Gordon Brown and public sector reform

The Brown government’s views on public sector reform are somewhat hard to discern although the pace of change in the NHS may soon be slower. However, there is an interesting debate on reform going on.

The Society section of the Guardian website is carrying both an article by a former Downing Street adviser and a selection of views on the role of choice in changing public services.

Although I see choice and competition in public services as a driver for improvement and efficiency, the cartoon above does amuse me.

NHS under-spend - "boom and bust" lives on

It was depressing to read this week that the NHS had under-spent £500million as a result of a starvation diet in the latter months of 2006/7. (The under-spent was achieved in some areas by a sharp change of gear with the temporary introduction of maximum waiting times despite the minimum waiting times so central to NHS objectives.)

The diet was required to avoid the political embarrassment of the NHS £90billion budget being overspent by a pound.

Isn’t this one of the strongest arguments for the NHS being considered a set of healthcare entitlements rather than a nationalised industry?

In January the Reform think tank published an analysis on NHS developments that policy that policy was marked by “stop-go” (NHS reform: the empire strikes back, pdf available). It’s a pity that the NHS is still infected by “boom and bust” in contrast to a wider economy marked by stability and success.

Juries, boards and diversity

While recently traveling on crawling Russian trains and decrepit ex-Aeroflot planes I have been able to read some books. My holiday reading included the book by James Surowiecki on The Wisdom of Crowds. It is an interesting set of essays on the effectiveness of collective wisdom - collective wisdom even trumping individual experts. (He does explore when and how groups don't work as in stock market bubbles.)

I would recommend that you read the book if you haven't already. (Its been out a couple of years.)

I was particularly interested in the chapter on Committees, Juries, and Teams. Many of Surowiecki's comments have a bearing on governance and management.

Surowiecki argues that juries are either verdict-based (starting with the verdict and working back) or evidence-based. He also points to the influence on group decisions of the status and talkativeness of individual group members.

In making small groups work better Surowiecki stresses the importance of diversity of group members. This militates against "groupthink" and improves the chances of a "devil's advocate" emerging who can challenge and test the evidence and recommendations being put forward.

I see Surowieck's arguments supporting the case that boards and governing bodies should have a real social, gender, ethnic and skill mix. This isn't "political correctness" or just "tokenism" (although it can be, if done badly) - it is a vital contribution to making decision-making more effective.

Police, performance indicators and customer service

The claims from the Police Federation that Performance Indicators are distorting police work is hardly surprising.

The stress on PIs seen throughout public services is perhaps accentuated in the case of the police due to its peculiarities.

When I last visited my local police station (a minor motoring offence, I hasten to add), it wasn't open at the advertised hours and the bell/link to another local station that was (also) meant to be open just rang and rang. When I phoned to complain later, I discovered that the local constabulary had no mechanism for complaints unless it was about bent coppers. (Perhaps I was misinformed - if I was, thats not too impressive either.)

What other public service would consider normal or reasonable the absence of a feedback loop in the form of assessing and addressing complaints? Housing associations aren't only expected to have complaints processes - but they are meant to have one that does feed into performance improvement through organisational learning.

Surely there needs to be a focus on building a culture of customer service rather than just focussing (and perhaps manipulating) a set of PI "metrics".

Apologies for the scarcity of postings

I’m not able to log on much at the moment. Normal service will resume soon.

Maxwell: the "Bouncing Czech", leadership and public services

(To be precise Bob Maxwell was a Ruthenian from the borders of modern Ukraine and Slovakia rather than a Czech.)

I am disappointed to be missing this week's BBC2 drama about Bob Maxwell.

Maxwell was living proof of the saying (from Russia or Scandinavia or Japan – you choose) that “the fish rots from the head”.

According to the management writer John Argenti, corporate collapse is associated with:

- One-man rule
- A non-participating board
- An unbalanced top team
- A lack of management depth
- A weak finance function

The public and not-for-profit sector has seen its share of collapse and scandal – and in deed many of those symptoms (and causes) listed. Not long ago there was the Barnsley College trial which highlighted some of the problems.

While public services reform is ongoing (and vital), there remains the need to strengthen governance in public services.

Public services need strong leadership – but not the all-powerful strong Leader.

Rising interest rates and public services

Naturally the discussion of interest rates focuses on the impact on families with mortgages, credit cards, etc – especially if there are suggestions that interest rates of 7.5% might be required.

But interest rates have major implications for public services.

For example, many Further Education colleges have embarked on (or are proposing) ambitious “accommodation strategies” driven by the Learning and Skills Council’s commitment to “world class buildings” – if interest rates rise on the loan finance required, life becomes much harder.

Toilet paper, efficiency and sustainability

While I have several Sheryl Crow CDs, I do not agree with her call for eco-rationing of toilet paper.

Having said that, I do think that public sector and not-for-profit organisations should be linking the efficiency agenda with the cause of sustainability.

How many housing associations, FE colleges, charities, etc have sought advice from the Carbon Trust or similar organisations on reducing waste in the consumption of energy?

Affordable housing and "Key Workers"

The Financial Times this week criticised the government's investment of resources in housing to help a few thousand "Key Workers":

For the price of the average London home, you could get a brand new Ferrari 599 with enough left over for a passable second-hand yacht. For nurses and police officers in London and other parts of Britain - so called "key workers" - stratospheric house prices are a problem. Government housing subsidies only make the problem worse: if houses are to be affordable, the only answer is to build a lot more of them.

I share this sentiment.

I must say that I also have a problem with the whole concept of "Key Workers" - what about the rest of us? Teachers, nurses and other front line public sector workers are vital (and for a long time they had worse pay than other similarly qualified professionals), but I'm not convinced that non-Key Workers should be treated less favourably in the housing market.

If those deemed to be "Key workers" are leaving their professions because they can't afford to buy in London and other high demand, wouldn't it be better to pay them more? And if necessary, have local pay settlements that reflect local conditions?

Controlling pandemic flu in 1918 and business continuity in public services now

I am a bit doubtful about the preparedness of much of the public sector and not-for-profit sector for a pandemic flu outbreak - as I've already mentioned on this blog.

Recent American research on the 1918 pandemic (which killed more people than world war one) has considered how different cities responded. Using mathematical models, they reported that large differences in death rates could be explained by the prevention measures, particularly their timing. Cities that instituted quarantine, school closings, bans on public gatherings and other such procedures early in the epidemic had peak death rates 30 percent to 50 percent lower than those that did not.

Are our public services ready for the kind of business disruption likely to result from pandemic control measures – let alone any outbreak itself?

Social housing regulation - tenants' views

Recently the Department for Communities and Local Government published the output of the tenants’ focus groups for the Cave Review of social housing regulation. (The document can be downloaded.)

As you’d expect from a series of focus group meetings there were a variety of views expressed. Important themes can be found in the key findings:

- local management arrangements in organisations of a “human scale”;

- a common framework and regulator for all housing organisations – including the private sector;

- removing benefit dis-incentives that discourage tenant involvement on boards;

- a national organisation giving tenants a voice alongside the Audit Commission, National Housing Federation and the Chartered Institute of Housing; and

- more choice for tenants – including choice of landlord.

I agree with all those – and have argued on this blog for them!

Hopefully the Cave report will reflect the views of tenants.

The radical, critical and thoughtful contributions of tenants to the housing debate contrasts with the empty rhetoric and anti-housing association stereotyping in this month’s Red Pepper Housing Special (I’ll be cancelling my subscription) or on the Defend Council Housing website.

NHS independence day - coming soon?

Today’s Financial Times carries an interesting article about plans being prepared for greater independence for the NHS.

I am a sceptic about proposals for an NHS constitution and “independence” unless such moves enshrine and promote choice and voice for patients and communities.

The idea of less central interference from politicians and Whitehall is welcome. But can politicians sit on their hands when they get the blame – rightly or wrongly – for everything that goes wrong anywhere in a £90 billion business?

Efficiency, annual savings and the CSR07

Tucked away on the Treasury website among the pages about the 2007 Comprehensive Spending review (CSR07) there is the comment that:

Through this work the Government has identified scope to deliver annual savings of 3 per cent across departments over the CSR07 period, together with cuts to administration budgets of 5 per cent per year in real terms, thereby releasing resources for reallocation to frontline services.

Is that really possible?

I have my doubts. There is work throughout public services on leaner processes, smarter procurement, cost reduction, etc. But is there enough?

In February the National Audit Office cast doubt on the robustness of some of the existing efficiency claimed against current targets of 2.5% annual savings. The NAO could be certain of about a quarter (£3.5bn) of the savings claimed by the government. But queried the rest.

The Local Government Association has just issued various documents on the CSR07 including a factsheet on efficiency issues. It points out that the easy savings have been made and not all spending can be made more efficient due to long-term contracts. The LGA conclude that the 3% annual savings are “undeliverable”.

The new annual savings in the CSR07 will be vital for maintaining and improving public services in a more bracing environment for public finances. Unless public services can deliver on these savings and work a lot smarter, we could be faced with cuts rather than efficiencies over the rest of the decade.

Blair, Brown and public sector reform - diversity of providers

Last week's government's policy review document on Building on progress: Public services (pdf) included 11 references to a diversity of providers as well as a section entitled "Opening up supply".

But rewinding to last summer's Releasing the resources to meet the challenges ahead: value for money in the 2007 Comprehensive Spending Review (pdf) document published by (and concisely titled by) the Treasury last summer there was a list of the key elements of public service reform as:

1. establishing clear goals, national standards and accountability for performance;
2. devolving decision-making to the frontline and improving the capability and capacity of public servants;
3. engaging public service users and communities in the design, delivery and governance of public services; and
4. empowering users, including through the exercise of choice.

No mention of diversity of provision there. In 55 pages there is only one reference to "diversity and competition among providers" - in the Foreward by the Prime Minister and Chancellor of the Exchequer.

Does this mean anything? A lot? Perhaps not. It does cast some doubt on the suggestion that the velocity of reform will be sustained under a Brown premiership.

FE Governance - does size matter?

On yesterday's The Bottom Line on Radio 4 (available on Listen Again for one week), there was a discussion about the optimal size of project teams. One of the business people suggested that six or seven was the best size with the maximum practical size being - with complexity of communication increasing exponentially above that.

That wasn't a revolutionary or unique insight - there has been plenty of research on the size of teams - but it struck me that many governance "teams" are a lot bigger in public services.

In social housing the National Housing Federation is encouraging small boards - urging housing associations to avoid having boards more than 12 members. Things are different in Further Education colleges, where governing bodies are typically about 18 members - normally coming from particular constituencies.

Big boards and governing bodies have to constantly confront the risk of degenerating into talking shops. Sir Walter Puckey could have been talking about FE governing bodies when he commented:

Too many board meetings display verbosity among a few and almost complete silence from the rest.

Its not the fault of FE colleges. The Instrument and Articles constituting governing bodies, creates a one-size-fits-almost-all template with limited flexibility around the edges. (There have been cases of FE colleges seeking even larger governing bodies than required by the Instrument and Articles - often after mergers where there was felt to be a need for 11 a side or whatever on the new governing body.)

While the Department for Education and Skills can reasonably have some rules on how governing bodies are constituted, why can't FE colleges be allowed to try new approaches and constitutions that reflect their specific requirements, culture, history, etc?

If "super-colleges" emerge with large turnovers and varied activities, there will be an even stronger case for allowing colleges to try forms of governance more akin to plcs with small boards - perhaps including executive directors. (This form of governance may emerge happen by the backdoor if the private sector take over the activities of failing colleges through contestability.)

There is certainly a need for the voice of customers, staff, local authorities, local civic society,
etc. But would this be better served through some kind of stakeholder council influencing strategy and holding directors to account? This is the model developed with NHS Foundation Trusts.

Even if such a model isn't considered appropriate for any FE colleges, it would be good see smaller and more effective boards and governing bodies.

The budget - the real story for public services

Wednesday's budget will be a budget for business according to Gordon Brown in the Financial Times today.

It'll be a budget for social policy - education, families and welfare to work schemes - according to a Brown ally, John McFall, on ePolitix today. (The ePolitix podcast is notable also for its dropped plastic cup, the rustling of papers and the emergency services sirens in the background.)

The certainty is that the real event is the Comprehensive Spending Review - with a tightening of public spending constraints and a greater expectation that public services will have to deliver "more for less" through efficiencies.

Monte Carlo: public services and risk management

I was pleased to read in Inside Housing that the Housing Corporation is to require the use of Monte Carlo scenario modelling in appraising the capacity of housing associations to deliver development programmes.

The article is not very clear on what Monte Carlo modelling is. Essentially it is a tool for factoring in uncertainties into financial forecasting. Uncertain variables can compound or counteract each other – Monte Carlo techniques factor this in and calculate a most likely outcome as well as a broader range of outcomes. (Apologies to investment analysts and other experts.) The Housing Corporation published a short paper on the use of Monte Carlo models as a risk management technique a couple of years ago. (Be careful googling "models".)

Generally I don’t like regulators telling independent organisations what to do. But I do hope that other funding bodies will encourage organisations, such as FE colleges, to use scenario modelling.

Far too often organisations delivering public services are only asked to forecast a single future - a gross simplification and dangerous too. In a world in uncertainty in terms of inflation rates, interest rates, pay rises and funding levels, it is vital that organisations manage risks – especially when they are being asked to embark on ambitious plan to build (and borrow for) more homes, new campuses, etc etc.

Regulation in the news: the NHS and social housing

Red tape is in the news this week.

According to the NHS Confederation, bureaucracy in the NHS is increasing with 56 bodies having a role in inspecting, assessing or monitoring the NHS. Is this necessary? (Report pdf available.)

With greater patient choice and more diversity of providers there should surely competition should replace regulation to some extent at least. Regulation should focus more promoting competition among providers (like OFCOM and other regulators) and disseminating information for “consumers”.

There is the on-going debate about regulation in social housing with the Cave review. This week Inside Housing has an interesting overview of the arguments from the various interested parties. (Sadly the article is not on the IH website.)

I strongly favour proposals for contestability and “choice based management” with the tenants able to exercise choice when their landlords fail them. This mechanism has been suggested by the Audit Commission in their submission to the Cave Review.

Affordable housing and community land trusts - more than talk?

On Saturday I went to the annual conference of the Labour Housing Group. The key note speaker was the Labour MP and former housing minister Nick Raynsford who spoke about the successes of the Labour government (particularly the decent homes standard and improving the quality of social housing) as well as the challenges ahead – notably the need for more new build to meet housing need.

In the afternoon there was an interesting discussion on the issue of mutual home ownership. David Rodgers of the CDS spoke on how these offer the promise of affordability with:

1. The public sector transferring land to a community land trust at nil cost so home buyers only buying the bricks and mortar.

2. The residential property being bought through a co-operative entity with the members buying equity stakes in the entity’s units in a manner similar to a pension fund.

(More information, including A simple guide to Mutual Home Ownership, is available on the CDS website.)

This does sound like an effective mechanism for enabling local people to get on the housing ladder in high cost areas. It has been supported by the Labour party and Liberal Democrats. It now appears to be a Conservative party “policy initiative”. It also figured in the recommendations of the Affordable Rural Housing Commission.

Let’s hope there is some action on this - as well as talk. It appears more promising than the suggestion that of 10% shared ownership.

Further education colleges and choice

This week’s debate about Brighton & Hove City Council’s approach to over-subscribed schools (“lottery” to the media; “equal preference” to the Council; “random selection” to the experts) was interesting.

The issue has arisen from the need to manage fairly the challenges of schools choice. (I’d recommend the podcast on schools choice from Bristol University’s Centre for Market and Public Organisation for background on these kinds of issues.)

For a long time I've been waiting for the simple idea of choice arriving on the agenda of the further education sector. There is now lots of talk of “personalisation” and “contestability” (for the uninitiated - reducing barriers to entry for new providers). Recently “learner choice” has been spotted in the pipeline.

Yet since the creation of the Learning & Skills Council (and to some extent before) there has been pressure for mergers. While some mergers have made sense – particularly where well-managed colleges have effectively rescued weaker ones – others seem to have been driven by a belief in rationalisation and reducing to the sector to 150 or so colleges. There is a real risk that the scope for learner choice as well as the impetus for innovation and the possibility of meaningful benchmarking could be merged away.