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Scottish Revolution – Alyson Stafford interview

By Ian Fraser

Published: Accountancy Magazine

Date: December 1st, 2010

One aspect of her job that Alyson Stafford relishes is her interactions with Scottish politicians, including first minister Alex Salmond and finance minister John Swinney. ‘What makes this role really interesting are the strategic aspects of the work,’ says Stafford, the finance director to the Scottish government. The 44-year-old Englishwoman has been based in Scotland for a decade.

‘That includes advising the Scottish cabinet on financial strategy; how to achieve sustainable economic growth – that’s a key purpose of the current government. It also means ensuring that any reforms of public services delivery going forward are underpinned by sound finances.’

Stafford is not a civil servant in the Sir Humphrey mould. During a one-hour interview in St Andrews House – the monolithic art deco-style headquarters of Scotland’s civil service, built as the nation entered an earlier period of austerity 70 years ago – she is courteous, relaxed and displays a keen sense of humour.

Even though she confirms she does work closely with Swinney, she refuses to elaborate on whether she regularly attends cabinet meetings. ‘I don’t really want to go into the particular dynamics and settings.’

Asked if she is Mr Swinney’s boss or if he is hers, Stafford laughs. She then clarifies the position: ‘My boss is the permanent secretary Sir Peter Housden [who succeeded Sir John Elvidge as Scotland’s top civil servant in July 2010]. Our role is to advise the cabinet secretaries, providing them with material that enables them to advise cabinet. We have to ensure that ministers are well-placed to make choices about how resources are deployed across Scotland.’

Halfway house
Scotland is in a halfway-house position from a fiscal perspective. Since devolution in 1999, the government has overseen an annual spend, £35bn in 2010-11, on ‘devolved’ matters including health, education, housing, transport, justice, policing, rural affairs and economic development. But the country remains part of the UK, which it depends on for all its revenues.

It’s a system that The Economist magazine believes encourages fecklessness among the ‘numpties’ (its word for Scottish politicians) who govern Scotland, encouraging them to behave like ‘teenagers on an allowance’.

Scotland’s semi-independent dependence also gives rise to flash points. Salmond’s desire for greater fiscal powers for Scotland does not go down particularly well in Whitehall and Westminster. And it means the Scots are more or less powerless to influence the extent of public sector cuts being imposed by chancellor George Osborne.

Finance minister Swinney has already said that these cuts, outlined in Osborne’s comprehensive spending review on 20 October, would see Scotland’s budget slashed by £1.3bn in cash terms in 2011/12 versus 2010/11 with an £800m reduction in the capital budget, down 25%. He has attacked the cuts, saying they are ‘too deep, too quick and in the wrong place… likely to destroy jobs and risk the economic recovery’.

Meanwhile, Stafford and her team were busy preparing two versions of the Scottish government’s budget. First was an actual budget, incorporating the spending cuts for 2011/12 – whose passage she has been helping to steer through parliament. But she was also asked to create a ‘fantasy’ budget, charting how different things might have been if Scotland had fiscal autonomy or, as Swinney put it, ‘demonstrate how full fiscal powers can deliver a growth strategy for Scotland’.

Stafford was born in 1965 and raised in Northamptonshire. She was an accomplished classical pianist at school, then went up to St Hugh’s College, Oxford, where she gained a degree in geography. As a student she was a member of the Industrial Society, but also played jazz clarinet and classical piano. She sang in choirs, since ‘you cannot always carry a piano around with you. A voice is more mobile!’

In her first year at Oxford, Stafford secured a traineeship with Grant Thornton. On graduating, she joined its Wellingborough, Northants, office and qualified with the ICAEW in 1992. But she did not stay long and moved soon afterwards to Dr Randall & Partners, a mid-sized medical practice in Northants, to be general manager.

Stafford says she was attracted by the health service because it was going through a period of change. Fund-holding practices were flavour of the month. ‘It was a question of bringing them from a “corner shop” mentality – and I’m sure they wouldn’t mind me saying this – into something that was an efficiently run business. You will see there is a common pattern to all of my roles: all were about bringing in change, managing change and often pushing the boundaries.’

Stafford held two further senor financial roles with the Northants health service before venturing north in November 2000. She was attracted by the prospect of becoming finance director of the Lothian Primary Care NHS Trust, one of the UK’s largest NHS trusts, with a £300m turnover and 7,000 employees. Stafford says: ‘It was a sector of the health service that I hadn’t worked in and I was really interested in strengthening my spectrum of experience.’

One of her key roles there was putting together a financial strategy, including refocusing business planning, procurement and supply chain. One of her biggest transactions was the £28m sale of the redundant Gogarburn psychiatric hospital site to the Royal Bank of Scotland, whose boss Fred Goodwin wanted the site for a campus-style headquarters on the outskirts of Edinburgh. Even though RBS was permitted to gazump the Queen Margaret University offer for the 80-acre site,

Stafford insists her behaviour was above board: ‘There is a requirement in the public sector to ensure that value for money is secured; and that the best value is secured from any land or any other asset transaction.’

After four years with Lothian, Stafford moved to the Argyll & Clyde health board as divisional chief executive. Her task there – to restore the organisation to financial health after it had sunk into the red – was aborted after the Holyrood government pulled the plug on Argyll & Clyde. Stafford declined to comment on her time there.

She landed on her feet, however. She returned to Edinburgh as finance director of the Scottish Executive (as it was then called), initially answerable to the LibLab administration of first minister Jack McConnell. Given that few of her predecessors in finance roles had been qualified chartered accountants, she says that her early focus was ‘improving strategic financial management and financial risk management’.

Sterling track record
What she did inherit was a bespoke accounting system from Oracle, which she said she intends to develop and roll out across the Scottish public sector. While declining to discuss the specifics, she insists that this system is performing well: ‘We have had an impeccable track record. Our accounts have had a clean bill of health for the last five years.’

The books are audited by Audit Scotland, which outsources the audit of some subsidiary entities and quangos to a panel of major accounting firms. They are also scrutinised by the committees of the Holyrood parliament and by three non-executive directors of the Scottish government: PwC consultant Bill Bound; Heather Logan, a former insurance executive at Scottish Amicable; and David Fisher, former human resources director at HBOS.

Stafford says that financial performance is only 0.1% adrift from the Treasury-allocated budget. ‘That is an extremely small margin of error; very, very narrow. That’s been carried out to a stringent statutory compliance regime, from parliament; and we have also had an unblemished record from audit on that.’

She said that the government’s last three-year spending plan, approved in November 2007, ‘provides a framework for subsequent choices and investments’. However, there has to be flexibility built in to cope with unpredictable events. One example of ‘flexing’ came in August 2008, when the government brought forward £293m of capital spending to assist the country’s beleaguered construction sector in the wake of the financial crash.

Making spending cuts is going to be culturally very difficult for Scotland’s political class. Under New Labour, Scotland’s politicians grew accustomed to inflation-busting budget rises, which, combined with a requirement to spend the entire £35bn block grant, led to spending indiscipline. The typical political gesture of 1999-2007 was the open-ended commitment, such as ‘free personal care for the elderly’, which might be construed as ‘freebies for votes’. Robert Black, auditor general for Scotland, has warned that Scotland is going to have to ‘go from fifth gear into reverse in a year or two’.

Cost-saving measures thought to be under consideration include hacking back the country’s enterprise bodies – Scottish Enterprise and Highlands and Islands Enterprise – and amalgamating the 115 quangos, 32 local authorities, 40 health boards, 14 universities and eight police forces in Scotland.

Stafford acknowledges that the cuts are going to cause ‘a degree of volatility there that we will have to plan for. A key strategic challenge is ensuring that services can operate effectively in the austere years ahead. We know capital is going to be scarce going forward, so we’re aiming to optimise our asset base; we also want to maximise new financial powers as they come forward to Scotland in due course’.

She definitely seems to relish the challenges ahead, seeing some of them – notably enhanced fiscal powers for Scotland – as pregnant with opportunity.

PDF of article as published in Accountancy

Short URL: https://www.ianfraser.org/?p=3819

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