high engagement with Government, they really wanted to do things better and make a difference. And we found that after three years that level of engagement dropped off 565 the edge of a cliff. So what that tells us is that people come into Government really enthused, sparked, fired up, wanting to do stuff – and after three years of getting the stuffing kicked out of them they just think, ‘You know, I’m just going to turn up, do nine-to-five and go home.’ So one of the things we focused on after the last survey was really trying to get that level of 570 engagement, trying to empower people to take more responsibility, to change their own service, and to understand why. But it is difficult and cultural change in an organisation is never easy.

Q190. Mr Cretney: Imagine what it would be like after 30 years! I was going to ask you, in terms of the reverse ... You have said about trying to get these 575 policies down through the various levels of management. To what extent are the views of the workforce ... who very often, in my opinion, could come up with ideas in terms of savings. To what extent are they listened to?

Mr Davies: I think that is a really good point – and one that we are not very good at. 580 Again, the survey told us that people felt that when they suggested a new idea it was not often taken up. We have actually just done a piece of work with one of the leadership programmes, and we are going to try and put something out there that allows and encourages people to suggest ideas for improvement. And we give them a whole set of tools to help them do it ... a way to expose it, so that if they feel they are not able to make the change at that level 585 and there is a barrier, to float it up – and maybe even above that ceiling or that barrier. So I think you are right, it is all very well having Council of Ministers and Chief Officers saying, ‘This is the change’. But it is the people at the front line who can expose the frustrations. And I think – particularly in Health – that is one area where, for a long time, those people at the front line have not been listened to, and we want to try ... and I know the new Chief Executive is really 590 keen to do that, so I think I am positive about that for the future

Q191. Mr Cretney: Yes, you do hear about that from time to time, that levels of people at the coalface – if I can describe it as such – come up with ideas and put them forward, but nothing happens. And I think that sometimes would lead to a frustration or, ‘Oh, I’ll just do the nine-to- 595 five, or whatever I’m required to do’. And it is trying to break that down, isn’t it?

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Mr Davies: What really staggers me in Government is sometimes how decisions float up a chain. If you phone an insurance company for a quote and they say, ‘This is our best quote’; and you say, ‘Well, I got a quote from XYZ ...’ The staff on the front line and on the telephone desk 600 will be empowered, within a parameter, to say, ‘I can give you a £10 discount’, or ‘I can give you a free car if you break down’. But we do not seem to encourage that in lots of areas in Government. So people are afraid to make decisions at a front line operational level ... and there are a number of reasons for that. And I think part of it is a cultural issue that we need to address. 605 The Minister: Also, Mr Chairman, the glass ceilings that are there in some Departments – and large Departments are worse than others. There is also an equality issue with regard to the sexes. I stood back and looked at Tynwald last month from the Bar of Tynwald, and we had one female – who was the President of Tynwald. 610 I then looked at and sat on a Committee, or a panel, and it was typically middle-aged men in grey suits. And we do not have diversity within our employment, which was raised very clearly at the Chief Minister's roadshow – where two female colleagues basically felt as if their views were not being communicated up the line, and they did not feel as if they had anywhere to go. Therefore, the very point you raise is one that we are attempting to promote as a culture ... 615 that at so many different levels people are blocking the way those people can feel that their voice will be heard. And it was my intention when I came in to work under Mr Robertshaw, to attempt to try and find some of these dripping taps and to try and meet some of the people you are talking about – the future servants of Government who are going to be there, and have ambition and drive to become future leaders – and to try and help them feel better about their 620 job. I do not physically have the time to do that now, which I regret; but it is something that we are constantly trying to get across to Departments – to actually listen to their staff. The same way as you are talking, Mr Coleman, about listening to the critics of our Department to likewise listen to their own staff. 625 The two officers I have now out doing some work on energy stuff, I would stake my mortgage on the fact that those two officers are more energised and enthusiastic and get more reward from their job now, than they have done for the last year or two. And that is what we can empower within a lot of our staff. But it takes courage on the part of managers to give them freedoms; and, if it goes wrong, not to hang them out to dry. 630 And it is that last point, I am afraid, which is the culture that pervades throughout our system now ... why would they do that if they are going to be hung out to dry?

Q192. Mr Cretney: I was just going to make that particular point: it seems to me that there is a risk-averse feeling and that pervades from top to bottom. And you should be encouraging 635 more initiative –

The Minister: And we can say the words but it does not change the view of somebody in one of the areas of Government that we do not deal with directly.

640 Q193. Mr Coleman: If I may, Mr Chairman? Just as a matter of interest, Health and Social Care is actually looking at a suggestions scheme at the moment – in fact we even had one of our members come in with a box that he could put somewhere and say, ‘Put your suggestions in there and they will be evaluated’. But secondly, I see this in a number of parts of Government. I say it is like a Victoria sponge: 645 you have got the people on the top who want to feed the information down, and the people at the bottom who want to feed it up ... but somewhere in the middle there is a cream layer (Mr Davies: Yes.) which just stops. But it is not cream, it is concrete and things just do not move up and down. And that is the challenge –

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The Minister: I will argue with you, Mr Coleman: it not concrete, it is glass. And the reason I 650 say it is glass is because you cannot see it, it is almost impossible … it is reinforced glass that you cannot see and you cannot break. If it was concrete we could see where the obstruction was and go around it, or shatter it. The problem I have is that in all of these areas where we have difficulty, there is a glass ceiling that nobody actually admits to or can see, because they feel intimidated or because they 655 feel they are not going to be listened to. And I agree with your analogy entirely that, as Mr Cretney has pointed out, it is fine top down or bottom up – but that middle area is where we really need to concentrate on the skills of managers to allow officers to flourish.

Q194. Mr Coleman: There was also another point ... and you mentioned the previous staff 660 survey. In the areas where I have contact, it was surprising that the loyalty to Government was low (Mr Davies: Yes.) but the loyalty within the unit was very high. So I wonder where that impermeable layer actually is?

Mr Davies: It is a really good point. 665 When we did the first survey … like you said, you have people in operational units who are really committed and engaged. But actually there are people in some units who do not even think they work for Government – they do not have that connection. So one of the things that we did after the last survey was to do some work trying to work out why that was. And we did quite a few projects and quite a lot of work to try and tell people, 670 ‘Yep, you are a – ’ Sorry … you were laughing?

The Clerk: Sorry, Mr Chairman, I was responding to the use of the words ‘tell people,’ which I thought was an interesting choice of word. But I didn’t mean to interrupt proceedings. Sorry. 675 The Chairman: Keep going.

Mr Davies: Okay. So we work with people and try to build that link to the Government and its strategic aims, back to … You know the old analogy: I think Kennedy was visiting the space 680 centre, wasn’t he, and he found a guy who was sweeping the loo, and he said, ‘What do you do?’ And he said, ‘I’m helping put a man on the moon, sir’. And it is that … we try to encourage that link and work with people. And I think there has been a slight improvement in that – we have found that, I think, there was an increase of maybe 5%-6% since the last time. 685 So I find that encouraging; but there are parts of Government who still do not believe they work for Government and the strategic aims of the Council of Ministers.

The Minister: I think, Chairman, most members of staff in the payment of Government would say they work for the public. Quite a lot of them would not wish to be associated with working 690 for Government – and that is your teachers, police officers, health workers. They will work for the Health Department, the Hospital, or they will work for a school, but they do not actually want to be associated with working for . But there is still such a strong loyalty and a commitment from so many staff to work for the public … but we have an awful long way to go to make people feel as if they are part of a larger team. 695 That is because we all have experiences of where that larger team lets us or our families down; and therefore we do not want to be associated necessarily with being Isle of Man Government, because you then take responsibility for all of the Government. Whereas if you are a teacher you can be loyal to a school and a headteacher. Certainly I think that whole element of public service is still strong throughout Government, but we are not capitalising on it because of 700 a range of measures. We have got years of work to go.

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I think that is my dilemma: that Dan and a small team of four people will not bring about the necessary level of cultural reform. That comes from political leadership, it comes from example and it comes from good leadership within Departments. And that is an ongoing thing which will be still being grappled with in 10-years’ time. 705 Q195. The Chairman: I have got a couple of questions just to follow up on what has been said so far. I just want to pick up on the HR issue, Minister. One of the issues that we picked up recently was the staff salaries, particularly at the senior level. Can I ask what analysis is being done at the 710 moment to look into some of those points that have been raised, particularly the over-£200,000 earners?

The Minister: Yes, I think the information that has been provided does indicate that the majority of those are within the medical field, and some within the legal field. 715 I would not like to comment until I have got further information and, due to Christmas holidays and the significant amount of work that we are dealing with … and Mr Callister. So I will come back –

Q196. The Chairman: But some analysis is being done on that? 720 The Minister: We are looking into that to try and give a clear breakdown of where those increases appear to have come from.

Q197. The Chairman: The summary point I wanted to make really is: we are here examining 725 the Transforming Government Programme, that is what we set out to examine specifically. Clearly, the Cabinet Office per se has other areas of significant responsibility – including public sector pensions – now under its belt. But just in terms of that Transforming Government Programme and what I have heard today, the leadership element has somewhat gone out of it. Since that team has been closed – the original political team, which had three or four political 730 Members on board, from different Departments – it has now gone to the Minister specifically. But in terms of its heavyweight remit, at the time, to really get things transformed and to lead that whole process, that has now dissipated … Is that fair to say, Minister? And what you have said this afternoon is that you now have a ‘facilitating role’ – but really the emphasis now is with the Departments to buy in and to really deliver. You will help and 735 assist where you can, but actually the Departments have really got to bite the bullet now and start delivering by themselves. But you were not in position – and I am not suggesting it is your decision at all – but your remit now, since Minister Robertshaw effectively closed it down when he joined the Cabinet Office, and when the Cabinet Office was formed … it really is very much a facilitation issue now 740 in terms of delivering cost improvement and of transforming Government. In some ways the emphasis for that should really now just be with Departments – and we should not really be focusing on the Cabinet Office, as such, to deliver that?

Mr Davies: Can I just answer … can I just explain – ? 745 The Minister: Oh, that is very brave!

Mr Davies: Thank you. I think it has always been a facilitative role from the centre in terms of working with 750 Departments. The savings were achieved through the hard efforts and work of the Departments and the people doing it. What we did from the centre was we set a direction of travel and we drove the work and we challenged Departments.

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Like I said, in 2010 the atmosphere was very different and it was a very difficult piece of work. I think we needed that kind of approach we had at the time; but now I think the role of 755 the Cabinet Office at the centre is still there, it is still recognised as the body that sets the overall direction of travel. But because of the change and the shift in relationships between Council of Ministers and the Chief Officers, I think it recognises that there has been a shift in that relationship. So I would say the Chief Minister and the Minister for Policy and Reform are heavyweights in 760 the way they approach leading the programme. But the Cabinet Office itself, which has evolved from the Chief Secretary’s Office, is now the Government Technology Service, the Office of Human Resources, Learning and Development – and we have just taken Planning Policy in; and the whole Department has a role, actually, in supporting and enabling change, and delivering change in the case of the Government Technology Service and the Office of Human Resources. 765 I think the changes have been evolutionary and reflect the current situation … and clearly there is a political angle to that which I will leave the Minister to answer.

The Minister: I would disagree with you, Chairman, on some of your descriptions. Firstly, I would clarify that the Cabinet Office does not have Public Sector Pensions Authority 770 – that is part of my role as Vice-Chairman of the PSPA, so it is not directly linked to my role as Minister for Policy and Reform, although it goes with it. I think my biggest concern is that somebody like myself who has been around a long time as a Minister, does have the ability to work with other colleagues; but it should not be down to a personality. I will not be in this post, post-September or October this year, therefore we should 775 depersonalise it from me and my experience, into a system and a mechanism which would work regardless of who is in the Cabinet Office, or Policy and Reform. This is why the Committee structure is so essential. I think I have a limited life in this area to use the experience I have got … to use the experience and muscle politically so that I can influence my colleagues to set up a structure that 780 will be totally depersonalised from me or anybody else. So that this structure and the system will be transparent – not just to Members of Tynwald but to the public – to see how policy formation is created. To do that I am using my experience and my relationships with political colleagues in the Council of Ministers particularly; but I am also talking to a number of backbenchers to try and see if the structure that we are trying to pull together is one which would appear to be 785 appropriate. So as much as the system and the team facilitate Departments, I would say it is more about the leadership from the Chief Minister and the Council of Ministers setting clear policies through those sub-committees to go up to Council of Ministers, which can then be relayed out to the public. And it is not, and should not, be seen as being a departmental responsibility … and I think 790 you possibly felt we were passing the responsibility into the Departments. My strong view is that this is a Council of Ministers’ responsibility so individual silos of Departments cannot go their own way. I think that the sub-committee structure will actually break down those silos far better than me just working with individual Departments; and therefore it is the structure that I would say is 795 more important. I think we have got it there; it is being evolved and will be offered to the next administration as an example of how this might work more successfully. When the current Chief Minister came in there was a considerable absence of policies and structures, which are now far better than they were four years ago. I expect whoever is sitting in that position in Council of Ministers after the next election will have the experience we have 800 learned, and a system and structure which could benefit the people.

The Chairman: Okay, thank you. Mike, have you got any further questions? David?

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805 Mr Cretney: I was going to ask … you have described how things have come on in the last few years. Maybe that is because I have moved on –

The Minister: Now you have gone! (Laughter)

810 Q198. Mr Cretney: The obstruction has gone! But what I was going to ask was: is it sometimes the case that important matters are still considered by a Department and do not come to the Council of Ministers for formal endorsement? Because that is what I have heard.

815 The Minister: It is less frequent. From my point of view … this certainly is not attempting to be arrogant, but I have now been Minister for five or six different Departments, so I actually have the knowledge and experience of a number of my ministerial colleagues – so they cannot pull some of those stunts as easily. But we do have a problem that some Departments still see themselves as an empire. 820 The Ministers come and go – as you and I know, Mr Cretney – but the Chief Officers and the senior staff tend to stay there. And they tend to hang on to that which is familiar – and they work well. We are breaking that down, and any Department that is attempting to bring information through to Council of Ministers directly is being sent back immediately to go through the 825 Committee structure. That has a slight problem, in that it can cause a delay in the short term, but that is because Departments attempted to get around the current system. Therefore, any significant policy – and we have got most policies already now in written form – but any variation on that has to be approved, ultimately by Tynwald or on recommendation from Council of Ministers. And that 830 should be endorsed by at least three Ministers and the sub-committee to say, ‘We believe this has merit’ – as opposed to one individual silo believing that their argument is more important. It comes straight to Council of Ministers because, as you do understand, anything on the agenda of Council of Ministers appears to be a priority and we deal with it; and some people over the years have found a way, myself included, of getting things to the top of the pile – 835 whereas this new structure, I believe, is more democratic.

Q199. The Chairman: Okay. I should leave you with a final opportunity: is there anything you wish to add, Mr Davies, to anything that has been said this afternoon? 840 Mr Davies: I think, overall, this has been a success for Government – in the broad brush strokes of it. We have delivered about £16.6 million – Government has saved £16.6 million in cashable savings since 2010. In capital returns we have taken about £14 million in a co-ordinated way that 845 has meant we can continue to deliver the services in the way we think they should be delivered. I think efficiency is something that will continue to go on. The next administration – September/October of this year – will set its priorities for the future. I think there are still big issues to address in Health and in Pensions – but I am proud of what Government has achieved since 2010. 850 The Minister: My only comment is, I think that we overlook the significant work that has gone into this from some of our colleagues – and I predominantly mean the officers of Government across a range of areas. And the success of these would not have been achieved without some dedicated officers – and I think we run the risk of forgetting that on occasions. 855 It is difficult when we know the system is not perfect ... and how can we be praising, because it appears complacent? I would like a bit more honesty about the fact that we have some

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outstanding – and some poor – officers of Government. The vast majority are very genuinely public service-oriented; and some are, quite literally, outstanding. I think that we have a responsibility to recognise those people who are saving the taxpayer 860 millions of pounds quietly, without any fuss, and without enough recognition. And that is part of my job, to try and identify that and make those people realise they are valued.

The Chairman: Okay, thank you very much, everybody. This hearing is now closed.

The Committee adjourned at 3.34 p.m.

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