A couple of flights across Europe offer the opportunity for catch-up. I used some time to read Governance: A discussion paper published last month by the Tenant Services Authority. The paper asks how the TSA should regulate governance on a cross-domain basis for all social housing providers – i.e. “across whole entities for not-for-profit registered providers and across the housing activities of for-profit providers”.
The discussion paper clearly sets out the issues and recognises the diversity of providers in a potentially mixed social housing economy. However, I am not convinced it faces up to the challenge of the kind of rigorous but focused regulation needed when addressing not-for-profit and for-profit providers. (I would argue that the financial turbulence buffeting social housing recently requires regulation targeted at promoting tenants interests and protecting public investment – which is not the same as more prescriptive or interventionist regulation.)
The discussion paper describes the current regulatory arrangements and notes that the self assessment compliance statement is “a key and significant part of our regulatory engagement”. The first question asked by the discussion paper is:
What elements of the existing approach to the regulation of governance should the TSA carry forward?
I would suggest that the self assessment compliance statement should be rejected or , at least, radically re-cast. I think it encourages a tick-box compliance mentality rather than fostering self-reflection. The TSA should ask where they see weaknesses and areas for action rather than requesting a “compliance statement”.
A document based on identifying scope for improvement should then be validated against an organisation’s financial and operational performance – internal and external audit reports, audited financial performance, reported operational performance indicators, etc.
The TSA says:
We are considering applying a range of assessment methodologies including:
- self-assessment by registered providers’ boards
- feedback/assessment from residents
- and stakeholders
- benchmarking and peer review
- independent validation/audit of a particular function/s
- accreditation
- the TSA’s assessment of certain key indicators of good governance
If that is focused and rigorous validation of performance about ensuring that governance is delivering for customers and protecting the public interest, I am in favour. But social housing providers do not need a paper chase.
Thursday, August 20, 2009
Sunday, August 09, 2009
School league tables: past performance is not necessarily a guide to future performance
Many of the opponents against choice in public services rely on weak arguments. “The middle class will benefit” – yet they already win by having the resources to choose through moving into catchment areas (or buying in the private sector); ”the poor don’t want choice” – yet surveys demonstrate otherwise; “what people want is a good local school/hospital/whatever” – yet choice (with competing providers) is a means to that end.
I was therefore interested to read an article in the latest bulletin of Bristol University’s Centre of Market and Public Organisation, Research in Public Policy. The authors of Are league tables any use for choosing schools?
George Leckie and Harvey Goldstein studied the statistical significance of value added scores and concluded:
... when taking account of this uncertainty, the comparison of schools becomes so imprecise that, at best, only a handful of schools can be separated from the average school or from one another with an acceptable degree of precision. This implies that publishing league tables to inform parental choice of school is a meaningless exercise, as parents are using a tool which is not fit for that purpose.
In particular, they noted the lag of over five years between the parents looking at league tables when choosing a school and the children sit their exams. Five years a long time in the life of a school.
Does this information problem blow a hole in the argument for empowering parents and other customers of public services? I would suggest not – there are other measures of performance other than exam league tables. (There may, of course, still be value in value added league tables if failing or coasting schools raise their game through being either “named and shamed” or spurred by fear of falling school rolls.) Nevertheless the research does pose more of a challenge than the arguments usually wheeled out against choice.
I was therefore interested to read an article in the latest bulletin of Bristol University’s Centre of Market and Public Organisation, Research in Public Policy. The authors of Are league tables any use for choosing schools?
George Leckie and Harvey Goldstein studied the statistical significance of value added scores and concluded:
... when taking account of this uncertainty, the comparison of schools becomes so imprecise that, at best, only a handful of schools can be separated from the average school or from one another with an acceptable degree of precision. This implies that publishing league tables to inform parental choice of school is a meaningless exercise, as parents are using a tool which is not fit for that purpose.
In particular, they noted the lag of over five years between the parents looking at league tables when choosing a school and the children sit their exams. Five years a long time in the life of a school.
Does this information problem blow a hole in the argument for empowering parents and other customers of public services? I would suggest not – there are other measures of performance other than exam league tables. (There may, of course, still be value in value added league tables if failing or coasting schools raise their game through being either “named and shamed” or spurred by fear of falling school rolls.) Nevertheless the research does pose more of a challenge than the arguments usually wheeled out against choice.
Friday, August 07, 2009
Board members, finance committees and financial monitoring – need to know basis?
I recently heard a partner of an accountancy firm (and provider of audit services to the housing sector) say that housing association board members did not need any quarterly financial reports – as long as the board had a finance committee doing the board’s financial monitoring. My immediate response was one of both disagreement and disbelief.
In case I had missed something. I thought I would consider Treading the Boards (pdf available) – the Housing Corporation’s self-assessment framework for board performance. (A guide to housing association governance published in 2001 but still relevant. It also informed the Corporation’s regulatory expectations).
Treading the Boards stated that the “key roles or functions” of a board include:
Monitor[ing] the association’s performance against agreed targets and milestones through regular critical appraisal of financial, operational and development information
It made it even clearer saying that the board should be able to demonstrate that it:
regularly and critically reviews management information on financial and operational performance against budget /targets, the previous year’s figures and external benchmarks
It interprets regularly as monthly or quarterly.
But can board members contract out their financial monitoring role to a finance committee?
Larger, more complex, associations may have established business activity sub-committees that can address the critical issues in more detail than would be possible for the main board.
I read that as giving finance committees a role of detailed scrutiny – not the rest of the board ducking out of this key function. (While I am a great believer in the value of committees in governance structures, I’ve seen governance failure arising from boards being oblivious to the concerns being raised about financial issues in committees.)
What about guides to good practice outside the world of social housing? The 2003 Review of the role and effectiveness of non-executive directors by a committee headed by the now late Sir David Higgs noted:
Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives, and monitor the reporting of performance.
That report considered this to be a “key element”. Subsequent events in social housing as well as the wider world have surely proven this and reminded everyone that we live in financially hazardous times.
Anyone suggesting that board members can pass the buck of financial monitoring to a finance committee should also pause and consider the fact that housing association board members will generally have the duties of a company director and/or charity trustee. These cannot be evaded in some kind of governance pass-the-parcel.
In case I had missed something. I thought I would consider Treading the Boards (pdf available) – the Housing Corporation’s self-assessment framework for board performance. (A guide to housing association governance published in 2001 but still relevant. It also informed the Corporation’s regulatory expectations).
Treading the Boards stated that the “key roles or functions” of a board include:
Monitor[ing] the association’s performance against agreed targets and milestones through regular critical appraisal of financial, operational and development information
It made it even clearer saying that the board should be able to demonstrate that it:
regularly and critically reviews management information on financial and operational performance against budget /targets, the previous year’s figures and external benchmarks
It interprets regularly as monthly or quarterly.
But can board members contract out their financial monitoring role to a finance committee?
Larger, more complex, associations may have established business activity sub-committees that can address the critical issues in more detail than would be possible for the main board.
I read that as giving finance committees a role of detailed scrutiny – not the rest of the board ducking out of this key function. (While I am a great believer in the value of committees in governance structures, I’ve seen governance failure arising from boards being oblivious to the concerns being raised about financial issues in committees.)
What about guides to good practice outside the world of social housing? The 2003 Review of the role and effectiveness of non-executive directors by a committee headed by the now late Sir David Higgs noted:
Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives, and monitor the reporting of performance.
That report considered this to be a “key element”. Subsequent events in social housing as well as the wider world have surely proven this and reminded everyone that we live in financially hazardous times.
Anyone suggesting that board members can pass the buck of financial monitoring to a finance committee should also pause and consider the fact that housing association board members will generally have the duties of a company director and/or charity trustee. These cannot be evaded in some kind of governance pass-the-parcel.
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