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

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

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

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

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

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

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

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

Women on Boards: as the public and third sectors do better than PLCs, is there anything to worry about?

In November I blogged on the possibility that Lord Davies’s independent review into Women on Boards would recommend mandatory quotas for boardrooms. Yesterday, Lord Davies’ report was launched; I opens with the bald fact: at the current rate of change it will take over 70 years to achieve gender-balanced boardrooms in the UK. However, his report does not recommend quotas. It recommends that FTSE 100 companies should be setting their own targets for a minimum of 25% female board member representation by 2015.

Lord Davies’ report also recommends that the Financial Reporting Council should amend the UK Corporate Governance Code to require listed companies to establish a policy concerning boardroom diversity. This would include how they would implement such a policy and require an annual disclosure summarising progress made.

Corporate Governance Code requirements usually flow through to the governance codes and requirements in the public and third sectors. Targets of 25% would not make sense in many organisations where women are well represented. (Last week I was presenting at a housing conference. When I started talking about gender balance on boards, one of the seminar participants pointed out that housing associations do much better than the 7.8% figure for women on the boards of FSE250 companies.)

While sectors such as housing associations may do better but there is no room for complacency when 37% of board members are women and only 21% of board chairs and chief executives.

Mind the [narrowing college funding] gap: the impact on school sixth forms

In the media coverage of the cuts there has been surprisingly little coverage of sixth forms. While overall 16-18 funding is set within the constraints of the deficit reduction program, there is the policy expectation that increased participation levels from raising the school leaving age should be funded by efficiency gains. In addition, schools are to be funded at the same (lower) rate as colleges. While there is “transitional protection” limiting losses in any one year, austerity will bite.

What does this mean? The local press around the country is starting to pick up on the implications. Staffordshire County Council is warning schools to prepare for significant challenges and to look at whether their courses will remain viable. This means collaboration and – for small uneconomic school sixth forms – closure. While in Croydon the Council wants schools and colleges to share sixth forms.

It is ironic that in the early noughties the Learning and Skills Council was expected to reshape 16-18 education with unviable school sixth forms being reorganised out of existence. Now the LSC is gone, this might well happen.

LGPS – mounting opposition to increased contributions

I was doubtful that the Coalition was retreating on public sector pensions when it was announced that the consultation period for the 3% pensions levy on most public sector workers would end three months later than previously planned. However, I think there is now a real chance that the Coalition may U-turn on the planned increase in employee contributions Local Government Pension Scheme.

There is mounting opposition to the suggestion that LGPS members should pay an extra 1% each year from 2012 for three years. First a group of London pension “administering authorities”. Then the Conservative leader of the Local Government Association. These concerns are on top of and different from the unions’ resistance.

The new opposition are concerned about the effect of the 3% pensions levy on the sustainability of the LGPS if it triggers a “mass opt-out” and spiralling contributions as the contributing membership shrinks.

The alternative advocated by some of these opponents is a paring back of pension entitlements within LGPS. There case makes a lot of sense. However, the savings will be over decades – George Osborne’s Spending Review was looking for about £3billion for the LGPS employers and the rest of the public sector by 2015. How can that gap be filled if the Coalition does another full or partial U-turn?

In the news: demographic pressures and failing secondary schools

A "youth bulge" may have been at work in the Tunisian and Egyptian revolts but demography has political implications closer to home. Since the turn of the millennium many education providers have been conscious of demographic decline. Now there is a recognition that rising birth rates are starting to feed into demand for primary school places as an extra 100,000 babies every year are fed into the equation.

This week the quality media has turned its attention to the longer term and post-11 places.

The Financial Times reports that secondary schools will be affected by both rising birth rates and slower rates of migration of middle-class families out of cities. The FT analysis of official projections indicates that an extra 80,000 secondary school places will be needed in England by 2016/17 in areas of population growth. However, in those areas, there is space for only 50,000 students at schools that meet government targets. In addition there are currently 6,000 places available in schools that do not meet the government’s minimum “floor standards”. This might become a major political issue unless new places are created through the free schools and other policies.

The ever excellent Guardian DataBlog maps the location of the current surplus capacity. It’s a shocking statistic that 225 schools - 7% of England's school estate - are more than a third empty and most of these have poor GCSE results. (Off course some may have poor results due to challenging circumstances but the persistence of such concentration of educational disadvantage remains a serious social issue.)

The OECD on Housing and the Economy – arguments and evidence

Yesterday I stumbled on an OECD survey Housing and the Economy: Policies for Renovation. The report seemed to have been overlooked by the UK press apart from the Financial Times. Even Inside Housing appears to have overlooked it.

The report recommends reforms to financial sector oversight, taxation, land use policies, rental sector regulation and social housing provision. It argues that these changes will improve the functioning of the housing market and benefit the economy more generally. (The relevance of the report can be seen in US’s jobless recovery where negative equity is hindering the ability of America’s unemployed to move for work.)

As housing has been a casualty of the financial crisis and now the deficit reduction plan, it might have been expected that this objective, balanced and well-researched report might have been read by someone. Even if it had not been carefully studied, chunks could easily be copied and pasted to provide fodder for arguments on all sides.

Advocates of the Coalition’s housing benefit curbs could point to:

Where housing supply is constrained in the short run, however, part of the benefit of government rent allowances may shift from renters to landlords without necessarily enhancing housing availability for needy households. Indeed, there is some evidence that rent allowances are passed onto higher rents.

Opponents of the government’s moves to weaken security of tenure in social housing could signpost:

means-tested social housing systems may potentially reduce job seeking incentives amongst the unemployed, or discourage low-wage workers from seeking higher paid jobs if social housing is withdrawn or rents are increased as earned income grows.

Even abuse and manipulation of the report might have been better than being ignored.

The report is written to draw conclusions from across the OECD’s membership of advanced industrial countries. Inevitably this means that the report’s recommendations may not all be relevant to all 30 countries. Even where the recommendations such as looser land use policies, freer rental markets and more reliance on rent allowances than social housing may be appropriate, there are practical and distributional concerns. However, the study is worth reading with an open mind.

Inside Housing’s board performance survey: cause for concern?

This week's Inside Housing has a survey of governance in the social housing sector. My initial reaction (or rather tweet) was: Shock! Horror! 82% of board members in #socialhousing think they do a good job - "only" 71% of chief execs agree

More important that some mismatch in satisfaction with board performance is the level (and again) some mismatch in the level of dissatisfaction with board performance: about one in ten board members was "dissatisfied or very dissatisfied" with board performance and a little more than that among chief executives, company secretaries and governance officers.

Arguably more serious than all of this is the problem of weak boards not realising that they are failing and not doing anything about this. (History shows us that often such weakness is only diagnosed after the event by regulators for all sorts of reasons.)

In the world of corporate governance good practice, external facilitation of board performance reviews are increasingly seen as important. I doubt many housing boards have accepted that challenge. Maybe something for the next Inside Housing survey?

The notes to the survey report need to be read:

95 valid responses were recorded. 62% were from board members, 9% from chief executives and 22% from company secretaries and governance managers.

I struggle to get those percentages to get anywhere near 100% - even allowing for roundings on all the figures. Am I missing something or is there a typo? (The percentages in the report are different from those in the article but do still fall short.)

The fact that we are talking about a survey of 95 must mean that we have to treat the findings with some caution. You do not need to be a statistical boffin to recognise that the margins of error may be somewhat substantial – possibly bigger than some of the mismatches between executives and non-executives. If 9% of the 95 were chief executives and 22% were company secretaries and governance officers, we are talking about 29 people.

Inside Housing should be applauded for commissioning the survey. However, a larger survey might have allowed some of the issues to have been probed more effectively and robustly.

The IFS Green Budget: public finance challenges and public sector pay premiums

Much of the media coverage of the Institute for Fiscal Studies’ (IFS) Green Budget (press release and full document pdfs available) has focused on the message that George Osborne should resist the temptation to have a giveaway Budget. A quick look at Google News suggests that there are fewer headlines about the Green Budget on desirability of a Plan B.

The IFS forecasts that the government will borrow slightly less in 2010/11 than the Office for Budget Responsibility (OBR) forecasts. Will the Chancellor splash out or even give a gentle stimulus when the recovery stalled in the fourth quarter last year?

There has been speculation that the Chancellor may delay the planned fuel duty rise. I had wondered if he may find some loose change for 16-18 students who lose the EMA grants.

The IFS’s warning against a giveaway on 23 March arise from two downside risks for the public finances.

1) the economy might not grow as quickly as the OBR expects, and even if it does the public finances might not bounce back as strongly as it forecasts.

2) the planned spending cuts might prove formidably hard to deliver.

Other commentators have suggested that the cuts may be hard to stomach. The IFS warn that the success in reducing public spending in the 1990s is of limited relevant. This is “the tightest five-year period for public spending since at least the Second World War”.

The IFS notes that

Spending plans set out in the October 2010 Spending Review imply a significant public pay freeze and large employment cuts.

Controversially it goes on:

Before the financial crisis, public sector employees were, on average, paid at levels roughly in line with their private sector counterparts once observed differences in skill composition were taken into account. Since 2008, a significant public pay premium has appeared. We do not therefore believe that the planned two-year pay freeze will lead to widespread recruitment problems in the public sector in the near future. However, the average pay differential hides large variations in relative pay between different areas of the country. Consequently, some public sector vacancies, especially in London and the South-East, will remain hard to fill.

Talk of a 6% public sector premium for men and over 10% for women could well show up in this spring’s debates about pay and pensions.

Government “retreat” on public sector pensions levy?

Yesterday Guardian readers who work in the public sector may have been pleasantly surprised to learn: “Treasury retreats over public sector pensions reforms”. The article went on:

The government has retreated over reforms to public sector pensions, saying it will not have proposals ready until the summer rather than pressing ahead with planned higher contributions in the March budget

In plain English: this means is that the consultation period for the *3% pensions levy on most public sector workers will end three months later than previously planned. This is hardly a U-turn. It could be seen as a tactical move to avoid industrial action on pensions before the May local elections.

More significantly this week it became clear that the extra pensions contributions for public sector workers would be the rallying cry for co-ordinated industrial action. Strikes really should start featuring on risk registers across the public sector.


* The 3% may actually be significantly more for some if lower paid workers’ contributions are kept constant.

16-19 academies: free schools meet sixth form colleges

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

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

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

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

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

PAC on academies: some thoughts on governance and regulation

Today is a big-ish day for education policy. At 11.30am Michael Gove published his Education Bill although the contents are previewed in parts of the media. Until then we can read about the cross-party Public Accounts Committee report on the Academies programme.

The parliamentary PAC report expresses concern over financial control in the academies sector. Unfortunately the headlines have overlooked the good news in the report’s Executive Summary:
sponsored academies… have performed impressively to date, achieving rapid academic improvements and raising aspirations in some of the most deprived areas in the country. In many cases this has been achieved through high-quality leadership, a relentless focus on standards, and innovative approaches to learning and to the school timetable.

However, the Summary goes on to make serious criticisms:

Many academies have inadequate financial controls and governance to assure the proper use of public money, and the Department and Agency have not been sufficiently rigorous in requiring compliance with guidance. In developing a new financial handbook and governance framework, the Agency should make it compulsory for all academies – sponsored and converter – to comply with basic standards of governance and financial management. This should include segregation of key roles and responsibilities, and timely submission of annual accounts.

Academies will have to consider and act on the concerns raised in relation to governance:

We heard evidence of non-separation of roles, for example the chair of the governing body also being the chair of the finance committee, the responsible officer also chairing the governing body, and the responsible officer also chairing the finance committee. All of these roles should be clearly separated. There was further evidence of a shortfall in financial assurance and challenge owing to academies not having audit committees – against Departmental recommendations and Charity Commission good practice. We also heard that not all academy finance directors are CCAB-qualified accountants, again counter to recommendations in the Academies Financial Handbook.

Quite a few academies may not like all or some of these criticisms. It is a fair point that academies may struggle to arrange their governance structures with a standalone audit committee when so many claim that they have difficulty recruiting one governor who is an accountant or auditor. If academies do not move on these issues, they will find that they are censured by the YPLA auditors.

Even without the PAC report, there was a strong case for academies to review and strengthen their governance and financial management. They are high-profile and publicly funded organisations with their reputations at risk if they do not demonstrate compliance with high standards of governance.

(I should declare an interest: I work with academies and provide Responsible Officer services – the quasi internal audit of basic financial controls mandated by the Academies Financial Handbook.)

The report touches on the nature of regulation for the academies sector:

In future [sic] there must be greater clarity about what is required as opposed to what is recommended. Too much in the current framework is permissive, and there is insufficient mandated practice to prevent individual academies adopting practices which do not comply with basic standards of good financial management and governance.

I would agree that there is a need for a clearer distinction between “must” and “should”, particularly in the Academies Financial Handbook. However, I believe that academies should be encouraged and cajoled individually and collectively to raise their standards of governance so that regulatory input can be focused rather than broad-brush and heavy-handed. For a long time I have argued for a code of governance agreed by and for the academies sector leveling-up standards with a “comply or explain” approach. It works in other sectors.

Strangely the report is out-of-date on one issue before it is published when it states:

From January 2011, all academy trusts became exempt charities. This means that the Secretary of State for Education has replaced the Charity Commission in the role of Principal Regulator, and academy trusts submit their accounts to the Department only

Due to delays, the Charity Commission is - for now – the Principal Regulator. Hopefully, when there is a new Principal Regulator (presumably the YPLA and then its successor the EFA), they will use the right mix of regulation, self-regulation and governance to strengthen internal financial control across the academies sector.

IT, productivity and culture

On the LSE Politics and Policy Blog there is an article highlighting how the productivity of the Department for Work and Pensions fell for much of the last two decades. The explanation is not the traditional Aunt Sally of allegedly lazy or incompetent public servants – it’s more complex than that as well as relevant beyond Whitehall.

Policy churn, organisational change and personnel turnover at ministerial change partly explain the dismal performance at DWP. More significantly, Patrick Dunleavy and Leandro Carrera suggest that a conservative mindset hindered the adoption of IT for improving productivity:

Three main organisational culture problems inside DWP prevented top officials even considering a shift to digital-era governance. First, senior officials with little or no IT background themselves did not believe that the poorer households and individuals receiving welfare benefits would ever get Internet access. However, in 2008 they discovered to their surprise that 51 percent of DWP ‘clients’ were already online with broadband Internet access.

Second, for years top civil servants saw the web as merely a place for posting static billboards of information and had no conception of creating a more interactive Web experience. Third, internal organisational power over policy on IT was concentrated among officials (aged in their 40s and 50s) running the big-budget mainframe computer systems, who saw web processes as a financially trivial (and hence organisationally irrelevant) sideline.

While these issues may be particularly acute in parts of central government, some of those attitudes can be found throughout the public and third sectors.

Hindmarch’s hints on college turnaround

Today's Guardian has an interview with the Colin Hindmarch - the principal credited with Harlow College's turnaround. The article includes advice on organisational recovery:

For turning around a college

• Keep students at the heart of everything you do

• Create a clear strategy for teaching and learning that is understood by everyone

• Be bold and brave and don't be afraid to take risks

• Create a culture where everyone accepts responsibility for students' successes and failures

• Always be truthful about what is going on at the college. Never deceive anyone else or yourself

A spring of disgruntlement? Strikes, pay and pensions in the public sector

Today the teaching union ATL announced that it would be balloting its members on industrial action over the proposed increase in teachers’ pension contributions. Meanwhile in colleges and universities UCU is doing likewise on the issues of jobs, pay and pensions.

Beyond schools, colleges and universities are we facing a spring of disgruntlement?

How will public sector unions respond to the austerity that is affecting their members’ jobs, pay and conditions?

Headlines may inflame matter when they highlight the remuneration packages of se senior management. The Daily Telegraph this weekend reported on pay rises enjoyed by university vice chancellors. (The paper’s survey found that three-quarters of vice chancellors saw pay packages, including salary, pensions and other benefits, increase during the year to August 2010. Eleven of the 87 surveyed benefited from rises of more than 10 per cent.)

The issue of pensions is likely to be a highly sensitive one. The Hutton Commission final report on public sector pensions is due in March 2011. The exact date has not been published but the 2011 Budget is on Wednesday March 23 – this would be an obvious candidate. The final report is likely to recommend pension entitlements based on a career average salary rather than “final salary”.

Public sector pensions are not “gold-plated” but public sector pension schemes do give workers a certainty about the timing of retirement and a level of entitlements that most private sector workers lack. I suspect that not all public sector workers recognise the full value of their pension schemes. Unions have not mobilised against the change in inflation indexation introduced last year. However, the increased pension contributions likely to kick in across the public sector from 2012 will be harder to swallow - as seen in the case of ATL members in schools - when pay is frozen for most of the public sector. Whether unions will enjoy public sympathy is another issue.

Quiet zone: the public sector whispering when Twittering

Maybe it is inevitable that last week Facebook complained that social media is not used enough by public agencies in the US. Perhaps as a relative newbie to the world of Twitter, I should not criticise those who are even later to the party than me. However, I have noticed that in the world of Twitter some UK public and third sector organisations have a presence that is worse than useless.

Fundamentally too many organisations do not know who they are talking to (Users? Other stakeholders? Media? Opinion formers?). Let alone what they are trying to convey.

Quite a few organisations lose interest after setting up their Twitter profile – why have a corporate presence if you have nothing to say?

Some struggle to get any followers at all. This is hardly surprising. They forget that you need to follow others in order to attract attention. A few hashtags might encourage people to take a look.

Too often tweets do not have any links - so the content becomes a dead-end rather than a path to a corporate website or other media content. (These cul-de-sacs do nothing in terms of search engine optimisation.)

It is sad that some organisations cannot even be criticised for using social media for “broadcasting” their messages rather than engaging in dialogue. So many organisations are half-heartedly whispering rather than broadcasting.

Is fraud rocketing? Even if it isn’t, what should you do about it?

Last week Public Finance was reporting that levels of fraud rocketed during 2010. There is plenty of media coverage of fraud. This week I joined in tweeting a link to a
blog about Portsmouth University and MacIntyre Hudson’s survey of public sector fraud.

It is worth emphasising that the Public Finance’s report was based on KPMG’s Fraud Barometer which tracks fraud cases in UK Crown Courts. So detected fraud is “soaring” – is actual fraud up?

Recessions, credit crunches, austerity, etc have a tendency to expose financial chicanery. Just ask Max Madoff. I am sure that Bob Maxwell would agree.

To borrow a great quote from Warren Buffett and use it in a different context:

It's only when the tide goes out that you learn who's been swimming naked.

Of course, total – detected and undetected – fraud may be up too – in line with media coverage. For example, some of the squeezed middle may resort to white collar crime in hard times. Media coverage may even have a copycat effect – MPs are not the only ones who may be susceptible to the feeling that if colleagues’ snouts are in the trough, they should no be missing out. Experts point to need, opportunity and justification driving fraud - "others doing it" offers a self-justification for some.

Organisations should treat the fraud threat seriously. They should ensure that internal audit allocate sufficient days to fraud detection using IT tools as well as addressing fraud risks as an integral part of other audit reviews.

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.