Public Bodies Expenditure: Supplementary Report of Data Commission

Public body expenditure involving corporate functions

The commission asked public bodies for details of expenditure in 2022-23, relating to their corporate functions in two respects. The first was the cost to the body of running six pivotal corporate functions – Human resources, Finance, Digital and data; Commercial; Communications, and Estates (“cost of running corporate functions”). Secondly, the commission requested data around external payments which was managed by the public body’s corporate functions (“third party expenditure managed by corporate functions”). This included data on spending against four categories (External communication spend; Spend on running IT and digital estate; Spend on digital transformation costs; Annual estate running costs), and total expenditure.

The details below separate information provided by bodies in the Health and Social Care portfolio from other public bodies. For bodies in the Health and Social Care portfolio, some of the information requested was reframed to reflect more closely information that NHS boards already collect. As a result, data from these public bodies will not be directly comparable with corresponding data from bodies in other portfolios.

The returns highlight the scale of expenditure on public bodies’ corporate functions. Total public body expenditure on these was nearly £1.3 billion in 2022-23.

This table summarises the breakdown of this expenditure by corporate function.

The commission also asked for details of expenditure to third parties which is managed by each body’s corporate functions. This table summarises the breakdown of this expenditure across a range of expenditure categories.

The returns also highlight levels of funding that public bodies passed through to other organisations and individuals. This includes, for instance, benefit payments paid by Social Security Scotland, and funding for colleges, higher education institutions and other providers paid by the Scottish Funding Council.

Management of grant funds

Commission returns revealed that 33 public bodies managed grant funds in 2022-23, with a total value of £2,993.8 million.

Delivering savings

Public bodies were asked to provide information about the approach they are taking in pursuing the “cascade approach” to delivering savings, barriers they are experiencing, and how it is assuring itself on these points.

Bodies responded with a range of ongoing and proposed options to deliver savings. Many have established project teams to review corporate functions and procurement procedures and have implemented recruitment freezes, redeployed staff and are exploring shared service opportunities, including use of the Scottish Government's Oracle Cloud based Human Resources, Finance and Procurement systems. A number have partnered with other bodies to achieve savings in training and shared office space or moving location to more cost-effective premises. One body has recently moved offices to save costs, which it estimates will save £500,000 over 5 years.

The Scottish Police Authority has rationalised and merged legacy bodies with over £200 million savings being achieved from the annual cost base. HM Fire Service Inspectorate is working closely with other inspection/scrutiny bodies to identify opportunities for collaboration and the Scottish Fire and Rescue Service are looking to develop co-location opportunities with other emergency services.

For organisations who have their own grades, terms, and conditions of employment as well as their own HR policies, a number of bodies suggested there may be an opportunity to use Scottish Government's systems and potentially adopt Scottish Government grades, terms and conditions and HR policies with HR support provided by SG on a shared service basis.

Some of the barriers to delivering savings which bodies referred to, included processes being set in statute, where a reduction in service is not possible, or demand-led services that have limited influence over user demand and for which it is necessary to maintain sufficient resources. For organisations such as the Scottish Prison Service that delivers a unique service, there is no realistic opportunity to merge or align premises or resources.

Revenue generation

Bodies which raise revenue were invited to provide feedback on how they are pursuing opportunities on this, and any barriers they were encountering.

Opportunities to increase revenue outlined included sub-letting premises, which has increased in recent years due to hybrid working, and managing staff numbers. There may be opportunities to increase fees, though these may require secondary legislation to be made in both the Scottish and UK Parliaments.

Among bodies who charge for services or licenses, reference was made to balancing needs between generating revenue to be self-sustaining, whilst providing a service that is affordable to the public, with revenue being influenced by demand. A number of bodies facing direct competition are constrained by competitive market pressures.

The argument was made that public bodies return more when they spend more. To ask a public body that is self-financing to spend less could actually inhibit revenue generation.

Workforce management

Public bodies were asked to provide information on their workforce management plan, how they review and update it, and its connection to the budget process. Strategic workforce planning and related planning methodologies was a theme across all bodies, with strategies based on planning cycles ranging from immediate to 3 years. Immediate strategies include freezes on recruitment, with a robust approval and scrutiny process where additional staffing is unavoidable. In line with efficiency measures public bodies are pursuing, they reported ongoing reductions in staffing levels, either by sharing resources or rationalisation of functions.

An inhibitor for some organisations is the need to fulfil statutory obligations which limit flexibility regarding workforce numbers. Similarly relationships with stakeholders and the public have to be managed, who often equate staffing reductions as a reduction in services. For example, officer headcount within Police Scotland has become a de facto measurement for policing outcomes.

For demand-led organisations, releasing or redeploying staff may be a quick win in the short term. However as demand increases, particularly for organisations that have seasonal fluctuations, there are challenges to quickly enrolling highly skilled staff to meet demand. A number of organisations have implemented fixed term and contracted appointments to manage this.

Another barrier to increasing efficiency which bodies mentioned was small staff complements, which bodies explained give little room for further staffing efficiencies without impacting on delivery. Bodies also referred to increasing workloads for demand led services; and constraints of single year budget periods, which do not allow for long term planning - in particular around digital solutions which require upfront costs to generate the transformational change to greater efficiencies later. The bar on compulsory redundancies by public bodies was also cited as a barrier, with posts only being streamlined through natural wastage.

Bodies were asked what support they would find helpful. A number of themes emerged. These included sharing of ideas and good and bad practice when looking to develop internal capability and capacity. Opportunities were also identified for networking and benchmarking with other Scottish public sector organisations facing similar challenges; and for sharing of services and skill sets, potentially including a skills audit across the sector.