Belt tightening in the 1990s — a geological survey in transition
|From: Allen, P M. 2003. A geological survey in transition. British Geological Survey Occasional Publication No. 1. Keyworth:British Geological Survey.|
Chapter 17 Belt tightening in the 1990s
Despite the PES awards of 1988 and 1989, the promised financial stability was short lived. The Treasury had already abandoned the practice of annually adjusting the Science Budget allocation to the research councils in line with inflation. Any increases in the Science Budget to the research councils usually came with precise instructions about its use. Within the national economy, inflation, which had an effect on all costs, did not stop and in 1990, after being quite low, was back at 10%. Salary inflation, which affected over 60% of the cost base, was a serious matter in the BGS because of the relatively high proportion of senior staff who were at the top of their pay scales. In the first year after each of the two PES awards, therefore, the amount of staff time that was affordable within a fixed budget diminished by an amount equivalent in percentage terms to a little more than the rate of inflation. In addition, several times, the NERC announced, unilaterally, small but painful cuts in baseline funding as it struggled with its own budgetary difficulties. On occasion, this happened during the financial year. Despite all of this, the expected annual outputs from the Core Programme remained constant, which meant that new ways had constantly to be sought to deliver them, with a little less money each year.
This downward pressure on income was a pervasive feature of the whole of the 1990s. One of the ways chosen to deal with it was to try to reduce overheads, which had to be done in the face of strong external pressures that were driving them up. These pressures were many, including Government and EU policy. Prior to 1979, BGS spent very little or nothing on marketing, health and safety, quality assurance, training, promotion and advertising, copyright protection and PR.
The Health and Safety at Work Act dated from 1974 and the BGS management were always aware of its requirements, but a full-time Health and Safety Officer had to be appointed in the early 1990s to cope with the flood of new regulations. Those introduced for the use of equipment in 1992 had major implications for the BGS, leading to the generation of a training strategy in 1995 in which health and safety training was elevated in priority. In 1990, the BGS completed the questionnaire required by the Control of Substances Hazardous to Health Regulations (COSSH) in order to gain accreditation. This was something that was increasingly required by customers and was used as a discriminant at the tendering stage. In August 1999, after several years of planning and the development of new analytical systems, United Kingdom Accreditation Service (UKAS) accreditation was gained for a set of tests carried out in the chemical analytical laboratories.
A Quality Assurance Working Party was set up in 1991, originally to debate its relevance. Although accreditation under either British Standards or ISO has not been sought, a full-time QA Manager has been appointed, auditors trained and audits carried out throughout the BGS as though in compliance with ISO standards.
The part-time training coordinator, who had been appointed in 1989, became a full-time Training Officer in April 1991. The amount and quality of training offered increased considerably and, in recognition of this, in October 1996 the BGS became the first component of the NERC to acquire Investors in People accreditation. It was renewed in 1999.
In January 2000 the BGS carried out a self-assessment exercise in benchmarking following the procedure defined by the European Foundation for Quality Model (EFQM). The next stage is to carry out a full, externally monitored assessment in one or two year’s time. Again, the BGS is the first component of the NERC to do this. While there are undoubted benefits from Investors in People and EFQM, and all Government organisations are under pressure from the Cabinet Office to achieve accreditation under them, there are also commercial advantages in having their logos at the foot of headed notepaper. But not everyone in the BGS is convinced that the cost of gaining accreditation translates into savings in running the organisation.
The Copyright Designs and Patents Act of 1988, in association with Government policy to treat its own information as a tradable commodity, had a severe impact on the BGS. Rules had to be developed for the licensing of data in 1990, and a pricing policy for all sale products followed in 1991. Ultimately a full-time Copyright Manager had to be appointed to manage them. Income from royalties, data licensing and copyright charges soon began to make an essential contribution to the budget, and copyright has to be enforced in order to protect it. In this case, the increase in overhead has been compensated by an increase in income.
Action in this area took place against the background of an internal reorganisation of the enquiry service in 1990 to take better account of it as a potential centre of income generation. However, further changes came in response to the Citizen’s Charter, one of the initiatives of John Major’s Government. A Customer Charter for the BGS was written and issued in March 1994. It incorporated a draft Quality Policy Statement and covered such matters as response time for enquiries, turn-around time for mail-order sales, time for dealing with telephone enquiries and for handling the post. Thus, in 1997, when the Intra-Governmental Group on Geographic Information (IGGI) introduced its Standard Charter Statement, BGS was among the first six Government bodies that were able to sign up to it.
The Programme Board, itself, came at a cost. It required a secretary, as did the now very active Directorate. These two posts formed the nucleus of the Central Directorate Support Group. Its work was enhanced by the need to deal with a seemingly exponential growth in the amount of paperwork generated by NERC Council and its committees and the EU. Within the International Division changes in the work profile, largely reflecting changes in Government policy, meant that senior staff, who had been mainly concerned with programme management before 1979, became preoccupied with a marketing and sales function. Externally stimulated reviews of various kinds that stained the 1990s made demands on staff time that were covered by overheads. When market testing was fashionable it took staff time to go through the process, even when the end result was negative. This, like all of the reviews, led to a drain in resources for no benefit. There was also an impact on the size of the budget required to cover management. In the early 1980s, Dr John Bowman, the NERC Secretary, had set a minimum number of staff that was allowed to justify a Grade 6 management appointment within the institutes. Thereafter, NERC HQ periodically complained about the apparent management overload in the BGS, but no BGS manager has ever found himself or herself underworked.
Lastly, the cost of computing has steadily grown. The BGS is now entirely dependent on computers. It is they that have enabled most of the operational efficiency gains, but they also generate the capability to do more and different types of work. For this reason it is not usual for the efficiency gains to translate into cost savings.
As a consequence of this progressive increase in the cost of the overhead, efficiencies and cost reductions had to be found elsewhere to pay for them. Throughout the organisation better project management, awareness of costs and a touch of parsimony brought benefits. The efficiency of book and map production increased considerably as costs reduced with the introduction of new technology. In 1993 the acquisition of a new wavelength-dispersive X-ray fluorescence machine and the introduction of a laboratory information management system (LIMS) improved analytical precision and sensitivity considerably and increased the potential throughput of samples. The unit cost of chemical analyses also decreased. The cost of making thin sections also went down after attention was paid to the detail of the processes used to make them. The automation of geomagnetic monitoring brought savings. Reviews of various services, such as vehicle maintenance, running the staff restaurant, security and cleaning were periodically carried out and in some cases led to the service being contracted out.
There were, however, some serious casualties of cost cutting. One of these has been the BGS drilling capability. From being a major part of the Core Programme in the 1960s,1970s and 1980s it was reduced to one team operating a single rig with a capability of reaching around 200 m onshore towards the end of the 1980s. The rig was finally mothballed in 1999.
The second major loss has been the offshore operational capability. The formal Continental Shelf Mapping Programme, funded by the Department of Trade and Industry finally came to an end in 1992 when the last 1:250 000 map was completed. The occasion was marked by a ceremony held in the Geological Museum at which a number of medals, cast in copper, were presented to participants in the long campaign. The inscription on the reverse side said, ‘Presented in recognition of your contribution to the BGS regional mapping programme 1966–1992’. This programme was a remarkable achievement, making the UK the first country in the world to map its continental shelf. Sadly, the end of this, effectively the primary survey stage, has not been followed with a programme of systematic revision. Surveying offshore is a very expensive business and funds have never been found to do other than opportunistic revision, except in the northwestern waters, where oil-industry consortia have funded primary exploration. As a consequence, the highly innovative operations team that sustained the Continental Shelf Mapping Programme has been run down to a minimum viable level and may not survive the end of the consortia mapping projects.
Another casualty of cost cutting was the closure of the district offices at Aberystwyth and Newcastle in 1994. One member of staff was left behind in accommodation provided by the university at Aberystwyth, but all other staff were transferred to Edinburgh or Keyworth. In 2000, as part of a second cost-cutting exercise, the Exeter office was sold and the staff level reduced to four, who were placed in rented accommodation on an industrial estate on the outskirts of the town. There was also a rationalisation of the geomagnetic monitoring stations, with some staff reductions as a consequence of the introduction of an automated system.
The single most important impact on staff morale that took place in the 1990s was the introduction of delegated pay arrangements. As part of the Government’s quest to reduce public expenditure, civil-service pay arrangements were replaced in 1995 by a series of separate agreements between the Treasury and individual departments, research councils and agencies. The NERC took over responsibility for devising and running its own pay scheme, negotiating directly with the unions. A Management Steering Group, made up of scientists and administrators from the NERC component bodies, acting as an advisory committee, was set up to work with the HQ team, who were tasked to develop the new arrangements in 1994. The advisory committee’s recommendations were frequently in conflict with Treasury instructions and the ambitions of HQ, which were to reduce the pay bill. The scheme that emerged was far from adequate. Pay bands were introduced to replace grades. This move was the final step in the process, started in the 1960s to unify the grading scheme in the civil service. It meant that there would, henceforward, be no terminological distinction between, say, scientists, administrators and cartographers who fell within the same pay band. This was an antidiscriminatory benefit that was much appreciated, but the way the pay bands were structured was far from beneficial to staff. Annual pay increments disappeared. In their place came performance-related pay. The NERC was allowed to determine for itself the percentage increase in pay it was going to implement for the forthcoming year, but it had to be within limits set by the Treasury. The total pay increase was divided into two parts; one was a cost-of living adjustment, the other was performance related. The knock-on effects of the latter on staff reporting were troublesome, to say the least, but the most serious deficiency was the lack of annual increments. The pay structure was such that newly promoted staff could never expect to reach the top of the pay band they had been promoted into, even if they remained in the same band for the rest of their careers. Fairly quickly staff became polarised between those newly promoted into a pay band and those who were at the top of the scale. In the case of the Grade 7 staff (now Band 4), there was a £14 000 pay differential between the highest and the lowest paid and no prospects for newly appointed staff into the pay band ever closing the gap. After the first year, steps had to be taken to improve the pay scheme, but after five years it was still inadequate and the source of more staff discontent than any other matter.
Other initiatives taken by the NERC at this time, partly to reduce its own overhead, were welcomed. For most of the 1990s NERC HQ behaved like a body that was about to be disbanded. The instruction that came with the abandonment of Prior Options, to develop its arm’s length relationships with its institutes, followed several important initiatives already taken. An early decision was to decentralise the computer services. The first step, taken in 1993, was for BGS to migrate from centralised VAX computers, maintained by NERC Computer Services (NCS), to a distributed, UNIX-based system managed within the BGS. This arrangement, which came as a recommendation from NCS, fitted well with the group-centred, post-Price-Waterhouse management structure within the BGS, even though it left a vacuum at the centre that had adverse long-term consequences. In 1995, NCS was market tested. Although it was decided that the provision of computer services by an in-house capability should continue, NCS was disbanded towards the end of the 1996/97 financial year and most of its staff were transferred into the NERC Centre/Surveys. A substantial transfer of funds accompanied this move and allowed the BGS, for the first time, to concentrate its resources on building a computer system that suited its own needs. This is not to say that NCS was unsuccessful, but its time had passed and it was a brave decision of the NERC to recognise this and act accordingly.
Another major decision was to return the NERC Isotope Geosciences Laboratory (NIGL) to BGS management in July 1997, over a decade after its removal from the Survey. The NIGL had been based in purpose-built laboratories in Keyworth since 1989, when the Gray’s Inn Road office was closed. The transfer of these staff to Keyworth, along with the analytical chemistry staff from the Mineral Resources and Applied Geochemistry Group, in December 1989, marked the end of the process of centralisation in Keyworth, which had begun in 1976 (see Dennis Hackett’s Our corporate history. Key events affecting the British Geological Survey, 1967–1998 for full details). In 1999 the budget that the NERC had held for building work in the Centre/Surveys was also transferred into their financial management.
There were several other important NERC initiatives taken in this ‘arm’s length’ period, which were perceived as giving the BGS a greater degree of autonomy and, by extension, better control of its finances. They covered recruitment, promotion, delegated spending limits (i.e. the level up to which the BGS Director was allowed to make a decision on spending without seeking approval from NERC HQ), the introduction of facilities to bank underspend at the end of the year, and a new financial management system. Only the last is of questionable benefit. Plans for a new NERC accounting system were laid in 1995. The BGS’s requirements were defined by an internal working group and conveyed to the NERC. After one false start a new financial management system was installed in 1999, which appeared not to take account of the BGS requirement. The NERC had been encouraged to improve its financial management by the Prior Options Steering Committee in 1997 at the same time as it was advised to develop its ‘arm’s length’ policy. In the light of this, it was disappointing that they chose, with their new system, to centralise financial management and deprive Centre/Surveys of their freedom to manage important aspects of their own finances.
The BGS was given the delegated responsibility to organise its own promotion panels for grades up to SSO (Band 5) in 1995 and for promotions from SSO to Grade 7 (Band 4) in 1996. Hitherto all promotion panels had been organised by the NERC. It was believed that this would lead to fewer promotions, as BGS management, being conscious of cost, would apply the promotion criteria more strictly than the NERC panels. This was followed by the delegation to the BGS of the NERC’s responsibility for managing the Career Management Panel for BGS staff. Finally, the carriage of all stages in the recruitment process up to Grade 7 (Band 4) was put into BGS hands; previously, approval to appoint had rested with NERC HQ.
By the end of the decade the BGS had more freedom to operate within NERC than ever before and felt that there were efficiency gains and cost benefits accompanying these new freedoms. The Survey also has a better ability to manage its cost base with direct control over more parts of it than in the past. But most of this is marginal. Salaries consume over 60% of the total costs and there is little that either the BGS or the NERC can do to keep them in check. The recently completed redundancy programme has reduced the salary bill, but at such a cost that repeating it cannot be contemplated again in the near future. With half of the BGS income earned commercially, the key to long-term financial stability and an end to belt tightening has to lie in NERC’s management of the Science Budget allocation. Some fresh thinking is clearly required here.
The glaring exception to the loosening of the reins was the new financial management system. This was followed, early in 2000 by a surprise letter from the NERC Chief Executive instructing the Survey to conform to new NERC-wide standards in the production of the Annual Report. This is the third such attempt since the late 1970s. The others succeeded only in antagonising BGS staff. Whether or not this signifies the end of the arm’s length policy and a stop to the drift of the BGS towards autonomy within the NERC has yet to be seen.
- This staff member is now located in Cardiff.