Letter from Mr Ernest Montado, Chief Secretary,
Government of Gibraltar, to Hon David Blunt CVO, Deputy Governor,
Gibraltar, 31 May 2002
Following receipt of a letter dated 19 April
2002 from the Foreign Secretary, the Chief Minister has asked
me to record the correct position, by way of response to the technical
and administrative issues raised in the Foreign Secretary's letter.
Since the end of last year, I have been tasked
to review the workings of the Statistics Office and to oversee
the implementation of a number of changes and improvements that
have been put in place. Having headed the Statistics Office in
the 1970s and as a Chartered Statistician myself I have always
taken a close interest in the workings of that office.
There is a wider policy dimension to the issues
raised in the Secretary of State's letter. You are presumably
aware of the importance that the current administration has placed
on transparency right across Government, since it took office
in 1996, and the very substantial reforms introduced. I am sure
that, in so far as concerns financial issues, the Financial and
Development Secretary will confirm this.
Since Mr Sedwill's letter dated 24 May 2002
to me speaks of "good governance", and the Foreign Secretary
(in his letter under reply) speaks of "full transparency
and probity", I think that it is necessary, desirable and
appropriate to spell out the record of this administration generally
on this issue.
It is widely acknowledged in Gibraltar that
this administration completely transformed for the good, transparency
in Government in Gibraltar. Indeed it was elected in 1996 with
a manifesto commitment to do just that.
I wish to deal with each area of transparency,
probity and good Government in turn, and, in doing so, would remind
you that none of these issues have been raised by HMG or the Convent
with the Gibraltar Government and that it has all been driven
exclusively by the policy of the Gibraltar Government:-
1. PUBLIC FINANCES
When this administration came into office in
1996 about 45 per cent of Government revenue was outside the Consolidated
Fund, and thus the subsequent expenditure of those funds was outside
the appropriation mechanism and scrutiny of the House of Assembly.
This situation has been completely rectified so that 100 per cent
of Government revenue and expenditure is now subject to the full
scrutiny of the House at Budget time.
Prior to 1996 a significant amount of Government
activity was conducted through a network of publicly unaccountable
Government owned companies. These have been reduced to a minimum
and in the case of the Companies that remain:-
(1) Ministers are no longer directors;
(2) Their accounting and financial affairs
have been placed under the direct control of the Accountant General;
(3) Their accounts are now published and
laid in the House of Assembly; and
(4) Ministers have, since 1996 made themselves
accountable in the House of Assembly for the affairs of these
companies, as if they were Government departments.
Historically, the Principal Auditor's (Government
Auditor) Office has always been, and has functioned as, an ordinary
department of Government. It had also become significantly under
resourced and under staffed. In recognition that all these factors
were undesirable the Government took practical steps to distance
the Principal Auditor from Government, ring fenced it, and its
staff, from the remainder of Government; significantly increased
its staffing levels and other resources, and took steps to prevent
the Office's destaffing in the future. The Government is also
working on draft legislation (subject to existing Constitutional
constraints) to make the Principal Auditor completely independent
of Government, as this Government believes it should be. All this
was acknowledged by the Principal Auditor himself in his last
Annual Report to the House of Assembly.
4. PUBLIC PROCUREMENT
Every single Government procurement contract,
whether it be of goods or services, is since 1996 subject to open
and transparent public tender process. Public procurement, for
the whole of Government, has been centralised in a Public Procurement
Office so that standards and controls are uniform and easily verifiable.
Adjudication is by a two-stage process of departmental tender
board reviewed by a Treasury Tender Board. Both stages are conducted
by civil servants. Ministers are no longer involved in procurement
decision making. Tender awards are published. Payments to each
Government contractor of recurrent contractorised services is
disclosed, individually, in the Budget estimates.
Since 1996, all recruitment to the Civil Service,
Government Agencies, Government companies and single purpose exclusive
Government contractors, is effected by an open, advertised recruitment
process culminating in a selection process conducted by civil
servants. Ministers are not since 1996 involved in this process.
6. PUBLIC SERVICES
The Government established in 1999 a statutory,
public services Ombudsman with wide powers to investigate all
Government Departments and agencies etc. The Ombudsman is totally
independent of Government, is financed directly by the House of
Assembly and his Annual Report has to be published and laid in
the House of Assembly within 60 days.
7. PLANNING LAWS
The Government has, for the first time ever,
introduced into Gibraltar's statutory planning procedures, a public
information, consultation, objection and participation right.
8. NATIONAL INCOME
National Income Accounts (as opposed to the
Government's Annual Income and Expenditure Accounts) have never
been published in Gibraltar. Overall figures for GDP estimates
have been made public but throughout the 1990s there was increasing
concern about their accuracy to the extent that the Government
Statistician felt that it was no longer credible to publish GDP
figures until specialist advice was obtained on how best to review
the then existing methods and systems for National Income accounting.
Also, more effective systems were needed to collect and collate
the necessary new economic information from the private sector.
When the current administration came into office
in May 1996, it decided that the situation, as described above,
was unacceptable and could not continue. You may like to refer
in Hansard, to what the Chief Minister has frequently said in
the House on this issue to this effect, as well as on statistics
availability generally. I would refer you, in particular to his
Budget Speech in 1999, which dealt with these issues in some detail.
The Chief Minister therefore instructed officials
to do whatever was necessary to place Gibraltar in a position
to produce and publish defensibly accurate National Income Accounts
on an annual basis. He further instructed that assistance should
be requested from a National Accounts expert in the UK, if necessary.
Such assistance was thus requested by us in 1997 and FCO/DFID
identified Mr Mansell for us in March 1998. The first phase of
this consultancy was completed in 1999. The second phase was put
on hold pending the outcome of an input/output study which the
Government had decided to commission from Professor Fletcher (Bournemouth
University) who had undertaken two such studies for Gibraltar
in 1980 and 1989. This was done shortly after the Mansell report
was produced. The Input/Output study provided an opportunity to
collate a wide range of statistical data at a micro economic level
which would serve to plug important gaps in our statistical database
and create control totals giving sufficient coverage and confidence
to restart work on the National Accounts.
The recommendations in the Mansell Report were
concerned with conceptual treatment of some of the key elements
which form the National Income Accounts. Although the Government
gave no undertaking to implement the recommendations, these were
accepted and have been worked on, but, as the Mansell Report infers,
cannot be tested until the relevant data becomes available.
The Input/Output study commenced in 1999 but
unfortunately suffered protracted delays beyond the completion
date of 2001. This was mainly due to problems over the accuracy
of available trade statistics and when that was rectified a severe
halt to data processing of these statistics when the major earthquake
which hit India at the time seriously affected the operations
of the Indian data processing company which was commissioned by
the Input/Output consultancy team to undertake this work. The
Study is now completed and we received a draft Report a few weeks
ago. This now provides a firmer basis for sourcing and validating
data for National Income Accounting.
9. ANNUAL ABSTRACT
The absence of an Annual Abstract of Statistics
since 1998 has not resulted in the absence of "comprehensive
official statistics" as the Foreign Secretary appears to
have been led to believe. Most of the information contained in
the Annual Abstracts are published separately on a regular basis
and are contained in publications such as the annual Employment
Earnings, Tourism, Hotel and Air Traffic Surveys (conducted under
the provisions of the Statistics Ordinance) as well as in a miscellany
of other Reports produced by departments and statutory bodies.
The Annual Abstract simply brings together the key social and
economic indicators into a single report. The Government Statistician
took the view in 1999 that he wanted to produce an improved publication
which would contain more accurate GDP and trade statisticsthe
key data emerging from the Input/Output Study.
The Chief Minister took the view last year that,
given the delays in completing the Input/Output Study, it was
no longer acceptable for the Annual Abstract to remain unpublished
and instructed me to address the matter the explained this in
the House of Assembly on 5 November 2001 in answer to a question.
I did so shortly after and I am pleased to say that a new Annual
Abstract will be published shortly.
Moreoever, I would add that, as a matter of
Government policy, the Opposition have access to all the statistical
and accounting information in the possession of the Government
throughout the year. You will have seen from Hansard that the
Government provides comprehensive, voluminous and unlimited detailed
statistical data to the Opposition at Question Time in the House
in the form of both oral and written replies. This also is novel
10. EU REQUIREMENTS
EU requirements on statistics are well covered.
We conform to UK and other international standard classification
systems and methods. We produce also extensive statistical data
on employment and earnings which appear to account for the majority
of the relevant UK regulations and directives. We are checking
whether there are any reporting requirements for transmitting
data which may not have been followed. If we identify any shortcomings,
I see no major difficulty in dealing with these satisfactorily.
The Statistics Office suffered some disruption
prior to 1996 when it was split up. Half its staff resources had
been deployed to the Income Tax Office and the employment and
earnings surveys were conducted there using secondary data from
PAYE records. This was done to reduce form-filling by the business
sectora move which that sector welcomedbut it resulted
in substantial delays in the production of timely reports on employment
and earnings. Indeed, the quality of the data was unsatisfactory
and the delays in producing reports meant that much of the information
lost its value and application. The changes prior to 1996 also
affected generally the workings of the remaining section of the
office which became understaffed. The Statistics Office was reintegrated
in 1997 and new premises and new computer facilities provided
in 1998. The employment/earnings surveys reverted to a questionnaire
method in 1999 and after some difficulties in readjusting to survey
methods, reports are being published now not only in a more timely
manner but also with better quality data. The Government Statistician
has so reported in submitting the results to the House of Assembly.
Also, extra staffing resources were provided
in 1999 and 2000 as preparations began in advance for the 2001
Census of Gibraltar. The office was able to undertake the Census
successfully at the end of last year and comprehensive results
are expected later this year. This is clearly indicative of the
extent to which the office has restored and developed its capacity
Everything that I have set out above has repeatedly
been the subject of statements by Ministers in the House of Assembly
during successive budget debates and in the course of question
time in the House and in the local press since 1997. It seems
to me unfortunate that the Secretary of State must have been unaware
of any of this. I find it particularly unfortunate that no-one,
either in the FCO or here at the Convent, has ever raised any
of these issues with us first to establish the facts or to express
any concerns either during this term of office of this administration
or even throughout the eight years of office of the previous administration.
Had anyone done so, I doubt whether the concerns set out in the
Secretary of State's letter would have surfaced at all.
I make a final point which I explained to you
last week. I do so purely in a personal context and in the light
of my close involvement here with all these issues over the past
16 years. That is, I consider it is unfair that the record of
this administration on transparency, probity and good government
(including statistics) should have been put into question in this
way. I am not therefore surprised that it has so disappointed
the Chief Minister.
I would be grateful, if despite the length of
this letter, it were to be shown in full to the Secretary of State.
31 May 2002