Decisions, decisions

I am currently reading The Decision Book. It sets out fifty models for decision-making alongside some historic context to each model. I’m reading one a day – a bit like Thought for the Day.

The Decision Book even has something of interest to say about old and familiar favourites like the SWOT model of Strengths Weaknesses Opportunities Threats. The SWOT section includes a quote from Margaret J. Wheatley relevant to our uncertain times:

The things we fear most in organisations – fluctuations, disturbances, imbalances – are he primary sources of creativity.

Colleges, Alumni and their donations

I was pleased to see on the Education Guardian website an article about colleges and alumni. Iain Mackinnon – from the governing body of Ealing, Hammersmith and West London College – was suggesting that donations from alumni could become a major source of income for colleges as it has for many UK universities.

Ian MacKinnon gave examples of colleges generating income now:

Plumpton College in Sussex, for example, which has an international reputation for its wine-related training, was recently given £70,000 for research. Bournemouth and Poole College has raised over £1m in the last 15 years, from a wide range of supporters. The City Lit, London's most illustrious adult education college, raises tens of thousands every year, mostly from alumni, which it uses to help students with their fees.

I am aware of sixth form colleges seeking to generate donations from parents. This a wise move but parents are no longer when students move on – alumni are for life.

Following my earlier blog post on alumni donations, I googled to see how many colleges had alumni pages on their websites. The answer was very few. Not all of them may be using alumni to

EMA may be saved or, more likely, more than 10% salvaged. But its not likely. Students now could benefit from alumni donations and the associated Gift Aid. What is stopping colleges?

Talking about the future – what about small housing associations?

This week’s Inside Housing carries a roundtable discussion on What’s on the cards for 2011. It brings together figures from the world of social housing and its hinterland to discuss the threats and opportunities of the next 12 months.

The discussion was quite upbeat. Maybe the flexibility of the new Affordable Rent at 80% of market levels will ensure new development despite the huge reductions in public finance.

What struck me was who at the table. Local authorities and large housing associations were well-represented. Small housing associations were not there. Liverpool Mutual Homes and City West Housing Trust have around 15,000 – other soothsayers in the article many more.

The small associations will struggle to develop in the future – does that mean decline? The roundtable participants believe that associations will have to be more commercially driven. That is not necessarily something that small housing associations are well prepared to do with their limited resources and voluntary ethos.
One participant suggested: “‘Voluntary boards are part of the past now”.

Small associations – those with a few hundred or, even, a thousand or so homes - will have to do some serious thinking. Working together and with others will be vital for the associations who like to call themselves as “the smalls”.

It would be ironic if local organisations based on a voluntary ethic found themselves evicted from a future of localism and Big Society.

Academies: the significance of numbers and the future of regulation

So one in ten English schools are now academies – marking a doubling of academy numbers. I do have some sympathy with commentator Conor Ryan’s tweet that:

It is not the number of academies, but their contribution to school improvement that matters most.

As a former advisor to the last government Conor Ryan blogs:

it is simply ridiculous to claim that the marginal governance and financial changes involved in converting an outstanding school to an academy are in any way comparable to the huge task involved in gaining secure sponsorship and leadership for a new academy in a tough area or an academy replacing a failing school.

The setting-up of academies planned by the previous government and the conversion process allowed by the current government mean that there is a significant challenge and workload associated with regulating them. (On top of that free schools are in the pipeline.) It is therefore ironic that a fog of uncertainty has descended on the future regulation of the academy sector since the regulatory changes planned for 1 January appear to have been postponed. The Young People’s Learning Agency is funding and overseeing the sector, but Third Sector reported yesterday that it has not formally been made the new Principal Regulator to replace the Charity Commission.

Bracing weather - the "double freeze": pay rises and increments

Today’s Financial Times reports on proposals from a group of NHS chief executives for a "double pay freeze" - that is, a two year pay freeze for staff earning less than £21k and a freeze on incremental rises which over two thirds of NHS staff enjoy. The good news would be a promise of no compulsory redundancies – the article notes scepticism over whether all NHS organisations could afford that guarantee.

Similar plans – whether or not the NHS proposal happens – may be seen elsewhere – perhaps in education where funding cuts for some organisations may be serious enough to require radical action but not so deep as to require compulsory redundancies.

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.

Nine years of being a board member - lessons learnt

Yesterday was my last board meeting. I have learned many things by being on a board for nine years.

Here is some of what I have learned:

1) Boards need to focus on mission. Strategies should support mission rather than distract from it.

2) Board members need time to gain the knowledge and confidence to fully contribute. I think the first one or two years are a matter of finding your way even if you are given a good induction and commit to learning about the organisation and its environment. It is bewildering that some housing associations seek to rotate resident board members after three years – board renewal should not be about getting rid of new blood.

3) Boards need practitioners. I can say with confidence as a non-housing practitioner that housing associations need housing practitioners. I had worked as a consultant and as an auditor in the housing sector but recognised that having hands-on practitioners could bring something extra. They can re-balance the inevitable information asymmetry between full-time executive managers and part-time non-executive board members. (In my day job I have seen colleges how education practitioners are vital for adequate board level scrutiny at colleges.)

4) Boards can recruit excellent board members from a range of fields. If an organisation can afford board remuneration (and if it is legally allowed to pay it), it can be almost overwhelmed by interest. (I had not fully appreciated this when I was wary about board remuneration.) More recently I learned that social networks like LinkedIn can play a valuable role in attracting and identifying new talent.

5) Board members – however individually talented – need to be wielded into an excellent board. That is not automatic – it requires a chair to leverage in all the talents as well as encourage useful challenge and teamwork.

Apologies if some of that just sounds like common sense.

Mortgages, misery and the happiness index

The Council of Mortgage Lenders has published a forecast that next year net mortgage lending will fall to the lowest level since 1980. It will be £6bn compared with £110bn in 2006. It could be worse - the CML are assuming there is no double-dip.

This will have implications for the housing market.

Yesterday I was reading the latest Research in Public Policy bulletin from the CMPO think tank at Bristol University. It included research on a link between house prices and well-being. The study found a correlation but explaining it is more tricky. The article suggested: "Perhaps the state of the housing market – and media coverage of the housing market – foster a ‘feel good factor’ when house prices perform well – and vice versa." That feel bad factor might be bad news for David Cameron's happiness index.

Public sector pensions as a business risk - no need to panic?

Tomorrow morning I am attending a briefing for colleges and other organisations who are part of one of the local government pension schemes (LGPS) in the north west. I suspect that the content on long-term developments may be a little vague as we await that final report from Lord Hutton.

How big a business risk is the LGPS now for colleges, transfer housing associations, etc? I do not often sound overly optimistic but I have started to wonder if the pension risk has started to recede.

While the viability of some weaker organisations will still be threatened by the costs of keeping promises, in general the shift to CPI indexing and the 3% pensions levy will have both lowered entitlements and shifted the costs towards employees. (It is worth noting that the indexation change will - according to Hutton's interim report - reduce entitlements by 15% - which disproportionately reduces the burden on employers as they are the ones who underwrite the scheme bar a degree of burden-sharing on life expectancy.)

When I recently suggested that the pensions risk may have slightly abated, the risk of industrial action was drawn to my attention. We have seen industrial action at the BBC - and we may see it elsewhere. But unions have accepted the CPI indexation surprisingly quietly even though it has taken away existing entitlements.

Elitism in the tuition fees debate: left, right and centre

Following the tuition fees debate in the media I have been a little disturbed by some of the implicit elitism at work.(I have no problem with elite universities – higher education finance needs to ensure we can compete globally. My issue is with elitism: The belief that certain persons or members of certain classes or groups deserve favoured treatment by virtue of their perceived superiority, as in intellect, social status, or financial resources.

On the left (or at least centre-left) we have blogger Marko Attila Hoare commenting:

the simultaneous expansion and dumbing down of higher education over the past two decades, and to the proliferation of Mickey Mouse courses and institutions, where third-rate students could take courses on East Enders Studies or Football Studies or whatever

In the middle at the Independent Mary Dejevsky asks:

Everything else is being cut, so why not student numbers?

I think I caught a Liberal Democrat MP suggest on Radio Four's World at One that fewer students would be better than higher fees.

On the right flank the Daily Telegraph reports that Conservative MP David Davis opposing the Coalition's fees plans as believes that the answer to higher education funding problems is a reduction in the number of universities and people attending them.

Whatever we think of the Coalition’s proposals, it is a pity that there is not a stronger recognition of the vital role that higher education can and should play in promoting social mobility. It is disappointing that a higher proportion of young people are now getting a degree in Slovakia, Poland and the Czech Republic than the UK. It is even more depressing than so many opinion-formers favour an even lower proportion here.

Winners and losers from changes in higher education funding

Today’s media coverage of the University and College Union’s report on the future financial health has helpfully broadened the current debate. The report (pdf available) warns that More than a third of England's universities may be forced to close or merge as a result of changes in higher education finance. (I do feel sorry for the four institutions which have been flagged up as particularly vulnerable – they are even more so today.)

There can be some scope for debate over the report’s methodology. For example, the report gives a higher risk score where the university admits significant numbers of disadvantaged students. Research commissioned by the Higher Education Funding Council (pdf available) shows that in the past the introduction of fees has not substantially affected access to universities for disadvantaged students. (Of course, as Coalition spokespeople point out as often as possible: the increased fees will be paid by graduates rather than students on entry.)

Maybe the most badly affected universities will be those who fail to offer their customers value for money. Newer universities and further education colleges may be well placed to offer students a focus on teaching and vocationally orientated qualifications – as well as the savings and convenience (for young people!) of studying while living at home.

There will certainly be significant turbulence in the universities sector from higher fees and reductions by about three-quarters in teaching grants. However, the winners and losers are likely to be different from those identified by the University and College Union report.

U-turns and Big Bangs – councils and academies

It is interesting to see that Richmond is proposing that all its primary and secondary schools become academies. I can see a big bang might be more convenient for the local authority to cope with than a slow withering on the vine of maintained schools as they leave council control. It is not clear whether the local head teachers and governing bodies have bought into the plan.

It should be noted that Surrey County Council was planning something similar – and then announced a change of mind. Even more strangely, at almost the same time as the county-wide plan was revealed, the Conservative leader of Surrey Council said that he saw "little benefit" in schools there becoming an academy.

The LGiU blog suggested yesterday that the current rate of progressing in local authority applying for academy status and applications being processed means that it could take 140 years for all schools to convert to academy status. I suspect things will quicken up. It is a major decision for head teachers and governors. Moreover, it’s scary being an early mover. While academies are a priority, the Department for Education has a lot on its plate.

What is clear is that the academy conversion process and the emergence of free schools will pose practical challenges to local authorities when they already face many other constraints and difficulties. A harbinger of this could be seen back in January the Conservative leader of Kent County Council indicated that the authority’s enthusiasm for academies had waned because the council lost money needed for “crucial support services for all its schools”.

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.

Armchair auditors and their weapons in the war on waste

Last week I heard a local authority Head of Internal Audit refer to Eric Pickle’s army of “armchair auditors” as “nutters”.

I looked the term up on The FreeDictionary. “Nutter” is a slang term for:

“A crazy or eccentric person.” or
“An enthusiast; a buff” or
A part of the male anatomy.

This made me think as I am interested in issues of public finance and mental health.

I suspect that those who want to scrutinise records of public spending may be slightly eccentric. Perhaps this is only a matter of degree – these armchair auditors choose to do their stuff for free unlike professional auditors.

I do think that there is potential in “armchair auditors”. Look at the creation of a huge encyclopedia online from the crowd-sourcing endeavours of those who right and edit articles using wiki technology.

Technological mashups might offer them an impressive arsenal. In the UK Mysociety introduced a range of tools for improving democratic accountability: They work for you; FixMyStreet; Whatdotheyknow. These got taken up by the last government with its No 10 petitions site.

In September Dan Herbert in Public Finance surveyed what the current government’s “data-sharing revolution” had prompted. It is worth looking at some of the tools he refers to. Some – like wheredoesmymoneygo.org - provide interesting information for tax payers on how public funds are spent but this is not really raw material for armchair auditing. Others set out more detail – such as Spotlight on Spend and Armchair Auditor – but not really enough to give any armchair auditors scope to drill down to provide either comfort or concern.

As the Reluctant Armchair Auditor on The Guardian’s Datablog noted last week:

For this to work in the way envisaged, councils must put out a lot more information and in a format that can be used by anyone. There has to be sufficient context to enable anyone reading the information to understand what is being bought and why. Then you can have a sensible discussion about whether the spending makes sense or is value for money. We can then deal with the material figures not the trivial ones which cause most of the negative publicity.

Of course, it is early days. The army of “armchair auditors” may have a long march ahead of them. But it is vital that government – local and national – provide assistance in terms of useful data in helpful formats.

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.

Bribery, corruption and trips

On the Third Sector website I was reading that the Oxfam Finance Director was concerned that charities might be tripped up by the new Bribery Act unless sector guidance was issued. The Act creates new offences including one which relates to businesses that fail to take sufficient steps to prevent bribery involving their employees or agents.

The Bribery Act might well affect the education sector too. Colleges and schools take learners to fascinating and exotic places. Some destinations have endemic corruption. For example, students sometimes visit Russia – 154th out of 178 in the Transparency International league table.

I have travelled widely in the former Soviet Union so have had bribes extracted from me directly or via taxi drivers. On one holiday I had to cross the border of the breakaway Pridnestrovian Moldavian Republic on four occasions – on three of them, I had to pay a “fine” or make a “present” to the border guards for fear of ending up in a prison of an unrecognised statelet with which Britain has no consular relations!

The YPLA and plans for nationalising schools funding

Tucked away in yesterday's Financial Times article about plans for a national schools funding formula was a clue to the fate of the Young People's Learning Agency:

Officials are preparing for the transition to a new funding system to begin in 2012, with a new independent Education Funding Agency taking over finance for “all schools and sixth form provision” from 2013.

Of course, this may not happen. Councils and councillors - not least Conservative ones - may be most unhappy about the policy which may appear to run contrary to "localism" rhetoric. The Conservative backbencher Douglas Carswell has already voiced doubts on his blog. The plans would create a super quango dispensingover £30billion each year. Moreover, there are many practical obstacles to a more rational and transparent allocation of resources to schools.

School heads may welcome the move now but not necessarily when they realise that many of their schools may be losers - 60% of secondary schools according to research by the Institute of Fiscal Studies in the Spring (a pdf of the research paper is available).

Michael Gove may be in for another bruising battle.

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.

Pay and productivity: freezes and unforeseen consequences

On the Civil Society website there is a short article on XpertHr’s annual review of pay trends. It finds that for 2009-10 the highest median basic pay award was in the general manufacturing and food, drink and tobacco sectors with median pay rises of 2 per cent. However, in the charity sector the median pay rise was only 1 per cent. The median pay award for housing associations was nil.

On the Viewpoint blog of Centre for Market and Public Organisation a Bristol University there is a discussion of where public sector productivity is likely to go in the age of austerity.

Interestingly it suggests:

With the prospect of public sector pay freezes, quality decreases may arise through talented staff leaving for the private sector. Research suggests that remuneration over the lifetime is roughly similar in the public and private sector with a small public sector premium. Hence there is a risk, with public sector pay frozen, and if jobs become available, that quality will decrease if some of the most able employees go private.

This impact has been overlooked and/or ignored in the debate about public sector pay. Of course, the pay freeze is accompanied by the pension levy which will amount to a 3% pay cut for most public sector workers. Voluntary redundancy programmes may well allow some of the best staff to leave - the "muppet retention scheme" syndrome.

Whether deteriorating quality is reflecting in productivity yardsticks hinges on how accurately public sector productivity is and can be measured.

Women, diversity and board quotas

At the weekend The Guardian reported that the Lord Davies is considering gender quotas as part of his review for the Department of Business, Innovation and Skills into the obstacles that prevent more women from reaching senior positions in business.

The suggestion of quotas will raise howls of protest. In the summer the Institute of Directors’ queried the way that the revised UK Corporate Governance Code highlighted gender as an important factor in making appointments to the board. It said: “By including gender in the Code, there is a risk that the Code will increasingly become seen as a tool of social policy rather than good governance.”

While I do not share the IoD’s concerns over the UK Corporate Governance Code, I do fear that quotas may lead to tokenism.

Business should, of course, work harder at finding suitable female board members. As women thin out in the higher reaches of business, maybe corporate boards should look further afield and outside the corporate sector for candidates for non-executives.

Generally changes in the corporate sector flow through to the public and third sectors. These organisations are generally more diverse at board level: for example, one-third of college governors are women compared with less than one-twelfth of FTSE250 board members.

Pensions, programmes, Paul Mason and public services

It is great that normal service has been resumed at the BBC. But the NUJ’s strike may be a foretaste of pensions disputes to come.

I was surprised to read Paul Mason – the Economics Editor on Newsnight – quoted in The Guardian suggesting a solution to the pension dispute would be for the BBC to sell assets, securitise them (as some local authorities are doing), or spend less on programmes. While asset disposal and securitization may be appropriate, I doubt the idea of spending less on programmes will be popular – will that be making staff redundant or opting for cardboard Crossroads-style sets?

I am sure that some people will be posing the issue of public sector pensions in terms of pensions versus pupils, pensions versus patients, etc but I was strange for a union activist to suggest that a trade-off should resolved at the expense of public services.

The significance of the benefits cuts controversy for the rest of the public sector

The kerfuffle over the changes to Child Benefit and Housing Benefit must raise doubts over how viable the path set out by the Spending Review will be. Both sets of “reforms” may not survive coming into contact with the real world. There are serious practical problems with their implementation. The numbers involved are significant – as always the losers from any change are very vocal but in this case there are no apparent winners; in the case of the Housing Benefit caps the media will be able to show emotionally charged footage of families and pensioners being evicted. (For a fascinating look at the numbers involved, the Data Blog of the Guardian has an interesting analysis.)

This is only the start. Hardly any media coverage has been devoted to the changes to Council Tax Benefit. From April 2013, CTB will be replaced with grants to councils who will be able to set their own local criteria for payments. The central government funding is being reduced by 10% - saving £0.5bn a year by 2014/15. Tom Clark on the Guardian has pointed to echoes of the Poll Tax.

In last week's Public Finance Ian Mulheirn of the Social Market Foundation set out how the difficulties of implementing reform will blunt the blade of George Osborne's axe.

In addition to the political challenges of cuts, there is the inevitable uncertainty surrounding the macro-economy.

So might the Spending Review be jettisoned? Probably not given the political priority given to deficit reduction. (Interestingly there is speculation about another Spending Review in 2012 and then a pre-election one in 2014. Nevertheless these are more likely to see only a tilt on the tiller.)

If deficit reduction is here to stay but some of the welfare savings are not tenable – what takes the strain? The Spending Review gave several spending departments more generous departmental expenditure limits than expected as a result of headroom created by “welfare reform”.

Good and bad news about the college sector and its financial health

The fog may be clearing after last week's Spending Review - or at least being displaced by new fog.

This week’s Times Education Supplement suggested that the £500 savings on Education Maintenance Allowances would be recycled into 16-18 funding. However, it raised doubts over whether this would be sufficient to fully fund the increase in the participation age aka “the school-leaving age”. The former Department for Children, Schools and Families estimated the cost would be £774 million, while the education economist Professor Alison Wolf has estimated that the figure might be £1.5 billion.

The TES article reported that George Osborne had promised that the 16-18 budget would increase in real terms although it would be spread over greater numbers of students.

Yesterday’s Financial Times had more depressing news for general FE colleges. It highlighted government estimates that deep cuts would lead to three-quarters of FE colleges becoming “financially inadequate”. The government now hopes that plans for increased fees – with more student support via loans – will ease the pain. The proposed framework parallels the Browne proposals for higher education and builds on the report by Christopher Banks which proposed greater co-payment in further education.

Deciphering the Spending Review for sixth form colleges

The Spending Review is somewhat challenging to interpret in some areas. Yesterday’s Financial Times editiorial accused George Osborne of “obfuscation” and said that “what should have been a sober presentation was cheapened by political spin”. I am not going judge on that - partly because I am more concerned and somewhat perplexed by what the SR means for sixth form colleges.

There was no mention of 16-18 funding in the SR speech. But it was in the SR report. The Department for Education (DFE) press release states:

As we move towards full participation by 2015 we will secure reduction in individual unit costs

What does that mean exactly? It clearly implies increased numbers will mean lower funding rates. But will those rates be lower in real terms or – more worryingly – in cash terms?

How big is the overall 16-18 pie? I guess it may shrink by something like the 12% real reduction for non-schools DFE spend. It may be a little less as DFE and quango administration costs are being reduced by a third and Educational Maintenance Allowances are being replaced by a scheme costing 90% less.

If the pie is shrinking in real terms by perhaps one-tenth and then it is spread over a larger number of learners, are funding rates likely to fall by about one-fifth in real terms?

There is also the issue of who gets the 16-18 pie. Will general FE colleges get more as their offer may be more attractive and appropriate to many of those currently not in education and training? These colleges will certainly be very keen for funding given the severe cuts in the FE budget.

It certainly seems like many sixth form colleges will be facing a hard times, if not as bleak as general FE colleges. It will be reminiscent – but perhaps much worse – than the efficiency gains required of colleges during the 1990s.

The Spending Review and public sector pensions

In all the media coverage of the Spending Review there has been little on the extra 3% of pension contributions implied that public sector workers will have to bear.

I did a highly unscientific piece of research. By putting the words SPENDING REVIEW PUBLIC SECTOR PENSION into Google News Search I got 834 results, whereas SPENDING REVIEW got 23051. Does that mean that less than 4% of news articles do not mention the new 3% “pensions levy”? Perhaps. I found one mention in yesterday’s 10 page Spending Review special in the Financial Times. It is perhaps inevitable that the media coverage should focus on the broad macroeconomic impact and the implications for public services and those who rely on them.

The pension levy is not a surprise. In Ireland they have had introduced one as part of the austerity programme. (Their levy rates go from 5% to 9.6%.) Lord Hutton’s interim report on public sector pensions passed the issue of employee contributions over to George Osborne rather than deferring it to his final report on structure and entitlements.

Nevertheless, the pension levy is significant. It will ease a small part of the frontline impact of the real spending cuts being applied across the public sector outside schools, overseas aid and (arguably) the NHS.

The impact will be felt by public sector workers – many of whom face a two year pay freeze.

How will the trade unions respond? The UNISON press release on “For CSR read Cuts Strange Recovery” omitted all mention of the pension levy. Maybe the public services union realises that public sector pensions is not an issue that will win hearts and minds. Perhaps UNISON did not spot the rather unclear references in the speech and report.

I think this issue will gain profile in the Spring when the government acts on the Hutton Report. By then the imminent local government pension scheme valuations may have pushed public sector pensions further up the news agenda.

Axe Wednesday – what it means

Today promises to be interesting, to say the least. The Independent has branded it as Axe Wednesday. According to Mike Smithson on Politicalbetting.com it will determine the outcome of the next election.

In today’s Financial Times, Andrew Adonis - former Labour minister and now director of the Institute of Government – warns:

The downsizing unveiled this week represents one of the biggest challenges faced by British government since the second world war. Without fundamental changes on these lines, it will simply be about cuts not improvement.

The government’s plans involve the biggest cuts since the Geddes Axe of the early 1920s.

The National Institute for Economic and Social Research believes that the government’s plans for public spending cuts are unachievable. It suggests that the government will end up raising taxes by 2% of national income – more than £30 billion a year – close to the 2015 election. This echoes earlier skepticism from the Social Market Foundation.

Prophecy and the Spending Review

I was intrigued to see a firm advertising for a “Prophet Modeler”. Apparently Prophet is a liability forecasting system. Nevertheless, at this time there is a need for foresight.

While double-dip fears seem to have receded, no one can tell what a huge fiscal retrenchment (significant public spending cuts and maybe a step change in pension contributions for public sector workers) will do to consumer confidence. The optimists promise a "choppy recovery".

These concerns plus the practical issues with cutting spending and contracts in the short-term explain speculation about some re-profiling (aka delay) in the fiscal squeeze. Likewise, Chris Huhne's suggestion of Plan B from within the Cabinet.

Looking for a silver lining, the ferocity on fiscal policy is likely to be offset on the monetary policy. (While the bankers to a college that I work with love to send me terrifying articles from the Daily Telegraph warning of 8% base rates, I suspect that base rates will say low for a couple more years. Of course they can only go in one direction but I am less worried about interest rate risk than six months ago. There are plenty of other things to worry about and highlight on the risk register.)

I will be interested to see the Office for Budget Responsibility's forecast next week - the first under its new chair, the respected former head of the Institute for Fiscal Studies, Robert Chote. It may be overshadowed by the cuts but it will give some clues to the whole economy impact.

Post-16 alphabet soup – who survives and how?

Maybe I was naive but I thought we might learn today something of the new regulatory landscape in post-16 education. However, today's quango hit list merely notes on the Young People’s Learning Agency:

Under Consideration - Subject to education structural reforms

I thought that the Skills Funding Agency and Higher Education Funding Council might merge. It was in the Liberal Democrat manifesto. But according to the Times Education Supplement this is now unlikely. Vince Cable has changed his mind. On today’s list HEFC survives as a quango.

So maybe the YPLA and the SFA may merge? The SFA was not mentioned on today’s list as it is an Executive Agency rather than a quango.

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.

Internal audit in a new world for local authorities

Today I attended CATs - Cipfa’s Audit Training in the Midlands – as someone who more than dabbles in internal audit and sits on an audit committee. The session started with a overview of internal audit and governance by Robin Pritchard, Professor of Internal Audit at Birmingham City University. Professor Robin stressed the importance of stakeholders in governance and hence for internal audit.

As over 90% of the audience at CATs were local authority internal auditors it struck me how they were about to face a tsunami of change. A couple of the speakers touched on cuts and “transformation” in local government. What was not mentioned was the likelihood of new models of local government.

In Lambeth there is the John Lewis Council – a Labour council seeking to become a “co-operative council” by hiving-off functions to mutual organisations and community ownership. Then there are the easyCouncil models with Conservative councils adopting the budget airlines as a template.

Recently there was Suffolk County Council which is developing a vision of an “enabling council” with many activities (and almost all staff) divested. This clearly chimes with the Big Society rhetoric of central government.

In all of this there are new models of local government with a scaled back core and a series of out-sourcing relationships going far beyond past and partial contracting out. Of course thrown into the mix are shared service centres and even shared management teams.

So where are internal audit in all this? Does it shrink? And just look at contract compliance and performance? I suspect that will not be enough.

If governance and internal audit is as much about stakeholders as Professor Robin says, internal audit has a key role. It will need new approaches and skills – probably more training and seminars too.

Free schools – numbers, expectations and reality

Today there is bad news for the free schools movement and its highest profile exponent, Michael Gove.

The Financial Times warns that the first wave of free schools might consist of only eight schools or fewer. An assessment by Department for Education officials says that the “majority” of the 16 proposals for free schools that have been approved to open in September 2011 are “likely” to miss five of the 14 deadlines that officials believe must be met.

There appear to be issues with the appointment of Principals by the December deadline and having in place fit-for-purpose buildings in time. There are also uncertainties over transport-related planning requirements.

This revolution – like so many in history – may have raised expectations that it will struggle to deliver.

The "spirit of openness" and its compliance costs

Central government has put details of its transactions worth over ₤500 on the internet for “armchair auditors”. Local government is doing likewise. This week’s Inside Housing reports that the housing minister Grant Shapps wants housing associations to follow suit in a “spirit of openness”.

If housing associations have to start opening the detail of their books, maybe other independent organisations such as academies and colleges will have to. There are levers to make this kind of thing happen. Colleges already have to publish online their governing body minutes - its enshrined in their governing instrument and articles.

While openness is desirable, such arrangements will have onerous compliance costs, especially for the smaller organisations. Maybe the publication of senior managers' and board members' expenses would be a more practical way forward.

In a Pickle: the Coalition, the Audit Commission and an article in Public Finance

There are all sorts of explanations of why the Coalition plans to axe the Audit Commission. It is clear that Eric Pickles was not keen on the Commission. If he reads CIPFA’s journal, Public Finance, he’ll be even more keen to have the watchdog put down. This week’s edition carries an incredible article by David Walker – the Guardian journalist turned Director of Communications at the Commission.

In many respects the article, Are you sitting comfortably?, is a rigorous discussion about and robust argument for evidence-based policy making and evaluation – the kind you would expect from the Commission. But David Walker goes much further in presenting “his own views” as a polemical broadside on the Coalition, its proposed abolition of the Commission and its suggestion that “armchair auditors” scrutinise public spending.

In case Eric Pickles was still sitting comfortably, David Walker needles on other topics. For example:

Two glaring examples of evidence-less policy-making stand out from the early months. Gove ploughed ahead with ­parent-run schools without pausing for breath; Health Secretary Andrew Lansley produced his GP consortiums plan fully cooked from his back pocket. Both might have been given geographically delimited trials and both appear to be examples of the hasty policy-making for which the Opposition caned Labour a few years ago.

The government also ceased funding speed cameras without a review or appraisal of costs and benefits. Culling quangos might cut independent appraisal; ministers have seemed unconcerned. The National Policing Improvement Agency – its abolition announced in the summer – has been working on the effectiveness of CCTV. Now there is a subject armchair auditors might have strong views on. What if they clashed with the objective evidence put forth by the analysts?

It’s a great read.

I doubt the Coalition was ever going to think again - in spite of the concerns about how Council performance and value for money will be scrutinised objectively after the Commission - but the article means that a highly improbable U-turn became an impossible reprieve.

Free schools – policy and September 2011 numbers

Will the Coalition's policy of free schools fly? An early measure of success – or failure – will be numbers. Later the researchers will study the effectiveness of free schools in improving attainment – but they will need some schools to put under the microscope.

September 2011 will be a key date. The government is apparently working on the assumption of 20 free schools opening in 2011. (As this number is barely whispered, it cannot really be called a target.)

Will there be 20? Maybe, perhaps not. But the numbers are affecting policy around the edges.

On Friday the website building.co.uk reported that as few as five “free” schools might open in September 2011. There was also the suggestion that the government might approach firms on the academies’ project management framework to get the schools set up, rather than allowing school groups to recruit their own project managers

Earlier in the week the Financial Times reported that “a dozen” free schools might open in 2011. It also indicated that several high-profile projects, including the proposed Bolingbroke Academy in Wandsworth and Toby Young’s West London Free School, are now facing delays.

At the weekend the FT also suggested that Michael Gove might give faith schools and independent fee-paying schools more “leeway” to join the 2011 cohort of free schools.

We will have to watch this space.

The NAO on staff costs in "a period of spending reduction"

Last week the National Audit Office published A framework for managing staff costs in a period of spending reduction. Its a timely guide - less than two months until the Spending Review on October reveals where the axe will fall in terms of Whitehall departments. The NAO suggests that the guide is relevant to the "wider public sector" beyond the central government departments who are the primary audience of the NAO.

I have only had a quick scan of the report but I noticed that the "context" warns:

In their planning assumptions, departments have been asked to produce plans of what budget reductions of up to 40 per cent would entail. We expect departments to need to explore the more radical strategic and sustainable cost reduction options ... in order to deliver savings on this scale.

It goes on:

however, delivering cost reduction of this nature usually demands higher implementation costs and longer timescales. This increases risk and therefore requires a clear strategy from the outset, as well as strong project management and control if expected savings are to be delivered.

The report identifies the challenges in conducting staff cost reduction activity. It also stresses the key elements required including high quality management information and robust data analysis.

Private sector interest in free schools

This weekend the BBC reported the high level of private sector interest in free schools.

Of course, for-profit companies cannot launched their own free schools. Michael Gove has stated that a not-for-profit governing body must always oversee a school even if for-profit company runs things on a day-to-day basis.

I would prefer free schools (and many other public services) to be run a mutual not-for-profit basis. Mutuals involve their customers, motivate their staff, build trust when there are conflicting interests and/information inequalities. However, I do think that the ban on for-profits is unfortunate. It will, to a greater or lesser extent, reduce the choice offered to parents.

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”.

The Big Society, charities and reserves: money too tight to mention?

Today’s Financial Times quotes research from the National Council for Voluntary Organisations which found that 36% of charities are operating hand-to-mouth without any cash reserves.

The FT suggests that this raises “profound doubts about whether [these charities] can survive the imminent cull of Whitehall budgets and help deliver David Cameron’s “big society”.

The article notes the current squeeze on contracts and grants. It also observes that some funders are wary of supporting charities with significant reserves and that funding sometimes only covers costs. Of course, some trustees may also bear some responsibility for failing to address the issue of reserves and setting a reserves policy for maintaining financial viability.

Academies, crisis management and risk management

Last week the website Children & Young People Now carried an article about changes to the academies funding agreement. Various duties have been erased – how these deletions are interpreted depends on your perspective.

One of the requirements struck out was the duty to have a crisis management plan in place before an academy opens. While I am all for reduced bureaucracy for academies (and other schools too), I do hope that academies do still have appropriate arrangements in place before opening.

Crisis management plans are is basic risk management – and it’s not too difficult either. There are plenty of templates on the internet. For example, here, here and here. Have a look; take your pick; tailor to your organisation; and be prepared for the unexpected.

There is no need for lots of consultancy from people like myself – although my rates are very reasonable!

For guidance on risk management more generally, the Academies Financial Handbook is a wealth of information. The Handbook includes templates for risk registers, although I do believe that a simpler methodology may be more user-friendly and manageable for academies. (There is a revised Handbook in the pipeline so there may be amended guidance and templates when that arrives.)

With academies - and organisations generally - it is vital that risk management becomes a continuous thread through governance, management and operations rather than a ritual that is "done" periodically.

Academies and free schools: useful resources

The whirlwind progress of the Academies Bill through Parliament and the controversy that the subject of schools reform attracts, may leave one or two heads being scratched. Thankfully, there is an excellent summary of the new legislation on the Montrose42 blog.

Another new resource is the Free Schools Resource group on LinkedIn. Its only been up and running a few days but its growing fast. It offers a forum for sharing news, views and queries as well as networking.

ROOFless after 35 years

It was disappointing to get the final issue of ROOF this month. For 35 years ROOF has been campaigning and covering housing policy.

The magazine has provided the serious analysis so often missing from the mainstream media.

The magazine will be particularly missed at a time when there are so many worrying developments - not least the cuts in Housing Benefit proposed in the Budget.

The only good news is that everyone can now access the magazine's online archive.

Qualified accountants in academies – an optional extra?

Today the magazine Education Executive reports on Michael Gove’s reassurances to prospective academies that they do not have to have a qualified accountant on their staff:

“The Academies Finance Handbook currently recommends that finance directors of academies are qualified accountants because of the additional demands compared with maintained schools, in terms of preparation of accounts," Gove wrote. "However, there is no actual rule that there must be."

Gove said it was "perfectly possible" for the bursar of the previous school, "if suitable in other ways", to become the academy finance director. "An effective member of the senior management team is much more important than technical knowledge of charity and company accounts," he said. Gove also pointed out that such technical expertise could be bought in if necessary.

I would not necessarily disagree with that. (If I did, I would have to declare an interest: I am a Chartered Accountant who works with academies.) However, I would add that what can be most dangerous are the unknown unknowns – you do not always know when you need to call in the “technical experts”.

An understanding of company law and charity accounting is essential – bursars will need that if they are to navigate risk and avoid constantly calling upon accountancy firms.

Where schools become academies, they are entering a brave new world – one of threats as well as opportunities.

What academies need to know about NHS accounting and foundation trusts

Monday’s NHS White Paper is likely to lead to NHS Foundation Trusts (FTs) being moved off the public sector balance sheet. I wonder if this may herald changes down the line in how academy schools (and free schools from 2011) are accounted for.

Academies are similar to FTs – they are independent, not-for-profit (or more precisely, not-for-dividend) entities delivering public services. Historically academies and FTs have found themselves accounted for as part of the public sector.

Google can help with most things but I have never found the Office for National Statistics’ justification for putting academies on the public sector balance sheet. I presume it is a reflection of Whitehall’s control over academies – and maybe the fact that they were originally proposed as “independent state schools”. The accounting treatment is quite different from that applied to Further Education Colleges and Sixth Form Colleges.

Does any of this matter? It’s not accounting anorakism. Sitting on the public sector balance sheet means that academies are consolidated into Whole of Government Accounts – and that requires additional information to be collected and returned by academies. Being an integral part of the public sector also reflects a mindset where the emphasis is on being state schools rather than independent schools.

If academies do follow FTs off the public sector balance sheet, maybe they will be allowed to borrow in the same manner as colleges have to improve their buildings. That may be very useful given the squeeze on capital funding in the public sector and the demise of Building Schools for the Future.

The Big Tax rise for the Big Society

I try not to spout off on this blog. But I am concerned about the impact of the VAT rise on charities. (Colleges too will be hit.) The Charity Tax Group estimates the impact to be £143m.

As well as a campaign by the third sector to protect charities, there is an online petition in support of a proposed amendment to the Finance Bill. I urge you to sign it.

Size can be bad for your (college financial) health?

The KPMG report on Delivering Value for Money through Infrastructural Change found “evidence that larger colleges may be more efficient and have the advantage of economies of scale”. The graphs certainly show administrative costs fall with overall costs. This finding was a key underlying hypothesis in the report. More perplexingly the report also found that when comparing the percentage of General FE (GFE) colleges’ surpluses against their total income: “It shows a slight negative correlation between total income and surplus as a proportion of this. This is an emerging finding which we will be exploring further.”

The report does not really explain this peculiar finding that larger GFE colleges have worse financial performance despite lower admin costs. The demise of the LSC and the squeeze on consultancy fees may have put the kibosh on a further exploration.

Was the analysis of the 2007/8 college accounts a historical anomaly? Maybe not. I cranked the numbers for GFE colleges using the 2008/9 accounts. (As I suspect that Greater London with its high costs and extra funding may distort the picture, I excluded London colleges. I also omitted Newcastle College which is so much larger than the rest of the sector.) What I found was a slight deterioration in operating surplus as a percentage of income as income increased.

How can this be that larger GFE colleges have much lower admin costs and slightly lower surpluses? Maybe these colleges are shifting resources from admin to the front line. There is some evidence for this as success rates and inspection results suggest larger colleges perform better non-financially. (Of course, larger colleges are better able to prepare for inspection which may not always mean that the outcomes are so much better.)

Another explanation might be that larger colleges suffer other diseconomies of scale which eat up much of the benefit of lower admin costs.

I do also have a nagging doubt about the data. The KPMG report shows a huge dispersion in admin costs at almost level of overall costs (their proxy for college size). Have we measurement problem? The KPMG report writers sensibly included plenty of caveats in their report – not least on the unvalidated nature of the data that they were given to analyse. In my experience of looking at benchmark data in colleges and in other sectors such as housing, accountants have difficulty in categorising costs even when there is clear guidance.

Do problems in dividing costs between admin and other categories explain why we have these much lower admin costs and slightly lower surpluses? I wonder if these problems do explain some of the peculiar findings – maybe larger colleges, as a consequence of size, have difficulty in identifying the admin costs in the remote reaches of their empires and in distinguishing admin from other support in curriculum areas.

Any other explanations?

KPMG on the college sector, financial health and “infrastructural change”

I am currently reading KPMG's report for the Learning and Skills Council, Delivering Value for Money through Infrastructural Change. The report was published recently by the LSC's successor, the Skills Funding Agency. It is more interesting than it sounds - at least to those working in the college sector. It reviews the FE sector, current delivery models and potential institutional change.

(I will forgive the report's use of the American term "organizations" and the misspelt reference to the "Robins Report" [sic] on Higher Education in the 1960s.)

While a wake-up call to colleges should not be necessary the Executive Summary warns:

The financial health of the FE sector is in general deteriorating rapidly, and requires urgent action.

The report provocatively notes:

Some Governing Body members may tolerate a more relaxed view of deficit and insolvency than in their day job in the private sector.

The report also believed that the regulatory framework was such that:

... there appears to be implicit in these statements [by the LSC about intervention], and the actions that have followed, the view that some degree of failure is to be tolerated and there are no immediately dire consequences of delivering a deficit budget; instead, a protracted period of dialogue with the LSC is envisaged. In our experience, the consequence of the time this process takes for some LSC’s and Principals and Governing bodies is that one or both may be complacent for too long, or strive to elongate the dialogue, before robust remedial action - by which time it is often too late to salvage the college. The option of closure for a failing college is not seriously contemplated by colleges as a consequence because it has happened so rarely.

The report goes on to suggest that the current regulatory arrangements also hinder new ways of working and structuring institutions in the "FE system".

Tenant Services Authority – stay of execution?

Today’s Financial Times reports that the Coalition is having second thoughts about abolishing the Tenant Services Authority.

The report indicates that practical problems are causing anxiety for the Treasury. There are worries about crystallising a £80m pension shortfall. There is also a risk that £50bn of housing association borrowing could be placed on the government balance sheet if the arms length regulator disappears.

The Coalition had already said that it recognised that independent economic regulation of social housing is essential for housing associations continuing to be considered low risk (and worthy of cheaper borrowing). Maybe the TSA will be kept as such a regulator.

The unachievable budget?

Over the last few days the Institute of Fiscal Studies has predominated in the commentary on the implications of the budget for public services. This is understandable when an independent and well-respected think tank warns of "the longest, and deepest sustained, of cuts to public service spending since (at least) WW2". The IFS also suggests that higher education, home office, justice, transport and housing could see spending cut by one-third over this parliament.

Less media profile has been given to the Social Market Foundation who have suggested the scale of cuts are unachievable:

The tax measures announced today mean cutting over £60 billion from public spending over the next five years. With universal benefits protected, the NHS needlessly ring-fenced and the unaffordable triple lock on pensions, cuts elsewhere will be swingeing which would undo their efforts today to protect the least well off.

The state's creditors want the deficit closed and they don't much care how it's done, so long as the plan is viable. The danger for the Government is that the country simply won't swallow this level of cuts to public services - hair-shirts have never flown off the shelves. It's therefore likely that the Chancellor will be back with more taxes before long.

Today’s free school revolution?

There has been a lot of discussion about the academies bill (and a few postings on this blog!) which will potentially cut loose high-performing schools. There has been less attention (until today) given to the Conservative proposals for free schools - allowing parents, teachers, charities etc to set up independent state-funded schools.

While the free schools idea builds on provisions introduced by the Labour government for parent-sponsored academies, the new Coalition is planning to clear obstacles to such schools. In particular, they promise to make it easier to secure sites for new schools by allowing a wider range of sites, including residential and commercial property, to be used as schools without the need for ‘change of use’ consent and by creating a presumption in planning guidance in favour of setting up of new schools.

There is still a lot of scepticism about free schools and whether "parents really want to run schools".(Of course, in headteachers will play the leading role in running free schools albeit with accountability to parents.) Often the most sceptical are people who would normally be keen on co-operatives.

The examples of Swedish free schools and American Charter Schools show how free schools here offer an opportunity to transform education in this country - particularly if a pupil premium for disadvantaged children is given sufficient financial weight.

The government has published information on the Department for Education website and encouraged anyone interested to link up with the New Schools Network who already have hundreds of local groups interested in setting up their own schools.

Revised Charity Commission guidance on finance, risk and black swans

Last week the Charity Commission published four updated sets of financial guidance for charities. The documents cover risk management; financial difficulties and insolvency; reserves and internal financial controls.

The Commission says that the guidance has been revised to reflect new developments and the challenging economic climate that charities now face.

The updates include guidance on controls over internet banking and safeguards against fraud and financial crime (Internal Financial Controls) and a checklist of key questions for trustees to establish their charity’s financial position (Financial Difficulties and Insolvency).

Interestingly the Commission is warning charities to beware black swans – i.e. the high-impact, hard-to-predict and rare events spotted in Nassim Nicholas Taleb’s book.

The Commission notes (Charities and Risk Management):

If an organisation is vulnerable to a risk that potentially might have an extremely high impact on its operations, it should be considered and evaluated regardless of how remote the likelihood of its happening appears to be. Charities need to find a balance and they will need to weigh the nature of the risk and its impact alongside its likelihood of occurrence. With limited resources, the risks and the benefits or rewards from the activity concerned will need to be considered. It is important to bear in mind that on rare occasions improbable events do occur with devastating effect, at other times probable events do not happen.

Of course, the trickiest aspect of black swans is knowing what they are. High-impact and low-probability risks are often off the radar. Nevertheless rigorous risk management helps: the organisation with contingency plans for staff absence arising from pandemic flu will be more resilient when coping with absences due to volcanic ash grounding Europe.

Cuts, EMAs and alumni

This week’s Public Finance has an interesting article about by Conor Ryan about the Coalition’s education policies.

I was disappointed to read that Education Maintenance Allowances face an uncertain future under the Coalition. These grants were introduced to widen participation at 16-18 as well as promote achievement through linking payment to attendance. (A nudge before behavioural change became a fashionable policy agenda.)

When the independent and respected Institute of Fiscal Studies tracked the effects of EMAs, they found improved participation and achievement in education for disadvantaged students. In the case of minority ethnic there were “strong and significant improvements”. (The pdf can be found here.)

As the Coalition is committed to social mobility, EMAs should be safe in their hands. But if EMAs are to be reduced or abolished, perhaps some colleges might be able to do something.

I have always wondered why sixth form colleges, at least, do not see alumni as an opportunity. Might some old girls and boys be interested in contributing something to ensure that others share in the opportunities that they enjoyed? Universities do it – why not sixth form colleges?

Michael Gove and academies: an update on numbers

The Times Education Supplement reports that only 200 extra new academies are expected in September as a result of the proposed Academies Bill. The timescales did look rather challenging.

I cannot find online the impact assessment for the Academies Bill that the TES quotes but I will add a link when I do.

Academies and free schools: practical problems?

As over 1,000 schools have responded positively to Michael Gove’s suggestion that they might like to become academies, it is inevitable some thought and media attention is given to some of the problems and practicalities.

Yesterday’s Times carried an article about the “complex problems” involved including staffing, land use and administrative capacity. As there are over 200 existing academies I am sure that many of these problems are neither new or insurmountable although I am sure that some of the smaller academies will struggle to cope with independence.

The Times article was strangely silent on the biggest issue of practicality: time. Is it realistic that secondaries and primaries making a decision now will be up and running by the start of the autumn term? Michael Gove is clever man so I assume that he has thought that through.

The media focus on the morphing of existing schools into academies has overshadowed the policy agenda around new providers – “free schools”. Last week the Guardian carried an interesting article about the application of European Union procurement rules to contracts to manage free schools. (Michael Gove has spoken of for-profit businesses managing the day-to-day affairs of free schools for not-for-profit governing bodies. In Sweden many of the free schools are run by for-profits such as Kunskapsskolan who operate over 30 secondary schools.)

Revised Corporate Governance Code issued

This week the Financial Reporting Council launched governance the June 2010 revision of The UK Corporate Governance Code. While it is essentially obligatory for UK listed companies, its influence extends further as best practice or more – the previous versions have rippled through the public and third sectors informing both regulatory expectations and self-regulated codes of governance.

I will not try to summarise it prematurely. However, there do not appear to be any radical changes although some may ask why not given the recent problems at UK plc. For me a couple of issues stand out in the revised Code.

Firstly, the Code requires the boards of FTSE 350 companies to have externally facilitated evaluations at least every three years. This should, hopefully, lead to more rigorous self-reflection.

Secondly, the Code continues to promote board renewal with board members nudged to stand down after nine years. The Consultation queried the so-called “nine year rule”. (This still allows a degree of flexibility: non-executives can serve more than nine years but are subject to annual re-election.)

Academies: what the papers (and commentators) say

Following this week’s Queen Speech The Guardian usefully carried an article on “What is an academy?” For a more partisan introduction (as well as recent news about open and proposed academies) there is always the Anti Academies Alliance.

I am not aware of any media commentators saying much about the uncertainty around how many school heads will opt for academy status. It was interesting to read in the FT that Michael Gove had cautioned against what the “dartboard politics” of announcing targets. On the other hand he clearly wants academies to be the “norm” at some point.

The unions obviously think Michael Gove is serious. In yesterday's Times the leaders of NASUWT, NUT, ATL and Unison had a letter published voicing their unions’ opposition to the Coalition’s policy and academies more generally:

We believe that an essential principle for all education reform must be that it raises educational standards. All of the independent evidence confirms that academy schools do not deliver better educational outcomes for pupils, cost more money, and create widespread inequality and social segregation.

On his blog former No10 adviser Mathew Taylor described how experience overcame his doubts about academies but he also expressed some skepticism about the Coalition’s new moves:

What had reconciled me to the Academy policy was, first, the way it channelled new capital expenditure into deprived areas and second, that the extra element of diversity and innovation would be good for the system as a whole. The new policy is different in both aspects. The redistribution element has gone, indeed it must be most likely that it will be more privileged schools and sets of parents who take up the new freedoms and funding streams. Second, rather than putting grit in the oyster of the local schools system the policy is now to smash the oyster entirely.

An key issue is whether the academies push will affect the time, attention and resources given to the free schools policy. The latter policy promises (or threatens) a supply-side revolution with an influx of new providers.

We live in interesting times.

Housing and the Coalition: TSA lives on?

Before the election there was some uncertainty over whether Grant Shapps would have housing brief in a Conservative government. Last week Mr Shapps was given responsibility for housing in the Conservative-Liberal coalition. The tolling of bells for the Tenant Services Authority could almost be heard ...

Yet looking at the full coalition agreement, there is no reference to the abolition of the TSA. In fact there is not much about housing at all. A quick CTRL+F unearths a few references: abolishing Regional Spatial Strategies, converting farmyard buildings into homes, reviewing the Housing Revenue Account (again), using empty homes and promoting shared ownership.

I suspect things may get more interesting.