Relocation of Scottish Executive departments, agencies and NDPBs

Prepared for the Auditor General
September 2006

Auditor General for Scotland
The Auditor General for Scotland is the Parliament’s watchdog for ensuring propriety and value for money in the spending of public funds.

He is responsible for investigating whether public spending bodies achieve the best possible value for money and adhere to the highest standards of financial management.

He is independent and not subject to the control of any member of the Scottish Executive or the Parliament.

The Auditor General is responsible for securing the audit of the Scottish Executive and most other public sector bodies except local authorities and fire and police boards.

The following bodies fall within the remit of the Auditor General:

•	departments of the Scottish Executive eg, the Health Department
•	executive agencies eg, the Prison Service, Historic Scotland
•	NHS boards
•	further education colleges
•	Scottish Water
•	NDPBs and others eg, Scottish Enterprise.

Summary

Background

1. The Scottish Executive’s policy for the location and relocation of public sector organisations in Scotland was announced in September 1999. The policy covers the Executive’s departments and agencies, departments of non-ministerial office holders, the Crown Office, National Health Service common services functions and all non-departmental public bodies (NDPBs) funded by the Scottish Executive. Around 34,000 posts are eligible to be considered under the policy, representing approximately one per cent of the employed population in Scotland. The policy has evolved over time and currently has three key objectives:

•	to ensure that the government in Scotland is more efficient and decentralised
•	to provide cost-effective delivery solutions
•	to assist areas with particular social and economic needs.1
2. Organisations are normally considered to be potential candidates for relocation when they reach one of the following ‘trigger’ points:

•	A new unit, agency or organisation is created.
•	An existing organisation is merged or otherwise reorganised.
•	A significant property break is reached, for example, the termination of an existing lease.
What has relocation delivered?

3. By May 2006, the locations of 38 public sector bodies, involving some 4,681 staff, had been, or were being, reviewed. Of these, 28 bodies with 2,833 staff had been (or will be) 
either relocated or established outside Edinburgh. The Executive estimates that a further 20 reviews will be announced in the next five years. No targets for the number of jobs to be relocated or established have been set and the Executive has not issued any priorities for specific areas of the country expected to benefit from the policy.

4. By May 2006, 1,653 posts (15 per cent of those eligible for consideration) had been transferred, or were in the process of being transferred, from Edinburgh to another location. A further 1,164 posts had been established outside Edinburgh in new or reorganised organisations.

5. The decision to relocate an organisation will result in direct and indirect costs. Advantages can be gained where the relocated organisation operates more efficiently or where other benefits related to wider policy objectives, such as economic development or social inclusion, are achieved. Other organisations, such as central branches of the Executive, and local authorities and local enterprise companies who attract relocation to their areas, also incur costs.

6. We found that the one-off costs of moving varied significantly. Some of this reflects the size of the organisation but significant variation also arose because some organisations 
needed to operate at two sites as the relocation proceeded. This parallel running is needed to maintain business performance and is influenced by several factors:

•	Rate and timing of staff leaving who choose not to move with the organisation.
•	When current accommodation requires to be vacated.
•	When accommodation at the new location will be ready.
•	Training requirements for new staff, particularly where the new location is distant from the existing location.
7. Information to calculate cost per job for the relocations to date was not available at the outset of our audit. Only one of the organisations in our sample used cost per job during their location review. In some cases we were unable to gather sufficient information to construct an estimate, but in six cases we were able to gather enough information to allow us to make a provisional estimate. These estimates suggest that, for the six cases where information is available, the cost per job relocated may range from a saving of some £33,000 per job to a cost of £45,000 per job.

8. The Executive has no routine mechanisms in place to monitor the potential efficiency or productivity indicators for bodies that have relocated. This is partly explained by difficulties in assessing the extent to which efficiency gains can be attributed to relocation and partly because the full benefit can only be recognised over time. At May 2006, four of the 12 cases we reviewed had been operating at a new site for less than six months. There has been some limited analysis of the wider benefits delivered for individual relocations. For example, Scottish Enterprise Borders and the Scottish Borders Council commissioned consultants to assess the impact of the Scottish Public Pensions Agency’s (SPPA) move to Galashiels. The analysis identified a range of positive and negative results attributable to the relocation but reached no overall conclusion.

How has relocation been managed?

9. The Scottish Executive relies on departments to identify organisations that are subject to major organisational change or are considering future accommodation options. Our analysis found that only two of 38 reviews arose from potential efficiency improvements identified in organisations’ business plans. A further five reviews arose from the Small Units Initiative (SUI) which is directly linked to wider policy objectives for developing remote and rural communities. Eleven organisations were new. The remaining 20 cases all arose from a requirement 
to undertake reviews because of changes in status or lease breaks.

10. In nine of the 12 cases we examined, new or revised criteria were introduced late in the process. As a result, organisations were required to revisit proposals to accommodate factors such as:

•	locations not on the initial shortlist
•	different criteria for assessing sites
•	multiple, rather than single, site options (or vice-versa)
•	co-location with other organisations.
11. These late changes reflect the absence of a clear process for relocation. Established organisations are identified for relocation based on a lease break or change in organisational 
status, but once they are in the process of relocation, ministers may decide to utilise the move to achieve additional policy objectives.

12. In making their decision, ministers may consider not only the individual scores awarded to locations but also external factors which might be relevant, such as whether a particular location has suffered significant redundancies or another set-back where ministers consider public sector jobs may be of benefit. For example, in the case of SPPA, ministers considered the impact of foot and mouth disease in the Borders in reaching their decision on Galashiels 
as the location for the organisation.

13. In other cases, the reasons for not choosing a highly ranked location were less clear. For example, in the case of Scottish Natural Heritage (SNH), Inverness was chosen by ministers despite being ranked lowest of the five locations on the final shortlist.

14. For all of the cases in our study, the reasons for choosing the final location over the others in the shortlist were not clearly articulated. In September 2004, the Executive told the Scottish Parliament’s Finance Committee that, in future, it would issue statements highlighting the main reasons behind decisions.

15. Relocation of public sector organisations and posts is not unique to Scotland. There is a UK policy and several other countries have established policies or specific approaches to relocation. There has been no formal evaluation of the UK policy, but there are a number of interesting variations from the Scottish approach. 

Summary of recommendations

16. The Executive’s approach to location and relocation has evolved since the policy was announced in 1999. The publication of a formal relocation guide and the strengthening of support for organisations undertaking location reviews should help to reduce the inconsistencies found in reviews undertaken to date. A summary of our recommendations follows. 

Strategic approach
17. The Executive should:

•		compile a database of suitable locations and properties and consider prioritising locations
•		consider how individual relocations can affect other public sector organisations not directly involved in the relocation eg, loss of staff and/or staff inputs required to the process from the wider public sector
•		consider how good practice across the UK could be disseminated or incorporated.
Costs and benefits
18. The Executive should:

•		ensure the measures of success are clearly defined for both individual relocations and for relocation overall
•		improve its approach to gathering cost information before, during and after relocation
•		develop its plans for monitoring, evaluating and reporting both efficiency gains and wider benefits from relocation.

Relocation practice
19. The Executive should:

•		provide clear guidance, including the criteria and weightings to be used, at the outset of each review, and should make changes only where the reasons for doing so are clear
•		ensure organisations engage staff from the outset and that they provide all staff with information and support throughout the relocation process
•		ensure reviews are completed in a reasonable timescale to minimise the potential adverse 
effect on staff and performance
•		make clear the reasons for choosing a particular location over others on the shortlist at the time the final location is announced. The reasons should be clearly linked to the objective to which the location is expected to contribute.
 Scottish Executive Relocation Guide, June 2005

Part 1. Introduction

20. The dispersal of public sector jobs is intended to deliver a range of benefits. By moving jobs from high cost areas such as Edinburgh to other locations throughout Scotland, the Scottish Executive expects to achieve efficiency savings and improvements in service by taking government closer to the people.  The introduction of new jobs to other areas of the country can also bring socio-economic benefits in line with the Executive’s economic development and social inclusion policies.
 
21. In September 1999, the Executive’s policy for the location and relocation of public sector organisations in Scotland was announced, to promote efficiency and effectiveness and to deliver services close to the communities they serve. The policy covers the Executive’s departments and agencies, departments of non-ministerial office holders, the Crown Office, National Health Service common services functions and all NDPBs funded by the Scottish Executive. The policy has evolved over time and currently has three key objectives. These were introduced to:

•	ensure that the government in Scotland is more efficient and decentralised
•	provide cost-effective delivery solutions
•	assist areas with particular social and economic needs.2
22. Another strand of the policy, the Small Units Initiative (SUI), was introduced in 2002. It seeks to focus some dispersal on promoting sustainable rural communities by relocating small discrete units of Executive work to Scotland’s more remote and rural communities. 

23. The Executive does not see the policy as being implemented in isolation and has given a commitment to make explicit the connection between relocation policy, 
efficient government and best value.3 

Scottish relocation practice 

24. Organisations are normally considered to be potential candidates for relocation when they reach one of the following trigger points:

•	A new unit, agency or organisation is created.
•	An existing organisation is merged or otherwise reorganised.
•	A significant property break is reached, for example, the termination of an existing lease.
25. When trigger points are reached, individual organisations are expected to identify and review location options. Potential locations are scored against criteria to assess the extent to which they will meet policy objectives before a shortlist of potential locations is submitted to ministers. Organisations can include any location within Scotland in their review but there is a general presumption against retaining or establishing new operations in Edinburgh. Ministers make the final choice of location and the organisations are then required to plan and implement the relocation.

26. Exhibit 2 lists those organisations that have been reviewed, established and/or relocated since the policy’s introduction. By May 2006, the locations of 38 public bodies, involving some 4,681 staff, had been, or were being, reviewed. Of these, 28 bodies (with 2,833 staff) had been (or will be) either relocated or established outside Edinburgh. The Executive estimates that a further 20 reviews will be announced in the next five years. No targets for the number of jobs to be relocated or established have been set and the Executive has not issued any priorities for specific areas of the country expected to benefit from the policy.

Scottish Parliament’s Finance Committee Inquiry

27. The Scottish Parliament’s Finance Committee conducted an inquiry into the relocation of public sector jobs. Its report, published in June 2004,4 raised a number of questions about the strategic nature of the policy, such as lease break as an appropriate trigger, and the implementation of relocation practice. In response, the Executive identified a number of areas where relocation practice could be clarified, to bring improvements to the process for organisations currently under consideration.

28. The Finance Committee continues to monitor relocation and has taken evidence from the Executive approximately every six months, normally in June and December, since its report was published. 

About the study

29. This report examines the implementation of the policy, the outcomes achieved (Part 2) the processes employed to deliver those outcomes (Part 3). Audit Scotland’s research for this project included:

•	Detailed examination of a sample of 12 locations and relocations. For each, we reviewed 
the relocation process from announcement of the review through to the physical relocation (where it had taken place).
•	A series of meetings and discussions with our study advisory group members (see Appendix 1). 
•	Regular consultations with the relocation team at the Scottish Executive to understand past 
and current practice in terms of relocations. 
•	A review of the literature on relocation policy at both a Scottish and UK level, including work prepared for Audit Scotland by King Sturge and subsequently updated for UK-wide relocations (Appendix 5). 
2 Scottish Executive Relocation Guide, June 2005
3 Answer to Parliamentary Question, 12 July 2005 (Ref: S2W-17570)
4 Finance Committee, 6th Report 2004 – Relocation of Public Sector Jobs, SP Paper 189.

Part 2. What has relocation delivered?

Key messages

Only six per cent of public sector employees in Scotland are covered by the relocation policy. A significant proportion of the posts relocated and located throughout Scotland have been located in Glasgow. Around half of the jobs not filled by existing staff have been filled by new staff recruited from other public sector organisations. 

The Executive has limited information on costs and benefits incurred but our estimates suggest moving costs for relocations vary significantly. There is some evidence of efficiency gains from reduced running costs, and some limited evidence of improvements in productivity. We found that the cost per job associated with individual relocations varies.

Little has been done to systematically evaluate the wider benefits of relocation but we did find evidence of evaluation in one case. The Executive plans to evaluate impact, both for individual locations/relocations and for Scotland as a whole. 

30. This part of the report looks at what relocation has delivered in terms of:

•	dispersal of jobs 
•	financial/economic costs and benefits of relocation
•	wider benefits of relocation 
•	evaluation of impact. 
Dispersal of jobs 

Only six per cent of public sector employees in Scotland are covered by the relocation policy
31. Some two-and-a-half million people are in employment in Scotland, with around a quarter (580,300) employed in the public sector.5 Relocation policy applies only to public sector jobs under the direct control of the Executive and excludes staff employed by:

•	UK government departments located in Scotland eg, Department of Work and Pensions and Ministry of Defence staff
•	local authorities, the police and the fire service
•	health boards.6 
32. Relocation has progressed against a general trend of increasing public sector staff. The Executive estimates that around 34,000 posts (six per cent of public sector employees) are covered and that around 67 per cent of the eligible posts are located outside Edinburgh. Exhibit 4 provides a breakdown of the posts eligible for relocation.

Posts have been relocated and located throughout Scotland.  Nearly 60 per cent of relocated jobs have moved to Glasgow
33. By May 2006, 1,653 posts (15 per cent of those eligible) had been transferred, or were in the process of being transferred, from Edinburgh to another location. A further 1,164 posts had been established outside Edinburgh in new or reorganised organisations. 

34. Exhibits 5 and 6 detail how jobs have been dispersed throughout Scotland since 1999. Fifty-six per cent of the posts relocated from Edinburgh have been or will be located in Glasgow. A further 200 posts have been created in Glasgow as a result of the creation of the Executive’s new transport agency, Transport Scotland. Other areas benefiting from the policy include Inverness, Dundee, Aberdeen and Hamilton. The main areas to benefit from the SUI are Dumfries, Alloa, Kinlochleven and Tiree.

Around half of the jobs not filled by existing staff have been filled by new staff recruited from other public sector organisations
35. Seven of the 12 organisations we examined have relocated or are in the process of moving. A further two are new organisations which carried over some functions and staff from predecessor organisations. Of the remaining three, two were reviewed but did not move and a decision is still to be reached for the other. Exhibit 7 provides a breakdown of employment at the new locations and the information available to us on the source of staff filling those posts.

36. We found that most current staff did not transfer from the original location. Of some 800 posts located or relocated in the cases we examined just over a quarter (234) of staff 
had transferred from the original location. Some 250 of the posts were filled by transfers from the organisations’ other locations and by staff already employed by the Executive or other public bodies. In the case of SNH, around 70 per cent of the staff at the new location came from SNH offices in other locations throughout Scotland (including Edinburgh and existing offices in Inverness). 

37. Where new staff are recruited from other organisations, the vacancies they create will need to be filled. As a result, organisations that lose staff are likely to incur costs, in terms of advertising and recruitment. Although, in some cases, the loss of staff may help organisations who are themselves reducing staff numbers.   

Costs and benefits of relocation 

The Executive has limited information on costs and benefits
38. The decision to relocate an organisation will result in direct and indirect costs being incurred by that organisation. Advantages can be gained where the relocated organisation operates more efficiently or where other benefits related to wider policy objectives, such as economic development or social inclusion, are achieved. While ministers had expressed these aims at various times, they were first articulated explicitly in the Scottish 
Executive’s The Relocation Guide, published in June 2005. Exhibit 8 summarises the costs and benefits that may occur. Other organisations, such as central branches of the Executive and local authorities and local enterprise companies also incur costs.

39. Departments normally track the progress of policy initiatives through a process of monitoring and evaluation. Monitoring data should be collected from the moment decisions are made to establish baselines, and then at regular intervals to ensure delivery against forecast is achieved. The Executive has not set up any mechanism for routinely gathering data. Consequently it has not undertaken any central review of the costs and benefits resulting from individual relocations. Although attempts have been made to gather some cost information, organisations which had undertaken relocation reviews were not able to provide complete information on projected and actual costs. 

40. We were able to estimate the costs associated with the relocation of six of the 12 organisations in our sample. Where possible, these estimates have been prepared in line with HM Treasury (The Green Book) guidance on appraising public sector expenditure. Of the remaining six cases, one of the new organisations did not involve relocation, and one organisation has not yet had a final decision on location arrangements. In the remaining four, we were unable to gather sufficiently detailed information to allow us to construct an estimate. 
  
Estimated moving costs for relocations vary significantly
41. The level of costs and benefits associated with individual relocations will vary. Factors such as the size of the organisation and the choice of location will have a significant effect on the costs of any move. Some moves may be expected to result in improved efficiency, where the benefit will be savings on running costs or recognisable improvements in productivity. In other cases, moves may be expected to achieve socio-economic benefits to encourage 
economic development and social inclusion in less well-off areas.
   
42. We found that the one-off costs of moving varied significantly. Some of this reflects the size of the organisation relocated but significant variation also arose because some organisations required to operate at two sites for periods of time as the relocation proceeded. This parallel running is needed to maintain business performance and is influenced by several factors:

•	Rate and timing of staff leaving who choose not to move with the organisation.
•	Date by which current accommodation requires to be vacated.
•	Date at which accommodation at the new location will be ready.
•	Training requirements for new staff, particularly where the new location is distant from the existing location.     
There is some evidence of efficiency gains from reduced running costs. More limited evidence exists of improvements in productivity
43. Organisations can achieve benefits from relocation through savings gained from more efficient delivery of services at their new location. More efficient and effective service is one of the objectives of the relocation policy and may be measured by improvements in the unit cost of an organisation’s operations or by improved productivity. We were able to estimate the impact of relocation on annual running costs for six organisations (Exhibit 11, page 19). 

44. The Executive’s relocation guide includes advice for relocating bodies about collecting information on costs/savings, efficiency and productivity gains. For relocations undertaken prior to the guide being published, there were no routine mechanisms in place to monitor the potential efficiency or productivity indicators for bodies that relocated. Evidence for the cases reviewed is limited. This is partly explained by difficulties in assessing the extent to which efficiency gains can be attributed to relocation and partly because the full benefit can only be recognised over time. At May 2006, four of the 12 cases we reviewed had been operating at a new site for less than six months.

45. Organisations in Scotland are also constrained in the extent to which they can achieve efficiency savings by two further factors:
 
•	There is no Edinburgh ‘weighting’ for salary costs in the capital. In London, organisations relocating to another part of the UK can save approximately 11 per cent on salary costs, all other things being equal, simply as a result of the London weighting. Given salary costs are one of the most significant expenditure items incurred by the public sector, and relocation in itself will not alter an organisation’s salary bill, efficiency savings must be achieved through other measures.  
•	Savings in property costs can be limited because property costs usually only account for a small proportion of organisations’ running costs.  
46. Three of the six organisations we examined forecast savings on running costs. In the remaining three cases, running costs are estimated to be the same or higher at the new locations.   

47. We found one case where an organisation had reported an improvement in staff related performance measures post relocation. The SPPA had recorded significant improvements in sick absence levels and staff turnover 
– both important factors in productivity rates – since its move from Edinburgh. 

The cost per job of relocation varies
48. Cost per job is a key measure of the effectiveness of a policy or programme. A cost can be calculated at either the appraisal stage to determine whether a project should go forward or the evaluation stage to determine whether cost improvements have been achieved.  While traditionally used in evaluating investment and/or regeneration programmes aimed at generating jobs, the measure of cost per job can also be applied to identify the cost of relocating existing jobs.
 
49. Cost (or saving) per job is only one indicator and should be used in conjunction with other measures to determine the overall impact. It should be calculated based on the additional cost of relocating jobs. All additional costs, both one-off and recurring, should be forecast over the medium term (in this case 15 years) and discounted back to year one, using accepted public sector discount rates. This will provide the net present cost of the relocation and when divided by the number of jobs will give the cost per job.

50. Information to undertake cost per job calculations for all the relocations to date was not available at the outset of our audit. Prior to our examination, only one of the organisations in our sample used cost per job during their location review. Some organisations were unable to provide sufficient information to undertake any calculation but in six cases we were able to gather enough information to allow us to make a provisional estimate.
 
51. These estimates (Exhibit 13, overleaf) suggest that the cost per job for the six cases, where information is available, may range from a saving of some £33,000 per job to a cost of £45,000 per job.   

The wider benefits of relocation

Little has been done to systematically evaluate these impacts
52. In his evidence to the Finance Committee in December 2005, the Deputy Minister for Finance, Public Service Reform and Parliamentary Business emphasised the potential for the policy to deliver socio-economic benefits.7 
   
53. Measuring the socio-economic benefits delivered by relocation is not straightforward. Benefits are more likely to be measurable where the number of posts is high and/or the receiving area is small. For example, measuring the impact of 60 jobs on Glasgow (NHS NSS) is more difficult than measuring the impact of nine jobs on Tiree (Croft House Grant Scheme).
 
54. The Executive’s relocation guide provides the following indicators for use in scoring locations for socio-economic benefits:

•	Supporting fragile communities.
	– Change in working age population.
	– Population density.
•	Helping areas of economic hardship and deprivation.
	– Scottish index of multiple deprivation.
	– Average weekly earnings.
	– Claimant count unemployment.
•	Decentralisation and sharing the benefits of public sector employment.
	– Employment by the public sector.
55. The Relocation Guide does not provide guidance on how impacts should be evaluated and none of the organisations in our sample had attempted to evaluate socio-economic impact. However, there has been some limited analysis of the wider benefits delivered for individual relocations. For example, Scottish Enterprise Borders and the Scottish Borders Council commissioned consultants to assess the impact of the SPPA’s move to Galashiels. The analysis identified a range of positive and negative results attributable to the relocation but reached no overall conclusion.

The Executive plans to evaluate impact, both for individual locations/relocations and for Scotland as a whole
56. The Executive has announced that it will publish evaluation information on its relocation policy during 2006. This will focus on three areas:

•	Analysis of the benefits to date – in December 2005 the Executive announced plans to evaluate relocations thus far and assess the benefits both to the individual organisations and to the wider community.
•	Benchmarking of decisions to date against other accommodation decisions – 
this will cover an examination of occupancy levels, workspace management and running costs.
•	Comparative analysis of relocation in other countries – a comparative international study, comparing the Executive’s policy with those in other countries. 
5 Public Sector Employment in Scotland: Statistics for 3rd Quarter 2005, Scottish Executive and the Office for National Statistics 
6 With the exception of special health boards, which are covered by the policy.
7 Finance Committee Official Report, 13 December 2005, cols 3223, 3226 and 3229.

Part 3. How has relocation been managed?

Key messages

Triggers for relocation are not directly linked to policy objectives.
 
Reviews have not been approached consistently. The Executive did not have sufficient information to ensure lease break triggers were applied consistently; and organisations used different criteria and weightings to assess locations.
 
Criteria and/or weightings were changed late in the process and there is wide variation in the time taken to complete reviews. Part of this can be explained by the lack of a central hub for guidance in initial reviews. The Executive now provides formal guidance and centralised support to organisations, and this should promote consistency and deliver improvement.

Despite the variation in approach, reviews often led to the same locations appearing on shortlists. The reasons for choosing aparticular location over others on a shortlist are not clearly articulated when a final decision is announced. Staff are often an organisation’s most important resource and we found staff were consulted and engaged throughout the relocation process.

57. This part of the report looks at how 
each stage in the relocation process has been handled in terms of:  

•	the trigger for relocation 
•	the relocation review 
•	ministerial decision on relocation. 
The triggers for location reviews

The triggers are not linked directly to policy objectives
58. Relocation reviews produce greatest benefit where they identify significant improvements in business efficiency or contribute most to wider policy objectives. Reviews require significant investment and can disrupt business operations by diverting valuable management and staff time from core activities. It is therefore important that factors triggering reviews are clearly linked to relocation objectives, efficient government or best value. 
 
59. UK relocation policy and best practice applied in the private sector base such decisions on a wider consideration of the business needs of individual organisations. Treasury guidance on relocation requires Whitehall departments to meet targets for numbers of posts to be moved from London, and Treasury and Office of Government Commerce has provided a pre-defined list of the most deprived areas of the country. In the private sector the decision to relocate is taken following an assessment of both the employment and property needs of an organisation. ‘The starting point for any office relocation exercise should involve understanding the existing people and property in addition to the business objectives behind the existing location and the decision to relocate.’ 8
 
60. The Scottish Executive relies on departments to identify organisations that are subject to change in status or are considering future accommodation options.  Our analysis found that only two of 38 reviews arose from potential efficiency improvements identified 
in organisations’ business plans. A further five reviews arose from the SUI which is directly linked to wider policy objectives for developing remote and rural communities. Eleven 
organisations were new. The remaining 20 cases all arose from a requirement to undertake reviews because of organisational change or lease breaks. These cases were not directly linked to potential efficiencies and it was not clear whether relocation would deliver wider policy objectives.

The Executive has lacked information to ensure the lease break trigger has been applied consistently 
61. The Executive does not hold a comprehensive database of all the accommodation currently used by central government units, agencies and NDPBs. While departments are aware of the accommodation utilised by core staff, they do not hold asset registers detailing occupancy levels and/or lease details for all functions covered by the department. Ministers have recently announced that this information will be gathered and stored centrally, but until that information is available there is a risk that the lease break trigger will not be applied consistently across all potential candidates. 

The review process

62. On reaching a trigger, ministers consider whether a relocation review should be initiated. If initiated, the organisation should establish a relocation project team to analyse their business and potential locations. Early in the review, organisations should let staff know about relocation proposals and seek their views.  
 
Initially the reviews relied on informal guidance, with no central hub for provision of that guidance 
63. Until 2002, relocations were managed directly by organisations or sponsor departments. Executive teams from areas such as accommodation division and 
human resources provided ad hoc support but it was not formalised 
and there was no central coordination of activity.  
 
64. We compiled a list of good practice from relocations across the UK (Appendix 5, page 44). This included a number of examples drawn from early activity under the Executive’s policy but we found that, in many cases, guidance emerged as the relocation took shape. 
 
Organisations used different criteria and weightings to 
assess locations
65. The majority of the case studies we examined followed a broadly similar process for identifying locations and for ranking locations against set criteria. We found that the criteria adopted were largely similar in each case and, in all but two cases – Learning and Teaching Scotland (LTS) and Scottish Natural Heritage (SNH) – the Executive contributed to the selection of criteria.  

66. There was significant variation in the weightings applied by the organisations:

•	Organisations reviewed under the SUI use a different approach and are not included in Exhibit 16.
•	LTS applied very different criteria and weightings from the others.
•	Seven organisations weighted socio-economic factors at 50 per cent. One organisation did not consider them at all, while the remaining organisation weighted it at 17 per cent. 
•	Business efficiency ranged between 15 per cent and 20 per cent. One organisation considered this separately from the other criteria. 
•	Property suitability and cost varied between ten per cent and 50 per cent, though the 50 per cent applied in only one case, the range otherwise being ten per cent to 17 per cent.
•	Accessibility varied between 15 per cent and 50 per cent. Again, the 50 per cent applied in only one case, the range otherwise being 15 per cent to 20 per cent.
•	Costs were considered by eight of the ten after all other factors had been assessed. 
The remaining two considered costs at the same time as the other criteria. 
67. The reasons for using different weightings were not always clear. 

Criteria and/or weightings were changed late in the process 
68. We found that in nine of the 12 cases we examined, new or revised criteria were introduced late in the process. As a result, organisations were required to revisit proposals to accommodate factors such as:

•	locations not on the initial shortlist    
•	different criteria for assessing sites  
•	multiple, rather than single, site options (or vice versa) 
•	co-location with other organisations.
69. The late changes reflect the absence of a clear process for relocation. While established organisations are identified for relocation based on a lease break or change in organisational status, once they are in the process of relocation, ministers may decide to utilise the move to achieve additional policy objectives.
 
70. A clearer, two-stage process to identify a shortlist of potential locations (stage one), which is then approved for more detailed assessment (stage two), was introduced in 2005. 
But ministers may still request changes to the weightings or for additional locations to be added at any time. 

Staff were consulted and engaged throughout the process
71. Staff are the most valuable resource of public sector organisations. Proposals for relocation can be unpopular with staff and can have a negative effect on morale. Ensuring staff feel engaged and involved can help ensure changes are implemented smoothly and can mitigate poor morale caused by delays in the review process.
 
72. In 11 of the 12 cases we examined, organisations told staff about the review before a public announcement. In all cases reviewed, organisations continued to plan and manage the process well throughout the review and decision-making stages.

73. Organisations consulted staff, to assess preferences and to assess the factors likely to influence staff decisions. 

74. Organisations continued to engage staff throughout the relocation process, using a variety 
of forms:

•	Regular newsletters. 
•	Intranet updates and forums.
•	Staff meetings. 
75. Some organisations also provided support to those moving, in the form of information packs about the new location, and to those who chose not to move, in the form of 
re-training and assistance with finding alternative posts or employment. 

The Executive now provides formal guidance and centralised support to organisations selected for review 
76. In 2002, the Executive established a relocation policy team but the resources available were limited and the team was strengthened in late 2004. In 2006, the team comprised six members of staff. A formal relocation guide, defining the stages in the decision making process in more detail and providing instructions on weightings to be applied to review 
criteria, was published in June 2005. The Executive’s relocation guide now clearly states that socio-economic factors are to be given a weighting of 50 per cent in all cases.  

77. The Relocation Guide does not specify the sub-criteria to be used to assess the impact moving to potential locations will have on organisational efficiency and effectiveness. However, in most cases, the issues that will require consideration are likely to be the same:

•	Staff retention – a significant loss of staff because existing staff choose not to relocate to a particular location is likely to cause difficulties for the organisation in delivering its business.  
•	Accessibility and transport – good transport links should increase the catchment area for potential staff and make it easier for staff, customers and stakeholders to reach the organisation.
•	Property suitability and cost – the main variable here will be staffing. Unless the organisation has very specific building needs it is likely that the type of accommodation required will be broadly similar. In all of the cases in our sample the type of accommodation required was standard office accommodation. 
78. Further, a particular location should score similarly against these criteria in every review. For example, unless an organisation’s customer or stakeholder base is clustered in one particular area, a location near a large transport hub is likely to score well for accessibility. Given that most organisations covered by the policy provide services for the benefit of the whole of Scotland, it is likely that variation would occur in only a few cases.  

The decision stage 

79. In Scotland, the portfolio minister makes the final decision on location. In the rest of the UK, the decision is taken by the organisation.
  
80. The Scottish approach can lead to conflict between decisions and an accountable officer’s responsibilities for best value from an organisation’s resources. Where an accountable officer considers that a decision taken by the minister is not supported by clear evidence that it will deliver value for money, the accountable officer may request a written instruction from the minister to implement the decision. The accountable officer for SNH requested a direction from the SNH Board, which in turn made a request to the minister in relation to the decision to relocate from Edinburgh to Inverness.

The reasons for choosing a particular location are not clearly articulated when the decision is announced
81. Ministers consider the shortlist derived from the review process. In most cases the organisation ranks the options by the wider criteria or cost, or a combination of both. However, locations ranked top are not always those selected by ministers.

82. In making their decision, ministers may consider not only the individual scores awarded to locations but also external factors which might be relevant. This could include whether a particular location has suffered significant redundancies or another set-back where ministers consider public sector jobs may be of benefit. For example, in the case of SPPA, ministers considered the impact in the Borders of foot and mouth disease in reaching their decision on Galashiels as the location for the organisation. 

83. In other cases, the reasons for not choosing a highly ranked location were not clear. For example, in the case of SNH, Inverness was chosen by ministers, despite being ranked lowest of the five locations on the final shortlist (Appendix 3).

84. For all of the cases in our study, the reasons for choosing the final location over the others in the shortlist were not clearly articulated. In its response to the Finance Committee’s report on relocation, the Executive indicated that, in future, it would issue statements highlighting the main reasons behind decisions. Decisions on four of the 12 reviews in our sample were announced after the Executive’s response to the Finance Committee.

Some locations have featured regularly on shortlists 
85. We discussed previously, in paragraph 78, the likelihood of individual locations scoring similarly against the Executive’s criteria. We found that some locations appeared regularly in the shortlists considered by ministers. Nine local authority areas featured in at least half of the shortlists provided to ministers in the cases we examined. Conversely, ten local authority areas did not feature on any shortlist, although locations within five of these local authority areas feature on the list of potential locations to be considered for any review under the SUI. 

We found wide variation in the time taken to complete reviews
86. Long timescales and uncertainties about the review process can affect staff morale. 
This can have an adverse effect on performance. 

87. We found wide variation in the time taken from announcement of the review until the announcement of the decision on geographical location. The average time taken was 17 months; the shortest six months (Scottish Building Standards Agency and Office of the Scottish Charity Regulator); and the longest 34 months (LTS). Details of the reasons for the long timescale in the case of LTS are set out in Appendix 3. 

88. The times for other location reviews could only be established where the date of both announcement and decision could be identified. Overall, we could establish the relevant dates for only 21 of the 31 reviews to date. The average time taken was 17 months; the shortest six months; and the longest 65 months.

89. A further seven organisations are currently undergoing reviews. The date on which the review was announced is available for only four. The average elapsed time to date for these four is 50 months. However, decisions for three of the four have been deferred. The other has taken 66 months to date. 

90. We found that the review process took less time for new organisations than for existing organisations. In our sample, the two organisations with the shortest elapsed time were both new organisations. Overall, for those organisations where we could establish both dates, we found the average time taken to reach a decision for a new organisation was nine months. For existing organisations, the average time taken was 21 months. 

8 Office Relocation – A Generic Guide to Office Relocation Strategy for Audit Scotland by King Sturge, April 2005

Part 4. The way ahead

91. The Executive’s commitment to dispersal to improve efficiency and assist wider policy objectives for economic development and social inclusion is clear. Our report shows that implementation of the policy to date has lacked clear focus on these objectives which in turn has produced inconsistency and a lack of transparency in results. Important changes in the way relocation is administered, such as the establishment of a central unit to coordinate activity and the publication of The Relocation Guide should improve future performance but a number of key lessons have still to be learned. To aid that process, in this part of the report we set out a number of recommendations for the Executive, under the following broad headings:

•	strategic approach
•	assessing costs and benefits
•	relocation practice.
UK relocation policy and practice
 
92. At various points in the report we have included comparisons with the UK approach to relocation. The UK policy covers UK government departments and their executive agencies and there is a target to achieve dispersal of 20,000 jobs from London and the South East to other parts of the UK by 2010. Relocation is a workstream of the Efficiency Programme and is led by the Office of Government Commerce. Departments identify units and agencies for relocation and guidance is provided to those asked to consider relocation. The most recent guidance identifies geographical areas to which posts should be dispersed. The areas have been selected on the basis of levels of deprivation. Once the relocation review has been completed, the final decision on location is taken by the accountable officer of the organisation being relocated.

93. Some of our recommendations have been influenced by the UK approach and we recommend the Executive consider how good practice in the UK could be disseminated or incorporated.

Strategic approach

94. In considering its strategic approach to relocation, the Executive should:

•	consider how individual relocations can affect the wider public sector, such as local authorities and local enterprise companies, and other public sector organisations through lost staff and recruitment costs
•	compile a database of suitable locations and properties and consider prioritising locations. 
Assessing costs and benefits

95. The Executive could do more to assess the costs and benefits of both individual relocations and as a whole. It should:

•	improve its approach to gathering cost information before, during and after relocation
•	develop its plans for monitoring and evaluating, and publish regular progress and evaluation reports
•	calculate a cost per job figure for each relocation, at both the appraisal and evaluation stage  
•	identify the efficiency gains arising from each relocation
•	do more to evaluate the wider benefits arising from relocation and should engage key stakeholders, such as local authorities and local enterprise companies, to do so
•	ensure the measures of success for both individual relocations and for relocation overall are clearly defined
•	engage effectively with relocating organisations to ensure the individual organisations are clear about what is expected of them in relation to evaluation.
Relocation practice

96. The Executive should consider reviewing the practice and processes for relocation reviews. In doing so it should:

•	consider whether there is scope to share experiences and good practice more systematically 
•	provide clear guidance at the outset of each review. Changes should be made only where the reasons for doing so are clear 
•	ensure that candidates for relocation are identified on a consistent basis
•	consider setting the sub-criteria and weightings for individual relocations. In doing so it should be clear about the reasons for variations 
•	specify whether organisations should identify local authority areas or towns and cities at each stage of the review process
•	ensure organisations engage staff from the outset and that they provide all staff with information and support throughout the relocation process
•	ensure organisations establish a project team with the necessary skills and knowledge to implement the location or relocation 
•	ensure organisations plan carefully, identifying risks and mitigating actions
•	ensure reviews are completed in a reasonable timescale to minimise the potential adverse effect on staff and performance
•	improve transparency by ensuring the reasons for choosing a particular location over others on the shortlist are clearly articulated at the time of the announcement. The reasons should be linked clearly to the objective to which the location is expected to contribute 
•	ensure any additional locations or changes to weightings are specified at the earliest juncture, and certainly before any full economic or financial appraisal takes place. 

Appendix 1. Advisory group members
  
James McCulloch 	Scottish Executive Inquiry Reporters Unit

Stan Ure 			Dundee City Council
	
Angus McIntosh 	King Sturge

Tony Fitzpatrick 	Dumfries & Galloway Council

Keith Jenkinson 	Accountant in Bankruptcy/Scottish Executive

Archie McCreevy 	Highlands & Islands Enterprise

Charlie Fisher 	Scottish Executive

Owen McCabe 	Halifax/Bank of Scotland

Appendix 2. Summary of key findings 
See PDF of report for tabular data.

Appendix 3. Case study narratives 
Accountant in Bankruptcy (AiB)

The AiB is an Executive agency of the Scottish Executive Justice Department. The Accountant is the chief executive, and the agency operates independently and impartially while remaining directly accountable to the Scottish ministers. The Accountant is responsible for administering the process of personal bankruptcy (sequestration), recording corporate insolvencies and acting as administrator for the Debt Arrangement Scheme in Scotland. The staff are all civil servants within the Scottish Executive. 

The AiB was considered for review because it underwent a change in status to an executive agency in April 2002. The organisation continues to undertake all of the same work it did before, plus introduced the Debt Arrangement Scheme in November 2004, and will shortly take on additional work as a result of new legislation soon to come into force.

The organisation was located in Edinburgh at the time the review was announced, in December 2002. The organisation engaged consultants to assist with the review. In December 2003, Ayrshire was announced as the new location. In March 2006, the organisation was operating more or less fully from its final Kilwinning location. The review ranked Ayrshire second in terms of cost but eighth against the combined other criteria.

The organisation employed 92 staff at its previous location. Only two staff moved with the organisation to the new location. AiB currently employs 132 staff, 31 of whom are either employed on a temporary basis or are involved in parallel running. Staff are split between the new office and accommodation in Edinburgh. The organisation employed parallel running to mitigate risks to business delivery. Although AiB has not been operating at its new location 
for very long, there is no evidence of any negative impact on performance as a result of the review or relocation.

Key points:

•	The organisation experienced some pressure from local authorities and other organisations during the review process, where the organisations were bidding for the organisation to locate in their area. 
•	Some delay was caused by the fairness of the review process being challenged – the minister sought clarification of the process followed.
•	The organisation felt it could have benefited from a ‘mentor’ or being part of a forum of people who had gone through relocation. 
Croft House Grant Scheme (CHGS)

The Crofters (Scotland) Act 1993, allows the Scottish ministers to provide grants and loans to crofters and cottars towards the erection, improvement or rebuilding of dwelling houses in the former crofting counties of Argyll, Inverness, Ross & Cromarty, Sutherland, Caithness, Orkney and Shetland.

The unit administering the scheme, based in Edinburgh and consisting of eight-and-a-half full time equivalent staff, was formally identified for review in October 2002, under the recently announced SUI. Highlands & Islands Enterprise had previously approached the Scottish ministers about relocating the unit and ministers began considering the possibility of relocation as early as March 2002.
 
The location review was run alongside a consultation on a review of the provisions of the scheme. The location review was handled primarily by Highlands & Islands Enterprise. Stakeholders were consulted on the possibility of relocating the unit and the majority were in favour of the unit’s work being delivered from existing area offices, spread throughout the Highlands & Islands. This proposal appeared to meet with ministerial approval initially but, in March 2004, ministers asked the unit to reconsider options, particularly the possibility of moving the unit to a single location. The final decision, to relocate the unit to Tiree, was announced in November 2004. The unit relocated in July 2005.
   
Key points:

•	The unit was considered for relocation before the SUI had been developed. 
•	Ministers initially agreed the dispersed approach but very late in the process decided that a single location would bring greater direct benefit.  
Her Majesty’s Inspectorate of Education (HMIE)

The principal activity of HMIE is to promote sustainable improvements in Scottish education. HMIE does this through independent inspections and reviews of schools and other educational establishments, community learning and the education functions of local councils.

The organisation was initially located in several locations throughout Scotland, including in Executive offices in Edinburgh. It was considered for a location review when it underwent a change in status to an Executive agency in April 2001. The review was formally announced in November 2001 but would focus only on certain Edinburgh-based posts: senior management, central functions and inspection posts with a national remit. The organisation did not commence with the review until September 2002. Ministers approved the shortlist but asked that Lanarkshire also be considered on the basis of socio-economic factors. Initially the review ranked Saughton House (an Executive building in the south west of Edinburgh) first but this was not acceptable to ministers. The review ultimately ranked Falkirk first. However, the organisation was made aware by the Executive that another organisation undertaking a location review had also ranked Falkirk first and suggested Livingston as a suitable alternative. In November 2003, ministers announced Livingston as the chosen location and the relocation was broadly complete in December 2004.

Staffing details:

•	The organisation employed 173 permanent staff prior to its move. Seventy-four posts were based outside Edinburgh. Of the 99 Edinburgh posts, only 60 were considered formally under the review as the remainder had their inspection function centred on Edinburgh and adjoining areas. 
•	Overall staffing increased as a result of additional responsibilities allocated by ministers, and the relocation exercise was carried out in the context of a restructuring exercise (this was not undertaken as a result of the relocation). These factors complicate reporting on the HMIE relocation exercise because it was, in effect, carried out as one element of a wider accommodation exercise involving a number of offices around Scotland. By May 2006, there were 111 permanent staff based at Livingston. A further 23 seconded and part-time staff had Livingston as their home base, spending varying amounts of 
time there. 
•	Sixty-three existing staff moved with the organisation. Some staff with a remit for inspections in the local area remained in Edinburgh and some posts were also moved to Dunbartonshire. The number of posts in Dundee increased with the opening of a new office there. Moves to Ayrshire were agreed but have not yet been implemented.
The organisation did not employ parallel running, instead it drew on its own staff in other office locations to provide temporary cover where needed. There is no evidence of any negative impact on performance.

A distinctive feature of HMIE’s relocation exercise derived from growth in organisational numbers while the relocation exercise was ongoing. It was not possible to accommodate the increased numbers in existing accommodation while new offices were being prepared and opened. Accordingly, HMIE incurred additional costs through taking on temporary accommodation in both Livingston and Dundee over the relevant period.

Key point:

•	Although the organisation suggested that the score for cost and other criteria would be similar for Livingston and Falkirk, Livingston was not subjected to formal assessment.   
Learning and Teaching Scotland (LTS)
 
LTS is the lead organisation for the development and support of the Scottish curriculum. It works with the Scottish Executive and education authorities to take forward the national education improvement agenda. The organisation formed when the functions of the Scottish Consultative Council on the Curriculum and the Scottish Council for Educational Technology were brought together in July 2000. 

The review was not formally announced but the Executive sponsor team indicated to the organisation during 2000 that it should consider relocation. The trigger for the review was the merger/major reorganisation. The review proper commenced in May 2001, following a request from the Executive. The initial review, undertaken with the assistance of consultants and submitted to ministers in October 2002, identified the best option as being co-location of all existing staff (then split between Glasgow and Dundee) in a single office in Glasgow. The review was brought fully within the scope of the policy in September 2003, when ministers requested that the organisation reconsider the options. Despite not ruling out a single site location, the minister did emphasise that moving jobs into the central belt would be difficult to justify in terms of the policy, effectively ruling out the co-location in Glasgow option. The final decision was made in March 2004, being a split location between Glasgow and Dundee, but with the organisation moving to a new office within Glasgow. A public announcement was made in May 2005, including that the organisation would co-locate with the Scottish Qualifications Authority. The organisation was operating from its new office from February 2006.

In 2002, the organisation employed 162 staff at the original Glasgow office. There are 172 staff employed at the new location. All existing staff moved with the organisation. The organisation was unable to provide evidence on performance but considers that that performance was maintained during the relocation process.

Key points:

•	The organisation’s existing Glasgow office was not fit for purpose (primarily a result of it being an old building in need of major refurbishment) and a move to another building was likely even had there not been an Executive policy on relocation.
•	The organisation was not told at the outset that moving all staff to Glasgow would be 
difficult to justify.
•	The Scottish Qualifications Authority (SQA) shares the new building in Glasgow.    
NHS Central Register (NHS CR)

The Register is an electronic database of all people born in Scotland and those registered with a National Heath Service general medical practitioner in Scotland. Its main purpose is to permit the efficient movement of patients’ medical record envelopes as they transfer between health boards, leave the country, join the Armed Forces (or are dependants of Armed Forces personnel). It also records all deaths occurring in Scotland. Staff are responsible for maintaining the register and, although they are employed by the General Register Office for Scotland, staff carry out work on behalf of the Scottish Executive Health Department.

The unit was identified under the SUI, and the review was announced in March 2003. The initial review, submitted to ministers in September 2004, suggested either deferring the decision (because the future role of the unit was unclear at that time) or staying in Edinburgh. However, ministers did not consider deferment appropriate and announced Dumfries as the new location in November 2004. The unit opened in temporary accommodation in Dumfries in June 2005 and, following a period of parallel running, the Edinburgh office closed in March 2006. The move to the permanent premises in Dumfries is scheduled for April 2007.
 
The unit employed 16 full-time equivalent staff both before and after the move. Only the head of the unit moved with the organisation. The unit employed parallel running during the relocation process and performance was maintained.

Key point:

•	Dumfries was chosen for its links with NHS clients; it did not feature on the list of suggested locations for small unit moves.   
NHS Education for Scotland (NES)

NES is a special health board, established to provide better patient care by designing, commissioning, quality assuring and, where appropriate, providing education, training and lifelong learning for the NHS workforce in Scotland. The organisation was created to merge the work of three predecessor organisations and staff are employed at a variety of locations around Scotland.

The merger led to the organisation being considered for a location review. Ministers announced the review in December 2002. The organisation engaged consultants to assist with the review. In November 2003, NES submitted its review report to ministers, identifying dispersal to existing regional offices as the best option. Ministers requested that another NHS agency, National Services Scotland (NSS) carry out another location review, looking at co-location options in Glasgow only. The NSS report was submitted to ministers in June 2004. While the final building for relocation has not yet been announced, in June 2005, ministers announced that the organisation would relocate to Glasgow, and was likely to be co-located with another special health board.

As at May 2006, the organisation employed around 440 staff, spread around the country. Only 106 were included in the initial review but the organisation currently estimates that around 150 posts will be relocated. The organisation has not yet moved. The current estimate for the relocation is September 2008.
    
Key point:

•	Two reviews were conducted – it is not clear why co-location was not considered from the outset.
Office of the Scottish Charity Regulator (OSCR)

The OSCR came into existence as an Executive agency in December 2003. The OSCR is the independent regulator and registrar for 19,000 Scottish Charities. In February 2006, it became a non-ministerial department and forms part of the Scottish Administration.

The creation of a new organisation is one of the triggers for a location review. The creation of the organisation, and the associated location review, were announced in December 2002. The review was carried out by the Charity Law Team, within the Scottish Executive’s Development Department. The review report was submitted to ministers in May 2003 and ranked Dundee first. Ministers announced Dundee as the location in June 2003 and the organisation began operating at its new location in December 2003.

Some functions previously undertaken by the Executive were carried over to the new organisation and two staff moved to the new organisation.

Scottish Building Standards Agency (SBSA) 

The SBSA is an Executive agency of the Scottish Executive, and established to undertake the national functions related to the building standards system which came into effect in May 2005. The agency is responsible for taking forward the requirements of the Building (Scotland) Act 2003, which protects the public interest in matters relating to the design, construction, conversion and demolition of buildings. Some of the functions of the agency were previously carried out by Executive staff based in Edinburgh.

The creation of a new organisation is one of the triggers for a location review and the review was announced in December 2003. The organisation employed consultants to assist with the review and the initial review report was submitted to ministers in February 2004. The report ranked Glasgow first. Ministers subsequently requested that Dumfries and some peripheral areas also be considered. The final submission ranked Livingston first. Ministers announced Livingston as the chosen location in June 2004. Although the organisation was established in June 2004, it did not begin operating in Livingston until February 2005. 

Twenty-one staff were employed in Edinburgh prior to relocation to Livingston. Nineteen of these staff relocated to the new location. Thirteen new staff have been recruited since the move and a total of three staff have left. The additional work required to support the new building standards system mean that staffing is likely to increase (current estimates are that 44 staff will be employed by the organisation by the end of 2007).   

Scottish Executive Inquiry Reporters Unit (SE IRU)

The unit is part of the Scottish Executive and is responsible for dealing with planning and related appeals in Scotland. A Reporter appointed by the Scottish ministers decides most appeals.

The unit was identified due to a future lease expiry at its Edinburgh office. The review was announced in December 2002. The unit employed 26 staff at its Edinburgh office at the time of the announcement.

The organisation engaged consultants to assist with the review and the initial submission to ministers, in June 2003, identified a shortlist of potential locations which ranked Glasgow first. Ministers requested that North Lanarkshire be added due to its socio-economic profile. The final submission ranked Edinburgh and Falkirk equal first. Edinburgh because it was the most cost-effective option that would meet the sustainability and accessibility criteria and Falkirk as the lowest cost option overall. Ministers selected Falkirk.

Twenty-two staff are employed at the new location, only six of whom transferred from the original location. Performance was maintained during the move and there has been some improvement, though this was as a result of new working methods being used. This, and a restructuring of the administration team, has resulted in a reduction of staff from 26 to 22 since relocation.  

Scottish Natural Heritage (SNH) 

SNH is a non-departmental public body, responsible for securing the conservation and enhancement of Scotland’s natural heritage – the wildlife, the habitats and the landscapes which have evolved 
in Scotland. Its work also includes access, education, landscape, casework, renewables and greenspace. The organisation employs 
around 750 staff at a variety of locations throughout Scotland. 

The organisation was identified for review as a result of an upcoming lease expiry at one of its two Edinburgh offices. The review was announced in November 2001. The review focused on the Edinburgh offices only, where 268 staff were employed when the review was announced.

The organisation submitted its review report to ministers in October 2002. The review ranked West Lothian, Stirling or Perth as the best options, if Edinburgh was not acceptable. The SNH Board rejected the Inverness option on grounds relating to its ‘position in the SNH office network, distance from key partners and the proportion of staff that would leave’. Further work was requested by ministers and this was coordinated by the sponsor department. The organisation was not given the opportunity to comment on the cost figures upon which ministers based their final decision and disputes the rationale behind some of the assumptions. In March 2003, ministers announced Inverness as the chosen location. When the final decision was announced, the organisation, at both board and chief executive level, sought a ministerial direction to go ahead with the move, expressing their concerns that the move did not represent value for money.

The organisation began operating at its new office in Inverness in May 2006. The building has the capacity to accommodate a maximum of 293 people. At present SNH has 225 posts based in the new office. Fifty-five staff previously based in Edinburgh have moved or will move to Inverness. SNH staff from other locations, including staff previously based in Inverness, and new recruits make up the remainder. While the organisation has only recently relocated, there is no evidence of any adverse effect on performance as a result of the relocation process.

Key points:

•	Seventy per cent of staff were located outside Edinburgh at the time the review was announced.
•	The organisation will continue to operate at the office where the lease expiry triggered the review.
•	The organisation did not consider Inverness to be a viable option in terms of value for money.
•	Of the new staff in Inverness, 66 transferred from other SNH offices throughout Scotland.
Scottish Public Pensions Agency (SPPA)

The SPPA is an Executive agency of the Scottish Executive. The agency administers and regulates the NHS and teachers’ pension schemes in Scotland, and other occupational pension schemes for which the Scottish ministers are responsible. It also regulates the local government, police and fire pension schemes administered by Scottish local authorities. The organisation employs around 220 staff.

The organisation was identified for review due to an upcoming lease break at its Edinburgh office. The review was announced in July 2000. The initial report was submitted to ministers in April 2001 and recommended either Rosyth or Galashiels. Ministers queried some aspects of the review, including the weightings used, and further work was undertaken. The final submission ranked Galashiels first and it was the location subsequently selected by ministers. The relocation was completed in September 2002.

The organisation employed 194 staff at the original location and 33 staff transferred to the Galashiels office. The organisation took on additional work at the same time as the move and current staffing is 220. Some adjustments had to be made to performance measures but there is no evidence of any long-term drop in performance. The organisation has also experienced improvements in both staff turnover and staff sick absence levels.
  
Key points:

•	The organisation was unable to provide detailed evidence in relation to several aspects of the review, primarily due to the elapsed time since the events.
•	There have been improvements in staff turnover and sick absence levels.
VisitScotland

VisitScotland is a non-departmental public body and is the principal agency 
for the promotion and development of Scotland’s tourism industry. The organisation has around 1,000 staff who are employed at a variety of locations throughout Scotland.

The organisation’s Edinburgh headquarters, where 125 staff were based, was identified for review as a result of an upcoming lease expiry. The organisation engaged consultants to assist with the review and the initial review report was submitted to ministers in August 2003. Glasgow topped a scored matrix of local authority areas at this stage. Ministers requested that North Lanarkshire and Inverclyde be added to the shortlist, and VisitScotland added Inverness. The final report ranked West Lothian first (the lowest cost option) but the organisation argued that relocating while also restructuring the Area Tourist Board network would have a significant negative impact on tourism and the economy. It suggested that the difference between it and a new Edinburgh location was small (£1.7 million over 15 years) and recommended relocating within Edinburgh. Ministers selected the regeneration area of North Edinburgh as the location. The relocation was completed in Spring 2005.

All of the staff moved with the organisation and performance was maintained during the move.

Key points:

•	The organisation’s existing accommodation in Edinburgh was to be sold on by the landlord for residential use.
•	The impact on the organisation’s ability to deliver its services was the key factor in it not relocating away from Edinburgh.
Appendix 4. Cost per job calculations 
Tabular data available on PDF of report.
The inputs to the calculations for cost per job for six of our case studies are given below. The figures (set-up costs and running costs) form the basis of Exhibits 9, 10, 11 and 13 in this report. The job figures used in the calculations are based on current staff complement. Our cost per job model has been run over a 15-year period. 

Appendix 5. Good practice in relocation 
Tabular data available on PDF of report.

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