A social enterprise stocktake

Now – with the sale of ECT Recycling – is a good time to take stock on social enterprise. There is a timely review in this month’s Director magazine.

If anyone thought the situation was simple, the article will disabuse them of that notion. It warns of charitable and corporate entities being re-sprayed as social enterprises – “carpet-bagging”. It also suggests a distinction between the Body Shop as a social business and the Big Issue as a social enterprise. (I'm not sure about that one: it sounds like the government when it suggests that the "business" in the Department for Business, Enterprise and Regulatory Reform is something different from the "enterprise".) The article also points to the challenges – such as “scalability” with capacity issues in expanding to be in a position to deliver big contracts.

I have recently worked with one social enterprise that was thinking about seeking growth through mixing commercial and public funding. That poses a whole set of new challenges – not least for governance and accountability.

I suspect this bandwagon will keep rolling.

Social enterprises, muck and brass

I was surprised to read that the social enterprise ECT Recycling (linked to leading social business Ealing Community Transport) has been bought for £3.4m by private sector company May Gurney.

ECT Recycling is a community interest company required to return only 35 per cent of its profits to shareholders with the rest reinvested in operations.

The CIC regulator has said it will be monitoring developments. It will be important that this deal does not go sour – otherwise there will more cries of “privatisation” when new providers are involved in delivering public services.

HA boards: one-third fits all?

On the Great Governance blog for Welsh housing associations there is the executive summary of a report on governance commissioned by the Community Housing Cymru for the current Welsh Assembly Government review on the subject.

The report rightly recommends that

boards recognise that citizen and community engagement should be a defining feature of the governance of housing associations, constantly seek to innovate in their engagement with citizens and communities, sharing experiences and learning from others, and ensure that the direction and decisions taken by the board are informed by the engagement.

It also recommends that boards of associations which are responsible for providing housing services include one-third of their membership from tenants. Does one size really fit all?

Admiring the colourful housing in Albania

Interesting colour schemes in Tirana.

Temporary interrupton in service

Over the next couple of weeks, there may not be any postings. I'll be back on June 4th.

Are colleges open for business?

I have spent much of today trying to speak to colleges about them providing construction training for a client. While some FE colleges are enthusiastic and accessible, others offer unreturned emails, labyrinthine websites and ringing-out phones. I am lucky to escape the loop of one college’s telephone system.

It will be a challenge when they are assessed on their responsiveness to customers under the LSC’s Framework for Excellence.

Maybe choice and competition will sharpen up their act.

The NHS, Polyclincs and progress

As the NHS awaits the July report from Lord Darzi with its likely promotion of polyclinics (where several GPs’ surgeries are brought together linked to other services), I thought this quote was worth pondering:

We tend to meet any new situation by reorganising [to create] the illusion of progress, while producing confusion, inefficiency and demoralisation.

Usually attributed to Roman Consul Petronius but possibly dating from a British Army officer after the second world war.

Better integration of primary services makes sense. The fact that the medical profession does not like polyclinics could be seen as positive as the BMA has always opposed change including the foundation of the NHS.

On the other hand there is a risk that polyclinics will make primary care more distant from the individual – at least geographically. Nevertheless, we should all be conscious of the investment of time and resources (including the reserves now being accumulated in parts of the NHS) - will it be value-for-money?

School governors: less is more

I was pleased to read in Public Finance that a major review has started aimed at smaller and better-trained school governing bodies.

While school governors make a valuable contribution, having more of them does not mean more value.

Data, community cohesion, equality and diversity

Last week’s Public Finance has an interesting article by Professor Ted Cantle of the Institute of Community Cohesion (iCoCo for short).

On this blog I have expressed a certain wariness of some of the thinking behind the community cohesion agenda. In particular, I am uncomfortable with the hostility to multi-culturalism and the shift towards an emphasis on inter-cultural ignorance rather than inequality and discrimination. (I would add that I also believe that the public and third sectors need to treat this agenda seriously and connecting it in a progressive way to work on equality and diversity.)

After that caveat and caveat to my caveat, I would recommend Ted Cantle’s article. While talking primarily about the variety in the Muslim community (or communities), he notes more widely:

There is a real need to refine the crude total population data from sources such as the census to reflect the turnover of population and to map the complexities within communities. This would allow a move beyond a uniform approach to engagement and service delivery.

Too often organisations adopt a simplistic approach to using data in these areas – sometimes narrowly focusing on “targets” for “BME” (black and minority ethnic) access to services rather than thinking about what level of use would be expected and by which communities.

Double whammy for social housebuilding targets

The impact on social housing of the credit crunch and property market is at last getting some attention in the mainstream media. On Monday's Radio 4 PM programme, the chief executive of Southern Housing Group warned that the reticence of lenders was making it hard for housing associations to plan new developments. Combined with a likely decline in homes earmearked as affordable coming through Section 106 planning agreements, this adds up to a double whammy.

Can and will the government increase grant rates from the Housing Corporation to provide more socially rented and other affordable homes?

One Plus governance issues equals organisational failure

The Office of the Scottish Charity Regulator (pronounced Oscar for those of us south of the border) has issued a report into the collapse of the Scottish charity One Plus: One Parent Familes (no relation of One Parent Families/Gingerbread or its sister charity One Parent Families Scotland). One Plus went down with an overdraft of £2m plus – as well as other debts. OCSR’s case study report found “important lessons”.

The section on governance issues reads like a visit to a chamber of horrors. This is even sadder as the board were interested and enthusiastic.

1) “The Board did not appear to contain adequate skills and independence of thinking to reflect the needs of a multi-million-pound business” - including poor arrangements for recruitment and development, a finance committee that had difficulty meeting, the Board did "not seem capable and willing to hold the previous Chief Executive and Senior Management Team (SMT) to account".

2) “The lack of timely or full financial information being presented to the Board” - including tabled papers, out-of-date and insufficient information.

3) “The scale, skills and leadership of the finance department seems not to have been adequate for the size of charity”.

4) “The apparent lack of independent third party advice sought by the Board” - "The charity and the directors tended not to seek advice nor engage with the external auditors between audits", no internal auditors and no audit committee.

5) "Both the Board and the SMT appear not to have taken responsibility for making decisions to resolve difficulties when they were identified".

The other sections of the report, including those dealing with broader funding issues, are worth a read too.

Its worth noting that the same themes recur in so many organisational failures in the public and third sectors. The sooner those lessons are learnt, the better.

Codes of conduct and the bad behaviour of board members

The Charity Trustees Network is drafting a model Code of Conduct for charities. This recognises the difficulties that can arise from problem board members.

Its worth remembering that having a code is one thing; having the ability and willingness to apply it is another. I know of at least one college that had a code of conduct but did not know how it was going to use it when a governor was accused of breaching confidentiality.

The CTN would like to hear about:

1) the kinds of trustee behaviours that have caused concern and difficulties

2) experience of putting in place and using a code of conduct

Blue Avocado on governance: abolishing board committees

There is a new blog and website for not-for-profits, Blue Avocado. It comes from across the Atlantic but a lot of the issues are the same.

Blue Avocado has just posed the question: Abolish Board Committees?

It goes on:

Too many boards are bogged down by committees that are inactive or maybe even semi-fictitious. And board members can feel compelled to be on three or four committees each!

It suggests time-limited, task-orientated taskforces or working groups. I do not have too much of a problem with that (especially for small community and voluntary groups) although I have seen working groups end up blurring the management-governance dividing line.

It is also noteworthy that Blue Avocado answers its own question by saying:

One permanent (standing) committee you'll probably need is the Finance Committee, which must oversee financial performance on a continuous basis.

I would also urge any organisations with internal audit (or some too small to have it) that an audit committee is fairly essential in good governance.

A leaner public sector?

Today’s Global Business on BBC World Service was about applying the Toyota-style lean production methodology to service industries. (The podcast is avilable but only for a week or so.) Its worth noting that lean is particularly relevant to making public services more effective and customer-centred.

Lean production includes a range of tools including a focus on dealing with the seven wastes:

Defects in products
Overproduction ie the costs associated with the production or acquisition of items before they are required
Transportation of products
Waiting
Inventory ie the capital costs of raw materials, Work-In-Progress (WIP) and Finished Goods
Motion of staff and equipment
Over-processing ie using a more expensive resource than is needed

The ideas of lean are already being applied in some public services such as the NHS and social housing. But much of the potential is being left untapped.

The third sector and terrorism

The Institute of Chartered Accountants’ seminar on charities on Thursday included a thought-provoking session on charities, terrorism and fraud.

I must confess a degree of doubt over whether the WRVS would be targeted by Osama Bin Laden. Moreover, I think that the banks’ money-laundering regulations get in the way of civil society much more than criminals and terrorists who would merrily steal identities to circumvent the bureaucracy. Nevertheless, terrorism should be borne in mind when addressing fraud and other criminal threats as good risk management.

The Charity Commission’s operational guidance on Charities and Terrorism is useful and relevant in the public and third sectors beyond charities.

Lies, damned lies and performance management

Last week’s Public Finance magazine carried an interesting article about performance management – yes, really. It included a disturbing statistic: over 70% of recipients in a recent survey admitted to fabricating performance data. (How many of the others didn’t like to admit it?)

We know about perverse incentives, erroneous errors and even issues with performance data to regulators and clients, but this is organisations telling themselves lies.

(Before I go on, I should stress that I am a sceptic when it comes to “targets” as reform and performance information as a panacea. But performance information is integral to good governance.)

What can be done? A mature attitude to performance information would be a start – seeing it as a means to an end rather than an end in itself; measuring what matters rather than what is easily measurable.

There is also value in assurance. Boards and managers should ensure that key information systems are reliable. How can they do their job if they are driving with a faulty dashboard?

Larger housing associations have to get certain operational performance information systems verified periodically. Other organisations could get internal auditors to check out performance information systems. Yet in most of the public sector and third sector performance information is just accepted at face value.

What’s the point of complaining: learning from mistakes

This month the Heathcare Commission has published its second report on NHS complaints systems. It suggested that the NHS should use complaints to learn from mistakes and promote improvement.

It’s not a new or radical idea. As Bill Gates commented: “Your most unhappy customers are your greatest source of learning."

Yet reporting on complaints is often seen as chore of governance rather than an opportunity for learning. Reports labour over who complains, what about and what happened (in terms of whether complaints “upheld” and remedial action) – with hardly a mention (probably no mention) of what lessons were drawn from upheld complaints (and, of course, even rejected complaints might indicate scope for improvement).

If public and third sector want to improve their complaints processes, there is help out there. The Housing Ombudsman published a guide some year ago which sets out key principles and best practice (pdf available).

Productivity and diversity of perspectives

This week’s Global Business on BBC World Service was about developing effective teams. (The podcast will only be available for a week or so.) Professor Lynda Gratton of the London Business School talked about the key ingredients – which don’t include mandatory team building!

Like James Surowiecki in his excellent book The Wisdom of Crowds, Professor Gratton argues that diversity of perspectives results in creative tension and from that great ideas. She suggested that productivity in the UK would improve if corporate boards had a better gender balance.

That logic applies to the public and third sectors – and other perspectives: culture, belief, disability ethnicity.

Audit committees - some (late) new year's resolutions

I am not having a week of plugging the Audit Committee Institute (sponsored by KPMG). But I would recommend the ACI’s latest quarterly. It carries an article on Ten To-Do’s for Audit Committees in 2008.

A couple of the To-Dos are, in my opinion, less priorities for the audit committees of the public and third sectors. The rest are:

- Be a catalyst for improving risk management and oversight.

- Make sure the CFO (chief financial officer) and the finance team have what they need to succeed.

- Ensure there’s a shared vision for internal audit.

- Encourage (expect) frequent, informal communications with the audit engagement partner.

- Be prepared for a crisis.

- Make sure the full board is aware of the audit committee’s activities and needs.

- Assess the tone at the top and throughout the organisation.

- Take a hard look at the audit committee’s performance.

The article has some suggestions on all of these too.

As I’ve signposted before, there is plenty of useful guidance out there for audit committee members in all sectors.

How well will housing associations be able to digest the credit crunch?

Yesterday I went to an excellent seminar for housing association audit committee members run by KPMG’s Audit Committee Institute. One of sessions was delivered by the Housing Corporation’s head of financial regulation. He spoke about the financial health of housing associations. It was somewhat depressing hearing his summary of the sector's Global Accounts. He noted the pressure on association’s operating margins and their heavy reliance on profits on property sales.

It is rumoured that there are only two lenders in the housing finance market. (And, of course, the margins are higher and expressed over the inter-bank rate LIBOR.) This week Inside Housing is reporting the lenders' loss of appetite. This will hopefully change once the credit crunch passes - eventually. If housing associations struggle to sell shared ownership (and outright sale) new build, they may also lose interest development.

Housing associations (including their boards) need to watch this very closely although there scope for action is fairly limited.

Housing repairs PIs, inspectors and targets

This week’s Inside Housing has a challenging article by John Seddon (the management guru who has popularised “lean thinking” in the UK). He writes on performance improvement in housing - and how, he suggests, targets and the Audit Commission inspection regime hinders it.

Sadly there is no copy of the article on Inside Housing website. However, there is an article making a similar case on John Seddon’s website, Systems Thinking. I have some sympathy with the case being made.

Inspectors (and politicians) often assume that everything can be fixed by targets (or higher targets if performance is not good enough). Sometimes “targets and terror” can work – but I would argue that such an approach cannot deliver sustainable improvement.

Housing associations and ALMOs should not give up all hope. They can do something. For a start, they should remember that the Housing Corporation has shifted the focus on repairs performance indicators from response times to resident satisfaction. It appears to be that few housing associations have re-thought their own repairs PIs and introduced a more holistic and sophisticated framework for repairs performance.

Boardroom furniture – the role of the chair

The recent kerfuffle about Stuart Rose being an executive chairman at Marks and Spencer (ie combining the roles of chairman and chief executive) should be a useful reminder of the importance of the chair in acting as a balance to executive management.

A degree of tension between a chair and a chief executive can be creative. That is more difficult if the roles are combined. In the public and third sectors, we don’t get the roles combined although weakness in either party can result in a similar type of imbalance.

Perhaps relationships between chairs and chief executives are a bit like marriage. The National Council of Voluntary Organisations’ website has suggested prenuptial agreements as a way of avoiding relationship breakdowns.

There is a lot of truth in the old cliché: the chief executive manages the organisation, the chair manages the board. Unfortunately useful advice in applying that can be harder to find. I would signpost new (and not-so-new) chairs to the Governance Hub if they are looking for some guidance.

Beyond decent homes - rooftop swimming pools for social housing?

We are fast approaching 2010 when the decent homes programme is meant to be (kind of) complete. It will have achieved a significant improvement in the long-neglected council housing sector as well as being used to promote reform and modernisation - not least with the successes of the Arms Length Management Organisation model of managing council homes. But what then?

Vienna's alt-erlaa social housing complex includes rooftop swimming pools. I don't think that will be on the agenda here. (I did not post this on April 1st!)

But local authorities, housing ALMOs and housing associations need to do some thinking about strategy - and some talking to residents. It should be remembered that decent homes is a narrow set of yardsticks and - as the name suggested - pretty limited to the basics of "decency". In the twenty first century I would suggest that having a shower fitted something that residents should be entitled to expect (and arguably it is an environmental prerequisite in water-hungry times).

Windfalls for departing bosses – robust arrangements for remuneration and performance management

There has been a lot of debate about the pay-off received by the Northern Rock chief executive, Adam Applegarth. These issues are relevant to the public sector too. Earlier this year we had the £75,000 payment to the chief executive of the “superbug scandal” Maidstone and Tunbridge Wells NHS Trust. Now the Yorkshire Post reports that Principal of Doncaster College has been given a compensation package of £163,000 after seven months doing the job and eight months being suspended.

Boards in the public and third sector must remember that hiring and firing chief executives is central to their role – so they need to have robust arrangements for remuneration and performance management.

Some thoughts on audit, governance and regulation in colleges

I have some doubts over the government’s plans to redistribute the role of the Learning and Skills Council among a Young People’s Funding Agency, adult Skills Funding Council, a National Apprenticeships Service and over a hundred local authorities – oops, I almost forgot the sub-regional clusters. What an article in the Guardian dubbed a "quango tango". Camparisons with the fragmentation of British Rail aren't exactly cheery. But let us put to one side issues of joined-up government and managing the transition, what about the implications for the regulation and governance of colleges who deliver so much education and training?

Presumably the “provider assurance” function of the LSC will be split two or more ways. This will be sad as this will be disruptive and risk a fall-out of auditors who do know colleges - even if they can be frustrating at times. Any loss of experience and expertise may result in a nit-picking defensive mentality or a soft-touch approach (as opposed to an effective light-touch). Possibly colleges will get both.

The re-arrangement of agencies might, on a brighter note, lead to a re-think of audit for colleges. (But I doubt it.) I would query whether the smallest colleges – particularly the smaller sixth form colleges – need their own internal audit service. These colleges often have a total income of a few million and limited non-core activities. They are quite different from Newcastle College with its £150 million income.

The smaller colleges are little different from the schools that they compete with for staff and students. They are arguably less exposed to risk than small housing associations who are not obliged to have their own internal audit.

As always there is a need for a cost-benefit analysis.

I am not downplaying the importance of internal control. I certainly think that all colleges should have their own audit committee – which should assess and report to governing bodies how assured they can be that internal control is robust. Whether they get this assurance from internal audit, external audit, healthchecks by consultants, or whatever, should be a matter for them.

Auditors as unsung heroes and the role of audit committees

No one likes auditors – or so it seemed until I read in yesterday’s Guardian that Auditors are unsung heroes.

To be precise, Duncan Campbell-Smith was only really talking about the Audit Commission who audit local government and the NHS (and inspect social landlords). But I’ll claim some credit as I temped in the mid-90s for District Audit!

It is nice for auditors and accountants to get some good press. Their image problems are such that there are even calls for jihad against the profession.

On a serious note, I do think that when – in the aftermath of organisational failure in the private, public or even third sector - the cry goes up of “where were the auditors”, we should also ask about the audit committee who should have been thinking about risk and internal control. Auditors need audit committees to keep them on their toes. In order to do that effectively, audit committees have to know what their own purpose is. Too often they don’t.

The end for Carter & Carter - FE college comes to the rescue

Last week brought the good and perhaps surprising news that the training giant Carter & Carter was to be taken over by England’s largest FE college. The acquisition by Newcastle College will save 1500 jobs. (The reach of the college was already far-reaching – at least geographically.)

As I’ve discussed here before, Carter & Carter started off with big ambitions – it promised to overtake Cambridge University in size. Instead it was plagued by at least bad luck.

This isn’t the first take over of a private training provider by a college but it is in a league of its own. (Not all such acquisitions have been very businesslike – I know of one which ended in tears after the college involved did not undertake due diligence.)

The take-over is not so good news for promoting contestability in the FE sector. Carter & Carter could have been in the market for rescuing and turning-around failing FE colleges – its a strange twist of fate that it was the other way round.

LSC RIP - Chronicle of a death foretold

Today the government announced that the Learning and Skills Council will be axed in 2010. It will be replaced by a Young People's Learning Agency, charged with helping local councils work together in providing for 14-19 learners, and a Skills Funding Agency (SFA) to administer funding to colleges and training providers.

When it was set-up in 2000, the LSC was built very much on the basis of the local Training and Enterprise Councils. If it had been built around a regionalised and reformed Further Education Funding Council (its predecessor), its early years may have been happier.

While the writing was on the wall for some time, now colleges will now be preparing again for the unknown. Let’s hope the government manages these changes effectively without destabilising and fragmenting the learning and skills landscape.

Policies all round – the Daily Telegraph on the “regulatory thicket”

The Daily Telegraph website carries an anguished article by Charles Moore about the regulatory burden of “policies” on civil society.

Moore writes:

A "policy", you must understand, is not a simple thing any more. It is not just a statement like: "We aim to provide residential care for the elderly" or "We try to cure children with spinal injuries" (or whatever). Nor is it just a statement of specific rules such as "No alcohol may be consumed on the premises" or "Pupils need not wear school uniform in the sixth form".

No, a policy has to be a lengthy document on anything that the Government thinks important. It must set out aims, procedures, targets, monitoring, assessment, evaluation and so on. Depending slightly on what sort of organisation you are, you must have policies on health and safety, access, disability, recruitment, transparency, energy efficiency, environmental health, etc, etc.

I share some of this frustration. (I’ve blogged on “over-policying” before.) However, I do not share Moore’s ideological diagnosis:

The "speech community" of the post-1960s Left has gained almost complete power and influence over the administration of government. Its concepts, its way of putting things, now have the force of law. It is producing the slow death of free institutions in this country.

Neverthless, the proliferation of policies like a triffid in public services is a threat. Public and third sector organisations need to adopt a sensible approach – streamlining things where possible by combining some policies and relegating some to “procedures” outside the remit of board governance. Sometimes they need to have confidence and stand up to regulators when the so-called “good practice” of having a particular policy will get in the way of effectiveness. Above all there is a need to focus on improving outcomes rather than being in thrall to process. (Too many action plans can be just as much a distraction as too many policies.)

I would also suggest that organisations look at the Policy Governance model of the American organisation guru John Carver which focuses on policies as central to the role of boards in governing organisations. In this model:

Policies are written statements that are designed to provide that framework of values and perspectives and thus guide further decisions. They set up rules, defining what is to be accomplished and what should not occur. The policies are embodiments of the values and perspectives of the greater authority that the board stands in to represent. If policies direct all further decisions, then the best place for leadership is in the development of policy.

It sounds like common sense but many organisations struggle with this and end up micro-managing (often encouraged and/or coerced by the regulatory pressures discussed by Moore).

Personalisation and Co-operation - mutual solutions in social care

Today I went to a co-operative movement conference on Personalisation and Co-operation. The speakers were Neal Lawson from Compass, Helga Pile from UNISON and Mick Taylor from Mutual Advantage.

I am sure that I will blog some more later on some of the broader issues but I found Mick Taylor’s contribution particularly interesting and inspiring. He has been working with a new co-operative society, Caring Support, set-up to pool individual budgets of a group of social care users. This gave them collective and individual control over the services that they received as well as providing for better terms and conditions for the staff.

I do hope that the co-operative movement will promote and incumbent such mutual solutions to the challenges of an ageing society and the needs of the most vulnerable users of public services. The government appears interested in this area with the recent announcement of more money for the Social Enterprise Investment Fund.

Getting the goat - Conservative plans on homelessness

The budget may not have been very exciting but the opposition is really getting serious about the housing crisis. The Financial Times reports that Conservative MPs and conference delegates are being urged by Caroline Spelman, their party chairman (sic), to help build a shelter for a rare breed of Bagot goats at a working farm near Gateshead.

Surveying UK civil society

As a corporate affiliate of the National Council for Voluntary Organisations, today I received my copy of the new UK Civil Society Almanac 2008 (pdf of the executive summary available). It is a pretty comprehensive review of where the third sector is at. Significantly it takes over from the previous NCVO almanacs of the voluntary sector with their narrower coverage.

The Almanac's executive summary notes that civil society organisations account for £109 billion of income in 2005/6. That’s a lot of activity. (I would query the inclusion of “independent schools” as part of civil society but the omission of Further Education Colleges which give so many young and not-so-young people a second chance as well as opportunities to develop skills for citizenship and employability.)

The Almanac addresses many important issues for the third sector which I will no doubt blog about as I read my way through the book.

Looking forward to a period of financial uncertainty the Almanac comments: “It remains to be seen how this will affect civil society, but the difficulties at Northern Rock plc highlight the dangers.”

Audit committees with added value - the NAO's "top tips"

The National Audit Office has launched a new edition of its Audit Committee Handbook. While it is primarily intended for audit committees of government organisations, other audit committee members may find it useful.

Alongside the Audit Committee Handbook there is a self-assessment checklist and a guide to “adding value”. The latter includes some practices that many audit committees would consider to be fairly routine or standard. However, it does suggest some practices that are less common but would certainly add value such as:

- calling appropriate business heads to meetings to explain how they are delivering on their agreed actions or on risks for which they are responsible; and

- improving communication between audit committee chairs and auditors with meetings outside of the formal committee meetings.

Supporting student governors - learning lessons from Scotland?

This week I discovered the sparqs website. It is a free service which is funded by the Scottish Funding Council to assist and support Scottish students in improving promoting quality improvement. I am not aware of anything similar in England – we could perhaps learn from our devolved cousins.

On the sparqs website there is a useful Supporting College Student Governors Handbook. (We’ll have to forgive whoever forgot to proof read the web page about it. The odd typo creeps onto this blog so I won’t cast the first stone.)

The Supporting College Student Governors Handbook sets out key information for student governors including how they can engage with their fellow students.

In the Handbook I did find some confusing wording on the difficult issue of to represent or not to represent. It notes: “Governors do not represent particular groups or interests, and as such they cannot be mandated.” Yet elsewhere: “Although you gain your position on the board as a student representative, remember that all of your decisions as a board and as an individual member will impact on other stakeholders too.” I would suggest that student governors are not student representatives but are there to give a student perspective – not least in a providing a reality check in what can be an isolated governance bubble. (I would suggest that the same issues arise for resident members on housing association and ALMO boards – or indeed any board members who are customers.)

I would also query the relevance of the examples of conflicts of interest in the Handbook. They are not likely to encounter the examples given. How many student governors are likely to also be a company director in the construction industry? Examples relating to, say, grants to student unions may have been more instructive when student governors may also be active on student union executives.

Despite my misgivings over some elements of the Handbook, I would like to see something in England for student governors. It would be timely given the profile now given to Learner Voice.

E-openness: New Freedom of Information website from mySociety

There is new website from mySociety (the people who brought you They Work For You and Directionlessgov). The What Do They Know site focuses on Freedom of Information. It helps you to easily and simply file request and share information on these requests and their results. The site is still in development but it is working. Have a look and maybe use it!

Commitment to reduce public sector bureaucracy

Sadly the aim “to reduce the enormous quantity of meetings, co-ordinations, permissions, conciliations, dispositions, regulations, circulars, etc, etc.” is in Cuba rather than in the UK public sector.

It will be interesting to see if Raul Castro can deliver on his commitment and breathe new life into Cuba’s centrally planned economy. Closer to home the jury is still out on Gordon Brown’s own commitment to regulatory reform. There does appear to be continuing threat to the independence of foundation hospitals.

Governance matters – at last proof that doing things right means better results

It was good to read in The Guardian this week that well governed companies do perform better than badly governed ones. This proves that it is worthwhile for organisations in all sectors to listen to the advocates of better governance.

In the past doubters could always stall and ask for the proof. As one of the many reports on governance in he 1990s reported a little feebly: “Business prosperity cannot be commanded. It is important to recognise that there is no hard evidence to link success to good governance, although we believe good governance enhances the prospect.”

But no more! The researchers at the Association of British Insurers analysed 241 companies with the best and worse corporate governance records. They found that governance drives performance rather than the other way round, and found lags of two to three years in the relationship between poor governance and inferior performance. For each year a company was in the worst category for governance, its return on assets fell by about one percentage point a year.

While the study was looking at the private sector, I think it’s reasonable to apply its lessons to the public and third sectors where practice can be found to be a lot better and a lot worse than the private sector.

The vulnerability of chief executives in FE and housing

In the FE and social housing sectors where I spend a lot of my time working, I’ve noticed that the industry press have been talking about the vulnerability and turnover of chief executives.

Inside Housing reported that arm's-length management organisations (ALMOs) have experienced massive upheaval over the last year with a quarter replacing their chief executives. It talked about pressure to meet the decent homes deadline, interference from parent local authorities and the desire of some chief executives to take on a new challenge

The FE pages of the Guardian reported that college principals are now like football managers - they don't last long if they don't get results. It also reported that research suggested had found that “excessive audit cultures, inconsistent funding and multiple community engagements” resulted in a growing disinclination for qualified candidates to apply for vacancies.

Should we worry? I am suspicious of the cult of the CEO – chief executives are not superheroes. (Nor in fact are football managers – see King Kevin at Newcastle United.) As one author has pointed out “Past success is no guarantee of future success”. Sometimes chief executives are just lucky – chief executives (and boards too) are at the helm of successful organisations (or what are perceived to be successful at the timel – look at Enron or Northern Rock).

Nevertheless, I have seen how a lack of leadership can be debilitating. Organisations in public services will be losing direction if they do increasingly lose their chief executives.

The creative industries in UK plc: the third sector, education and training

It is good to read that the government is providing for 5,000 new apprenticeships in film, fashion, music and design as part of a new strategy for the creative industries.

I’ve been doing some work with third sector organisations recently – many of which are well placed to assist this push on education and training for the creative industries. I have learned a lot about how creative industries are a key element in the British economy.

Research by the think tank Demos has found that the creative industries employ 1.8 million people in the UK. The creative industries are definitely not a passenger in UK plc – they are a driver. Sadly this is not widely understood. (I once had to explain how the creative industries were as much "wealth generating" as manufacturing industry to a documentary maker who asked me how this could be!)

The property market and the implications for housing policy and housing associations

The property website Rightmove reports that the asking price for houses moved up last month. Rightmove's latest survey for the month to February 9 shows that asking prices rose 3.2 per cent to £237,856. The rise, averaging £7,428, pushed the annual rate of growth up to 5.8 per cent, from 3.4 per cent in January.

Don’t get over-excited. This is asking prices – the prices are much higher than the final sales prices recorded by the Land Registry. Rightmove also point out that there is often such a pick-up in February.

Perhaps the real picture is better shown by the falling prices – some pretty spectacular – on Property Snake.

No doubt there are some recession-proof areas, particularly in London – but the property market correction is surely here.

What does this mean for housing policy and housing providers? Some housing associations will be struggling to sell the shared ownership properties that they have built or got through section 106s. Where business plans rely upon shared ownership and even outright market sales there could be problems. Those problems could have an impact for the policy-makers (and those suffering the effects of the housing shortage) where difficulties prevent the delivery of ambitious affordable house-building plans (plans that already seem to be a bit of bother).

The Healthcare Commission learning from investigations – mergers, targets, governance and other common themes in public services

The Healthcare Commission watchdog has published an interesting analysis of lessons from 14 investigations into patient safety failures. Such analyses of failing organisations are always to be welcomed. In social housing there are the Learning from Problem Cases series of reviews into "supervision" cases (see the Housing Corporation website here and here). Sadly in other sectors, such as further education colleges, there are ad hoc reactions to failures rather than systematic reviews and efforts to promote learning.

The Learning from investigations report (pdf available) found common themes:

1) Leadership and management: Poor leadership was a problem in nearly all of the investigations carried out by the Commission.

2) Some boards had been focused on mergers or targets at the expense of their broader activities.

3) Lack of continuity in leadership was a problem in some trusts, where frequent changes in management were a factor in poor care. Bullying and harassment by managers was a factor in two cases investigated. The Commission found there was a fine line between promoting change vigorously and bullying.

4) Investigations often uncovered a breakdown in leadership and management, with a lack of clarity on responsibilities from board to ward. Poor teamwork, either between management and clinicians or between clinicians themselves was another common factor in failings.

5) Use of information: The Commission found that most of the trusts investigated did not have adequate systems in place to routinely inform the board of trends or potential problems.

6) Mergers and restructures: Seven of the trusts investigated had recently undergone mergers or significant organisational change.

7) Safeguarding vulnerable adults: Poor understanding of adult protection procedures and responsibilities was a serious problem in the two investigations into learning disability services and also a number of interventions in trusts.

8) Poor care on general wards: When its investigations looked at acute hospital care, the Commission noted that care on general wards fell well below the care provided on specialist wards. Older patients were most at risk as they were often most dependent on good nursing care.

It is note-worthy that the first five of these themes are found widely across public services.

Northern Rock and mutualism

As the government nationalises the Northern Rock its worth taking this opportunity to remember that the bank used to be that most solid of institutions, a building society owned mutually by its customers.

If Northern Rock had not succumb to de-mutualisation in 1997, it is unlikely that it would have experimented with such a risky business model based on lending long and borrowing short with wholesale funds.

Its official: efficiency gains claimed by housing associations "do not reflect the whole picture"

Readers of this blog will know that I am a long time skeptic about the huge efficiency gains being claimed by housing associations through the annual efficiency statements to the Housing Corporation. All sorts were being claimed without much concern for definitions or common sense. (The efficiency gains reported reminded me of reading Soviet Weekly on grain targets.) I was heartened to read that the Audit Commission has one or two doubts too.

In the Commission’s new report on procurement (Better Buys - pdf available) they note that reported efficiency gains represent 3.5 per cent of aggregate turnover and 4 per cent of total expenditure of the sector in 2005/06. Yet they observe that “these global cost savings do not reflect the whole picture” and remark on the reliability of these figures.

It is particularly interesting that in an attempt at verifying of a sample of annual efficiency statements, but it was not possible to track the efficiency savings reported in the statements into associations’ management accounts.

Thank goodness the Housing Corporation has abolished this requirement. It is a lesson in how efficiency gains cannot be brought forward at regulatory behest.

Corporate fundraising: the cautionary tale of the Northern Rock Foundation

Northern Rock gives us a cautionary tale on corporate fundraising for charities. For a decade the Northern Rock Foundation has made an poured millions of pounds into voluntary and community organisations in the north east and Cumbria. But the future of the Foundation and for its beneficiaries is uncertain.

The Financial Times reports that the Foundation ploughed 5 per cent of the Northern Rock’s pre-tax profits each year into charitable works. In 2008, it looked set to receive in excess of £35m from the bank, its largest injection of funds ever.

Believing future funding was assured, the Foundation spent most of its money, rather than tying it up in endowments. Of the £190m it had received, it spent £171m to date. In response to the bank’s difficulties, 2007 foundation spending was trimmed to £23m and 2008’s cut to £7m. Future grants are expected to be much reduced especially for some sector such as culture and heritage.

Third sector salaries in 2007

The Workforce Hub has just published the main findings from the 19th Annual Voluntary Sector Salary Survey. Its makes interesting reading which will be of particular interest to those responsible for human resources and financial management (including business planning and financial forecasting).

The Salary Survey found that average salaries and earnings in the voluntary sector each increased by 3.7%, a higher rate than the Average Earnings Index of 3.0%, but below the Retail Price Index of 4.3%. The increases are slightly lower than twelve months ago when both increased by 4.9%.

The Salary Survey found that 62% of organisations had experienced problems with staff recruitment in 2007: an increase of almost 10 percentage points from last year. The main reasons behind these difficulties were a lack of suitably trained applicants and the salary levels available. Likewise problems with staff retention were more widely reported as was an increase in staff turnover.

2008 may be the year when the squeeze on public finances impacts more radically on salaries in the third sector as well as the public sector.

Eco-office - an example for all

I’ve had a busy weekend. As well as the NHF Board Members’ Conference, on Friday I attended the official opening Christ Church Memorial Hall eco-office – a part of a £2.3m eco neighbourhood project led by Family Housing Association (Birmingham).

While I must declare an interest as a board member of FHA (Birmingham) board, the eco-office is an excellent exemplar of good practice for private, public and third sectors. Moreover the opening was well-timed as last week was European Sustainable Energy Week.

There is more on the eco-office and the associated projects on the FHA (Birmingham) website.

Social housing reform - priorities for housing associations

I spent the weekend at the National Housing Federation’s conference for housing association board members. One of the more interesting sessions was speech by Terrie Alafat, Director of Housing Strategy and Support

In an update on the government’s agenda of social housing reform, the main policy priorities with a bearing on housing associations were identified (according to my scrawled handwritten notes) as:

- Preventing homelessness.

- Addressing worklessness.

- Specialist services for the socially excluded.

- Tackling overcrowding.

- Improving choice and mobility for tenants eg choice based lettings, common housing registers.

And, of course, there is the challenge of ramping up house-building to about 70,000 affordable homes a year by 2010/11.

It was good to hear a range of policy concerns being talked about – without disproportionate emphasis on shared ownership.

Better Buys – housing association procurement and repairs

On Friday the Audit Commission published an enlightening and challenging study on housing association procurement. The Better Buys report (pdf available) includes the diagram above which presents the “low hanging fruit” and the less easy wins available diagrammatically.

The study found that a third of efficiency savings by housing associations in 2006/7 came from procurement. But significantly shows that further annual savings of about £100 per home could be made through the better procurement of housing maintenance services.

The report’s main recommendations for housing associations (but with relevance to other social landlords) are:

• identify gaps in procurement skills and take steps to fill those gaps, either by building in-house capacity or seeking external expertise;

• identify and collect information on the market before considering procurement options and ensure that performance monitoring and benchmarking is undertaken as part of the procurement cycle;

• consider and evaluate all models of collaboration for achieving greater efficiency, including shared services in groups and consortia;

• explore and evaluate a greater role for e-procurement tools; and

• ensure that residents are involved in, and have appropriate opportunities to influence, relevant procurement processes.

Charitable giving: international league tables and support for the arts in the UK

It was depressing to read USA Today report how badly European countries – including the UK – compare with record levels of charitable giving in the USA.

Last year Americans gave nearly $300 billion to charitable causes - a record exceeding the 2005 total that had been boosted by a surge in aid following Katrina and the Asian tsunami.

A Charities Aid Foundation study in 2006 found that philanthropic giving as a percentage of gross domestic product, put the US first at 1.7% with the UK second on 0.73%. (That compared well with France’s 0.14%!).

There was good news yesterday from Arts & Business who have found that the private sector is putting more money into the arts than ever before. The total amount of private support for the arts has grown by 11% to £599 million.

I do wonder how the interest in corporate social responsibility will weather increasingly uncertain and stringent economic times. However Arts & Business are highlighting the tax incentives to give.

Time to repeal some laws of unintended consequences?

A lot of those who moan about red tape (including clumsy and heavy over-regulation in public services) talk about the compliance costs (eg the former Better Regulation Commission’s first aim was in relation to “unnecessary regulatory and administrative burdens). There is less discussion of the nasty effects in the form of unintended consequences.

Stephen J. Dubner And Steven D. Levitt, the authors of the economics best-seller Freakonomics, have written a well-argued article about how the most powerful law is the law of unintended consequences.

Too often policy makers are far more aware of market-failure than they are of regulation-failure. Hopefully they will read the article by Dubner and Levitt.

Tower of strength – mutualism in the 21st century

The end of the Tower Colliery in Hirwaun, Rhondda Cynon Taf, has been sad. However, the example of the successful (and profitable) co-operative running what was deemed uneconomic is heartening.

Looking forward, it was pleasing to read this week that co-operative schools might rival city academies as the model for raising standards in education according to the schools secretary of state Ed Balls. He welcomed plans for Reddish Vale Technology College in Stockport to become England’s first co-operative school and predicted “significant future potential for a co-operative model”. It is good that mutual options for public services are still on the reform agenda.

The Economist.com on social enterprise at the crossroads

This week’s Economist.com notes the growing influence of social entrepreneurs. However, it goes on to observe:

In some ways, social entrepreneurship has reached a crossroads. As it has become better known, expectations have been raised; the next few years will show whether these expectations are justified and these social entrepreneurs can deliver. This will depend on them mastering the nitty-gritty of managing a growing organisation, including everything from a proper budgeting process and human-resource policies to succession planning and corporate governance.

While being innovative and challenging in some areas, the third sector has also been known to lag behind too – for instance in good governance. Getting that right is vital if social enterprises - and the third sector generally - are to be able to sustainably play a part in delivering public services.

Governance and diversity: an inspector calls in Norway - what can we do here to improve board diversity?

Things get serious in Norway next month. The Economist reports that public companies will shortly receive a letter informing them that they have until the end of February to act - or face the legal consequences (which could include being dissolved) - unless they ensure that at least 40% of their board directors are women.

A law passed in 2003 setting the quota has pushed board representation up from 7% to 36%. That compare with the UK’s figure of 11% tracked by Cranfield School of Management’s FTSE Female Index.

You might think that things were better in the public sector given the profile of equality and diversity. You would be right – but things aren’t OK.

According to a study last year by the Centre for Excellence in Leadership (CEL) only about one-third of Further Education college governors are women. (Studies suggest that diversity is poor in relation to age, ethnicity and disability too.)

Does diversity on boards matter?

The HR professional's institute, the Chartered Institute of Personnel and Development, says:

Diversity is ... the concept that people should be valued as individuals for reasons related to business interests, as well as for moral and social reasons. It recognises that people from different backgrounds can bring fresh ideas and perceptions which can make the way work is done more efficient and products and services better.

There is a strong case that diversity helps avoid groupthink.

What can be done by the public and not-for-profit sectors?

I would argue that the key is moving away from reliance on personal contacts and word of mouth – it still survives.

The CEL study mentioned above included in its recommendations:

* Open and Formalised Advertising of governor vacancies, with specific requirements on outlets used. Advertising should clearly specify the skills required to become a governor.

* Clear Messages in Advertising Material that ‘the college strongly encourages applications from all sections of the community’.

* Consider independent assessors on search committees who contribute to the screening, interviewing and assessing of applicants.

* Formalised Records on appointment decisions, which can then also be viewed in audit.

* Formalised induction and training procedures (especially on equality and diversity issues).

* Community outreach initiatives: to enhance applications from underrepresented groups, colleges should explore creative ways to reach out to local communities, consulting with students, staff and parents, for example, by focus groups and surveys.

Its findings also suggested that horariums for governors might be helpful. However, I would note that board remuneration can cause complications for diversity – particularly due to the anomalies and disincentives of the benefit system.

I would also stress the importance of organisations building links with networks in the community – rather than just the personal networks of existing governors.

Lessons from Ujima?

The demise of Ujima, the UK’s largest black and minority ethnic (BME) housing association has not had much coverage beyond some discussion in the Guardian and its blog (and, of course, Inside Housing). You might expect it to be bigger news – as Patrick Butler asks “Is this the housing sector's Northern Rock?”

For me Ujima raises three sets of questions:

1) How does this affect the social housing sector in the eyes of lenders? The Housing Corporation says that we do not need to worry. Yet this is the first housing association to go bust. Lenders are looking for safe harbours after the credit crunch. Is social housing as safe as they thought?

2) The related question – how good is regulation? The conventional wisdom (that I share) is that the Housing Corporation’s financial monitoring is generally good. Perhaps we need to check out lessons from Ujima. But we should not fall into the sloppy reasoning of presuming that because something went wrong therefore something was wrong. Bad things can happen even with good regulation.

3) Does this symbolise broader changes in thinking? In particular, why is the BME brand of Ujima being binned? What does this mean for organisational ethos? Over recent years “multiculturalism” has become taboo for much of the political class. Likewise, the discourse of cohesion has shifted towards an emphasis on the problem being inter-cultural ignorance rather than inequality and discrimination. For me, this was typified by the film American film Crash which I suspect was popular with British policy-makers. It seems to me contradictory and sad that when there is so much talk of co-production and community empowerment, black leadership and self-help seems to fallen out of favour.

Any answers?

How clear was my crystal ball on the public sector in 2007?

Yesterday I stumbled over my blog post on “What will 2007 hold for the public sector”. It maybe gives an insight in my Mystic Meg abilities to predict (or not) future events.

I was right about NHS being in the news (not really a very startling forecast). Likewise social housing was on the policy agenda and in the headlines – the Hills report wasn’t a huge revelation but we do now know what the Housing and Communities Agency will look like and the regulatory arrangements.

Neither my blog or the Times article that inspired it suggested that data and privacy would become such an issue. Similarly it did not talk about the changes in emphasis on public sector reform away from choice and competition as Blair exited to bring peace to the Middle East.

I had written about the tightening of public finances in other posts. (After all the Institute of Fiscal Studies had been predicting that for a couple of years!) I suspect that will feed into the headlines in 2008.

Merger-skepticism in Further Education: a change of heart?

Readers of this blog will know that I am a bit of a skeptic when it comes to mergers and "big is beautiful" – including in FE. The “synergies” (wince) and other benefits are identified and extrapolated – the downsides aren’t always. The distraction involved is almost never fully taken on board.

According to today’s Times Education Supplement the Learning and Skills Council may be showing a change of heart on mergers. The merger criteria are being revised.

This is welcome when nearly one in ten colleges are reportedly now in merger talks.

Risk and regulation - good and bad news on regulatory reform

There was good news on risk and regulation this week. The government launched a Risk and Regulation Advisory Council (RRAC) with the stated aim of improving the way risk to the public is understood and managed by government. No one can object to that objective.

The agenda of RRAC will be set after consulting stakeholders but topics under consideration include obesity, regional regeneration failures, systemic risk aversion and aspects of corporate governance. The RRAC needs to create a better awareness of the benefits and costs (including unforeseen consequences) of regulation as a response to risk.

The RRAC replaces the Better Regulation Commission (BRC). It is vital that the RRAC continues with the BRC's mission to identify how to:

1) reduce unnecessary regulatory and administrative burdens;

2) and ensure that regulation and its enforcement are proportionate, accountable, consistent, transparent and targeted

It is promising that there is someone from the third sector on the RRAC. Hopefully the RRAC will make an effort to listen and look at how regulation can affect the third sector’s small and medium enterprises. Just as small businesses in the private sector are engines of wealth creation so their equivalents in the third sector are generators of social value.

However, elsewhere things are looking less promising for regulatory reform. David Orr, the Chief Executive of the National Housing Federation, set out in the Guardian this week the dangers of the government’s housing bill – particularly how it will significantly extend the regulatory reach of the regulation over the neighbourhood services of housing associations. I had hoped that the recasting of social housing regulation would streamline arrangements.

More than SPINning on sustainability and procurement?

On this website I have discussed the need for the efficiency and sustainability agendas to be linked. The Sustainable Procurement Information Network has launched a website that supports managers in doing this.

The SPIN website includes examples of good practice including environmental policies and strategies. Although the website is primarily aimed at central and local government, it should be helpful to other organisations in the public and not-for-profit sectors.

Business plans – is failing to plan, planning to fail?

Apparently not according to a report in yesterday’s Financial Times. It reported that a survey by two professors from Babson College in the US, Julian Lange and William Bygrave. The professors surveyed over 100 Babson College graduates who went on to start their own businesses. They found that the performance of these start-ups was unaffected by whether or not they had written a business plan prior to launch.

Perhaps the research is a little more nuanced. For some entrepreneurs, a business plan is not necessary. I had a very rudimentary plan – but it was essentially just me and a laptop.

Before social entrepreneurs rip up their business plans, they should remember that if they want some finance, they will need a business plan. Moreover, if you are taking others (and their livelihoods) with you, a business plan is pretty desirable.

There is lots of useful guidance on business planning out there. I’ve identified some before from Forth Sector. Other sources of help include Microsoft for templates and Future Builders for guidance focussed on the third sector.

Forecasting the future, corporate social responsibility and charities

As we are well past Twelfth Night the decorations are down and the papers are reporting news rather than reviews of 2007 and looks forward. I always enjoy reading the forecasts for the new year. However, we need to be cautious. These are among my favourite quotes:

Airplanes are interesting toys but of no military value
Marshall Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre

There is no reason anyone would want a computer in their home
Ken Olsen, president, chairman and founder of Digital Equipment Corp, 1977

Whilst being wary, it is important to note and watch trends.

On the last day of 2007 I noticed in the Financial Times’s suggested that it was time to say goodbye to corporate social responsibility:

Never mind rising sea levels: the waves of cynicism washing over corporate executives as they push their CSR agendas promise to become life threatening in 2008. In the inevitable life-cycle of management fads CSR is now heading for the exit … as to the identity of the next Big Thing in management: sustainability. Unlike CSR, this concept has some meat and commercial potential to it. Innovations that make money while helping to reduce carbon emissions are actually worth pursuing.

I've commented on here that cutting costs and cutting carbon can go together.

If CSR is on the way out (albeit with some re-badging of CSR as sustainability), this may pose challenges for some charities – particularly if the economic environment forces some corporate sponsors to do some trimming of budgets.

Foundation Trust governance: Network Rail and NHS Direct

There has been some debate about the effectiveness of the governance of NHS Foundation Trusts – in particular, the poor levels of participation seen in some Trusts. However, it is interesting to see that there is an emerging campaign to reform the governance of Network Rail along the lines of Foundation Trusts. In the aftermath of the new year “Network Fail” engineering works, some stakeholders of Network Rails are frustrated by the lack of accountability seen in the organisation.

On the issue of Foundation Trust governance, there is a big opportunity for everyone to have a say in a widely used NHS service. NHS Direct receives 120,000 calls every week. Now it is seeking Foundation Trust status and, hence, asking members of the public to join as Trust members. Its Foundation Trust zone is here.

Public services and YouTube

If an antiquated and anachronistic institution such as the monarchy is using YouTube, why aren’t more providers of public services using it? It offers a way of reaching younger people as well as those not keen on wading through paper.

I only know of one social landlord that is making use of YouTube to reach its customers and stakeholders.

Christmas present to Colleges – revised governance documents

The government has presented FE and sixth form colleges with new instrument and articles to go live in 2008.

Some of the amendments to the I&A are housekeeping matters – for example, resulting from the Machinery of Government changes (i.e. the divorce of the pre- and post-19 parts of the old Department for Education and Skills. (Further governance changes may result from this potentially messy divorce.) However, other modifications to the I&A are more significant.

There is the ending of the rigid specification of categories of “external” governors i.e. the requirement for numbers for local authority, community, business and co-opted members. This is a modest but welcome measure of de-regulation. As I have argued here before, colleges should be given more flexibility in determining the size and shape of their governing bodies.

The new I&A also include a strengthening of the “learner voice” with at least two learner governors on each governing body. This will need to be accompanied by action to support learner governors in being able to challenge and contribute in the governance framework. Sometimes this is a problem. (Arguably it would be good to see colleges exploring new ways of enabling learners to hold governing bodies accountable – and this might not require such reliance on learners being on governing bodies.)

Some colleges may struggle with the requirement to post governing body minutes on the internet. However, this is good governance.

If you are a college clerk to governors and can’t find the new I&A, don’t spend all your Christmas and New Year holiday searching for the documents, they are tucked away on the old DFES website so click here.

The rise and fall of Carter & Carter – issues raised by private sector provision of public services

Over my 14 years working with Further Education colleges, one of my particular interests has been the spectacular collapses of some colleges. These collapses have often offered other colleges useful lessons in how not to do things, as I have noted here. (They have also led to a series of knee-jerk reactions from certain quarters with the result that colleges find themselves badly tied up in red tape.) Recently we have seen a phenomenon of a major training provider worth (at one point) £500m implode.

Carter & Carter was a fast growing training provider with plans for further expansion. Some colleges considered partnerships or actually entered joint ventures with the training provider. Then things went wrong. The founder and chief executive died in a helicopter accident. Then the share prices fell, the bankers got twitchy and the auditors got busy. The Guardian has the full story.

The rise (and fall) of Carter & Carter poses issues of private sector involvement in public services. I suspect it has delayed the day when we see the private sector taking over a failing FE college. I personally favour a mixed economy in public services (and, more importantly, so does Gordon Brown according to the Financial Times) as a way of promoting choice, competition and innovation. But how does the funder and the regulator ensure a level playing field?

Interestingly outsourced contractors might be star-rated when providing welfare services according to Public Finance. Stretching the regulatory regime for the public sector over the private sector is certainly one option. However, a lighter but smarter regulation might be a lot helpful in allowing all public service providers to focus more on outcomes than compliance.

Payments to charity trustees – the voluntary sector raises the issue

The Association of Chief Executives of Voluntary Organisations has launched a report Chief Executives on Governance. The report stresses the need for "fit for purpose" governance including implementing board appraisal and more transparent recruitment processes.

Interestingly the report touches on the controversial issue of payment of trustees. The report suggests that payment should be considered by third sector organisations to encourage the right mix of skills and experience on boards. A survey for the report found that 15% of ACEVO members already believe it will be necessary to remunerate trustees beyond expenses.

I am wary payment. I think it has potential to damage the reputation of the third sector unless it is linked to excellent governance including effective appraisal and transparent appointment. I also think it has potential to harm the ethos of smaller “voluntary” organisations. (Its not unlike the issues posed by the sociologist Richard Titmuss on the gift relationship. Will more people give blood if they are paid to give?) Moreover, there remain the unresolved problems of how payments may cause difficulties and exclude from participation those on benefits.

I do recognise that payments to trustees can be a tool to broaden pool of potential trustees. This appears to be the experience of some housing associations after the introduction of board remuneration. I am not aware of any research studies in this area. They would be very welcome.

In balancing the pros and cons, I think it is another case of horses for courses. Appropriate governance arrangements will vary with payments for trustees making sense for larger organisations.

Some facts about police pay and performance

The latest bulletin from the Reform think tank makes some interesting points about policy pay and performance which are worth considering in the heat and noise over the government’s reluctance to aware the review body’s recommended rise. For example it notes that over the last 12 years, police pay has risen at twice the rate of inflation and by more than the average of the public sector and the private sector pay increases.

It also puts falling crime rates in the context of how now 63 per cent of main family cars now have an alarm, compared to 23 per cent in 1992. So often performance indicators are seen in isolation rather than considering the external factors bearing on them.

Social landlords and Plain English

The Plain English Campaign has just announced its latest awards. Looking at past winners I am surprised that social landlords aren’t represented among the winners of Golden Bulls.

While some housing associations have clear and well laid out tenants handbooks, other handbooks are written without tenants in mind. When I have put text from tenant handbooks through reading ease scoring they have have been shown to assume fairly advanced levels of education. How may tenants would understand a tenant handbook that talks about problems with soffits?

I do wonder how many organisations actually use the reading ease scoring that can be found on basic Word packages. The Plain English Campaign has its own Driven Defence software too to make text understandable.

Social landlords have an admirable commitment to translation into other languages (albeit sometimes forgetting the new migrant communities have emerged in the last decade). It would be good if all social landlords (and other public services) had a similar enthusiasm for Plain English.

Social housing and self-regulation - CIH on residents leading the way

I’ve not read all of it yet but it looks like the Chartered Institute of Housing have published an interesting report on resident-led self regulation of social housing. Leading the way: Achieving resident-driven accountability and excellence (pdf available) sets out how scrutiny by residents could be an effective substitute to external regulation of service delivery.

While I believe that resident board members are important in ensuring accountability in social housing, they are not enough. (Indeed there is a risk that the most effective resident voices are co-opted.) Likewise other channels for resident representation are not sufficient.

The report sets out a framework for councils, ALMOs and housing associations where board members and senior managers have a formal duty to respond to the queries and recommendations. The resident-led self regulation group (RLSRG) would have “internal and external powers to get responses and drive change where the board/executive is uncooperative”.

This makes sense to me. How can residents be asked to invest time and effort in getting involved unless they know that they will be taken seriously?

NHS financial turnaround - superficial or sustainable?

In the Public Finance website’s archive there is an interesting article (yes, really) on the state of the NHS’s finances. In “Surplus to requirements” Sally Gainsbury explores how the NHS has managed to turn a deficit of £547m into a surplus of £510m in one year.

The article looks at some of the most spectacular turnarounds in the performance of Primary Care Trusts.

These paragraphs give a good taste of the explanations:

In annual turnover terms, the biggest recovery was in Western Cheshire PCT. There, the provisional NHS accounts show a move from a £16.3m deficit in 2005/06 to a £4m surplus in 2006/07 – a turnaround of £20.3m, representing 6% of its annual turnover.

But monthly finance reports presented to the PCT’s board between April 2006 and May 2007 show that it received more than £33m in non-recurrent funds in the financial year 2006/07, all of which have been absorbed into its final income and expenditure account.

Other case studies are worryingly similar with one-off windfalls and the like.

Too often “efficiencies” and turnarounds throughout the public sector are a little too superficial.

NHS at 60 – faltering progress on reform

The Economist has made content from its crystal ball gazing The World in 2008 available on the internet. It’s worth a look.

There is a fairly depressing prognosis for the NHS as it reaches the age of 60. The article notes that Gordon Brown lacks the enthusiasm for introducing the market forces of competition among health care providers. The article concludes:

It is hard for the public to feel confident about how Labour is handling the NHS when its staff are so dissatisfied. And one of their biggest gripes has been the threat of private health-care groups moving in on their territory. But there will be a long-term price to pay. For it is exactly that threat which has the potential to unleash real change in the NHS, as Mr Blair belatedly realised. His vision of turning the NHS into a publicly funded health-care market may have run into difficulties, but that reflected the resistance of the vested interests of its staff as well as ministerial incompetence. Under Mr Brown and his health secretary, Alan Johnson, genuine progress in transforming the NHS looks set to falter in 2008.