Monday, July 30, 2007

Retreat from reform? Gordon Brown and public sector reform

The public sector reform think tank Reform have produced a challenging analysis of the initial policy decisions of Gordon Brown's government.

Retreat from reform (pdf available) concludes:

The new Government has presented itself as an agent of change. Its initial policy decisions do represent a real change from the previous Government. Alistair Darling’s brave statements on taxation are a positive change, since they give greater prominence to the idea of competitiveness. But for the spending departments, the change is negative and represents a reversal of reform.

It identifies the themes of the new Government’s public sector policies as:

an inputs-led approach. Ministers have praised increases in public sector spending and costs for their own sake. Their key attack on the Opposition has been over putative reductions in spending.

central intervention. Ministers have pledged to intervene in detail, from the maths curriculum in schools to the buildings of the London NHS to the numbers of houses in different regions. This is at odds with the Prime Minister’s rhetoric of a decentralised, “people first” policy approach.

the producer interest. The NHS review, for example, gives much greater prominence to the views of health service staff than to patients.

I was pleased to read that I am not alone in my scepticism about the huge efficiencies (claimed and forecast) underpinning much of policy in public services (both the public sector and the third sector eg housing associations). The report notes:

The Government has indicated that these extra costs will be funded by efficiency savings. But the recent record on efficiency savings is very weak. However, judging by the experience of previous efficiency drives, it is unwise for the Government to fund new spending commitments through the promise of efficiency savings.

The report is well worth a read.

Friday, July 27, 2007

The private sector and the NHS - some unreported good news

I can't recall any coverage in the media last week when the Commission for Healthcare Audit and Inspection published its report on the work of the Independent Sector Treatment Centres (pdf available). Given the controversy associated with a mixed economy in NHS funded care, it would have been useful if this Healthcare Commission had been given a wider airing.

This week there was a mention in the
Guardian focusing on the data issues raised by the report:

Last week, a report by the Healthcare Commission, which monitors NHS and private health services, criticised the £5bn ISTC programme for failing to provide information that would allow the clinics' work to be compared with similar services in the NHS.

Interestingly the Guardian didn't highlight the fairly glowing feedback from patients.

The report found that of the 33 issues explored in the patient survey, patients assessed ISTCs consistently better than the NHS on 28 of them.

In some areas the ratings were substantially better.

  • 98% of those surveyed said the toilets and bathrooms were “very clean” or “fairly clean” in ISTCs, compared to 92% in the NHS
  • 65% of those surveyed said they were given a choice of admission date in ISTCs compared to 27% in the NHS
  • 96% of those surveyed said they were told who to contact if they were worried about their treatment in ISTCs compared to 76% in the NHS
  • 98% of those surveyed said that there were enough nurses on the wards in ISTCs compared to 92% in the NHS

This is not to say that ISTCs (or the private sector more generally) is better. ISTCs were to some extent set up as treatment factories without complications such as emergency cases disrupting operating theatre scheduling. But the feedback does indicate that ISTCs (and the public sector) can deliver in a mixed economy.

Hopefully the report may contribute to ending some of the prejudice surrounding reform of public services. If so, it may be too late as the government seems to be turning against private sector involvement in the NHS.

Monday, July 23, 2007

The Housing Green Paper and the need for action

Today’s housing Green Paper will make interesting reading.

There was coverage in the Financial Times yesterday on the broad outlines of the Green Paper. The Building newsletter suggested that the "comeback for council housing" will involve Special Purpose Vehicle partnerships being developed between councils and either private developers and housing associations. I hope it will create opportunities for the ALMOs and new forms of social and co-operative housing like community land trusts.

The need for action on the housing crisis was further highlighted for me by an article about young people renting space in empty commercial property. It is an interesting and more mainstream variant on the squatting movement’s use of empty housing.

Sunday, July 22, 2007

Board remuneration: over-laden pack animals on public and third sector boards

I won’t make a habit of quoting the accountancy press, but an article in Friday’s Accountancy Age did make me think. It asked who would be a non-executive director?

It suggested that it was “disconcerting” that NEDs were expected to have expertise and knowledge from accounting to law as well as bear the burden of multiplying risks like “over-laden pack animals”.

The article was mainly concerned with FTSE NEDs, yet according to the Independent Commission on Good Governance in Public Services there are over 450,000 people in the UK who hold governance positions (excluding local government councillors). They are governors in schools, hospitals, police authorities, housing associations and national public bodies.

Many – probably most – of those huge army of board members and governors in the public and third sectors are unpaid. This is a credit to British civil society.

It is inevitable (and often desirable) that the larger boards and governing bodies of larger organisations will move towards more professionalised governance – in the sense of “board remuneration”. However, it would be sad if the voluntary ethos was lost.

The over-laden pack animals – loaded with more and more risks to think about - will increasingly expect carrots.

Saturday, July 21, 2007

Boardroom battles - lessons for governance and appraisal of chief executives

Boardroom battles - with the resignation of both a chief executive and a Chair (ex-MP Kerry Pollard) at William Sutton Homes - have recently raged within the Affinity Sutton group, one of the largest housing association groups in the country. Such problems aren’t very helpful in terms of reputation, partnerships, etc.

If you are curious about the publicly known (and complicated) details, I’d recommend a look in Inside Housing or the Borehamwood & Elstree Times.

More importantly, I think all organisations – whether housing associations, third sector or whatever – should have a quick look at their procedures for chief executive appraisal. (I fear that internal auditors don't often review this area - something for audit committees to ponder.)

Chief executive appraisal appears to be at the heart of the Affinity Sutton problems. It is not unusual either – before now, I’ve been asked to review the problems arising chief execs leaving.

Generally, I believe that the performance review of chief executive is a critical but neglected function of governance. It is easy to forget the basic but easy things like documenting appraisals and ensuring board members are aware of the results of appraisals. Of course, appraisal arrangements have to be well thought through and clear to all concerned where there are parent and subsidiary organisations in a group structure – as with Affinity Sutton and William Sutton.

Let Affinity Sutton be a lesson to us all.

Friday, July 20, 2007

The future of ALMOs - through the community gateway?

It was interesting to read in this week’s Inside Housing that some arm’s length management organisations are looking at the community gateway model of stock transfer pioneered in Preston.

As I've said before, I am a big fan of the community gateway model as a form of mutually owned and led housing association committed to supporting and working through resident involvement. The community gateway was designed to reassure residents doubtful about stock transfer and traditional forms of housing association.

If some ALMOs move towards stock transfer into community gateways that is good news for ALMO residents. However, I hope that we continue to see ALMOs surviving and prospering beyond their contract contracts to manage council housing. ALMOs are keeping council housing in municipal ownership while introducing new and better management than what went before.

Of course any change in the status of ALMOs must be with the consent of residents. (Defend Council Housing would love to see any evidence of the "two-stage privatisation" that they have sought to scare council tenants with.)

Changing charities and delivering public services

This week’s Society supplement in Guardian had a balanced and thoughtful article by Adam Sampson, the chief executive of Shelter. It explored the issues faced by increasing involvement of voluntary organisations (aka the third sector) in bidding for and delivering government funded work as part of the government's reform of public services.

Sampson concluded:

Rising to the challenge being dangled by the government is not the problem. It is finding a way to deliver more without compromising what makes us unique in the first place.

The article contrasts with some of the thinking coming from Nick Seddon at Civitas (an “independent” but pretty traditional right-wing think tank). Seddon advocates denying charitable funding to charities that deliver government funded services.

Some of Seddon’s analysis got an airing on the BBC’s recent Analysis documentary on Changing Charities (the transcript is still available).

While there are organisational dilemmas and challenges for the third sector in delivering government funded work, I believe that much of the third sector is up to it and can make a vital contribution to a mixed economy in public services.

Thursday, July 19, 2007

A new word to learn: over-policying

On today’s Business Daily on BBC World Service, there was reference to over-policying in the USA. Over-policying is having a policy for everything. Sounds familiar?

Anyone in the UK public sector and many outside will be conscious of over-policying – and often ground down by it. Sometimes it is a requirement of legislators and often regulators. With initiatives and fads, the canon of policy accumulates at an incredible rate.

I am a believer in the policy governance model developed by the American organisational guru John Carver. In this model, governance is largely about setting ends and determining certain prohibited means – with the title “policy” used sparingly to refer to these ends . (Probably best to read one of his books for a proper introduction!)

Too many organisations use the words “policy” and “procedure” interchangeably. And then give the board members or governors shed loads of paper at every meeting to give them the illusion of being “in control”.

Little time is spent on consolidating policies. Even less on making them consistent. (When I do work on governance with FE colleges it is usual for “whistle-blowing” policies to be inconsistent with - or even contradict – anti fraud policies.)

More generally, rather than delivering change and improvement, the focus is on writing new policies which will gain dust on the shelf.

Sometimes Orwellian technology is introduced to make sure staff read policies, sign-up and then get pass marks in a little test.

I probably sound cynical, but I’m not. Surely it doesn’t have to be this way?

While organisations cannot avoid the demands of legislators, funders and regulators, they can try to avoid over-policying. Instead of rushing to introduce a new policy, perhaps they could think first:

  1. Can this policy be integrated into an existing one? If so, consolidate them
  2. Is this policy consistent with an existing one? If so, make sure.
  3. Can this policy be made clear and concise? Of course, you can try.
  4. Is this really a policy at all? If not, call it a procedure or whatever, which management can adopt without bothering board members or governors.

Friday, July 13, 2007

New council housing - welcome but ...

While the commitment to dealing with the housing shortage was evident, it was unclear from Gordon Brown’s not-the-Queen’s-Speech whether we are to see a revival of council house building.

There has been much speculation about council house building. I welcome the prospect (with caveats) although I am wary about the “Fourth Option” advocated by Defend Council Housing. I favour linking reform and investment in social housing as much as elsewhere in public services.

If there is to be more council housing, we need to be sure that:
  1. There is no return to the mono tenure estates of yesteryear. Any new council houses should be in a mixed and sustainable communities.
  2. There is capacity in terms of design, build and project management generally. As council house building has not happened for a couple of decades, council may be lacking some of the skills required. That will mean councils teaming up with partners such as housing associations.
  3. The new council homes will be well managed – the obvious candidates are the high performing Arms Length Management Organisations. (These organisations are hated by the Defend Council Homes campaign but are proving great for their tenants as shown by so many good and excellent inspection reports.)

Sunday, July 08, 2007

The red tape cutting challenge: regulatory reform and public services

In the last week of the Blair era the Cabinet Office published Cutting bureaucracy for our public services (pdf available). Hopefully this document will not be lost in the reshuffle and “change”.

It is easy to mock a document talking of Simplification Plans and targets for reducing targets as well as bragging that “the Department for Communities and Local Government has pledged to cut 800 Local Government targets to 200”. (I’ve seen “bureaucracy-busting” in the FE sector - and not much red tape was blown away.) Nevertheless the strategy should be welcomed as it recognises:

So targets and inspections have a critical role to play. But as we move into the next phase of public sector reform, it makes sense to look to see what unnecessary bureaucracy there might be and what more we can do to empower the front-line to respond to the wishes of the public.

This shift was evident in
the late-Blair thinking on public services and reform. The strategy promises:
The commitment to better regulation in the public sector will be led from the very top. Lets hope it still is.

One novel element of the strategy is the commitment that:

everyone [in public services] has the opportunity to suggest ideas for reducing burdens, including those on the public sector through the website.

The strategy commits Whitehall to respond to ideas or suggestions within 90 days, outlining whether they have been taken forward and explaining why a particular decision has been made.

Those on the front line in public services (and their unions and other representative bodies) should take up this challenge.

Thursday, July 05, 2007

Maintaining trust: PIs, partnering and housing associations

According to the BBC, the Housing Corporation has launched an investigation after 5 Live Report alleged that it had uncovered evidence that a leading housing maintenance firm had falsified performance figures.

The case does raise some questions on how housing associations can be sure that performance information is reliable. I would certainly suggest that associations:

  1. Periodically commission external validation of performance indicator systems whatever the future of social housing regulation is. (I declare an interest - I do PI system validation.)
  2. Ensure that their audit committees (and, hence, their internal auditors) do consider the robustness of PI information - including PI collected by contractors and used to monitor partners

The alleged problems do make the case for associations (and other not-for-profits) creating a culture that stresses ethics both in within the organisation and in what is sometimes called the "extended enterprises" - not least suppliers and partners. Whistleblowing policies are a key part of this.

Monday, July 02, 2007

Profile of a fraudster - internal controls, financial loss and reputational risk

I do applaud the work of the KPMG sponsored Audit Committee Institute. It provides a useful resource for audit committee members in the private, public and third sector (and those involved in corporate governance outside audit committees) even if a lot of its work is focused on big private sector entities. In the latest Audit Committee Quarterly published by the Institute there is an interesting article on the profile of a fraudster.

Based on a major study of fraud cases by KPMG International, the research finds that 85 percent of fraudsters are male. The typical fraudster is aged between 36 and 55. By the time he starts enriching himself by illegal means, he has usually been employed by the company for six or more years. He typically works in the finance department and commits the fraud single-handed. In 86 percent of cases he is at management level – and in two thirds of cases he is a member of senior management. Greed and opportunity are his motivating factors.

Some of that isn’t new. But it is a useful reminder of how tighter internal controls, more widely publicised fraud reporting mechanisms and an anti-fraud culture are important. They are normally worth it. Total financial loss caused per fraudster was more than 1m euros in almost half the cases in the study.

Amongst the cases KPMG analysed, in Europe the highest proportion occurred in the public sector (29 percent of cases). That is fairly in line with the rest of the economy given the size of Europe’s public sector. It shows that the professional ethos, caring professions, the relative absence of "profit motive", etc can't entirely innoculate the public sector from fraud and the less desirable aspects of human nature.

The article doesn’t refer on reputational damage but that can be significant - perhaps potentially outwearing financial loss, sometimes aggravating it. An American accountant at a large not-for-profit was convicted of fraud associated with funding a dominatrix. No one likes to drop their coins into a collecting box if it will end up in an accountant being whipped or walked over in stilettos.

Sunday, July 01, 2007

Parliamentary scepticism on efficiency gains

Last week the Treasury select committee issued its report on The 2007 Comprehensive Spending Review: prospects and processes.

Interestingly the report noted the National Audit Office’s concerns about the robustness of measurement processes for efficiency gains. The Treasury committee addressed these issues in its conclusions:

We recommend that the Government ensure that a clearer performance measurement framework is established for the efficiency programme from 2008-09 onwards, including a greater role for external audit of service quality than hitherto.

It also recommended a coherent framework for the verification and reporting of savings on a consistent basis as part of the forthcoming Comprehensive Spending Review. (It also qureried the value of the fairly arbitrary head count targets that have been adopted.)

I would personally have recommended a healthy scepticism to almost all fanfares, reports, etc on the size of efficiency gains being delivered. I'm all for efficiency (better procurement, lean processes, more productive time and the rest) but I suspect that too many figures are affected by wishful thinking and sloppy measurement.

Getting rid of consultants - NAO launch toolkit

Everyone (or at least many people) hate consultants. There has been plenty of discussion and media coverage about the numbers of consultants (Blair’s barmy army”) and the cost of them to the public sector. So it is interesting to see that the National Audit Office is trying to help central government departments to secure efficiency gains in this area.

(I should declare an interest as I work with FE colleges, housing associations and other organisations delivering public services on governance and finance - the clue is in the heading to this blog.)

The NAO has launched an interactive toolkit for use before commissioning consultants. It is meant to provide an analysis of areas of weakness, guidance on how to improve value for money and good practice case studies. Presumably the toolkit is just as relevant to other public sector and not-for-profit organisations outside Whitehall.

The NAO toolkit is available at Unfortunately when I tried using it, it didn’t work.