Infrastructure - Safeguarding key assets while securing savings

Summary

• Revenue spending reduced by £10m in real terms since 2008/09. Budget to be reduced 5% a year for the next three years
• Smarter working combined with changes to terms and conditions and increasing use of new technology mean fewer people required to deliver the same service
• Staffing reductions achieved so far through natural wastage which has, so far, reduced staff numbers by 46, with 41 more planned in 2013/14, bringing staffing down by 10%
• Spending on staff now £1.8m less than in 2010/11
• Maximising life of plant and vehicles thus reducing use of scarce capital resources
• £4.6m raised thus far through sale of Government buildings, plus savings of £700,000 a year from reduced need for rented accommodation
• Procurement efficiency expected to save £292,000
• Department has responsibility for assets worth £1 billion – vital to supporting the Island’s economy and quality of life
• Recognition that retaining current service levels may not always be possible to achieve, as spending reductions become deeper. Minister’s commitment to ensuring continued delivery of services in spite of savings

The Minister for Infrastructure today set out details of how his Department will continue to ensure that the Isle of Man’s critical infrastructure and strategic assets remain in good condition in spite of significant reductions in both revenue and capital spending.

These key assets, which have a combined value of more than £1billion, are crucial to ensuring that the Island’s economy is in a position to grow and enhance the quality of life for all. Since 2008/09 the Department of Infrastructure and, before it, the Department of Transport, has reduced its revenue spending by £10million in real terms.

In the five years since 2008/09 there has been massive change in how Government is organised. The former DOT became the DOI by aggregation of DOT and parts of the former DOLGE. Estates Shared Services meant amalgamating the DOI estates maintenance team with those from DEC and DH. During the same period Finance and HR Shared Services were formed leading to the transfer of staff from DOI to Treasury and OHR.

The net effect of all of these moves was to increase the DOI establishment by almost 188 FTEs. However the actual increase in funded establishment over those years has been only 142 FTEs. The remaining 46 FTEs have been lost by taking advantage of natural wastage.

The Department plans to reduce its workforce by a further 41 posts in 2013/14, again through natural wastage. These reductions represent a reduction in staffing of more than 10%. Nevertheless, this has not been an easy journey and these changes have only been achieved through the hard work, dedication and co-operation of those people who remain.

The Minister, David Cretney MHK, went on to explain that, in spite of these reductions in spending, he has been committed to ensuring the best possible delivery of functions and that this commitment is shared not only by his political colleagues but also by the staff of the Department. Mr Cretney highlighted the key areas of service delivery for the DOI and how these contribute to the well being and economic stability of the Isle of Man.

The Minister said: ‘A programme of continued improvements to aim for a sound and extensive road network and well-functioning and accessible airport and harbour facilities will ensure that both residents and visitors to the Island receive the best service from our local transport infrastructure. It will also ensure that vulnerable members of our society can be reached quickly and easily by people who may need to help them. A robust but open-minded planning system ensures that red tape does not hinder development. However, it is also vital that development is carried out sensitively ensuring that the quality of life, for which the Island is widely recognised, is safeguarded. Combining estates maintenance teams from several Departments during 2012/13 will drive consistency of standards and increasing efficiency especially around procurement of materials and services.’

These growing responsibilities are being and will continue to be met in spite of further pressure on resources. Again in 2013/14, and for the following two years, the Department’s revenue budget will be reduced by 5% each year.

In 2013/14 this amounts to £1.2million, in addition to this inflationary and other costs will also have to be found from existing resources. In order to achieve these savings, while continuing to meet our responsibilities, the Department will employ smarter working techniques, increase the use of new technologies and continue its objective of maximising the life expectancy of its plant and vehicle fleet.

This year the Department is spending £1.8 million less on staff than it did in 2010/11. These reductions have been achieved by absorbing workloads into existing teams as staff leave or retire, reducing overtime working and work is already in progress on changes to staff terms and conditions. Management structures at the DOI are being examined to ensure that they remain fit for purpose.

It is anticipated that this review will lead to changes in the senior and middle management structure. This review is currently focused on the potential merger of four divisions into two.

Reviewing office and other accommodation requirements and applying strict space criteria per person, coupled with reduced numbers of employees, has already allowed the Strategic Asset Management Unit to sell buildings previously owned by Government with a value of over £4.6million over the last two years and reduce requirements for rented accommodation, saving over £700,000 each year.

In common with every other organisation and indeed individual on the Island the Department faces increasing costs through inflationary pressures. Furthermore the Department faces significant other pressures on its budgets – such as lower than expected passenger numbers through the Airport and Douglas Harbour and thus reduced income – which add to the difficulty of maintaining service levels within falling budgets.

It is estimated that the combined effect of inflation and other pressures will amount to approximately £1million per annum over the next three years. The Department is committed to funding these pressures in addition to the savings set out below.

During 2013/14 the Department will be making further savings by:

• Reducing staff spend by £670,000 which will be achieved by further reductions in staff numbers through natural wastage (not replacing leavers) and further changes to terms and conditions of employment which will be enabled by smarter working and greater use of technologies
• More efficient use of accommodation will allow savings of £175,000 on rents and building maintenance
• Increasingly efficient procurement practices and increased purchasing power will lead to savings of £292,000
• Realignment of job roles, made possible by changing working practices, will enable greater use to be made of specialist skills held by employees thus reducing the need to buy in certain expertise from outside – this will save £75,000
• Continued review of management structures will release savings but the extent of these is not yet quantified

The Minister said:

‘Despite the reduction in budgets for the Department over the coming years, we are committed, wherever possible, to maintaining the levels of service that have previously been provided. The further reduction in budget means that we are taking a more short term approach to maintenance, increasingly only dealing with hazardous defects on a reactive basis. Similarly Government properties may become less well cleaned or re-decorated less frequently in order to concentrate remaining resources on maintenance of the essential fabric of the buildings. By employing the cost saving measures mentioned above, I am confident that we will be able to help rebalance the Government budget whilst continuing to maintain our Island’s vital infrastructure.’