Friday, June 29, 2007

Interest rates - the pain for some public services (but not all)

Today the Financial Times is predicting a quarter point increase in interest rates next week. The Bank of England may be setting interest rates at 6% by Christmas.

As I’ve noted before, this is not only bad news for families with mortgages or other debt – but it adds to the pressures on many providers of public services such as further education colleges and housing associations. Hopefully some of the pain will be eased by finance directors thinking ahead and managing these risks.

Many general further education and sixth form colleges are now borrowing as an integral part of property strategies aimed at transforming tatty buildings into “world class” places of learning. Interesting school sixth forms don’t have to borrow as their capital needs are met 100% - not a very level playing field!

It goes without saying the providers of public services will have to raise their game on finding efficiencies. Otherwise we’ll be back to a world of cuts.

Monday, June 25, 2007

Cave Report - the single regulator and resident scrutiny panels

The Cave Report on social housing regulation (a pdf is available of the full report as well as an executive summary) has arrived at last! It is a pity that the government appears to be lukewarm on the recommendation of a single regulator for social housing. Surely Cave was right to query the silos in social housing regulation - why should ALMO or council tenants be regulated differently from housing association tenants?

Many of the Cave recommendations were perhaps heralded in advance.

My only initial criticism would be that the idea of resident scrutiny panels as a form of accountability is supported but does not feature very prominently in the report. I would argue that such panels can be more effective forms of voice for tenants than one or two tenant board members - especially for the increasing number of large social landlords.

Third Sector - the DCLG's strategy and the NAO's findings

The Department for Communities & Local Government’s heart is in the right place. Its Third Sector Strategy discussion paper (mentioned here when it was issued) does propose practical ways of making the department more Third Sector friendly as well as developing community asset ownership.

Whether or not the Third Sector Strategy will be enough to protect community and voluntary organisations from the tightening of public finances (and the associated Efficiency Agenda) is more doubtful. Moreover, small Third Sector organisations face many of the regulatory burdens of any other small business.

Last week the National Audit Office issued a report on Local Area Agreements and The Third Sector: Public Service Delivery (pdf available). This noted that the new LAAs which cover an increasing amount of local government funding have not been used to create for “a level playing field” Third Sector organisations competing with other suppliers. Thankfully some of the recommendations are already in DCLG’s Third Sector Strategy document.

Sunday, June 24, 2007

Social enterprise in the NHS - not tilting at Windmills

The Kings Fund and several other key players in the debate about NHS reform ran a a two-day simulation event of a health economy model from 2008 to 2011. The publication Windmill 2007: The Future of Health Care Reforms in England (pdf available) draws out the main findings from the exercise involving more than 100 participants including clinicians, managers, policy-makers, regulators and analysts.

On the subject of the role for social enterprise, Windmill 2007 queried whether this was "a missed opportunity". It noted:

The government has supported the development of social enterprise as a means of combining commercial rigour with the benefits and values of the third sector. However, within the NHS, the model is poorly understood – by both commissioners and providers – and it is questionable whether social enterprise will operate on a scale that will enable it to become the model for mainstream service providers.

Let us hope the government, NHS employers and the representatives of NHS employees read the report and act on the recommendations. These include PCTs preparing their directly employed staff to work at arm’s length or outside the NHS and the Royal Colleges and other representative bodies enabling their members to understand and prepare for change.

Social enterprises (and through them professionals, patients and communities) playing a leading role in healthcare in a post-monopoly NHS is an opportunity that shouldn’t be missed.

Sunday, June 17, 2007

Regulation of social housing - the Dutch model

The Cave Review on the regulation of social housing is due to report soon. It was due in “the spring”. (Spring must have been officially postponed.) It is unlikely to favour the kind of self-regulation favoured by the National Housing Federation and some (definitely not all) of its housing association members.

For some time Dutch social housing and its self-regulation has engendered much enthusiasm among some housing circles. (Perhaps understandably when you visit the Netherlands and housing seems so much better there than here.)

Interestingly the Dutch housing associations have come in for stick recently. The director of the Dutch government's bureau for economic policy analysis said that there was too little supervision of Dutch housing associations. He argued that they were building too few houses and putting their money instead into other things.

Friday, June 15, 2007

RSL efficiency gains – too good to be true?

Reading the Housing Corporation’s recent thematic review of Efficiency (which, to be fair, does include a handful of good practice casestudies), I was reminded of the breathless triumphalism of Soviet Weekly greeting the over-achievement of grain targets:

The 2005-06 gains reported by associations reflect savings well ahead of CLG’s interim targets set for the year. The actual recorded savings of £81 million for capital works, £130 million for management and maintenance and £27 million for commodities exceed the respective targets of £2 million, £35 million and £10 million by a total of £191 million.

While many housing associations are working hard to improve, are they really generating efficiencies of 4% of total expenditure – an average £162 per year per home?

I’m not entirely convinced that a world of burgeoning efficiency is reflected in the Housing Corporation’s own Global accounts of housing associations for 2005-06 – even allowing for other cost pressures. The global accounts show that costs are rising with turnover with operating margins reducing rather than increasing.

Perhaps I sound cynical, but I fear that there is a lot of cynicism out there. (Personally I don’t view the requirement for annual efficiency statement as a joke – I think it should be treated seriously and seized as an opportunity to drive change and promote efficiency.)

I’ve also seen some claimed efficiency gains. One housing association that I know claimed an increase in tenant satisfaction as an “efficiency gain” but without identifying any action leading to this gain and without factoring in any costs incurred in delivering the gain.

If housing associations are over-stating their efficiency, they will be the ones paying the price. Local government is now facing a funding squeeze as its been so successful in over-achieving its ability to do more for less.

Monday, June 11, 2007

Need for third sector to respond to the DCLG strategy

The Department of Communities and Local Government has published a discussion paper in preparing its Third Sector strategy.

DCLG says that it wants to hear from the third sector about the proposals in the discussion paper.

The Third Sector needs to engage with this consultation. Alongside the traditional consultation process, there is a web forum on the issues.

A quick skim read of the discussion paper suggests that DCLG has not taken on board the possibility that the Third Sector may be a casualty of the “efficiency agenda” and tightening public finances at local level. Likewise there is no direct reference to the burden of red tape on small organisations in the Third Sector.

Sunday, June 10, 2007

Good news on waiting lists - but lets not forget the flaws of targets in the NHS, housing, etc

It was welcome to read some good news about the NHS on Friday.

The NHS is on target to achieve the "historic goal" of eliminating long waits for treatment. By the end of 2008, no patient will have to wait more than 18 weeks from GP referral to hospital admission.

The chief executive of the King's Fund observed that the NHS had made "huge strides" forward. (Of course, it should do given the huge injection of resources.)

The Health Minister Andy Burnham was quoted by the Independent as saying: “I don't believe there should be further national targets for the NHS." (And certainly No 10 was thinking in terms of shifting the balance of public sector reform away from over-reliance on central targets.)

Let hope this is so. Targets have perhaps been a necessary evil – but they have harmful effects. They focus on what is measurable to the detriment of others concerns; they have unforeseen consequences (as with GP appointments); they encourage can encourage manipulation of data; they often centralise power in the hands of the target-setters rather than the customers etc.

One effect that I believe is often overlooked is a threshold effect. Where targets are set in terms of triggers or thresholds – as in waiting times less than 18 weeks – there is effort to get cases just over (or under) the threshold with cases failing the target getting relegated on To Do lists.

The classic case for me is responsive repairs waiting times for housing association. Generally emergency repairs are completed within 24 hours, urgent repairs one week and routine repairs one month. The average repairs times will be just inside the thresholds for the later categories. For the repairs that miss the target, the completion times will often be very long. If you are a housing association board member and don’t believe me – ask the managers at your housing association for the data.

Friday, June 08, 2007

Trades unions, mutualism and public services

Just when it seemed like enthusiasm for the third sector was universal, it appears that the General Secretary of the TUC has not heard of it. Brendan Barber writes in Public Finance magazine about "public value" and reform of public services simply in terms of the public sector and the private sector.

The trades union movement should be encouraging new mutually owned forms of public services which empower both those who work in public services and those who use them. After all the trades union movement and the co-operative movement grew as comrades in the nineteenth century.

Monday, June 04, 2007

Jerks and the public sector

The McKinsey Quarterly carries an interesting article on jerks in the workplace and building a civilized workplace.

In the article Robert Sutton argues for zero tolerance of harassment of workers. A “no jerks” policy as adopted by the software company Successfactors.

The article lists the “dirty dozen” seen with workplace jerks:

1. Personal insults
2. Invading coworkers personal territory
3. Uninvited physical contact
4. Threats and intimidation, verbal and nonverbal
5. Sarcastic jokes and teasing used as insult delivery
6. Withering emails
7. Status slaps intended to humiliate victims
8. Public shaming or status degradation rituals
9. Rude interruptions
10. Two-faced attacks
11. Dirty looks
12. Treating people as if they were invisible

The article discusses calculating a Total Cost of Jerks. It quotes one company where one star salesperson—generated additional costs of $160,000.

Jerks are a problem in all sectors of the economy. How much do they affect productivity in public sector organisations like the NHS?

FE colleges - the cinderella of education policy

My curiosity about the post-Blair future for public services led me to start reading Over to you, Mr Brown by Anthony Giddens - the guru of the Third Way.

It is a fairly interesting read supporting a move away from state monopolies in public services.

What disappointed me was that Giddens started to write about “universities and colleges” in the section on public services – but as you read on, it was clear that he wasn’t at all interested in further education colleges. He was only referring to higher education.

For him “universities and colleges” is all about universities teaching degrees courses. (Like at Cambridge University and the London School of Economics - where he worked.) What about the FE colleges that do so much to give learners skills for citizenship and for the workplace?

Giddens isn’t unique – the parties and the media often overlook FE and the hundreds of thousands of young people and adult learners in colleges.

Sunday, June 03, 2007

Gordon Brown and public sector reform

The Brown government’s views on public sector reform are somewhat hard to discern although the pace of change in the NHS may soon be slower. However, there is an interesting debate on reform going on.

The Society section of the Guardian website is carrying both an article by a former Downing Street adviser and a selection of views on the role of choice in changing public services.

Although I see choice and competition in public services as a driver for improvement and efficiency, the cartoon above does amuse me.

Saturday, June 02, 2007

NHS under-spend - "boom and bust" lives on

It was depressing to read this week that the NHS had under-spent £500million as a result of a starvation diet in the latter months of 2006/7. (The under-spent was achieved in some areas by a sharp change of gear with the temporary introduction of maximum waiting times despite the minimum waiting times so central to NHS objectives.)

The diet was required to avoid the political embarrassment of the NHS £90billion budget being overspent by a pound.

Isn’t this one of the strongest arguments for the NHS being considered a set of healthcare entitlements rather than a nationalised industry?

In January the Reform think tank published an analysis on NHS developments that policy that policy was marked by “stop-go” (NHS reform: the empire strikes back, pdf available). It’s a pity that the NHS is still infected by “boom and bust” in contrast to a wider economy marked by stability and success.