Actuaries, pension deficits and saving public money

This week’s Accountancy Age carries an article about actuaries and their assumptions. It might not be fascinating but it is interesting as well as relevant for the public and not-for-profit sectors with their pension deficits.

Perhaps surprisingly the author encourages finance directors to challenge actuaries despite being an actuary himself. While it is unusual for a professional to suggest that their profession doesn’t always know best, it should be remembered that any debate or correspondence is likely to result in fee income for actuaries. (Call me a cynic but I know from recent experience when I tried to do it for a client.)

Industrial disease? The corporate culture of some charities

Last week the Guardian carried an interesting article by Richard Burdett, the editor of Pavement – a magazine for homeless people. The main argument of the article was that there was a growing “homeless industry” with an industrial scale and culture:

These organisations see running charities as dog-eat-dog business … a charity when it needs to pull on heartstrings, but a business when it cones to selling services to local authorities.

Similar arguments are made about other charities as well as not-for-profit and public sector organisations involved in seeking success in contracting and commissioning. (Particularly when contracts are packaged up on large scale as a result of the "efficiency agenda" pressures on central and local government.)

I accept that there can be problems – smaller and specialist organisations being squeezed out; staff being demotivated. But I would suggest these issues are not an argument for turning the clock back on choice, competition and contestability. The challenges are to:

1) government to protect and promote smaller organisations – particularly in better regulation and intelligent commissioning; and

2) boards – who need to make sure that not-for-profits don’t lose sight of their mission when seeking growth and surpluses.

On Being Board - a free resource for board members

Few things are in life are free. But board members with not-for-profits, FE colleges, housing associations, etc may be interested in free “On Being Board” downloads from Board Star.

The downloads are about 10 minutes each and give an introduction to aspects of governance and management for not-for-profits. I’ve just listened to the downloads on the work of Finance Committees and the use of consultants. They are intended for charities and have an American accent but they are still helpful and relevant to the “Third Sector” (in its broadest sense) here.

All you have to do is visit the website (or use Itunes) and put the downloads on your pc or Ipod.

Good news for social landlords and their tenants - a new regulator

Inside Housing reports that the government has agreed to set up a new standalone social housing regulator. So the regulatory role will not be handed to the Audit Commission.

Its good news for all sectors of social housing which will be regulated by the Office for Tenants and Social Landlords. Even for the ALMOs, whose representative body had made the case for the Audit Commission. The inspectors are good at being inspectors but that never meant they necessarily had the skills or aptitudes for regulation.

Moreover, there is a strong case for new regulator to focus on regulating on finance and governance while allowing using tenant voice and choice to increasingly “regulate” service delivery.

A future for council housing

Some good news in this week's Comprehensive Spending Review was the announcement that the obstacles to local authorities building new council homes were being removed.

However, local authorities have to learn lessons from the success of the arm’s length management companies (the ALMOs). While some have struggled, most have been successfully transforming council housing where they have been given operational freedom from council bureaucracy.

NHS Foundation Trusts and accountability - some evidence

One of the legacies of Tony Blair will be foundation hospitals (FTs). They appear to be here to stay too.

A key characteristic of FTs is the governance structure which creates accountability to patients, staff and communities. The example of the co-operative movement served as a model. (Its worth adding that FTs remain not-for-profits and are not a form of privatisation - contrary to what their opponents say.)

Recent research suggests that these structures are working. (It’s a pity that my local FT appeared to lose my membership details for best part of a year. Hopefully I am isolated exception.)

The FT model (and the example of the co-operative movement) is worth applying elsewhere in public services.

The NCVOs on the Third Sector, public services and the efficiency agenda

Yesterday I went to an excellent conference run by Bristol University’s Centre for Market and Public Organisation on The Role of the Third Sector in Delivering Public Policies. As third sector organisations such as charities, mutuals and social enterprises are being considered as vehicles for both delivering public services and (to some extent) delivering public policies, the conference was timely.

The keynote speaker was Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations. (I should declare an interest – Deed Consulting is a corporate affiliate of NCVO.) He outlined the main issues facing the Third Sector in its relations to ‘the state’ clearly and thoroughly – all without the use of Powerpoint.

Stuart Etherington raised concerns about key elements of the government’s agenda. On the subject of the ‘efficiency agenda’, he was concerned that interpretation by the public sector was often a narrow one concentrating on cost cutting with implications for project prices and, hence, the Third Sector. He also suspected that this agenda was driving a scaling up in procurement exercises like the recent letting of large regional contracts by the Department for Work and Pensions.

There was also an intelligent analysis of choice, ‘personalisation’ and localism for the Third Sector.

On the issue of potential conflicts of interest between designing policy as campaigners and delivering policy as contractors, Stuart Etherington suggested that there may be a split between Third Sector organisations concentrating on advocacy and campaigning and those focusing on delivery. There will need to be a response from the Third Sector to critics and cynics on these concerns when they are aired.

More doubts on efficiencies - MOD and Gershon

There is now more evidence to suggest that much of the Gershon "efficiencies" being claimed by the public sector are not entirely robust - as I have suggested here before.

Public Finance reports that the Public Accounts Committee's recent report on the MoD’s major project spending examined claimed savings of £781m on 20 of the ministry's largest projects. But the Committee found that only £242m of this represented genuine savings.

I fear that many of the savings in local government and social housing are (and will be) disguised cost-cutting and/or plain creative accounting.

Between a Northern Rock and the NHS

The new report from Derek Wanless rings warning bells on the productivity problem in the NHS. There is an executive summary and an interview on the King’s Fund website. The report repeats some of the critique from think tanks like Reform although it does not go so far.

It is unfortunate that Wanless is a board member of Northern Rock. The NHS isn’t the only organisation a bit short of cash at the moment.

The NHS: gifts and markets - the need for both economies

Life has been busy so I have only just got round to reading last week's Society section of the Guardian. It carried an interesting article, Gift rap, by Paul Hodgkin about the role of gift economies in the health service.

I agreed with the main thrust of the article that altruistic and collaborative enterprises (such as support groups) have a vital role in NHS. Hodgkin is chief executive of Patient Opinion which is itself a good example of such gift enterprises. “Co-production” is likely to be a growing part of NHS activity in the future too.

What I disagreed with Hodgkin about was his casual rejection of "markets" in the NHS. He commented:

there are a number of reasons why the search for fully functioning markets in healthcare has little likelihood of success.

He went on:

First, markets within the public sector are zero sum - more hip replacements here means less chiropody there. Or put another way, the foundation trust's surplus tends to mirror my PCT's deficit.

But there will always be a choice between hip replacements and chiropody - unless resources are unlimited. Love it or loathe it, but the National Institute for Clinical Excellence is a way of making those decisions by setting entitlements. The market (or call it choice for patients and competition among providers) is a tool for resolving whether those treatments are at hospital A or hospital B or polyclinic C.

Hodgkin continued:

Second, the "goods" the market is trying to allocate are usually not desirable - unlike a holiday in the Maldives. No one aspires to go to hospital for a mastectomy. As consumers, patients can call some shots in a market. But their fears and anxieties are easy to exploit by suppliers (read doctors) inducing demand for ever "better" care.

I think that medical treatment is very desirable when you need it - even major surgery. The point about professionals over-treating is valid although incentive structures can be developed that address that risk. So doctors and/or hospitals are rewarded for healthy outcomes rather than simple throughput of treatments.

One of the biggest obstacles for markets is the imperfect information that patients have about alternative doctors, hospitals, etc. But Patient Opinion and similar initiatives are tackling that.

I believe that Hodgkin's article reflects are cultural weariness of "markets". We hear the word and imagine Del Boy selling three legged tights or City traders yelling "Sell, sell, sell" into their mobile phones. Perhaps there would be less prejudice against "markets" (and associated hostility to reform) if we spoke about decentralised decision making by patients (or parents or service users or whoever) rather centralised decision-making by planners and politicians.

Road signs - lessons for regulation

There is sometimes a case for regulation. For example, oversight of the governance and finances of housing associations means that lenders reduce the interest of loans as the HAs are seen as lower risk. But regulation and regulators tend to grow beyond what is strictly necessary.

Government politicians and civil servants cling to regulation as a safety blanket. Opposition politicians promote regulation ask why regulation didn’t stop each and every unfortunate incident. The auditors thrive on regulation. The regulators can justify every lengthening of red tape. There is always a case for doing and regulating more – without little time to consider the compliance costs, let alone the unforeseen and unintended consequences.

So it was great to learn today that a town in Germany is abolishing road signs. So often denigrated as lovers of regimentation, the Germans are showing that the way with this – allowing pedestrians and motorists to self-organise, take responsibility and negotiate amongst themselves. It’s a theory of “shared space” already being tried elsewhere in Europe and supported by Eurocrats of all people. There is even a variant in Kensington involving the decluttering of streets.

(If you don’t think it will work think about car parks. They don’t generally need traffic lights and the rest.)

Let us hope the lessons of Bohmte – with its bonfire of road signs – are learned elsewhere – not least in the UK’s public services. We need a bit less regulation and more anarchy.

Police, customers and targets

Its not news that target-driven policing doesn’t work. But it is good news that the government has admitted this.

We might even see the police service adopting an ethos of customer service. My local police station might even open at the stated time. When shut, the buzzer to the duty station may even work.

Perhaps not given uncertainty over the 101 pilots – where citizens could report non-emergency incidents without clogging up 999 lines and without being trapped in labyrinth-like never-ending call-waiting. These lines are showing customer satisfaction of 90%!

House prices from £10: supporting Shelter

It’s not often that people can buy a house for £10. Shelter is building a city in cyberspace. By buying a house, a shop, a skyscraper or whatever, you can help support Shelter’s campaigning for those suffering most from the shortage in affordable housing.

Deed Consulting has a shop in Shelter’s city. (Although the logo doesn’t seem to show.)

"Mass fatalities" - planning for the risk of pandemic flu

It is never very jolly to get back from holiday. It was particularly depressing to see that the Mass Fatalities Unit of the Home Office (I never even knew that they had one) had issued draft guidance on Planning for a Possible Influenza Pandemic (pdf available).

The report includes interesting planning assumptions. It also gives scenarios such as:

The reasonable worse case scenario could produce around 650,000 additional deaths across England and Wales, based on a clinical attack rate of 50% and a case fatality rate of 2.5%.

Nevertheless we should be cheered that central government is taking the risk of a flu pandemic seriously. Are other providers of public services doing likewise.

Another disruption in service - back next week

I'm on holiday in Prague. (I fear that Charles Bridge may be busier than this.)

NHS targets - waiting for change

Apparently an investigation has been launched into waiting list figures at a Lancashire foundation trust. The case at Royal Preston Hospital will be an interesting one to watch.

Managing the public services by target is hazardous as I’ve noted here before. Hopefully the new regime will continue the moves away from targets. However, some experts, such as Professor Colin Talbot in Public Finance, are rather doubtful that a cull of targets will actually occur.

A new university league table - plus some thoughts on carbon and public services

The campaigning group People and Planet have published an interesting league table showing the greenest (and dirtiest) universities.

I do a lot of work with the further education sector. It would be interesting to see how colleges would perform if subjected to such an examination. Hopefully the Association of Colleges' Green Colleges initiative will build and extend some good practice going on. (I must confess to being a bit skeptical about how representative the colleges were in the AoC's quite positive survey on this issue.)

It is worth remembering that almost all universities and colleges (and many other organisation in the public and third sector) are entitled to a free energy survey by the Carbon Trust.

Before we all get too smug - as individuals we can count our carbon on the excellent Act on co2 website.

Social housing - time to give consumers some clout?

It is disappointing to read in Inside Housing that fewer than one in three of social housing residents in a National Consumer Council (NCC) study said their landlords took on board tenant suggestions for service improvements.

It is noteworthy that residents said local authorities were less likely to provide a flexible housing service or foster a sense of community than housing associations. (Something for the "Defend Council Housing" campaigners to ponder. How about campaigning to "Transform Council Housing"?)

There is a real need to give consumers clout in social housing. That can be done in all sorts of ways. Hopefully we will see a national voice for residents as recommended by the Cave Review. But new forms of accountability and governance are needed with a key role for community gateway housing associations and co-operative housing. Interestingly, the NCC has suggested an approach based on “markets and mutuality”.

Working in Sarajevo

Apologies for the lack of postings. I am working in Sarajevo. (Excellent timing as its the Sarajevo Film Festival this week.)

Charities and bureaucracy - time to cut the red tape

Today's Financial Times reports that the National Audit Office has found that the “baroque complexity” of government funding is jeopardising plans to give charities a bigger role in delivering public services.

The NAO study of 12 large charities found that on average, the charities estimated they each spent £381,000 a year simply managing these multiple funding streams, which include Whitehall departments, local authorities and National Health Service bodies.

Each charity had between 95 and more than 4,000 separate funding relationships with public bodies.
If the big businesses of the charity world are entangled in red tape, just think how the smaller charities struggle.

When auditors think that red tape is unreasonable, something should be done.