A problem shared? Shared services, fear, loathing and VAT

There has been some debate on the FEWeek newspaper website about colleges and shared services. An Agitator op-ed suggested that shared services collaboration might end up with college principals in jail. The comments below the article seemed to highlight the doubts and even suspicions associated with the shared services agenda. No comments backed my suggestion that colleges could collaborate with colleges who are not competitors or even with other types of organisation.

Does any of this matter? Maybe.

In the summer the government’s Open Public Services White Paper explicitly encouraged shared services. Austerity will inevitably make cost cutting imperative.

One barrier to shared services has been tax. Colleges buying in services from outside suffer the irrecoverable VAT which in-house operations don’t incur. With VAT at 20%, the efficiencies from shared services (and, of course, other types of outsourcing) have to be significant to be worth the effort.

After three decades the UK government is getting round to implementing a European Union directive with a bearing on VAT on shared services. Last Friday a HMRC consultation closed on how certain types of shared service arrangements by charitable organisations might escape VAT.

The charities sector publication Third Sector has highlighted the debate on the significance or otherwise of the HMRC proposals. The National Council for Voluntary Organisations, the Charity Finance Directors’ Group, Universities UK and the National Housing Federation have declared that the proposed exemption is too restrictive:

In its proposed form, the exemption is likely to be of little use to the charity sector, particularly for smaller organisations who in many cases could benefit the most from cost sharing.

The Chartered Institute of Taxation have given the HMRC a hard time on the proposals too.

There is rumoured to be a divergence between a hardline HMRC worried about loopholes and a Treasury keen to see efficiencies in public services. Who will win? Who knows? But it will be a test case for the government with its commitment to a Big Society and its rhetoric about reform.

If the VAT issue is resolved, it will be up to colleges, universities and charities to think creatively and positively.

Only 12% of police are on the beat – true or false?

Inevitably police cuts have become a political football after a week that looked like an apocalyptic version of Supermarket Sweep - what the French newspapers have called "the shopping riots".

Yesterday David Cameron told the House of Commons that 20% police budget cuts would not necessarily lead to reductions in police on the beat. This claim was scrutinised by Cathy Newman on the Channel Four Factcheck, who concluded it involved a “rhetorical sleight of hand".

David Cameron also noted:

Today, as we speak, only 12% of police officers are on the beat at any one time.

It’s a shocking statistic. I verified this figure in a report, Demanding Times (pdf available), by HM Inspector of Constabulary. However, it’s a little misleading and maybe a tad mischievous.

Demanding Times explains exactly what is involved in the 12% figure for police “available” and “visible”:

The majority of officers and PCSOs in visible roles who are not available will be off shift. Some will be appearing in court (to give evidence or act as court liaison officers), others will be on holiday and a few will be off sick.

… 19% of police officers and PCSOs are in the middle and back offices combined. It is to be expected that there will be some police officers in these categories, as they include roles such as managing and processing intelligence, criminal justice, specialist investigative support functions and crime management. They will also be working in roles that benefit from operational insight, such as business transformation projects. Equally, the back office category includes training roles: and forces rely on the brightest and the best from the front line being able to pass on their skills and knowledge. Nevertheless, authorities and forces, taking account of their local circumstances, would benefit from assuring themselves of the need for police officer skills in these two categories.

No one would deprive police of their annual leave, sick leave or being off-shift – particularly after the last few days. Likewise intelligence, investigation, etc are valuable. Of course, there is no doubt scope for reducing red tape – just as there is in most public services. The fact that there is variation in rates of “available and visible” across the country points to scope to spread best practice e.g. in shift management.

There is a strong case for police reform and an urgent need for greater efficiency – the police force is arguably the least modernised territory of the public sector. However, misleading and mischievous use of eye-catching statistics is unhelpful.

The Coalition gives birth to the Open Public Services White Paper

After a long and difficult gestation, at last the Open Public Services White Paper arrived today.

Its timing could not have been less auspicious. The gaze of the media was upon the House of Commons where the Secretary of State for Culture was being flayed by the leader of the Opposition who wanted to know why the Prime Minister was not there to answer questions on Hackgate – rather than at Canary Wharf launching the plan for Open Public Services to a friendlier audience assembled by the centre-right Reform think tank.

The coincidence of the Open Public Services White Paper with the news of the break-up of the Southern Cross care home chain was unfortunate.

The White Paper set out five principles of Open Public Serices:

Choice – Wherever possible we will increase choice.

Decentralisation – Power should be decentralised to the lowest appropriate level.

Diversity – Public services should be open to a range of providers.

Fairness – We will ensure fair access to public services.

Accountability – Public services should be accountable to users and taxpayers.

It is worth considering the parentage of the new White Paper on Open Public Service. In Public Services published by the Prime Minister’s Strategy Unit, the language was of:

- With horizontal pressure from competition and contestability

- And bottom up incentives of choice and voice

- Supported by improvements in capability and capacity

…to create a “Self improving System”

That was in January 2007 in the last months of Tony Blair’s government.

In some quarters today was seen as a (another) re-launch of the Big Society. The White Paper certainly. Interestingly the only use of the term was in relation to the Big Society Bank. While the White Paper place emphasis on the role of new entrants as providers – including charities and mutuals – the New Philosophy Capital think tank was blogging quite sceptically this afternoon. The chill wings of austerity are blowing through the third sector.

How significant is the White Paper? Time will tell. The Coalition is promising more meat on the bones in coming months.

Education for-profits or not? It depends

We live in interesting times. The talk of Maoist revolution in public services seems to have tailed off. However, in education there is a huge wave of change coming the way of education even if the NHS is centre stage at the moment.

A critical issue in education at the moment is whether for-profits will become significant players. In the medium term, the answer may depend on which sector you are talking about.

In universities, the minister responsible is keen on “alternative providers”. They have already arrived. As I have noted on this blog before, the professional training company BPP is getting University College status. Recently it was announced that BPP had teamed up with Swindon’s New College to offer a no-frills law degree for £3000 per year.

This week an article in the Times Higher Education by a consultant from The Parthenon Group global strategy consultancy suggested:

By charging £27,000 for three years, England and Wales have just become Treasure Island to for-profit companies that know from experience that they can teach degrees for much less.

The article goes on to suggest that the new entrants will shake up the incumbents:

Universities must begin to provide the platform for more sophisticated strategies, including: greater pricing differentiation; international growth; regionalisation; improved employer partnerships; greater student employability; and targeting particular student segments - for example, adult learners.

For-profits may be welcomed by the government in higher education but the red carpet is not yet rolled out in primary and secondary education.

The government’s free school policy is turning out to be less revolutionary than hoped or feared. Last Friday’s New Statesman points to “the Coalition’s free school dilemma”. The introduction of new suppliers in the schools market need buildings when there are constraints on capital spending. Jonn Elledge of EducationInvestor magazine concludes:

The government wants three things: to create enough new schools to shake up state education; to keep the profiteers out; and to keep the cost to the taxpayer down. But it can't win on all three fronts. One of them is going to have to give. And right now, it looks like the revolution will be the one to get tossed aside.

Not so long ago it seemed like the ban on for-profit free schools might be lifted. There were voices from policy wonks calling for a change – people like Julian Astle of the Lib Dem think tank CentreForum. Now it seems that the government – or at least the Lib Dem wing of the Coalition - may be more cautious in reforming public services – let alone allowing for-profit schools.

Maybe things will change for schools as well as universities. The Coalition has – potentially – another four years when a week is a long time in politics.

In the news: academies, free schools and university technical colleges

In today’s Guardian an interview with former Tory education secretary Lord Baker highlights his recent work with Labour’s academies programme and now the Coalition on University Technical Colleges:

He is reviving the long-forgotten technical schools, which were enshrined, alongside grammar schools, in the 1944 Education Act, but which never got off the ground. They will be grandly, if rather confusingly, called university technical colleges (UTCs). One has already opened in Staffordshire – across the road from its sponsor, the big machinery maker JCB – and Baker has government support and funding to set up another 15. But that's just the start. "I want a hundred by 2015," Baker says. "After about 10 years, there will probably be 200 to 300." At the minimum, the initial costs will be £3m each. To hear Baker talk, you'd think the words "deficit reduction" had never been uttered; his fellow ministers used to say he was never knowingly underbid in public spending rounds. He has no truck with suggestions that the colleges are experimental. "This has become a movement," he proclaims.

The UTCs will cater for 14-to19-year-olds and offer a technical curriculum. The students will undertake 40-80 days' work experience each year on top of a nine hour day for 40 weeks a year. Lord Baker claims the support of Jaguar, Rolls-Royce, National Grid, British Aerospace, Siemens and Toyota for his movement.

The UTCs have been under the political and media radar. That might well change.

Selection and admission policies are always visible. This morning the Daily Telegraph reports (or maybe warns its readers) that the Coalition will consult over changes to the school admissions code in England which would give academies and free schools the freedom to prioritise deprived children when places are oversubscribed.

Today’s Financial Times highlights the problems of the Department for Education – in particular its ability to deliver the reform policies set out in the DfE business plan (pdf available). It notes the delays in changing planning rules to allow free schools in a variety of non-educational buildings.

Education Executive reports on the Free School Kit from Partnerships for Schools which will assist parents and others in their search for a site for a new school. The Kit is available online and allows parents to explore the geographical area where they propose setting up a new school, helping them to understand more about the existing educational landscape including pupil attainment, the percentage of pupils eligible for free school meals, Ofsted ratings, surplus places, etc. It is intended to find the “hot spots” of unmet parental demand.

16-19 academies: free schools meet sixth form colleges

The Education Bill published today makes provision for 16-19 academies. Until now many academies offered courses for 16-19 year olds. But this is more radical. It is a development of the free schools policy.

I am not sure how many people were listening last week when the media was full of Alan Johnson, Ed Balls and Andy Coulson but David Cameron gave a speech on Modern Public Services. It included this:

For the first time, charities, universities, businesses, teachers and groups of parents will be allowed to establish their own academies where there is a lack of suitable education for 16-19 year olds.

Based on the same principles that underpin our Free School programme, this will widen the range of options available to young people and encouraging them to continue in education beyond their GCSEs.

Incumbents in the 16-19 market had better be aware of this new challenge.

I am tweeting

I am now on Twitter and getting the hang of it. You are very welcome to follow, re-tweet and anything else.

I am personally finding that following others is a handy and quick way of keeping up to date.

Foretelling the future: 2011 predictions and speculations

With Christmas and New Year at the way it’s time to read the retrospectives on 2010 and the crystal ball gazing for 2011.

I have not yet listened to Radio Four’s Correspondents Look Ahead programme but Paul Mason of Newsnight makes an interesting prediction on the BBC website. He suggests that in 2011 the Coalition will fall “because everytime it tries to do something serious a bit falls off the machine”. (Interestingly Tony Benn and Dennis Healey made a similar preduction yesterday on Radio Four's Broadcasting House.) Paul Mason foresees a Liberal Democrat pull out leading to “a Second Coalition to be formed between the Conservatives, an inner core of Orange Book Libdem leaders and various Unionists, with a slim majority.” We will see if that happens and what it means for the public and third sections.

The London School of Economics blog on British Politics and Policy has a look ahead at some of the big issues that could dominate 2011. The list is far-ranging although it is a list of questions rather than predictions. While it features the Coalition and austerity, it does not mention the impact of the changes in schools and the NHS which are potentially profound and, the case of the slow painful death of Primary Care Trusts, possibly toxic.

One area which I will be watching and trying to understand is open source government, armchair auditors and some of the technology which may make this something significant. I am sure that there will be some headlines as more public bodies have to publish the detail of their financial transactions. There may even be some good to come out of these exercises.

A Cultural Revolution starting in the higher education sector?

While the huge reductions planned in teaching grant and the significant proposed increases in the average level of tuition fees for universities has political significance, the mainstream media has missed some of the other fundamental changes in higher education this year.

Only last week Pearson announced plans to create a vocational degree offered in partnership with further education colleges. It was covered on the BBC’s Education website but I did not see it anywhere else.

In the US for-profit universities have had a bad press this year but it can only be a matter of time before they arrive on this side of the Atlantic on a significant scale. The private sector BPP university college is almost here.

With the media talking about the Maoism of the Coalition’s policies, they have not really recognised this Cultural Revolution starting in the universities.

Pluralism in education - enter the humanist free school?

In the current issue of New Humanist Francis Beckett - author of The Great City Academy Fraud - suggests "co-operating with an objectionable and reactionary educational policy" and setting up a humanist free school. He suggests that this is "a one-off chance to show that real secular state education works".

It would be broadly tolerant, liberal but firm. The boundaries would be drawn widely, but they would be fixed. Cross that boundary and the sky falls in on you. Our staff would have better things to worry about than the length of their pupils’ hair, and there would be no uniform. But any form of bullying or abuse would not be tolerated. And neither would boring lessons. We can’t divorce ourselves from the target culture, but we can make sure it doesn’t ruin the lives and the learning experience of our pupils.

(It all sounds a bit like the liberal Kunskapskolan schools opening as part of the academies programme.)

The magazine’s website has an online poll on the issue. When I last looked almost three-quarters of those voting said that they would support the establishment of an avowedly atheist and humanist state school.

As someone who works with faith schools and colleges, I hope the humanist free school project gets off the ground. The project will contribute to the diversity and innovation created by academies and free schools.

The how and when of the YPLA's replacement

Tucked away in yesterday's Schools White Paper was the announcement that the Young People’s Learning Agency will be “replaced” by the Education Funding Agency. Perhaps re-badged would have been a more accurate description – the staff of the YPLA will be brought in-house into the Department for Education from being a standalone Non Departmental Public Body.I expect some other DFE staff will be included as the EFA will have a role in relation to schools which are not (yet) academies.

There was some uncertainty about the date of the change but according to the YPLA website the transition is assuming April 2012.

It is worth noting that Michael Gove has backed off from the idea of a direct EFA-schools relationship seen in an earlier draft of the White Paper. I suspect that this is a tactical retreat. You can only eat an elephant one bite at a time.

It is ironic that the survival of the Skill Funding Agency and the (de-quangoed) YPLA/EFA were not advocated in either manifesto of the Coalition parties for the post-16 funding landscape.

The government's changes to social rents and tenancies

The government’s announcements yesterday about rents and tenancies in social housing are complex and part of what can be seen as a somewhat contradictory policy agenda (cutting housing benefit and pushing up rents in social housing).I would therefore recommend the Chartered Institute of Housing’s fair minded Briefing on Social Housing Reform (pdf available).

The briefing clarifies what the new types of tenancies being proposed actually involve: (1) the fixed-term flexible tenancies lasting as little as two years and (2) the affordable rent tenancies set at a maximum of 80 per cent of local market rents.

The latter is intended to generate finance for more affordable housing at a time of much reduced capital spending on housing. The affordable rent tenancies will initially be offered by housing associations rather than local authorities. It will be offered on a proportion of re-lets from April 2011 and on new stock later. The CIH point out: “in high value markets 80% would not be an affordable product for consumers and it would create problems around housing benefit”.

As the flexible tenancies and the affordable rent tenancies may account for an increasing proportion of local authority and housing association tenancies, the shorter tenancies may well mean that Right to Buy never recovers from its current low levels. Maybe we are seeing a Conservative prime minister effectively abolishing Right to Buy while it is being retained in theory.

Government U-turn on a national funding system for schools and 16-18

Today the FT Westminster Blog reports that that the government is backing down on a national school funding system. It quotes Michael Gove on the Andrew Marr Show as saying:

The Financial Times ran a report of what they thought was going to be in the white paper, fair play to them, journalists often anticipate events, but the truth is that we will be funding schools through local authorities as we do at the moment.

The Westminster Blog says that it had a copy of a draft copy of the white paper and the details of their story were confirmed by civil servants at the Department for Education.

Where all this leaves the Young People’s Learning Agency is unclear. The draft seen by the Financial Times included this paragraph:

The Young People’s Learning Agency (YPLA) will extend their current responsibility for funding Academies and Free Schools to funding all schools becoming the Education Funding Agency from April 2013. It would administer the national funding formula to all schools directly as well as post 16 funding ensuring that the maximum amount of money goes directly to schools in a fair, transparent and equitable way. Local authorities will pass the national funding formula allocation directly to maintained schools until the Education Funding Agency comes into existence.

I suspect the YPLA will carry on even though the government has U-turned on the broader reform. Sadly this may mean that the inequalities in 16-18 funding between schools and colleges persist.

Interesting times: school federations, new markets and blurred boundaries in education

Working over the years in colleges I have noticed that there has been a slightly casual use of the term “federation” – sometimes to mean merger of colleges. In schools there is a precise meaning to the term. On the Teaching Expertise website there is an excellent survey of the legal meaning and implications of the term from two education lawyers at Veale Wasbrough Vizards.

A clear and useful exposition of the legal and other issues around federations is particularly timely at a time when the education landscape is in a degree of flux. In this week's New Statesman, Dr John Dunford (former general secretary of the Association of School and College Leaders) surveys what he sees as the “two different, but related, markets are being created by the Academies Act 2010”:

The first is the government's push for so-called "free" schools to be created by parent and teacher groups. The second, and potentially much larger, market being created is the provision of a range of services, from human resource management to school improvement capability, to both the new academies and to the free schools.

He concludes:

Schools are being offered by the coalition government a more autonomous way of working, with the additional funding that accompanies academy status looking very attractive at a time of economic retrenchment. Some of these academies will continue to buy services, where they are efficiently run, from the local authority, but many more will look outside the authority to the new market of entrepreneurial schools and commercial providers for their human resources and school improvement support, or even for federation under a single governing body. It is hardly surprising that so many organisations are looking at providing these services in what could become a lucrative new market

The revolution is not limited to the schools sector. The financial constraints on colleges and universities – as well as the pressures likely to flow from the market model proposed by the Browne review for higher education – may lead to an interesting reconfiguration of providers plus the growth of new entrants like the new private sector BPP University College. This may see some blurring of boundaries – a recent Financial Times article speculated on whether colleges might soon own their own university.

TSA (and other quangos) - fate announced

It was not a very well-kept secret after being leaked in Inside Housing. But the Cabinet Office list is out (pdf available) and it officially announces the Tenant Services Authority is being scaled back and absorbed into the Homes and Communities Agency.

The list says:

No longer an NDPB - Abolish body. Regulatory functions passed to Homes and Communities Agency. Independent economic regulation safeguarded. Consumer regulation slimmed down

While a focus on financial viability and governance is welcome, there will need to be adequate safeguards for residents.

Informed analysis on public policy: the NHS reforms and other changes

With so much change swirling around public services it’s useful to have a place to go for informed analysis. Today I stumbled on the LSE's British Politics and Policy blog which features a wide range of academics. Some of the bloggers, such as Tony Travers, are found in publications like CIPFA's Public Finance; others are more elusive (I cannot remember reading anything by Nicholas Barr since studying public sector economics at university sometime ago.)

This morning I read with interest Julian Le Grand’s thoughts on the Coalition’s plans to overhaul the NHS. Le Grand is a former advisor to Tony Blair on public service reform. He describes Andrew Lansley’s proposals as “impressive” with “their origin in policy reforms initiated by John Major’s Conservative government in the 1990s and subsequently developed by Tony Blair’s Labour government”. Similar sentiments were expressed last month by another advisor to Tony Blair – Simon Stevens wrote in the Financial Times that the Coalition’s plans take forward earlier reforms blocked by “internal opposition”.

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.

DIUS deceased

As was speculated this week the Department for Innovation, Universities and Skills is no more. It is now merged into Lord Mandelson's BERR business department.

When public finances (and hence public services) are under-pressure, the short-lived DIUS cost over £7 million to set-up - around £10,000 per day over its short and unhappy two years.

Re-shuffling bureaucracies

Today’s Financial Times indicates that Downing Street is thinking about “another Whitehall restructure” – i.e. re-shuffling departments as well as cabinet ministers. Earlier in the week there were suggestions at the Association of Colleges’ Finance Directors’ Conference that the Department for Industry, Universities and Skills might be merged into Department for Business, Enterprise and Regulatory Reform. (What would you call the offspring of such a union?)

It is a sad fact that the government periodically lapses into bureaucratic shuffling as if merging, de-merging or re-naming departments will fix problems. (Readers of this blog will know that I believe that genuine reform is more likely to involve creating customer choice and competing providers in he delivery of public services.)

Sometimes re-arranging bureaucracies is appropriate but it involves time, effort and resources which could be used for other purposes. How often is the cost-benefit analysis done?

DIUS has existed less than two years. It has major issues on its agenda – like the LSC capital funding debacle. Let’s hope the rumours are unfounded and DIUS can get on with its job.

Balancing the books – efficiencies, no-frills and co-payment

According to the media today, Wednesday’s budget will include £15billion of efficiency gains in 2010/11 to assist in balancing the public sector’s books. While any impetus to get more out of public spending is welcome, we need to remember that there are allsorts of issues with how efficiencies are measured. Moreover, if it is not possible to get “more for less”, we will all get “less for less” – the kinds of cuts seen so often through the 1970s, 1980s and 1990s.

Perhaps “no-frills” public services are inevitable – even if they are no one will admit it this side of an election. One thing that I am fairly sure about is that we will see more “co-payment” – that’s the jargon for users paying something towards the cost of services. (There was discussion of this as part of the Blairist approach to public service reform but it largely faded away with the arrival of Brownism - apart from in the NHS where the issue developed its own momentum due to NICE decisions.) We’ve got co-payment in higher education already. Where next? Or rather, where after the next election?