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PublicFinance

The business monthly of the public sector

publicﬁnance.co.uk

Issue 04 April 2014

APRIL 2014

Boxing clever? News, views and in-depth analysis of the coalition’s ﬁfth Budget

Chris Leslie PF’s interview with the shadow chief secretary to the Treasury

Whitehall woes The Institute for Government on further civil service reform

INSPECTOR

CALLS

Ofsted’s Michael Wilshaw talks exclusively to PF about schools, standards and spats with the education secretary

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PublicFinance

CONTENTS

April 2014

Features 24 COVER STORY Wilshaw’s wars What left the head of Ofsted ‘spitting blood’ in a battle with the Department for Education? Sir Michael Wilshaw, who was once hailed by Education Secretary Michael Gove as a ‘real hero’, talks to Peter Wilby

30 Whitehall – not the ﬁnal cut The 2015 Spending Review will demand even more austerity. Can Whitehall deliver without further farreaching reforms, ask Peter Thomas and Jonathan Pearson from the Institute for Government

36 The new broom Labour has been sprucing up its economic policy for the general election. Chris Leslie, shadow Treasury chief secretary, tells Judy Hirst about the makeover and his plans to reorganise local government

‘WE INSPECT LOCAL AUTHORITIES WHERE SCHOOLS AREN’T DOING WELL. IT SEEMS ONLY FAIR TO INSPECT ACADEMY CHAINS’

Regulars 4 Leader Slim pickings in the Budget 5 Second thoughts David Lipsey says predicting the 2015 election result is a close call 6 Budget 2014 News Warning on public sector pension shift; new start urged for Ebbsﬂeet; concerns on welfare cap; Troubled Families scheme extended

Need to Know 43 42 On Account CIPFA offers advice on cutting the clutter from ﬁnancial statements

CIPFA Scotland Conference Think differently, says John Swinney

12 Opinion Ben Lucas on managing demand, Kathleen Kelly on property tax and David Ellcock on NHS ﬁnance 17 18

Smart Thinking? After 25 years of the World Wide Web, it’s time to reﬂect on some vital lessons

letters

Voice of the Nations President’s ﬁght to save Cosla

20 Restless Nation Iain Macwhirter says the ﬂight of the banks may not be all it seems

Professional Development How to build a better business case

46 48

Numbers Game

Risk Review

Cipfa Events

Watchdog Watch

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CONTACTS

Leader No pain, no gain?

eorge Osborne has reputedly been on the fashionable 5:2 diet. And like his economic plan, he seems to think it’s working. Now, judging by his Budget speech, he wants to roll out the regimen for the public at large. But there’s an important twist. Unlike the five days on/two days off formula, the chancellor recommends that austerity rations continue for most of the time. There will, though, be some sweeteners along the way. Not just cheaper bingo and beer for the lower orders. Pensioners and well-heeled savers will get some instant gratification from the changes to annuity and ISA rules. However, the main message from Budget 2014 was that the fiscal pain is very far from over. Despite predictions of 2.7% growth this year, there is little spare capacity in the economy – and borrowing is expected to be £96bn for 2014/15. Growth alone, the chancellor told us, will not eliminate the deficit and achieve a surplus. Cuts, cuts and more cuts are needed to ‘get the job done’. With some minor modifications, the Opposition agrees. It too (see interview with Chris Leslie, page 36) has caught the ascetic bug. Labour has signed up to a current account surplus and wants some radical ‘decluttering’ of public services. It is also upping the ante on strict fiscal discipline. In response to Osborne’s Charter for Budget Responsibility and welfare cap, the shadow Treasury team is calling for the Office for Budget Responsibility to vet tax and spend decisions, as well as manifesto pledges. All this muscle-flexing over whose plans are the most credible feels a long way from debates over Plans A and B. Either way, it’s bad news for the public sector, which faces two-thirds of spending cuts to come. Another £2bn of funding for frontline services has just been lopped off by the chancellor. With the economic differences between the parties paper-thin, the electoral battleground turns increasingly to the cost of living – and how far the recovery is being felt on the ground. Cue much unpicking of the Budget’s childcare tax break – and of Osborne’s pensions shake-up, which many pundits fear will damage the public finances in the longer run. These and other forensic debates over when and whether real incomes will be restored are setting the scene for the 2015 election. But one thing is already clear. Osborne’s ‘resilient economy’ is lean and mean. And there’s precious little fat left to trim.

■ Judy Hirst DEPUTY EDITOR letterstoeditor@publicﬁnance.co.uk

REDACTIVE PUBLISHING LTD 17-18 Britton Street London EC1M 5TP 020 7880 6200 www.publicfinance.co.uk Editor Mike Thatcher 020 7324 2768 mike.thatcher@publicfinance.co.uk Deputy editor Judy Hirst 020 7324 2769 judy.hirst@publicfinance.co.uk News editor Vivienne Russell 020 7324 2788 vivienne.russell@publicfinance.co.uk Senior reporter Richard Johnstone 020 7324 2796 richard.johnstone@publicfinance.co.uk Reporter Judith Ugwumadu 020 7324 2794 judith@publicfinance.co.uk Contributors Paul Nettleton, Keith Aitken Senior designer Gene Cornelius 020 7880 6227 gene.cornelius@redactive.co.uk Editorial assistant Tania Forrester 020 7324 2793 tania.forrester@publicfinance.co.uk Digital content manager Harriet Patience 020 7324 2733 harriet.patience@redactive.co.uk Sales manager Katy Eggleton 020 7324 2762 katy.eggleton@redactive.co.uk Recruitment sales executive Emmanuel Nettey 020 7324 6234 emmanuel.nettey@redactive.co.uk Advertising production Aysha Miah 020 7880 6241 aysha.miah@redactive.co.uk Printing Polestar Stones, Banbury, Oxon To subscribe to Public Finance at the annual cost of £100, call 020 8950 9117 or email publicfinance@alliance-media.co.uk. Public Finance is editorially autonomous and the opinions expressed are not those of CIPFA or of contributors’ employing organisations, unless expressly stated. Public Finance reserves the copyright in all published articles, which may not be reproduced in whole or in part without permission. Public Finance is published for CIPFA by Redactive Publishing Ltd. Public Finance 17–18 Britton Street, London EC1M 5TP Tel 020 7880 6200 Fax 020 7324 2790

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PublicFinance APRIL SEPTEMBER 2014 2011

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Second thoughts pfOpinion

■ David Lipsey

The election unknowns It’s rare not to be able to predict the outcome of a British general election. But the May 2015 poll has a number of uncertainties and is simply too close to call Who will win the 2015 general election? The pundits queue up to make conﬁdent predictions; but the truth is that no one has a clue. This is rare. Since the shock of Harold Wilson’s win in February 1974, every election bar one has been eminently predictable a year before polling. And the one – John Major’s in 1992 – was unpredictable only because (as it later turned out) the opinion polls had, for technical reasons, lost the plot. Consider by comparison the uncertainties this time. First there are the psephological uncertainties – how the electoral system will translate votes into seats. In retrospect, the Liberal Democrats’ mercy killing of the coalition’s half-baked boundary redrawing may prove the decisive moment for 2015. Of the 50 seats by which it would have reduced the House

of Commons, more than two-thirds would have been Labour. However, there is an offsetting factor. One of the features of recent general elections is the incumbency effect. MPs who win a seat for the first time generally do better at the next general election than the average for their party. At the 2010 general election, Tory candidates fighting as first-time incumbents saw their vote increase by 5.6% compared with 3.8% for longer standing MPs. For an overall majority, Labour needs to gain some 67 seats. It would achieve this if it won all Tory-held seats where the majority is 10% of the vote or less. In all but three of these cases, the victor of 2010 is fighting again. So even if there is a big swing to Labour overall, it may be rewarded by fewer seats won than the party needs. Despite its gains from the electoral system, an overall majority is a tough target for Labour. No wonder Ed Miliband is making sure he does not necessarily alienate the LibDems as possible coalition partners.

THE 1992 GENERAL ELECTION WAS UNPREDICTABLE ONLY BECAUSE THE OPINION POLLS HAD, FOR TECHNICAL REASONS, LOST THE PLOT Photo: Rex

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That brings into play another psephological unknown: how the LibDems will fare. On their worst current poll ratings, the party’s MPs might again be able to fit into a London taxi. However, the LibDems have been particularly successful in establishing incumbency effects. Once they have a seat they tend to hold it, however desperate the party’s fortunes nationally. Will they repeat the trick this time? Who knows? Then there is Ukip. That will be a spectre haunting every party leader; but the ghost will loom even larger after the European elections this summer, where they might even be the largest party. Ukip will not capture Tory votes exclusively. It would not be surprising, for example, if it polled well in Northern Labour strongholds. But the point is that they are strongholds, and a high Ukip poll, as in last month’s Wythenshawe and Sale East byelection, will still leave the Labour member in place. In Toryheld marginals, however, it is Tory votes they are likely to garner, and that may leave the MPs for those seats in peril. Hence, the rampant Europhobia of the Tory backbenches. But surely the economic recovery will see the government home? Not necessarily. In hard times people keep hold of nurse. If voters think the economy has been fixed, they may be more prepared to countenance an untried government taking office, especially if that government promises a better NHS. I do not know who will win the election. However, I do know which prediction I would least distrust – the odds offered by the bookmakers. They have money riding on it. And Ladbrokes make Labour favourites to win most seats at 4/7. The Tories are 11/8. David Lipsey is a Labour life peer APRIL 2014

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Budget 2014

News Public sector pensions

Employers to plug £1bn pensions gap

Out of the box: Chancellor George Osborne’s Budget included help for savers but extra bills for public sector employers

BY RICHARD JOHNSTONE

Public sector pension contribution increases announced in the Budget will hit services and hinder attempts to expand provision by private firms and charities, the government has been warned. The Government Actuary’s Department is close to completing its valuation of the schemes, which is expected to highlight a shortfall in employer contributions. In his Budget statement on March 19, Chancellor George Osborne confirmed that NHS, school and civil service employers would have to increase their payments by more than £1bn in order to plug funding gaps. 6

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Currently, the costs of these unfunded schemes are paid for in part by the Treasury. However, from the introduction of new scheme benefits in April 2015, the full cost will transfer to the employers’ contributions. This switch means that about £725m will need to be found from existing public service budgets to meet the payments in 2015/16, Budget documents confirm, rising to more than £1bn in 2017/18 and 2018/19. Brian Strutton, the GMB union’s national officer for public services who has been involved in the negotiations over the pension reforms, said the

changes would cost schools £330m, the civil service £275m and the NHS £125m. If Whitehall departments were not reimbursed, there would be cuts due to the ‘smoke and mirror’ changes, he told Public Finance. ‘What the Treasury has done is set out an estimate of what an employer contribution would look like if those payas-you-go schemes were valued like a normal funded scheme, and what the new employer contribution rate would look like under that scenario,’ he said. ‘Now that the departments are starting to see the first cut of estimated numbers, it has brought the reality home to everyone on just how much it’s likely to be, at least, and it could yet be more.’ CIPFA also warned that the changes, when added to Osborne’s confirmation that £1bn will also be taken from departmental underspend, would have an impact on services. Chief executive Rob Whiteman welcomed the action in the Budget to help savers. However, these have come at the expense of service provision. ‘By taking over £1bn a year out of budgets through his revision of public sector pensions, he will hit services at a time when finances are tight and people and communities are at their most vulnerable,’ he told PF. Uncertainty over the new contribution rates will also undermine moves to increase the range of providers across a host of public services, experts warned. Under revisions to the government’s Fair Deal rules for outsourced public sector workers, which were first announced last October, any private or voluntary providers of services will need Photos: PA/Land Securities

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InBrief

BUDGET 2014 AT A GLANCE

PERMA-CUTS

REPAIRS FUND

WORKING CAPITAL

Whitehall spending cuts of £1bn in 2015/16 were made permanent and a new Charter for Budget Responsibility is to be brought forward in the autumn.

A £200m fund was announced for local authorities to pay for road repairs following the winter ﬂoods. An additional £140m was released for repair and maintenance of ﬂood defences.

The amount the Public Works Loan Board can lend to local authorities was increased from £70bn to £95bn.

to rise to £10,500 in 2015 with a rise in the higher rate threshold from £41,450 to £41,865 next month and to £42,285 next year.

WELFARE CAPPED

FLEXIBLE SAVINGS

Welfare spending is to be capped at £119bn from 2015/16 and rise only in line with forecast inflation. It will cover all benefits except the state pension and cyclical unemployment benefits.

Easing of tax restrictions on deﬁned contribution pension pots will give more ﬂexibility to retirees and pensioners. A new government-backed pensioner bond will pay 4% over three years. Cash and stocks-andshares ISAs will be merged and the annual savings limit increased to £15,000.

REACHING PEAK Growth is expected to reach its pre-recession peak this year. According to Office for Budget Responsibility estimates, growth will be 2.7% this year and 2.3% next year, while the deﬁcit will shrink to 6.6% of GDP this year.

HOMES HELP The Help to Buy equity loan scheme is to be extended to the end of the decade. Housing development to be concentrated in a new garden city at Ebbsﬂeet, in Barking Riverside and at Brent Cross.

to pay the extra contributions when they are admitted to the public service pension schemes. Bart Huby, the head of public sector outsourcing at pensions consultants LCP, said the fact that the increases are set to happen – but the exact amount remained unknown – was ‘worrying’ for companies and would put some off bidding for government contracts. ‘We know there’s a valuation going on, we know that there’s going to be new rates from 2015, but we don’t know what those rates are,’ Huby told PF. ‘So a lot of contractors will currently be wary about signing up to a contribution rate when they don’t know what it’s going to be, beyond the next year.’ This comes as the government looks to continue the expansion of the number of providers through its Open Public Services initiative. These include increasing the number of academies and free schools and opening up the probation services to new providers. In addition, the Treasury’s intention to revalue the schemes every four years raised the possibility of further contribution changes, Huby noted. This meant that providers may look to off-load the liabilities for pensions back to the public sector. Huby cited local government, where he said many contractors already reach agreements to ensure they are not responsible for any changes in pension contribution rates. ‘There are a lot of outsourcers now who say they will only do a deal where they take on a local authority contract where they do not have any pension risk,’ Huby said. ‘So it’s very common in the local authority schemes, and though it is still very early days [in other public service schemes] the same principle should apply.’

TAX THRESHOLDS The personal tax allowance is

Ebbsﬂeet

Garden city plan ‘needs blank sheet of paper’ BY RICHARD JOHNSTONE

The government agency announced by George Osborne to lead the creation of a garden city at Ebbsfleet in Kent must be given a ‘blank sheet of paper’ free from council planning agreements, the chair of the area’s local enterprise partnership has said. Peter Jones, who chairs the South East LEP that covers the proposed new town site in the Ebbsfleet Valley, said the announcement of an Urban Development Corporation for the area was welcome. In his Budget statement, the chancellor said the UDC would ensure obstacles to development on the site were overcome. ‘We’re going to build 15,000 homes there, put in the infrastructure, set up the development corporation and make it happen.’ He added that a government prospectus for further garden cities would be published by Easter. The Local Government Association urged ministers not to create

corporations, but to place councils at the centre of the initiative. However, Jones told Public Finance the corporation was needed to reset existing agreements for development at Ebbsfleet, which had been hit by the financial crisis. ‘I think they have to have a blank sheet of paper to do what is going to be right for the area,’ he said. ‘They have got to take a view on the development of the whole area, and unless they can start from first principles, then you could have some real “codge-ups”.’ Also speaking to PF, Labour’s former housing minister John Healey agreed strong central policies were needed. Healey, who was responsible for the last government’s planned eco-towns, said any administration that hoped to meet Britain’s housing needs had to look at the role new towns could play. ‘Where there is strong local leadership and support then government must give it the strongest possible backing from the centre,’ he added. ‘But in some areas that may not be sufficient, which is why I say the lesson from the successful wave of post-war new towns is that very strong central government is required if these are going to get off the ground.’ Earth works The proposed site of Ebbsfleet garden city in a former quarry

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Budget 2014 News Pension reforms

Chancellor accused of destroying pension policy BY JUDITH UGWUMADU

Chancellor George Osborne’s pension reforms will bring in a short-term boost for the public finances but have been criticised for a lack of consultation and long-term modelling of their impact. In the centrepiece announcement of his Budget statement, Osborne unexpectdly reduced tax restrictions on defined contribution pension pots. This will make it easier and cheaper for people to make cash drawdowns, rather than relying on often low-paying annuities. The chancellor said he was putting pensioners in charge of their own finances and bringing the tax treatment of defined contribution pensions ‘in line with the modern world’. The changes will take effect from April 2015 and are expected to bring in an extra £1.2bn in tax receipts in 2018/19, according to figures in the Red Book. Ed Wilson, pensions director at PricewaterhouseCoopers, told Public Finance there would be a beneficial short-term impact for the public finances.

‘The government assumes that people would be more likely take more cash at retirement or near retirement rather than spreading it over an entire life of retirement. ‘[Drawdown] is going to be taxed at marginal rates. The impact will accelerate payments and will push people to a higher tax band if they take more money earlier. There is an immediate cash flow benefit, creating a release for public finances.’ But the unexpected move and the manner of its introduction was slammed by the Strategic Society Centre’s director, James Lloyd. ‘For the Treasury to announce this without consultation and debate does not represent responsible, long-term policymaking, which is what pensions policy desperately needs,’ he told PF. ‘Stakeholders have spent the last decade building consensus around the Turner commission report and seeing it through… [but] without any warning, without any consultation, the chancellor has torn away the consensual basis of

Sitting pretty? The chancellor announced he was putting pensioners in charge of their own finances

UK private pension policy. That is not responsible. ‘I think in years to come he will be known as the chancellor who destroyed UK pension policy.’ National Association of Pension Funds chief executive Joanne Segars said it was ‘concerning’ that there had been little robust modelling to demonstrate that the government had properly understood the risks of the changes. Beneﬁts

Welfare cap ‘locks in austerity’ BY VIVIENNE RUSSELL

The £119bn welfare cap, announced in the Budget, ‘locks in’ austerity for millions of low-income families, anti-poverty campaigners warned. Chancellor George Osborne said in his March 19 statement that the cap, which comes into force in 2015/16, would cover all benefits with the exception of the state pension and cyclical unemployment benefits. It will rise, but only in line with forecast inflation, and is expected to reach £127bn in 2018/19. ‘Never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work,’ said Osborne. ‘In future, any government that wants to spend more on benefits will have to be honest with the public about the costs, need the approval of parliament and will be held to account by this permanent cap on welfare.’ But Alison Garnham, chief executive of the Child Poverty Action Group, said that without corresponding action on low pay and rising living costs, ‘the Budget tries to lock-in austerity for millions of low-paid families, poor children and disabled people’. She added: ‘Announcing a cap for social security spending without a plan to address the root causes of low pay, high rents and high childcare costs, simply forces the most vulnerable in society to pay the price for inaction.’ Others warned that the cap could shift costs to other parts of the public sector. Mike Turley, head of public sector at consultants Deloitte, said: ‘Targeting certain benefits could add pressure to

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pfBlogs BUDGET VIEWS F RO M THE PF B LO G

Whisky galore: Distilleries that argued the home market was being choked off welcomed the freeze on whisky duty

spending on education, social services, housing and policing, so the danger is that costs are simply displaced.’ But he added that the cap was an important means of tackling pressure on the public finances and the need to make a statement to Parliament if the spending limit was breached provided some ‘welcome governance’. Pooled funding

Help for troubled families extended BY RICHARD JOHNSTONE

County councils have welcomed the government’s decision to bring forward an extension to the Troubled Families Programme, and said the scheme could be used to expand pooled funding to other areas. David Hodge, chair of the County Councils Network, said the chancellor was right to bring forward the second phase of the programme by a year. The initial stage has seen all 152 upper tier local authorities in England, including counties, sign agreements to help 120,000 troubled families turn their life around through better coordination of services. A second stage, targeting help at an extra 400,000 households, will now begin in 2014/15. ‘We can’t afford to sit around and say in a year’s time we’ll think about it. I totally agree with the chancellor we need to push on,’ Hodge told Public Finance. According to government figures, the scheme has helped more than 22,000 families since March 2012. This showed the benefit of bringing services together, Hodge added. ‘The programme should embrace every aspect of public services, from local authorities to the health service and employment.’

Nations

Scots cool on oil, warm on whisky BY KEITH AITKEN IN EDINBURGH

Scottish reactions to the Budget were coloured by the prospect of the September independence referendum. George Osborne announced a downgrading of oil revenue forecasts. This, he claimed, would leave every adult in an independent Scotland £1,000 worse off, adding that ‘Britain is better together’. Scottish Secretary Alistair Carmichael said that the Budget allowed Scots to contrast a fast-growing UK economy with the ‘uncertainties’ of independence. But Scottish Finance Secretary John Swinney said it was ‘curious’ that the chancellor had backed Sir Ian Wood’s proposals for boosting future North Sea development, and in the next sentence downgraded the sector’s prospects. However, there was a widespread welcome for the ending of the alcohol price escalator and the freeze on whisky duties, which the industry argued have been choking off home sales. David Williamson of the Scotch Whisky Association called the measures ‘positive steps in the right direction’. Scottish Conservative leader Ruth Davidson said: ‘This tax boost will not only benefit the big players, but also the small independent distilleries right across Scotland who rely on our domestic market for sales.’ In Wales, Finance Secretary Jane Hutt said Osborne had done little to help stimulate economic growth and labelled it a Budget of ‘missed opportunities’. Northern Ireland’s Finance Minister, Simon Hamilton, said the additional £10.2m for capital investment would help secure long-term economic growth.

In one fell swoop, Budget 2014 destroyed UK pension policy. The chancellor’s announcement that individuals will no longer have to buy annuities is possibly the most catastrophically bad policy decision made by this government James Lloyd, director, Strategic Society Centre

There has been a quicker recovery than expected, but no evidence to show that the underlying health of the economy has improved, and that growth will be sustainable. Stronger private consumption has been facilitated by lower savings, not higher incomes Emran Mian, director, Social Market Foundation

Old habits die hard. The chancellor announced a £200m ‘challenge fund’ for pothole repairs. Welcome money no doubt, but we might wonder if ‘challenge funds’ is just a fancy new phrase for ringfencing Jonathan Carr-West, chief executive, Local Government Information Unit

The biggest worry for the Conservatives is that interest rates go up before the next election. The public have got so used to low rates they will be shocked, scared and angry when they rise from their record low of 0.5% Dan Corry, chief executive, New Philanthropy Capital

APRIL 2014

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Conference

News Swinney’s call to innovators PF reports from the CIPFA Scotland conference where ﬁnance professionals were told not to wait for permission from politicians to improve public services BY KEITH AITKEN

Scotland’s public finance professionals should not wait for political permission before innovating to reform and improve service delivery, Finance Secretary John Swinney told the CIPFA Scotland conference in Clydebank. Swinney admitted to fears that the three-year £500m change funding, provided by the Scottish Government to drive reform, would become the focus for innovation, to the exclusion of the other £60bn being spent on Scottish public services over the same period. ‘I would encourage this audience to think in a different way about how we innovate and not to wait for permission to be given by political leadership,’ he said. The shift to more preventive, collaborative and personalised services was ‘a very exciting agenda, and it needs to activate every public servant in the land to think differently about how we operate’. He said he had every confidence in the capacity of the accounting profession to meet the challenges of change. ‘The finance professionals of Scotland have provided an important bulwark in managing a

Financial bulwark: John Swinney praised the role ﬁnance professionals played in challenging times

fundamentally more challenging financial environment, and that is something of which the financial professionals of Scotland should be proud.’ Swinney told the conference that Scottish ministers had used the paving

legislation for the limited new tax powers devolved to Holyrood under the 2012 Scotland Act to pilot a tougher approach to tax collection and a more progressive fiscal strategy. They hoped to apply this generally if Scotland votes for independence in September’s referendum. He pointed to the replacement of stamp duty, one of the devolved taxes, with a property transaction tax more closely related to ability to pay. ‘It’s an indication of the thinking that the government has about the exercise of tax responsibilities,’ he said, referencing Adam Smith’s prescription that tax should reflect ability to pay, convenience to collect and simplicity to administer. Holyrood has been processing the bill that will allow the Scottish Government to set and collect a share of income tax from 2016. Swinney said that it represented ‘my best attempt to get to a maximalist position of intolerance to tax avoidance’. Swinney said he hoped these principles would extend throughout the tax system after independence. He appealed to public finance professionals to help create ‘a coherent and cohesive’ approach.

Don’t miss the point on targets, warns hospital chief BY MIKE THATCHER

A leading hospital chief executive warned conference delegates of the dangers of hitting NHS targets on waiting times and budgets but ‘missing the point’. Jill Young, chief executive of the Golden Jubilee National Hospital in Clydebank, gave the examples of MidStaffordshire NHS Foundation Trust and NHS Lothian, where targets had been met but patient care and respect for staff had been deficient. 10

‘Mid Staffordshire met their four-hour A&E target. They lived within their budget. They did that by leaving people in an ambulance for three hours in a queue outside the front door,’ she said. Young described the ‘huge outcry’ in 2012 when an independent study found that the NHS Lothian health board had an ‘inappropriate management culture’. ‘They met every waiting time and finance target that was set them. But there were huge grievances from the staff over

bullying and harassment. They met their targets and completely missed the point.’ While incorrect targets ‘could do more damage than they are worth’, setting goals still had a place in the NHS. Young said her hospital, adjoining the conference venue, emphasised ‘safe, effective and person-centred’ care. ‘Quality is never an accident. You have to think about it, you have to plan it, you have to watch it, you have to report on it. And you have to do it every single day.’

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Politics invigorated: Blair Jenkins (left) with Keith Aitken at the CIPFA Scotland conference session on independence

Yes campaign leader insists Holyrood will devolve power BY KEITH AITKEN

An independent Scotland would have an appetite for devolving power back from Holyrood to the local level, the leader of the referendum Yes campaign told the CIPFA Scotland conference. Blair Jenkins, chief executive of Yes Scotland, also predicted that it would operate a higher and better level of public services than was possible within the UK. But he acknowledged that austerity would continue in the medium term. Jenkins faced questioning by Public Finance and by CIPFA delegates in a session that had been scheduled as a debate with a representative of Better Together, the referendum No campaign. In the event, Better Together was unable to provide a speaker. While devolution had centralised power, taking it away from local government, the stated positions of the Scottish parties encouraged confidence in the appetite to reverse that flow after the first elections in an independent Scotland. Independence, Jenkins claimed, would make Scotland more democratic, more socially just and more prosperous. Describing the campaign as ‘a

temporary argument between friends’, Jenkins welcomed the way that it had invigorated civic politics in Scotland, as shown by high turnouts and engagement levels at public meetings throughout the country. Independence, he believed, could also improve relations between peoples north and south of the border. Pressed on whether independence might make it harder for public servants to move between jobs on their respective sides of the border, he admitted that he was unsure about the detail of how public service pay and conditions might diverge, but said the European Union guaranteed free movement of labour. Jenkins dismissed threats by businesses to consider relocating out of Scotland in the event of independence, and suggested that a succession of recent business warnings appeared orchestrated. He also continued to insist – despite a pledge to the contrary by Chief Secretary Danny Alexander – that the Treasury’s refusal to sanction a currency union was a mere negotiating position, and that Scotland would be entitled in return to refuse to shoulder its share of inherited sovereign debt.

Picking winners a challenge for judges Two new awards were presented at the conference dinner for the ‘finance professional of the year’ and the ‘team award for innovation and improvement’. The individual award went to Allan MacLeod, interim director of finance at Police Scotland, for helping to create the unified force. Photos: Stewart Cunningham

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The Service Desk Team at Glasgow City Council picked up the team award for a programme that saw 19 offices combined into one location, saving £6m. Gary Devlin, chair of CIPFA Scotland, said the judges had been ‘unprepared for the quality of the nominations and for the innovation that is out there’.

‘Smooth’ switch to national force BY KEITH AITKEN

Vic Emery, the chair of Scotland’s controversial national police authority, laid claim to a successful first year in operation, but admitted there was further to travel. Outstanding challenges included better communications, distinguishing governance from operational matters, and delivering innovative service reforms, he told delegates. The Scottish Police Authority came into operation last April alongside the national police force, Police Scotland, created by merging eight regional and two specialist forces. Emery said some decisions – including the closure of police station front desks – had been contentious. For the most part, though, the public had not noticed the change to a national force, which he took as a sign that the transition had been smoothly managed. This was despite the structure coming into being 18 months after the ministerial announcement and six months after the authority’s board first met. It had taken three years to set up the National Crime Agency south of the border, he noted. In its first year, the national force had achieved savings of £60m, drawn up an ambitious investment plan, completed more than 400 voluntary redundancies, and set up effective liaison with local authorities, Emery said. Crime was at a 39-year low, and still falling. He wanted to do more, especially in promoting inter-operability with other services, for example by sharing helicopters and command and control centres with the fire and ambulance services. ‘This kind of facility shouldn’t be news – it should be the norm,’ he said. APRIL 2014

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19/03/2014 16:43

■ New (new) public management, by Ben Lucas

■ Time up for the unfair tax? by Kathleen Kelly

Opinion ■ Ben Lucas

New (new) public management Public services need to be turned on their head, so they start from people and their needs rather than universal entitlements. We have to manage demand while generating better social value Now is when we ought to be turning our sights to the medium-term challenges and opportunities facing public services. A year from the general election, the coalition’s policy programme has pretty much run its course, and the longest and deepest recession for generations has ended. Of course, these are hardly times of plenty. Living standards have been squeezed as never before while public spending austerity will continue for the rest of the decade – with 60% of the cuts still to come, according to the Institute for Fiscal Studies. The Local Government Association estimates that at least 56 councils could cease to be financially viable after 2015, and that the funding shortfall for local government will be £14.4bn by 2020. But fiscal factors are only part of the picture. Our economy and society are going through profound change. An ageing society, combined with a birth spike, is changing family structures and work patterns. Our work, social and economic experiences are being transformed by open technology, with a surge in the number of micro and small businesses. New social networks challenge vertically structured bureaucracies, whether in government, public services or banks. This is also an era of rapid urbanisation. The population of Britain’s core cities has grown by nearly 10% 12

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in the last decade. Globally, cities are driving growth and 70% of the world’s population will live in urban areas by 2050. And climate change remains the world’s greatest challenge. Public services need to understand and respond to these trends. The Royal Society of Arts’ recent report, Managing demand: building future public services, sets out some much needed new thinking about this. The term ‘demand management’ is a deliberate inversion of the emphasis on supply-side change that has characterised much of public service reform for 20 or so years. The big story now has to be about how to generate better social value, not what we can do to promote greater efficiency. Public services need to be turned on their head, so that they start from people and their assets and needs, rather than from silos and universal service entitlements. There is an emerging use of demand management approaches across local government – from ‘nudge’ techniques through values modes analysis to applied behavioural insights in areas such as recycling and littering. A number of innovative councils now need to attempt something much bigger – whole-system change. That’s why the Leeds Local Government Commission proposed a new strategic purpose for the authority as a civic enterprise council. Similarly, Sunderland has been grappling with what it would mean to be animated by a community leadership purpose, while Lambeth merged its service departments into four thematic priorities to focus on co-operative commissioning. Greater Manchester has one of the

most ambitious approaches to reform, with demand management and public service reform at the heart of its economic development and City Deal plans. Whole-system, whole-place reform requires integrating organisations and services across places and within communities. It has five key components: tackling issues through the context of place; starting with individual families and places; working together to build community insight; linking networks and community identity with behaviour change; and emphasising the role that councillors can play in community leadership. Carolyn Wilkins, chief executive of Oldham Borough Council, highlighted the challenge at the launch of Managing demand: ‘We talk about troubled and chaotic families, but what about troubled and chaotic public services?’ Better information and insight are crucial, so open data is central to radical reform. Greater Manchester has been seeking to map complex dependency by drawing on data sources across health, employment and welfare services, social care, education and the criminal justice system. At the same time, we need to much better understand family, social and community networks. That’s why the innovation charity Nesta has called for proposals to digitally map community networks and why the RSA has developed Social Mirror, an application that enables people to match their interests with community groups and activities. And the Leeds Data Mill is publishing vast swaths of open data that can enable a richer understanding of the pattern of social and economic life and Photos: Shutterstock

19/03/2014 11:46

publicﬁnance.co.uk/opinion ■ Let’s stick together for future of NHS ﬁnance, by David Ellcock

Greater Manchester has one of the most ambitious approaches to reform, with demand management and public service reform at the heart of its economic development and City Deal plans provide the basis for community and business ventures. Hard fiscal reality sits behind much of this. It is unsustainable to carry on as we are. The financial case for a systemic shift towards prevention is based partly on savings already made by demand management, but much more on predictive modelling about the potential scale of these in future. EY modelling for the LGA, based on the four community budget pilots, predicts a potential fiveyear net benefit of up to £20.6bn. A leap of faith is required. This new approach will have to be developed with data from the bottom up, rather than the state down. It will draw on resources, such as social capital, that the state doesn’t count. Locating power and resources with people and local communities presents an existential challenge to our centralised state. It will have to learn to

let go, both financially and politically. A preventive, socially productive approach requires a new fiscal and financial settlement. There are three dimensions to this. Horizontally integrated public services will need long-term, single-pot whole-place funding. There should be much greater fiscal freedom and autonomy both for borrowing and to align the promotion of business and revenue growth. And the finance community in local government will need to help develop new mechanisms for encouraging social and preventive investment. The new social contract will be even more far reaching. You can’t create social productivity and open public services through a closed, vertically integrated administrative bureaucracy. This is a challenge to local government as much as to Whitehall. It requires a more open politics. Local politicians will

need to lead a conversation with their citizens about what they need and want from public services and also what they should do for themselves. Greater power and resources should be located within local communities, with the promotion of neighbourhood commissioning of services and the extension of personal budgets. Councils will need to become properly open institutions, using open-source policymaking, opening up budgeting and spending decisions, and publishing open data for their places. The new times call for a new approach. There are some promising developments across local government, but what’s now needed is a more open debate about what 2020 public services should look like. Ben Lucas is chair of public services at the Royal Society of Arts APRIL 2014

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Opinion ■ Kathleen Kelly

Value judgment: A mansion tax on property in Egerton Crescent, the most expensive street in London’s Kensington and Chelsea, would leave untouched the unfairness in council tax

Time up for the unfair tax? Now is the moment to start thinking about a long-term replacement for the council tax. Reform is not easy, but it is not impossible either We hear a lot about the cost of living these days. So much so it’s become part of the mantra for freezing council tax. Put that together with the fact that nobody likes taxes (never mind the spectre of the poll tax riots) and you see why council tax is such an easy political football to kick around. No one wants to stand for re-election based on a mandate of increased council tax bills, with expected reductions in London for 2014/15 seemingly linked to May’s local elections. The sympathy card is often played for a quick political win – note the council tax relief offered for flood victims, without any attempt to address underlying unfairness. This all makes it harder to address the fundamental problems with council tax 14

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that have become progressively worse since the system was hastily introduced in 1993 to replace the hated poll tax. With valuations standing since 1991 (outside a Welsh revaluation in 2005), house prices are now completely out of kilter with council tax. That may well have contributed to house price inflation in the boom years. The inherent ambiguity of whether council tax is a charge for local services or an imperfect property tax also blocks reform. In reality, authorities have little flexibility on council tax and it is not their main funding source. It’s also unclear why paying council tax offers any greater accountability than voting in local elections. Most important, though, council tax is unfair. If you live in a lower-value property, you end up paying a higher proportion of its value in tax. So a property valued at £320,001 is worth nearly five times a £68,001 home but pays only twice the amount of tax.

While that makes it easy to sympathise with the now regular-as-clockwork calls for a mansion tax, it would leave untouched the unfairness inherent in the design of council tax. And I haven’t even mentioned the very real political spectre of the impoverished elderly widow living in her expensive property that always arises whenever council tax reform is mentioned. Using such evocative images makes it easy for politicians to do nothing for fear of a public backlash. Yet the uneasy alliance between government and local authorities on council tax freezes is unravelling, and not necessarily on straight party political grounds. Doing nothing leaves the nearly two-thirds of people whose bills would fall by more than 10% under a progressive property tax still paying more; this at a time when a family of four has seen the amount they need to spend just to achieve a minimum Photo: Getty/PA

19/03/2014 15:01

publicﬁnance.co.uk/opinion

pfBlogs

A DIGEST FROM THE WEB

The uneasy alliance between government and local authorities on council tax freezes is unravelling, and not necessarily on party political grounds

‘Local government workers have been drawn into a race to the bottom, with scant recognition of their work. The coalition’s 43% cut in funding has piled on the pressure to slash and burn the worst pay and conditions in the public sector by miles’ Heather Wakeﬁeld, head of local government, Unison

‘Devolution has been a huge disappointment for Wales, yet the Silk Commission is calling for more powers for the National Assembly. We should not be giving greater responsibility to an already bloated and ineffective institution ’ Professor Malcolm Prowle, Nottingham Business School

acceptable standard of living increase by 25% in the last five years. Now is the time to start thinking about a long-term replacement for council tax that would introduce a fairer balance of the tax burden between lower- and higher-value properties. This is not easy, but neither is it impossible. Suggesting a property revaluation is always immediately rebutted by the argument that it’s too politically difficult. The Joseph Rowntree Foundation recently published evidence on the impact of moving to a progressive property tax. It was interesting when we ran a round-table debate on this issue that people in the room immediately started talking about how much easier it would be to simply revalue council tax and add some extra bands. Perhaps it was a response to the news that a progressive property tax would reduce median bills for elderly single people by £180 and by £320 for elderly couples compared to council tax. Having

‘Getting cross about the cold and callous nature of private ﬁnance is as futile as shouting at the rain. It is impossible to legislate ruthlessness and indifference out of the system and, unfortunately, pretty hard to bring social consciousness in’ Michael Ware, corporate ﬁnance partner, BDO

‘It might seem obvious that it’s a good idea to link payment to achieving the goals of particular public services, but the track record in health suggests that payment by results is a limited and blunt tool for performance improvement’ Anita Charlesworth, chief economist, Nuffield Trust

looked at the impact of a revenue-neutral progressive property tax, it’s clear that redistributing the tax burden makes it possible for median bills to fall while the overall tax take remains the same. Of course, someone has to pay more, so while the bills for the poorest tenth of households would fall by £202 with a

Political football: Protesters gather in Trafalgar Square 24 years ago at a demonstration against the poll tax

progressive property tax, the richest tenth would pay £184 a year more. Any replacement for council tax must stand the test of time. Any change must be gradual, carefully done and linked to ability to pay. It should also be linked to a wider debate on reform of local government finance. Change must also command political consensus, probably with a strong majority government to carry it through. We’re not there yet, but I watch with interest for developments on London Mayor Boris Johnson’s recent comment that ‘we cannot go on forever without looking at our council tax valuations’. The realist in me says nothing will happen during the next parliamentary term, but the optimist says that if we get the debate right now there might be hope post-2020.

Kathleen Kelly is policy and research manager at the Joseph Rowntree Foundation APRIL 2014

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Opinion ■ David Ellcock

Staff engagement: Workshops, including this one in Birmingham, have helped to shape Future-Focused Finance

Let’s stick together for future of NHS finance The pressure of reorganisation and the challenge of finding £30bn in savings have prompted an initiative to preserve the unity of NHS finance professionals When the first NHS trusts were introduced in the early 1990s many commentators argued that the resultant purchaser/provider split would encourage the health service in general, and its finance profession in particular, to split along tribal lines, with the trusts in one camp and health authorities in the other. In the 20 years since Kenneth Clarke piloted the move towards semiautonomous providers, NHS finance professionals have worked hard to stay united across organisational boundaries. The strong personal and professional relationships between senior finance colleagues have frequently been the key factor in resolving tricky contractual wrangles in local health economies. 16

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When the coalition government’s Health and Social Care Act came into force last April and hundreds of primary care trusts and strategic health authorities were swept away to be replaced by clinical commissioning groups, commissioning support units, NHS England, Health Education England and numerous other bodies, the prospect of the finance function’s hardwon unity being lost became very real. Added to the pressure created by the reorganisation is the need for the NHS to meet the Nicholson challenge and find £30bn of savings by 2015. One of the very real dangers of the efficiency drive is that organisations will balance their books by passing costs on to other parts of the NHS, thus driving finance colleagues apart. In the light of the above pressures, the six national heads of the NHS finance profession came together late last year to initiate a programme known as Future-Focused Finance. The detail of the programme is still

being developed, with people from across the NHS encouraged to give feedback on whether the strategic themes and associated action areas identified so far resonate with them. Those themes and action areas cover a wide range of issues, from ‘Securing Excellence’ in financial processes, through ‘Knowing the Business’ – ensuring that finance staff understand the NHS and have the skills to deliver its requirements – to ‘Fulfilling our Potential’ by ensuring that every employee has the opportunity to be the best that they can be. There are two elements to FutureFocused Finance that ensure it will be different to previous initiatives. At its heart is a desire to ensure that every member of the NHS finance function, and as many non-finance colleagues as are interested, can contribute to the programme’s success. Ten workshops took place in March, attended by a range of finance staff, from new recruits to finance directors. By the time it is formally launched, close to 1,000 people will have been involved in the programme’s design. Second, the need for finance to engage with colleagues from across the NHS is integral to Future-Focused Finance. This latter point is exemplified by one of the action areas being led by Dr Sanjay Agrawal, a consultant in respiratory and intensive care medicine at University Hospitals of Leicester NHS Trust. It is obvious that finance in the NHS can only be truly successful if it is fully engaged with colleagues throughout the service. From the work completed to date it is equally obvious that clinicians and managerial professionals want finance to be fully integrated into service delivery, not sitting in remote offices commenting from afar. If Future-Focused Finance is as successful over the next five years as it has been in the last five months, the programme will deliver the transformation in finance services that is required to help create a health service of which everyone will continue to be proud. David Ellcock is the programme manager for Future-Focused Finance. He can be contacted on futurefocusedfinance@nhs.net Photos: Idenk/Alamy

19/03/2014 12:25

publicﬁnance.co.uk/opinion

Letters

You can e-mail your letters to letterstoeditor@publicﬁnance. co.uk. Please include your name and address and a daytime phone number. The editor reserves the right to edit letters

pfObituary The conundrum of funding health and social care Congratulations on commissioning two pieces for PF on the interaction between health and social care (Winter pressure politics and Brave new world disorders, Public Finance, January/February 2014). These articles synthesise a dilemma that is increasingly urgent, but shows no sign of rational discussion. We know that responsibility for social care is shared between the NHS and local authorities, but the issue of funding co-operation and joint working is a conundrum. So you ringfence NHS funding, but require £20bn in efficiency savings over five years. You put in place yet another commissioning body and require it to purchase services based on a financial costing system that is not fit for purpose. You recognise but do little about the implications of an ageing population. Then you severely cut council grant and restrict/freeze council tax, but continue to insist there is adequate funding already in the system. You then introduce a bedroom tax but struggle to provide suitable alternative accommodation for those, including the disabled, who will need access to new sources of supply. You exacerbate the problem by, as one of your first actions in government, abolishing the Housing Corporation. This was the one organisation that was capable of responding to the housing needs of successive governments and that had a proven record of increasing the supply of public sector housing. So, it is a puzzle, but then I am only a dumb accountant. Someone far more intelligent than me will be able to provide an explanation that will make it clear. But, if not, try this. Finance, via the Treasury, has been allowed to lead. Only on rare occasions should this be the case. Finance should come last in the process. We must start by identifying client needs. We should commission a sober, independent piece of research that will evaluate present and future needs and their resource implications. Resource needs can be considered once the report is published. Finance,

Alan Titheridge 1949 – 2014

Alan Titheridge, who died in February 2014, had worked in London local authorities for almost 30 years, before moving into the private sector where he continued to develop council services. Alan started his career as a rates clerk in Islington, north London, in the 1960s, and rose to become the youngest chief rating officer in the country. A ﬁrm believer in professional education, he was a double-prize winner in the Institute of Revenues, Rating and Valuation examinations. More recently he had studied for the CIPFA examinations, which he completed in 1992. He served on the IRRV’s council and its law, research and education committee and was a member of the examinations and assessment board. The IRRV’s honorary treasurer, he also served as chair of the London and Home Counties Association. Alan was born in 1949 and grew up in Islington, one of three children. In 1973, he married June and they had three children, Andrew,

Stuart and Emma, and five grandchildren, Kieran, Samuel, Freya, Zahra and Christian. By the 1990s, Alan was working in Croydon as assistant director. In 1994 he led 300 staff in an employee buyout that won a £50m contract to provide financial services for the south London borough. In time this company became part of CSL and then Liberata, where he led development of the local government business. Alan joined Agilisys in 2003 to establish strategic partnerships with local authorities. He led development of a partnership with the London Borough of Hammersmith and Fulham. This partnership now operates as a joint venture providing transformational services and ICT for the council. Alan went on to establish the Elevate East London joint venture with Barking and Dagenham council. He oversaw the transition of 400 staff into the joint venture and took the role of chief executive for the first year.

human resources and equipment requirements will be identiﬁed, including sources of funding. At that point, ideological choice through political programmes – including proposals for funding – can be identiﬁed. That would be a good time to consider the form of the organisation

Client needs: An ageing population presents a challenge

Alan continued working with local government at the highest level. He had a depth of understanding of the economic and political environment, the success measures, and performance regimes within which local authorities operate. His understanding, empathy and knowledge of local government, combined with years of commercial experience, allowed him to help lead clients to solutions that were real and lasting. Alan’s family asks for any donations in his memory to be made to Cancer Research UK. David Graaff

CIPFA president Jaki Salisbury adds: ‘Alan was a dedicated and much loved member of the Institute, who always pushed for change and innovation, challenging the status quo. ‘He had great foresight and vision, seeing from early on the necessity of developing strategic partnerships to deliver more effective and sustainable public services. ‘Our thoughts are with his family at this sad time.’

that should deliver the programme. I fervently hope that a local solution is found. This would be accountable, sensitive to local needs and reporting on local outcomes. Such a solution will be fiercely opposed by the medical profession who will regard local accountability as incompatible with their assessment of medical needs and delivery. But it cannot be beyond the wit of mankind to find an organisational solution fit for purpose and to enhance the life chances of our fellow citizens. In the end, I believe we have to convince people that an increase in taxation is the only way in which we can continue to benefit from these services free at the point of need. JOHN FOSTER Stokesley North Yorkshire APRIL 2014

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19/03/2014 16:57

Voice of the

Nations Scotland

Leader in battle to save Cosla NEWS FROM THE DEVOLVED ADMINISTRATIONS Scotland S Scotland cotland BY KEITH AITKEN IN EDINBURGH

The leader of the Convention of Scottish Local Authorities has told Public Finance of his determination to ﬁght to stop the organisation blowing itself apart, after seven of the 32 councils served notice of their intention to quit next year. But David O’Neill, Cosla president, admitted some members could be lost. Concerns are understood to focus on Glasgow, Scotland’s biggest council, which suspended its membership for several years in the early 2000s. ‘We will be working extremely hard, and we are conﬁdent that we will be able to retain a fair number of them in membership,’ O’Neill told PF. ‘It would be a shame if we lost one or two, but Cosla will continue to do national pay deals. The work that Cosla does is absolutely vital. It cannot be done by small organisations or by 32 councils acting on their own.’ The row centres on the formula for

distributing Scottish Government funding and Cosla’s own decisionmaking processes – two issues that have become increasingly conflated. Both are lent momentum by tensions between Labour and the Scottish National Party, which drives much of Scottish politics at present. All the councils threatening to quit are Labourled and, while all have reserved the right to withdraw their threats, the Cosla leadership is taking the possibility of a meltdown seriously. The spark for the dispute is Scottish Government funding for councils in 2015/16. The finance secretary takes Cosla’s advice on how the money should be distributed. Traditionally, a needs-base formula has been used, but for 2015/16, Cosla leaders opted for a ‘flat uprate’ deal. While willing to accept Cosla’s decision, Finance Secretary John Swinney has published tables contrasting the effect of the two options for

Glasgow miss? The city chambers in Scotland’s largest city, where continued membership of Cosla is in doubt

individual councils, revealing differences of more than 2% for some authorities. The other issue is whether such decisions should be taken, as at present, by the so-called Leaders Group within Cosla, or by a larger representative body, the Convention. A constitutional review, due to report in June, is expected to recommend a shift in favour of the Convention. This is seen as reducing Labour’s strategic inﬂuence within a politically divided Cosla. O’Neill told PF that he expected the distribution issue to be revisited at the end of April by the Leaders Group, and appeared to hint at a change of heart in favour of updating the needs indicators. ‘John Swinney’s decision to publish the tables means councils now know on an individual basis what it would mean, so the idea of voting for it simply on principle no longer exists,’ he said. ‘What has taken people by surprise this time is the size of the variation. Nobody expected that it was going to be as large as this.’ Asked whether he regretted Swinney’s actions, he replied: ‘We are where we are.’ Both options for distributing the money were equally legitimate, he said. O’Neill defended the constitutional review. ‘Our constitution is out of date and some things need to be altered. For example, you can only speak once in a discussion. In an organisation that is all about debating issues, that frankly is daft.’ O’Neill, a former Labour leader in North Ayrshire, made clear his determination to head off a split. ‘There are 32 councils in Scotland and currently 32 of them are members of Cosla. Losing even one of them would be a serious blow, because it’s important that Cosla is able to speak up on behalf of all of Scottish local government, not just part of it.’

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19/03/2014 17:13

publicﬁnance.co.uk/news

InBrief SCOTLAND’S DEFICIT UP Fall in North Sea revenues A sharp fall in North Sea revenues last year increased Scotland’s notional public finance deficit to £12bn, annual Government Expenditure & Revenue Scotland statistics show. Labour said the figures proved an independent Scotland would have a £4.4bn budget hole, but First Minister Alex Salmond said the finances were in better shape than the rest of the UK’s.

MAKING PROGRESS Procurement boost for Welsh ﬁrms More Welsh companies are winning public service contracts after procurement

reforms, Finance Minister Jane Hutt said. Presenting a progress report on the Wales Procurement Policy Statement from 2012, Hutt said Welsh contractors now win 75% of all construction awards compared to about 30% in 2010/11. More small businesses were also winning work.

DEFAULT POSITION NI to change way ﬁnes are collected Northern Ireland’s Justice Department is consulting on changes to the way ﬁnes are enforced and collected. Views are being sought on whether a planned enforcement service should have powers to access people’s bank accounts or seize motor

vehicles when ﬁnes are not paid. Justice minister David Ford said ﬁne default was a ‘real problem’ but the legislation should bring in a balanced approach.

WAITING TIME INITIATIVE £5m to speed up NHS scans Welsh health minister Mark Drakeford has announced funding of £5m to reduce waiting times for diagnostic tests, of which £1m will buy a CT scanner and ultrasound machines. Health boards are being asked to work together to improve access to testing services by, for example, investing in mobile scanners. Drakeford said waits for tests were still too long in some cases.

Wales

Northern ireland

Silk seeks trio of powers for Cardiff

Council reforms ‘need more work’

The Welsh Assembly in Cardiff should take on powers over policing, justice and transport, according to the Commission on Devolution in Wales. Following its 2012 report on greater financial powers for Wales, the commission published its second report on the powers of the Assembly on March 3. It made a total of 61 recommendations, proposing that changes be phased in over a 10-year period. The commission called for a shift from the ‘conferred powers’ model of devolution to a ‘reserved’ model, which sets out powers that are not devolved, rather than those that are. This would clarify responsibilities and facilitate more confident governance, it said. Commisson chair Paul Silk said: ‘At a time when constitutional issues are high on the agenda in the United Kingdom, we have agreed recommendations that will provide a stable and well-founded devolution settlement fit for the future. ‘It will give Wales a lasting settlement that allows political decisions to be made in a democratic and accountable manner.’ He suggested that the recommendations would bring Wales more in line with other devolved countries in the UK. Among the commission’s specific suggestions were the devolution of policing and justice. While youth justice should be devolved immediately, a feasibility study for the devolution of prisons and probation should follow, the commission said.

More guidance is needed on aspects of the local government reforms that are set to be enacted in Northern Ireland next year, according to legislators. After an examination of the Local Government Bill, the Northern Ireland Assembly environment committee said careful consideration needed to be given to procedures for investigating complaints against councillors and called for more clarity on the allocation of positions of responsibility and the new roles of mayor and deputy mayor. Committee chair Anna Lo said a key aspect of the committee’s consideration was the introduction of community planning, which aims to give communities a central role in informing decision-making in local government. ‘We feel strongly that councils must involve the community and voluntary sector in community planning as an integral part of the process, and we welcome the minister’s assurance that this role will be clearly speciﬁed in statutory guidance,’ she said. ‘The committee also believes that real and committed engagement on the part of statutory agencies is crucial if community planning is to be a success.’ Regulation and guidance that would ﬂow from the reforms needed to be timely and subject to rigorous consultation, she added. Reforms by 2015 would reduce the number of councils from 26 to 11 and give them additional powers over planning, roads, housing, regeneration, economic development and tourism.

Photos: Alamy

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Arresting development: The Welsh Assembly should have powers on policing, the devolution commission says

The report recommended that the Assembly should assume powers for water and over ports, rail, bus and taxi regulation, and speed and drink driving limits. The Welsh dimension of BBC governance should also be beefed up and funding of the Welsh-language television channel, S4C, should be transferred from the UK government to the Welsh administration. There were also a series of recommendations over how the Assembly could better manage its affairs. These included greater ﬂexibility over the number and size of committees, increased numbers of research staff and more backbench Assembly members. Welsh Secretary David Jones welcomed the report, but said there was not sufﬁcient time in the remaining parliament to implement any changes that require primary legislation. ‘These will therefore be a matter for the next government and parliament, and for political parties to set out their proposals and intentions to the electorate ahead of the general election in 2015,’ Jones said.

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publicfinance.co.uk/voice of the nations

Restless nation A VIEW FROM NORTH OF THE BORDER

pfOpinion

■ Iain Macwhirter

High anxiety at ﬂight of the banks Fear of the unknown has been the dominant theme of the independence referendum campaign. But warnings from the mega-banks have an empty ring Will the last bank to leave Scotland please turn out the lights? That’s what the unionist Better Together campaign has been saying with undisguised glee after a succession of large finance houses including Royal Bank of Scotland, HBOS, Standard Life and Alliance Trust have threatened to leave Scotland over ‘uncertainty’ caused by the independence referendum. The Scottish Labour leader, Johann Lamont, taunted Alex Salmond at question time by paraphrasing the Scottish pop duo The Proclaimers: ‘Standard Life no more, RBS no more...’ However, the flight of the banks may not be quite what it appears, and the Yes Scotland campaign believes that the unionists have made a mistake allying themselves so closely with big business. The climate of monetary uncertainty is, of course, largely a result of the announcement in February by Chancellor George Osborne that

Scotland would not be allowed to use the pound after independence. That was the cue for a range of big companies to declare that they were considering their position. The Edinburgh insurance company, Standard Life, said that it is making contingency plans to move much of its business to London. However, Standard Life made similar warnings in the early 1990s about Scottish devolution, so its threat carries an air of familiarity. As for RBS, it has already left – at least as far as the European Union is concerned. Under an obscure 1995 EU directive, unearthed by BBC economics editor Robert Peston, banks are supposed to register their headquarters in the country where most of their business is located. For RBS and HBOS, this is and has been for many years England. RBS is also NatWest and HBOS is Lloyds Banking Group. This neutralises one problem for Yes Scotland. The chairman of the unionist Better Together, Alistair Darling, has repeatedly warned that an independent Scotland would be unable to cope with a banking crisis, so great are the assets and liabilities of the Scottish banks. What, he asks, would have happened in 2008 if

THE SCOTTISH LABOUR LEADER TAUNTED ALEX SALMOND BY PARAPHRASING POP DUO THE PROCLAIMERS: ‘STANDARD LIFE NO MORE, RBS NO MORE...’

Scotland had not been able to rely on the Bank of England and the UK? Well, now we know: it would have been pretty much what did happen in 2008, when the Bank of England organised a trillion pound bailout of RBS and the rest of the big banks to prevent a collapse of the UK financial system. There has been an erroneous, but nearuniversal, assumption that an independent Scotland alone would have been landed with sole responsibility for the toxic debts of its two mega-banks. This is not the case. However, this is a pretty rarified argument in a referendum campaign where fear of the unknown is the dominant theme. There is little doubt that the warnings from the banks, and from other businesses like Aggreko, BP and Sainsbury’s, which have dominated the Scottish press, have heightened anxiety about the economic consequences of independence. As have warnings from the UK government that mortgage costs would rise and pension values fall if Scotland votes Yes. Curiously, it doesn’t seem to have dented the Yes vote in the opinion polls very much. At the time of writing, Professor John Curtice of Strathclyde University says that Yes has increased marginally in the poll of polls from 39% before Christmas to about 42%. It might be there is a modest backlash against the banks and big business for appearing to hijack the referendum campaign. The Yes campaign is still far behind, but it will now seek to paint Better Together in Tory blue. The only way to make Scotland a fairer society, they’ll say, is is to wrest economic control from Westminster. And tell the bankers where to go. Iain Macwhirter is political commentator on the Sunday Herald

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Photo: Photoshot

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S P O N S O RE D C O LU M N : RI S K RE V I E W

Supported by

■ Andrew Jepp

Charting recovery A £28m City Deal offers hope of reinvigorating marine industry in Plymouth. But the ﬂagship regional growth policy has risks attached AS BUDGET CUTS take hold, local authorities

increasingly look towards economic opportunities that offer scope for regional growth. In particular, councils are taking advantage of a new breed of initiatives that derogate control of budgets away from central government and enable the pursuit of more locally-tailored policies. However, although such initiatives promise the reward of improved economic prospects, new models of tax and spend can bring greater uncertainty and introduce added risk. Last year, for example, saw the partial localisation of business rates. While this incentivised councils to promote local growth by allowing them to keep a share of increased business rate income, the changes brought further risk from greater exposure should the amount fall. It is important, therefore, to adopt a managed approach to fiscal innovation that balances the opportunity for regional stimulus with long-term financial resilience. City Deals are the government’s flagship policy to promote regional growth by offering metropolitan areas extensive economic control of their cities. They work across local authorities, sectors and professions, bringing together governments and council authorities with local business leaders to manage new powers over transport, education and infrastructure projects. Plymouth was among the cities that signed up to the initiative earlier this year. Under the agreement, it will receive £19m for infrastructure spending with a further £9m for businesses and apprentices, estimated to generate almost 10,000 jobs. The deal has been described as a ‘once in a generation opportunity’ to reinvigorate the area’s marine industries and is a welcome kick-start for the local economy. In return, Plymouth will need to take greater responsibility for fiscal management whereby the debt is not guaranteed by government. Should projects overrun or expected income not be realised, the Photo: Alamy

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Growth opportunity: Plymouth hopes to create nearly 10,000 jobs with the investment from its City Deal

region will be forced to raise local taxes and suffer the subsequent reputational fall-out. Already there is a legal requirement for local referendums to be held for council tax rises above 2%, and a strong line of accountability will be traced back to the local authority should the City Deal encounter problems. Councils must put in place strong governance arrangements to manage the risks associated with a more independent economic policy. Risk-weighted reserving for future liabilities and uncertainties is vital for sustainable financial management. Detailed scenario planning and strong oversight are also critical in assessing financial risks if authorities are to be prepared for major incidents, such as the recent flooding. While initiatives such as City Deals offer financial opportunities to councils, they are not a one-size-fits-all model and can come at a cost if not fully aligned to individual communities’ appetite for risk. Innovation comes with risks and the key for financial stability in the long term is retaining buffers of resilience now.

Encouragingly, local authorities already have a strong track record in managing a shifting risk profile. Having transformed their role from default providers to specifiers of local services, they have shown themselves adept at maintaining resilient supply chains that involve complex networks and multiple third parties. The experience will stand them in good stead for the challenges associated with the City Deals, spurred by the knowledge that their city’s leadership, rather than national government, will be held accountable. Developing local services, while remaining mindful of the economic resilience and risk appetite of the community, is not without challenges. But in managing higher financial volatility, while also asserting greater independence from central government, councils appear well placed to capitalise on the opportunities presented by City Deals, thereby providing a more relevant profile of local services for their communities. Andrew Jepp is director of public sector at Zurich Municipal APRIL 2014 PublicFinance 21

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Watchdog

Watch WHAT’S GOING ON IN THE WORLD OF REGULATION AND INSPECTION Monitor Monitor has been a rigorous and effective regulator for the health service but may struggle to maintain this with more foundation trusts at financial risk, according to a review of the health service watchdog by the National Audit Office. In a largely positive report, the NAO said Monitor had achieved value for money and raised the bar for the standards expected of trusts applying for foundation status. But the report also warned that, with more foundations trusts facing governance and financial risks, ‘unsustainable pressure’ could be placed on Monitor’s capacity to regulate trusts in difficulty or to maintain continuity of service. Meanwhile, Monitor itself reported that foundation trust hospitals have fallen behind on their efficiency savings target in the current financial year, and an increasing number of trusts are running a financial deficit. Following an examination of the financial performance of the 147 foundation trusts in England in the first nine months of 2013/14, the health regulator highlighted the need to improve financial performance. Savings targets were not being reached, said Monitor’s financial reporting director, Jason Dorsett. Overall, foundations made savings worth £867m to the end of December, but this was £185m behind what had been planned at this stage. In addition, there were 39 trusts in deficit, which was both more than expected and nearly double the 21 trusts that were in deficit at the same time last year. 22

Tied up: The government’s Help to Buy scheme locks up £3.7bn in the housing market

National Audit Office It is not possible to say whether the government’s Help to Buy equity loans, designed to improve access to mortgage finance, will provide taxpayers with value for money, the National Audit Office has said. In a review of the scheme, which was introduced last March to address some of the barriers to home ownership, auditors said the Department for Communities and Local Government was not yet able to quantify the economic benefits. Help to Buy was running smoothly, said NAO head Amyas Morse. ‘But the scheme’s costs, which come in large part from tying up £3.7bn long term in the housing market, will be substantial.’ Meanwhile, the NAO has warned that the government is set to miss its savings target from the new disability benefits because of a massive

backlog in the assessment process. Examining the rollout of Personal Independence Payments, which began to replace Disability Living Allowance from April 2013, the watchdog said the Department for Work and Pensions had not left enough time to test the system. By October 2013, there was a backlog of 92,000 mobility assessments for PIP while only 16% of the expected DWP eligibility decisions had been completed. The NAO said the £780m of savings forecast for the current spending review would not be realised because of these delays, predicting that only £640m will be achieved. In a separate report, the watchdog found that at least £22bn is owed to government by businesses and individuals, yet Whitehall does not have an integrated strategy to manage this debt. Attempts by the Treasury and Cabinet Office to highlight the issues and incentivise departments to address debt collection policies had made little impact, while efforts to develop a pangovernment approach to debt management in 2012 had been undermined by poor quality data, a lack of data sharing and inconsistent definitions, the NAO said.

Audit Commission Management costs in local authorities, including some finance functions, have increased by 10% in the past decade, the Audit Commission has said. The watchdog examined the cost of central management functions, such as finance, human resources, information

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COMINGUP… Classroom test: Ofsted wants to gather evidence on outcomes for new teachers as well as training quality

TEACHING FOCUS Ofsted is consulting on changes to the way it inspects teachertraining providers. From the summer term of this year it wants to introduce a two-stage inspection model, which would gather evidence on outcomes for trainees as well as the quality of the training provided, following up newly qualiﬁed teachers in the ﬁrst term of their employment. The education watchdog said this would provide a ‘sharper focus’ on how well training prepares new teachers for the rigours of the classroom. The consultation closes on May 6.

technology and property and called for greater scrutiny following the rise in spending. Total spending on management support services in councils grew by 23% in real terms between 2003/04 and 2007/08. From 2009/10 to 2011/12, spending was cut by 11%, according to available figures, but spending in real terms was still £577m higher in March 2012 than in 2003/04. By contrast, spending on statutory corporate functions such as financial reporting, as well as democratic management costs including allowances and expenses for councillors, fell over the decade. Although there was a realterms increase of 4% between 2003/04 and 2009/10, there was then a 16% fall to 2012/13, meaning a total cut of £227m – or 13% in real terms – over the period. Audit Commission chair Jeremy Newman said the watchdog’s analysis had been undermined because only 223 councils had a complete record of spending on central functions. Newman urged councils that have missing data to ‘focus on consistent and reliable recording of their spending to improve financial management and strengthen accountability to local taxpayers’.

HANDLING CHANGE This summer, the National Audit Office plans to publish a study looking at how well Whitehall departments have adjusted to

local government funding changes. Following the 2010 spending review, more ﬁnancial decision-making has been devolved to local authorities and, therefore, more grants are no longer ring-fenced. The NAO will assess how government departments are still able to assure parliament that funds have been spent with due regard to regularity, propriety and value for money.

TAX RELIEF CHECKS In a separate study, the NAO will look at the overall system of controls used by the Treasury and Revenue & Customs to develop, monitor and evaluate the use of tax reliefs. Auditors will ask how departments monitor and assess the cost of the reliefs and evaluate their outcomes as well as what

significant minority of the prisoner population. According to a survey of 4,700 prisoners carried out by the watchdog, 7% said they were ex-service. It also found that the highest proportion of ex-service personnel were located in high security prisons, were more likely to be serving longer sentences and more likely to be in prison for the first time. They were also more likely to report feeling depressed or suicidal on arriving in prison and more likely to have health problems and disabilities. ‘Despite the publication of guidance on how to identify and work with ex-service personnel in custody, inspection reports show that there is no consistent approach adopted by establishments and provision varies across the estate,’ the watchdog said.

Inspectorate of Prisons The National Offender Management Service should work with services charities to develop a strategy that meets the needs of ex-service personnel in prison and on release, the Inspectorate of Prisons has recommended. A review of ex-service personnel in prison found that they constitute a Photos: iStock/Alamy

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Minority report: there is no consistent approach to managing ex-service personnel in prison

mechanisms are in place to prevent excessive leakage through abuse and error.

STOCK OPTIONS In Northern Ireland, auditors are examining social housing stock transfers. In 2009, the Department for Social Development explored the option of transferring some of the Northern Ireland Housing Executive’s stock to housing associations as a means of delivering improvements. The Northern Ireland Audit Office report will highlight the best practice from Great Britain, where 1.3 million social homes have been transferred from local authorities to housing associations, as well as the lessons that have emerged from two small pilots in Northern Ireland.

Meanwhile, a review of prisoners from Gypsy, Romany and Traveller backgrounds found this group was significantly over-represented in the prison population and the proportion could be as high as 5%. The watchdog said Gypsy, Romany and Traveller prisoner numbers had been regularly under-estimated and the group experienced poorer outcomes across a range of areas. It urged the Ministry of Justice to monitor numbers of prisoners from Gypsy, Romany and Traveller backgrounds to try and understand reasons for the group’s over-representation.

Northern Ireland Audit Office About 20,000 Northern Irish school pupils missed more than 15% of their lessons in 2011/12, according to a review by the Northern Ireland Audit Office. Auditor general Kieran Donnelly called the finding ‘disturbing’, noting that persistent absentees were more likely to under-achieve. Non-attendance was particularly high among certain groups: children entitled to free school meals, pupils attending non-grammar schools, looked-after children and Travellers. Donnelly also noted that fewer than 4,000 of the persistently absent pupils were referred to the Education and Welfare Service by schools despite their high levels of non-attendance. APRIL 2014

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C OV E R F E AT U RE

Ofsted vs DfE

Once Sir Michael Wilshaw was hailed as ‘a real hero’ by Education Secretary Michael Gove. So what left him ‘spitting blood’ in a battle with the Department for Education? The head of Ofsted talks exclusively to PF about why he had to say ‘no, minister’

WILSHAW’S

WARS

Class struggle: Education Secretary Michael Gove has been outmanoeuvred by his chief inspector

Words: Peter Wilby | Photography: Akin Falope

YOU WOULD EXPECT Michael Gove and Sir Michael Wilshaw to be enjoying a marriage made in heaven. Wilshaw, the former head of Mossbourne Academy in Hackney, north-east London, and now head of the inspection service Ofsted, was once hailed by the education secretary as ‘a real hero’. He abhors mixed ability teaching, believes in giving children heaps of homework, and is so keen on a traditional timetable that, at his insistence, Mossbourne was built without a central staffroom, forcing teachers to take their breaks in ‘houses’ that corresponded with their subjects when the school opened in 2004. And since Wilshaw was appointed by Gove to Ofsted in January 2012, the widespread impression has been that you couldn’t put a cigarette paper between them. He has expressed such firm support for nearly all Gove’s

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C OV E R F E AT U RE

Ofsted vs DfE

policies, including the creation of academies and free schools, that teachers’ unions have accused him of being a ‘mouthpiece’ for the education secretary. So why, as the Times reported in January, do ‘supporters’ of Gove want Ofsted overhauled or even scrapped? Why is Ofsted accused of favouring 1960s approaches to teaching and learning and of marking down schools that use old-fashioned, formal methods? Why did Wilshaw tell the Sunday Times, a few days after the Times story, that he was ‘spitting blood’ about the behaviour of ‘people at the Department for Education’ and ‘think-tanks close to Gove’? Why was the chair of Ofsted, Baroness (Sally) Morgan, told by Gove (who had appointed her in the first place) that her contract would not be renewed, despite Wilshaw saying that he wanted her to stay? I meet Wilshaw at Ofsted’s headquarters in a converted church in central London. His language has moderated since his Sunday Times outburst – he later told an MPs’ committee that it had been ‘a spontaneous act of fury’ – but his message is no less emphatic. ‘Over the past 20 years,’ he tells me, ‘Ofsted has done more than any other organisation to tackle the problems created in schools by the 1960s and 1970s which, in my view, were pretty terrible decades. I take great offence at the suggestion that Ofsted is mired in the ideology of that time. It is insulting to the inspectors.’ When I last met him, at Mossbourne during his headship, he said: ‘We are traditional here and make no apologies for it.’ He has carried those old-school values into his work at Ofsted, but he also has an old-school faith in centralised regulation by a public authority. That, along with his closeness to New Labour – Tony Blair and Gordon Brown launched a package of education reforms at Mossbourne in 2006 – is what sours his relations with some of the more libertarian elements in and around the Tory party. On strictly educational matters – teaching, pupil dis26

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Marked down The secondary section was closed at Al-Madinah, a Muslim free school in Derby that was branded dysfunctional and inadequate by Ofsted inspectors

cipline and curriculum – Wilshaw and the Tories are of one mind. Almost unnoticed, Wilshaw is revolutionising the culture and practices of Ofsted, addressing exactly the issues raised by Right-wing think-tanks. Wilshaw says that, soon after his appointment, he decided to tackle the view that Ofsted favoured a particular style of teaching; one that prioritised ‘collaborative learning’, demanded a minimum of teacher talk, and required a range of activities in each lesson, some of them child-initiated. New guidance to inspectors, issued at the end of last year, was categorical: ‘Inspectors must not give the impression that Ofsted favours a particular teaching style… they should not criticise teacher talk for being overlong or bemoan a lack of opportunity for different activities in lessons… It is unrealistic, too, for inspectors to necessarily expect that all work in lessons is always matched to the specific needs of each individual.’ Independent learning should not be expected in all lessons, the document added. ‘On occasions… pupils are rightly passive rather than active recipients of learning.’ ‘Collaborative learning’ and ‘personalised learning’ – supposedly more systematic and focused than what used to be called ‘child-centred teaching’ – had Photo: Alamy/Akin Falope

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IF WILSHAW TRIES TO DISPENSE WITH PRIVATELY-RUN INSPECTION SERVICES, HE COULD FIND HIMSELF ON ANOTHER COLLISION COURSE WITH THE RIGHT AND POSSIBLY WITH GOVE HIMSELF

the status of divine liturgy during the New Labour era, and it is hard to imagine a more unequivocal rejection. Ofsted, Wilshaw told his inspectors, should not criticise a particular teaching style unless there was ‘unequivocal evidence’ that it was ‘slowing learning over time’. They should concentrate on the ‘outcomes’ of teaching. Wilshaw has taken another important step. Since Ofsted’s foundation in 1992, its inspectors have fallen into two categories: Her Majesty’s Inspectors, who are directly employed by Ofsted (and whose history dates back to the mid-19th century), and the more numerous ‘additional inspectors’ who carry out most inspections on the ground. The latter are employed and trained by regional contractors who include the giant public service providers Serco and Tribal. The additional inspectors have been widely criticised and not just by Right-wing think-tanks. They are said to be inconsistent in their judgments and frequently lacking in first-hand knowledge of the academic subjects and types of school they inspect. Wilshaw, however, has just taken in-house the training for leaders of inspection teams. ‘I want to make sure that our guidance is well observed and that judgments are as consistent as they should be,’ he tells me. He also says he has further plans for change. ‘I want to move to more risk-based inspections. It’s a waste of time and money to inspect schools that everybody knows to be good. We need to focus attention on those that are less than good.’ ‘Lighter touch’ inspections and loosening of control over many schools will go down well with most Tories. But they will be less enamoured of his startling reply when I ask

Contracted out Baroness Sally Morgan was not given a second term as Ofsted chair despite strong support from Wilshaw

if he wants to ditch the whole contracted-out model of school inspection. ‘We’re discussing that at the moment. Yes, we might bring it all back in-house. I don’t know. We’re working on it.’ Contracting out inspections was highly controversial when it was first introduced. But it is an article of Tory faith that private providers will always deliver a more efficient and flexible service than a central quango – as illustrated by the decision to scrap the Audit Commission and invite private providers to compete for its work because, as Communities Secretary Eric Pickles put it, it had become ‘a creature of the Whitehall state’. If Wilshaw tries to dispense with privately-run inspection services, he could find himself on another collision course with the right and possibly with Gove himself. The Right is not satisfied with the pace or scope of Wilshaw’s revolution and its misgivings are shared by many teachers, including those politically on the Left, who believe inspectors have no business dictating how teachers teach. Even after Wilshaw’s new guidance, critics point out, Ofsted reports have criticised schools where, to quote one example, ‘teachers do not encourage students to think things through for themselves and to turn to each other before looking to adults for support’. New Labour doctrines and managerialist habits, critics say, have not been wholly eradicated. That is why Wilshaw’s alliance with Morgan, a Downing Street aide during Blair’s premiership, was regarded with suspicion and her removal from Ofsted welcomed. Prominent among Ofsted’s critics is Civitas, the publisher of a British version of a knowledge-based curriculum designed by the 86-year-old American educational guru E D Hirsch. (Sample of what every seven-year-old needs to know: ‘The French city of Lyon, the biggest in France after Paris, lies where the Rhône joins the Saône.’) Civitas welcomes what Wilshaw has done so far. ‘If it is no longer acceptable to mark down a school for being too didactic,’ its director David Green tells me, ‘progress has been made.’ But, he continues, Ofsted should stop giving a separate APRIL 2014 PublicFinance 27

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Ofsted vs DfE

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‘WE INSPECT LOCAL AUTHORITIES WHERE WE SEE A SIGNIFICANT NUMBER OF SCHOOLS NOT DOING WELL. IT SEEMS ONLY FAIR AND EQUITABLE THAT WE INSPECT ACADEMY CHAINS’

Reﬂected glory Gove hailed Sir Michael Wilshaw for his success as head of Mossbourne Academy in Hackney, London

grade for teaching quality. ‘If a school gets outstanding results, that should be enough,’ he says. This view is shared by many left-inclined teachers. Wilshaw, however, insists that there must still be a role for inspectors’ professional judgment. ‘A school that has good outcomes might have achieved them by focusing on one year, leaving other year groups to languish.’ Civitas also argues that Ofsted is stifling innovation among academies and free schools. (In the right’s view, schools have laboured for 50 years under a rigid 1960s orthodoxy and, therefore, it is ‘innovative’ for children to sit in rows facing the front while the teacher explains where the Rhône joins the Saône.) A separate inspection regime should be set up for such schools, Civitas proposes, and it should operate, like that for fee-charging schools, under Ofsted’s aegis but not under its direct control. Here again Wilshaw is on a potential collision course. He is incredulous at suggestions that he restrains innovation. Academies and free schools, granted autonomy from local authorities, aren’t innovating enough, he says. ‘I want them to lengthen the school day, run extension classes, reward good teachers with bonuses and try other things that I did as an academy head.’ But he is adamant that academies and free schools should continue to be inspected as other publicly funded schools are. ‘Parents expect schools to be judged on the same basic standard. Do they teach children well enough? Is the behaviour good enough? If they don’t do these things well, we will say so publicly.’ Indeed, Wilshaw wants to go further and inspect private operators that run groups of academies. ‘We inspect local authorities where we see a significant number of schools not doing well. It seems only fair and equitable that we inspect academy chains.’ Gove has refused him the power to do so. Wilshaw, however, has found a way round it. Ofsted has simultaneously inspected nearly half the 34 schools run by E-Act, one of the largest chains. As a result of inspectors’ concerns, the chain, which had already been criticised by the Education Funding Agency for extravagant expenses, will relinquish control of 10 schools. This comes at a bad moment for Gove’s flagship policy to persuade (or compel) nearly all secondary schools and many primaries to convert to academy status while encouraging private and voluntary groups to set up new free schools. The E-Act episode follows the closure,

announced before Christmas, of a free school in Crawley, West Sussex, after three Ofsted visits in six months, and closure of the secondary section of a Muslim free school, Al-Madinah in Derby. It also coincides with growing public worries, skilfully fuelled by Labour, about the use of untrained teachers in free schools. A zealous regulator pursuing ‘failing’ private academy chains as eagerly as he pursues ‘failing’ local authorities is the last thing Gove needs just now. The clashes between Wilshaw and his critics echo the culture wars that have raged for decades in British education. The paradox is that Wilshaw, Gove and Civitas are essentially on the same side, united against what they call sixties ideology. But the libertarian right believes that, once schools are released from bureaucratic grip (whether of central or local government), all will be well. If an undistorted market, in the form of parents choosing schools for their children, is allowed to flourish, the right believes, the ‘trendies’ will go out of business because they won’t produce the results parents want. In the right’s view, the best form of regulation is consumer choice. Ofsted, it thinks, needs drastic slimming if it is to survive at all. Wilshaw has skilfully portrayed himself as a victim of dastardly politics. In truth, it is Gove – nervous of alienating Right-wing fundamentalists, but also wishing to present a ‘moderate’ face to the public – who is being outmanoeuvred. Faced with criticism, Wilshaw spoke out immediately, forcing Gove to pledge ‘full support’ and issue assurances that, if the chief inspector was, as he claimed to the Sunday Times, the victim of ‘attack dogs’, he (Gove) wasn’t responsible. A devout Roman Catholic – ‘I have an evangelical zeal to do Christ’s work on Earth,’ he once told me – Wilshaw, who is 68, spent his professional life making a success of schools in London’s toughest areas. A stranger to self-doubt, he will go his own way, doing what he thinks is right. How long will he continue as chief inspector? ‘As long as my health holds out,’ he says. No mention of whether he retains the confidence of the secretary of state. If Gove chooses to cross him, he will do so, he now knows, at his peril. Peter Wilby is a writer, commentator and former editor of the New Statesman APRIL 2014 PublicFinance 29

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FE AT URE

Civil service reform

WHITEHALL NOT THE FINAL CUT Words: Peter Thomas and Jonathan Pearson

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Whitehall has already undergone wholesale cutbacks and radical change. But to survive the 2015 Spending Review civil service leaders will have to step out of departmental silos and take transformation a whole lot further THE UNPRECEDENTED CUTS to public spending and the civil service made by the coalition government in 2010 came as no surprise to Whitehall. No-one doubted that tough measures would be required to meet the economic challenges facing the UK. It seemed the only real questions were whether these measures would be sufficient and how well the civil service would handle them. Few were asking whether the civil service would be facing the prospect of doing it all over again five years later. Of that, there is no longer any doubt. In 2015, a new government will again be faced with an austerity spending review demanding further large cuts in public expenditure. But will the civil service have the capacity and energy to go through it all again?

The findings of the Institute for Governmentâ&#x20AC;&#x2122;s new report Leading change in the civil service suggest that if pressing concerns about collective leadership at the centre are not addressed, the outlook is bleak. A perfect storm hit the civil service in 2010. The fiscal challenge facing the UK is hard to overstate and it translated into budget cuts across Whitehall. Simultaneously, the coalition pushed a policy and delivery agenda rivalled in scale and radicalism only by Clement Attlee and Margaret Thatcher. In tackling both the radical spending reductions and ambitious policy reforms since 2010, the civil service has much to be proud of. Spending cuts have proceeded at speed. About 55% of the cuts planned for this parliament were implemented by December

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FE AT URE

Civil service reform

Back on track? Renewal of the West Coast Mainline franchise was a ﬁasco for the civil service

2013. Departments have been cutting ahead of the required pace and are on track to meet reductions in running costs amounting to between 33% and 50%. The Cabinet Office body charged with monitoring progress, the Efficiency and Reform Group, points to savings against its 2009/10 baseline of more than £10bn across central government by the end of the last financial year. Over 66,000 full-time staff have left the civil service since the 2010 review, a headcount reduction of nearly 14%. A further 32,000 posts must go to reach the goal in the civil service reform plan of about 380,000 staff. In the midst of this upheaval, the civil service has willingly taken on high levels of risk in support of ministerial agendas, driving projects, programmes and reforms as diverse as the Olympic and Paralympic Games, NHS restructuring, and ramping up public service markets in areas such as probation and employment. In many cases it is too early to gauge the success of these undertakings. There have been failures – the West Coast Mainline franchise renewal and rural broadband to name two – while others, such as Universal Credit, remain precariously balanced. However, the overall record on driving ministerial priorities is one of moving at pace despite the scale and risk involved. Nevertheless, the wrong message to take from our assessment of the record since 2010 is that Whitehall is well placed ahead of the 2015 Spending Review. The civil service found a way through in 2010 by relying on familiar, if flawed, processes. Without improved collective leadership, the risk is that 2015 will be a repeat of 2010 with far worse consequences. The cuts in 2010 represented an historic shock to the system, yet the traditional methods of running a spending review – characterised by bilateral negotiations between the Treasury and the rest of Whitehall

66,000

FULL-TIME STAFF

HAVE LEFT THE CIVIL SERVICE

SINCE THE 2010 REVIEW, A HEADCOUNT REDUCTION

over the size of cuts – were adhered to, despite obvious weaknesses: ● With no measures of value for money and poor management information, it is impossible to be clear what impact the cuts have had on productivity and quality of service delivery. Focusing on cost-cutting via headcount reductions risks shrinking the civil service without sufficient regard to its capability to deliver the government’s agenda. ● Cross-government savings were largely ruled out, so cuts have been driven down through departmental silos. This leaves potentially large savings untouched, further increasing pressures inside silos. ● Many departments failed to plan for cuts on the scale announced and had little time for analysis before reaching settlements. As a result, several had little idea how they would meet agreed budget reductions. There are compelling reasons to think it will be even harder next time round: ● Savings in this parliament have taken out most of the ‘low-hanging fruit’, with further cuts likely to be more difficult to find within departmental silos. ● The risks taken on by the civil service since 2010 will not be discharged by 2015, as delivery of several large reforms is carried over into the next parliament. ● The direction of reform has added far greater urgency to the capability challenges facing civil servants – especially in areas such as commercial skills and managing public service markets. ● Keeping critical stakeholders – such as the judiciary, police, teachers and nurses – on board will be Hands-on approach Visible backing from the prime minister is a strong catalyst for civil service change

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ReinventingReform THE COALITION’S MISTAKE IN ABOLISHING PUBLIC SERVICE AGREEMENTS IS PERHAPS ACKNOWLEDGED IN THE REVAMPED IMPLEMENTATION UNIT

Most reforms have a shelf life and need to be reinvented – something that is rarely done well. Incoming leaders, anxious to build a reputation, grab the opportunity to invent something new rather than improve on what came before. As a result, opportunities to accelerate, refresh and embed reforms have been routinely missed. In our interviews with past and present officials, non-executive directors and ministers, a small of number of reforms were consistently named as having a lasting impact on the capability of the civil service. They were: ■ the Next Steps report and ‘agencification’ of the civil service (1987-98) ■ Bringing In and Bringing On Talent and subsequent efforts to improve diversity, talent management and career development (1999-2002) ■ Introduction of public service agreements and the Prime Minister’s Delivery Unit (1998-2010) ■ Capability reviews (2005-12) These reforms are all seen as successful because they introduced beneficial changes that survived the rise and fall of the leaders, teams, structures and programmes that constituted the reform itself. The accumulation of these reforms has fundamentally, if sometimes unintentionally, changed the civil service.

Photo: Getty/Sam Kesteven

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WHAT WORKED 1: THE NEXT STEPS REPORT AND ‘AGENCIFICATION’ The Next Steps report, published in 1988, aimed to change the ‘bone structure’ of Whitehall. The reform challenged the control wielded by the Treasury, senior politicians and officials. Next Steps emerged from an attempt to refresh existing reforms (Sir Derek Rayner’s ‘lasting reforms’ and the ‘scrutinies’) and began ambitiously, hiving off between 75 and 95% of the civil service to arm’slength agencies. The energy, drive and purposefully disruptive manner of Peter Kemp (above right), first head of the Next Steps unit, was crucial to getting the machinery up and running. At first he relied on Margaret Thatcher and Sir Robin Butler, then cabinet secretary, to calm tensions with recalcitrant politicians and permanent secretaries. A few years into the reform opposition was muted and it was no longer seen as controversial. An energetic central team developed clear processes to underpin agency creation. In 1992 new prime minister John Major was persuaded by Richard Mottram, project manager, that Next Steps could reinforce his priorities. Agencies were created at a faster rate, in more complex areas. But the discipline and sense of purpose decreased over time as agency creation became mechanistic. In 1997, the programme was officially closed. The Next Steps report had

far-reaching consequences. It introduced ‘hard’ changes in the operating model of the civil service. Greater freedom from the centre for agencies contributed to a greater focus on customers and to tangible improvements in frontline services. It opened up recruitment to senior managers from outside the civil service. Next Steps encouraged people to look at a department and ask what it was there for, laying the foundations for the public service agreements (PSA) that identified objectives for each department from 1998.

WHAT WORKED 2: THE PRIME MINISTER’S DELIVERY UNIT AND PUBLIC SERVICE AGREEMENTS The introduction of public service agreements was unexpected and unplanned – proposed by the chancellor’s special adviser days before the 1998 Spending Review was announced. The regime was electrified by the prime minister’s desire to grab hold of the public services agenda when, after his 2001 reelection, Tony Blair gave Michael Barber (right) his ‘instruction to deliver’. He wanted four departments to meet 17 ‘priority’ PSA targets.

Prime ministerial support was integral to an operating model that drew on a well-resourced, diverse team and collaborative working. Barber was very careful to create a good fit between the Prime Minister’s Delivery Unit and Treasury PSAs. In 2007, during the drawnout transition from Blair to Gordon Brown, the Treasury overhauled the performance management framework and shifted the focus of PSAs to 30 outcomes that cut across departmental boundaries. Now integrated into the Treasury and led by Ray Shostak, the Prime Minister’s Delivery

Unit took a more collaborative approach to developing PSAs and delivery agreements. The experiment was brought to a premature end by the coalition government in 2010. Many inside and outside government saw the abolition of PSAs as a mistake. This is perhaps now acknowledged by the recent re-emergence of much of the approach and tools of the Prime Minister’s Delivery Unit in the revamped Implementation Unit. The PSA machinery provided a ‘guiding star’ to the policy direction of the government, improving performance on the prime minister’s top priorities. The approach made civil servants and ministers feel directly accountable for delivery.

APRIL 2014

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FE AT URE

Civil service reform

A FURTHER

, 32 000 POSTS MUST GO

increasingly difficult, particularly when rethinking fragile policy and funding settlements. ● Despite staff engagement remaining stable at 58% in 2012 and 2013, morale is likely to be sorely tested by further downsizing, restructuring and continuing pressure on pay. ● Maintaining productive relationships between ministers and civil servants will get even tougher as the squeeze on public finances necessitates increasingly difficult decisions about priorities. To meet the challenge of the 2015 Spending Review the civil service will need to find a way to more effectively work across government, planning ahead to offer up the best options for further savings. So far there is little evidence that departments are working more closely across boundaries. With the pressure firmly on delivery ahead of the general election, there is little sign that the civil service is planning ahead for the next government. Choices made by the coalition – often a reasoned reaction against the style of the previous government – have played up federal habits in the civil service. There is limited political pressure for co-ordination across government from the Treasury or No 10. The prime minister plays a chairman role, with secretaries of state given substantial autonomy. The trajectory of civil service reform is insufficient to support a new government through a second austerity spending review and beyond. This will require the reinvention of collective leadership between leaders of the civil service and politicians. Though many senior leaders in the civil service believe the reform agenda deals with the issues that matter, progress p g is too slow or non-existent in critical areas such as improving the capability of the civil service, working across government more effectively, and p pl anning ahead to offer up the planning best spending options to the nextt government. Making p progress rogr ro g ess in the these hese critical are areas reas rrequires re e uires a very differe eq different ent

style of leadership to that now on offer. The most senior leaders (the cabinet secretary, Sir Jeremy Heywood; the head of the civil service, Sir Bob Kerslake; and the permanent secretary to the Treasury, Sir Nicholas Macpherson) need together to provide clear and active support for the reforms. Some of the most successful past reforms have emerged from a united centre with active Treasury support. At the moment, many view the Treasury as a ‘missing leader of reform’, conspicuously reluctant to throw its weight behind initiatives that are failing to make progress. Politics is a critical ingredient in the mix. More visible backing from the prime minister is a strong catalyst for change. Departmental officials take their lead from their secretary of state, who in turn responds to active prime ministerial interest. The strongly federal nature of the civil service is an undiminished barrier to collective leadership. Most secretaries of state and senior civil service leaders see wider reforms as secondary to the day-to-day running of their departments. Consciously or otherwise, delivering change within departments has consistently trumped the corporate agenda. If the civil service is to get back on track for 2015, the critical issues we have set out need to take centre stage in civil service-wide reform. This will require ministers and officials to act together. The historic weakness of corporate leadership in the civil service, and the fragmented nature of the centre across the Treasury and the Cabinet Office, may make this the toughest reform of all. Our report makes several recommendations to civil service leaders and politicians on the pressing issue of reforming corporate leadership. Most urgently, the cabinet secretary, head of the civil service and Treasury permanent secretary should establish themselves as a visible triumvirate providing the leadership to deliver a renewed core agenda that they are strongly and personally committed to. Without this, reform will continue to be squeezed in at the margins and the challenge presented by the next spending review will be grave indeed.

TO REACH THE GOAL IN THE CIVIL SERVICE REFORM PLAN OF ABOUT

380,000 STAFF

Peter Thomas is a senior fellow and Jonathan Pearson a researcher at the Institute for Government. The report, Leading change in the civil service, was published on March 26

Core agenda: Head of the civil service, Sir Bob Kerslake is one of a triumvirate of leaders whose support is necessary for reforms in Whitehall to succeed Photo: Akin Falope

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20/03/2014 12:29

Smart solutions, supporting change

essential skills to make change happen Accredited training in 2014 CIPFA’s programme of specialised training offers focused learning and development that helps to ensure public sector professionals are fully skilled with a recognised professional award. Training is accredited by bodies who are specialists or leaders in their sectors and all delivered by CIPFA, the specialist in public financial management: Certificate in Contract Management Certificate in Corporate Governance Certificate of Investigative Practice Qualification CIPFA Future Leaders Academy Prince2® – e-Learning or classroom based PLUS, our flagship leadership programme, the CIPFA Leadership Academy All our courses are available to be delivered in-house at your location. To discuss how in-house training can help your team call 020 7543 5702. Visit our website to view more details and to book on these training programmes: www.cipfa.org/events/accredited-training

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19/03/2014 10:24

PF I N T E RV I E W

Chris Leslie

PublicFinance APRIL 2014

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Words: Judy Hirst | Photography: Akin Falope

SPRING IS IN the air, and the Labour Party has been doing

a little light dusting to spruce up its policies ahead of the 2015 election. First up has been a vigorous shake-out of the party’s relations with the unions; something Ed Miliband deems essential to make the party more marketable. Then there is the finessing of Labour’s line on the European Union, and numerous policy reviews on housing, welfare, infrastructure and more. But the big one – the really deep clean – may yet turn out to be the rethink on the economy. The polls show that, whatever gains it can claim on other fronts, Labour lags well behind the Conservatives on the all-important issue of economic credibility, with nearly a third of voters still blaming the last government for the country’s economic woes. In response, it has launched a root and branch ‘zerobased review’ of public expenditure, which is due to publish its ‘phase 1’ report later this spring. Its proposals will eventually feed into the party manifesto.

The man charged with doing the heavy lifting in this area is shadow Treasury chief secretary Chris Leslie. Back in 1997, as a new Labour MP at age 24, he was the baby of the House. Now after a period in and out of the Commons – including a spell heading up the New Local Government Network – the Nottingham East MP is leading Labour’s drive to, as he puts it, ‘declutter’ public services. Leslie has been meeting his fellow shadow ministers to take a snapshot of what they can offer up in the way of reforms and savings post-2015. Alongside the zerobased review, a series of efficiency reviews is exploring issues such as procurement, IT, audit and accountability. The aim is clearly to give Labour’s ‘brand’ on economic competence a thorough makeover. In his first major interview since taking over the Treasury brief last autumn, Leslie talked to PF, ahead of the Budget, about the new direction of travel. Much of the focus will be on paring down, joining up

the

NEW BROOM

Shadow Treasury chief secretary Chris Leslie says that he wants to ‘declutter’ public services and chuck out the deﬁcit. He talks to PF about Labour’s economic makeover

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PF I N T E RV I E W

Chris Leslie

‘BALANCING THE BOOKS IS NOT AN INHERENTLY RIGHT-WING CONCEPT. THE CENTRE-LEFT HAS EVERY INTEREST IN SHOWING TAXPAYERS IT CAN BE TRUSTED WITH THE STEWARDSHIP OF PUBLIC MONEY TO FUND COLLECTIVE PROVISION’

and generally reconfiguring the public sector, he says. ‘For a long time we’ve talked about partnerships and collaboration. But that’s still quite a soft approach. In this fiscal climate there’s a strong imperative to go much further with decluttering and devolving services.’ This includes giving local government reorganisation a big push in the direction of more unitary councils – unfinished business for Labour – and streamlining overly complex commissioning structures in health, education and policing to release cashable savings. Leslie has Whitehall in his sights too, where he says that silo-based relations between spending departments and the Treasury are dysfunctional. ‘You’ve got to have a much more holistic view that goes beyond departmental boundaries.’ If it doesn’t serve an obvious purpose, chuck it out, seems to be the less-is-more, minimalist message. And as Ed Balls has recently made clear, that goes for getting rid of the budget deficit too. Like George Osborne, the shadow chancellor is now a fully signed up member of what Social Market Foundation director Emran Mian recently dubbed the ‘surplus hawks’. Labour is committed to achieving a budget surplus ‘as soon as possible’ in the next parliament, says Leslie, who calls this is a ‘more grown-up approach than fixing a date in aspic.’ Another important difference with the chancellor is Labour’s commitment to achieving a surplus on the current account, but not an absolute surplus. This allows for some leeway on capital spend, which Leslie sees as an important catalyst for sustaining growth. ‘The Treasury’s mandate has supposedly been to support capital infrastructure investment. But with the change of tack on an absolute surplus they appear to have moved away from that,’ he says. Nevertheless, the trend is clear. Particularly when you take into account the shadow Treasury team’s agreement with Osborne that there should be a cap on annually managed expenditure, the message is one of severe fiscal rectitude. Whoever moves into No 11 next May, the Institute for Fiscal Studies’ projection of another 60% of public sector cuts to come appears to be firmly on the agenda. All this feels a long way from that famous there-is-an-alternative 2010 Bloomberg speech by Balls, in which he argued the 38

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Surplus hawk The message from shadow chancellor Ed Balls, of severe ﬁscal rectitude, is a long way from his 2010 attack on the ‘growth deniers’

pro-stimulus case against the ‘growth deniers’. But then, to paraphrase Keynes, when the facts change, you change your mind. And the biggest fact that has changed for Labour’s front bench this past year is the economic recovery – however fragile or unbalanced it may still be. So is Plan B a dead duck, then? Not exactly. But there’s no point denying that the aggregate GDP statistics are now more positive, says Leslie, and that growth is coming through. ‘We’re long overdue a recovery. And we’re no longer quite in the rescue/stimulus phase,’ he says. However, that growth is still largely based on financial services and is only in certain parts of the country. ‘And the feel-good factor hasn’t percolated through. Most lowerand middle-income people don’t feel they’re seeing a recovery.’ If that’s the case, why is Labour’s economic standing still at such a low ebb? Leslie rattles off some stock responses about the difficulties all Oppositions face in restoring confidence – and the distorted view of Labour’s record presented by the coalition. ‘You can’t just erase the global banking crisis from the historical record, and the effect that had on collapsed revenues and increased costs,’ he argues. But of one thing he is sure: nailing those misconceptions involves a clean sweep on fiscal responsibility. ‘Balancing the books is not an inherently right-wing concept,’ he tells me. ‘The centre-left has every interest in showing taxpayers that it can be trusted with the stewardship and pooling of public money to fund collective provision.’ For Leslie, this is an article of faith – and key to rebutting the arguments of those who say you should just shrink the state instead. The good fiscal housekeeping extends to external audit too. Labour wants the Office for Budget Responsibility to go much further than at present, by vetting tax and spend decisions as well as growth and forecasting. They’ve also been talking to OBR boss Robert Chote about doing the same for manifesto pledges ahead of the election. As Leslie concedes – and Chote confirmed to the Treasury select committee – this is highly unlikely without a change to the watchdog’s remit. But given the Photos: Akin Falope /iStock

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chance to submit their economic and fiscal plans to external scrutiny, what distinctive pledges might Labour be asking the OBR to examine? There are a few costed specifics. The much-criticised ‘bedroom tax’ would go – paid for by (not scrapping) the stamp duty reserve tax. Childcare support would be extended with £800,000 million raised from uncollected bank levy funds. A jobs guarantee plan for the young unemployed would be funded from a levy on bankers’ bonuses and restrictions on pension tax relief. A lot of cost-of-living pressures are due to ‘market dysfunction’, says Leslie, for example in the energy and banking sectors. These and other vested interests will be addressed, he says. Labour will also tackle the politically tricky issue of rich pensioners’ winter fuel allowance and possible further changes to the retirement age. Yes, times are tight, but it’s all about choices, argues Leslie. So, instead of extending Help to Buy – which he says is ‘dangerously stoking up demand and a potential bubble’ – Labour would introduce a Help to Build scheme to address the problem of housing supply. These and other vestigial Plan B infrastructure measures could address the ‘lopsided recovery’, promote growth and bring down the deficit faster. ‘I’m a great believer in prevention and a-stitch-intime,’ he tells me. The current government’s shorttermism and salami-slicing is leading to increased costs and – in the case of something like flood prevention

Spending leeway Chris Leslie says it’s more grown-up to seek a budget surplus as soon as possible rather than ‘ﬁxing a date in aspic’

– a lot of human misery. ‘We need to elongate the budget planning process, and empower departments to spend on long-term prevention in childcare, skills, the environment and other areas,’ he says. ‘The 2015/16 Spending Review is really just a one-year budget. Getting back to a longer time-frame is really quite crucial.’ Given the opportunity, he would want to implement these and other changes at the Treasury. He’d also want to rethink performance management and targeting to avoid the more obvious mistakes of the past. But when it comes to some of the thornier issues in local government, Leslie is a little more cautious. The current Revenue Support Grant allocation system should certainly be revised. ‘The funding formula is perverse, with no semblance of a needs-based approach,’ he says. But, notwithstanding the party’s proposals for a ‘mansion tax’ on properties worth over £2m, there are ‘no immediate plans’ to reform the council tax, he says. With their critics set to go on the offensive over ‘Labour’s tax bombshell’, this don’t-frighten-the-horses approach is understandable, says former Treasury and No 10 adviser Dan Corry. ‘Yes, the council tax bands are crazy, but it would also be crazy to say too much about it at this stage.’ More generally, says Corry, Labour’s Treasury team is walking a classic Opposition tightrope. ‘How do you give the impression that you will be fiscally tight, without coming across as just the same as the government in office?’ It’s a dilemma. But Leslie appears unfazed. Asked what kind of note he – as opposed to Labour’s last incumbent – would leave in the next Treasury chief secretary’s drawer once he’d finished the job, he sticks to the prudent but upbeat script. ‘I’d like to say, look it can be done. It really is possible to have sound public financial management and good public service delivery that is both better from society’s point of view and more efficient. That’s the kind of story I’d like to get across.’ It could be a very long note. APRIL 2014 PublicFinance 39

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19/03/2014 17:25

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19/03/2014 10:30

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Workshops Tailor the conference to your needs with a variety of topical workshops. Each workshop will offer delegates practical insight and advice led by leading public ﬁnance practitioners: Exploring new funding models Economic regeneration and housing are likely to remain high on the agenda. In the last Parliament we have seen major projects including Economic Action Zones, introduction of the TIF and HS2. With all sides looking for new initiatives to boost growth and housing supply, explore current projects and initiatives.

Please note the programme content is subject to change.

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Making saving from contract management Sponsored by: Baker Tilly With further cuts in the 2013 spending taking local government funding to 43% by the end of ﬁnancial year, many public service professionals are exploring new ways of commissioning and delivering services. Discover the key recommendations from a joint LGA/ Audit Commission report into contract management. Executive coaching session Sponsored by: CIPFA Recruitment Services According to business experts, resilience is a vital business skill, which can help organisations and employees ﬂex and reshape their approach in times of economic recession and upturn. Explore how to develop this essential skill for you and your teams.

19/03/2014 10:31

NEED TO KNOW

On account ■ Alison Scott

Clear out the clutter We need more clarity and brevity in ﬁnancial statements if they are to meet the needs of users. But too often public bodies play safe and fail to consider the 'materiality' of the information included THE PUBLIC SECTOR is well advanced in

sector, but any changes will take time. However, there is much that individual organisations can do to improve their financial statements. CIPFA published Financial statements: a good practice guide for local authorities in late 2013. This looks at how the presentation can be improved and clutter cut from the accounts. Too often, organisations play safe by including every disclosure required by standards, in case an omission is questioned. And too often, auditors question the omission of non-material disclosures, encouraging this behaviour. If financial statements are to reduce in size, everyone involved needs to take materiality seriously. So how can materiality to the reader of the accounts be used to drive improvements in clarity and brevity? In considering materiality, a number of key factors can be found in the definition. ● First, an item is not material if omitting or misstating it would not influence the decisions that users might make. As the Accounting Code notes, materiality is an aspect of relevance so omitting credit risk information that showed an authority had a significant proportion of its investments in highrisk institutions could influence the decision of a lender on whether to lend, or at what rate. Conversely, omitting credit risk information where a debt-free authority had all its investments in government-backed investments is less likely Focal point: An item may be material, but not all the accompanying information to be material, at least

producing high-quality, audited, accrual-based financial statements. However, an important question remains – is the information they contain being used as intended by the standard setters, to inform decision making and accountability? In local government, the need to produce financial statements that address both accounting and legislative frameworks leads to complexity. Some items have to be accounted for in ways that do not reflect how the authority manages its budget. Timing differences in recognising expenditure and a service analysis that reflects national accounts requirements rather than how an authority is organised are just two examples of this. Decision makers often struggle to understand their own financial statements, and the valuable information they contain can be overlooked when policies and strategies are being considered. Both CIPFA/LASAAC and the Treasury are aware of these problems and are reviewing how to simplify financial accounts across the public

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from a lender’s perspective. ● Second, materiality does not just depend on the magnitude of an item; its nature is also relevant. A small investment in a high-risk institution might not be material when compared with the total value of investments; but it might be material by nature if the authority had already suffered a default by that institution, as users may question the authority’s investment strategy, and make different decisions. ● Third, the individual context needs to be considered. An item may not be material by magnitude, and its nature may be unremarkable, but if it is the difference between an authority showing a surplus or a deficit on its General Fund for the year, then it may be. Users may assess stewardship based on whether the authority’s net expenditure was within budget; so small items that resulted in the authority overspending its budget might be material for those users. Finally, the information that should be disclosed needs to be considered. Even if an item is material, additional information about it may not be. We should not only ask ‘Is this item material?’ but also ‘Is this piece of information material?’ The second question may produce a different answer to the first. An item may be material, but the full accompanying information may not. Or information may not relate to a particular item, but be material. At CIPFA, we are looking at the scope to be more radical in presenting accounts to better meet the needs of primary users. By focusing on materiality, public sector organisations can remove a great deal of clutter from their accounts relatively quickly. While some decisions can only be made in the context of final draft accounts, most of the work on cutting clutter can be done in advance. This should also facilitate the senior level input required. But, the bottom line is, there already is scope to make your 2013/14 accounts shorter and better focused if you want to take up that challenge now. Alison Scott is assistant director, policy and technical, at CIPFA Photo: Getty

18/03/2014 12:38

NEED TO KNOW

Smart thinking? ▪

John Thornton

Many happy returns? After 25 years of the World Wide Web and 15 years of digital government, it’s important to pause for a moment and learn some lessons from the past WHEN A 5.9 magnitude earthquake struck

Richmond, Virginia in the US, residents in New York read about the quake on Twitter 30 seconds before they experienced the quake themselves. This illustrates how the use of social media and electronic communications has made us very rapidly rethink our expectations in terms of speed and types of communication. The World Wide Web is 25 years old this year and has probably changed the world faster than any other technology in history. When Sir Tim Berners-Lee first proposed the web in 1989 he could not have conceived of the impact that it would have on so many spheres of activity. In the early days he kept a note of every website created but gave up when he reached 20, which was just as well because the total is rapidly moving from about 600 million to a billion websites worldwide. The web has not only revolutionised communications, but also fundamentally changed the ways that we transact business, seek information and collaborate. As the web has evolved, governments, public services and politicians have often struggled to keep pace and adapt. In the UK, the genesis of today’s ‘digital government’ can be traced back to the late 1990s. Since then it has evolved through ‘e-government’, ‘transformational government’ and ‘Smart government’, with billions of pounds being spent by central government, the NHS and every type of public service organisation. We live in an increasingly webdependent world and nearly all public sector organisations, whether they recognise it or not, are primarily digital enterprises; they are entirely dependent upon digital information and technology Illustration: Angus Greig

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to deliver services and to communicate with service users. For most this means that technology is no longer grafted on to the organisation to deal with specific tasks. Information is now the lifeblood of the organisation, and technology provides the arteries and blood vessels that deliver the required information. What lessons can we draw from just over a decade and a half of e-government/ digital government? First, that it is easy to be seduced by the hype that accompanies rapid technological change, as we saw with the dotcom boom and the dotcom bomb that followed. Also, that exploiting new technologies is not easy, as we know from the many government and public sector projects that have consumed large amounts of taxpayers’ money and failed to deliver promised benefits and savings. It is tempting to conclude that

‘digital’ is a panacea for fixing all of our communications, funding and delivery problems. Clearly, it is not and sometimes, particularly where there are complex social interactions, as in social care, increased use of technology is inappropriate. What we do know is that ‘digital’ works best when embedded in an organisation’s culture: when the organisation starts with the needs of the customer and service user, and thinks in terms of customer journeys and business processes, and technology is used to help facilitate and support improved ways of working. While improving efficiency and innovation does not rely on technology, new technologies can spark ideas, improve existing practices and support successful implementations - ‘digital’ will in most cases be part of the solution. This is a fast-moving area and there is understandably a focus on the latest developments and issues. Today these might include cloud, BYOD, Big Data and cyber. But, do we always pause to learn the lessons of the past? Will we be better prepared when the web turns 30? John Thornton is an independent adviser and writer on business transformation, ﬁnancial management and innovation john.thornton@e-ssentialresources.co.uk

It is easy to be seduced by the hype that accompanies rapid technological change. But do we pause to learn the lessons of the past? Will we be better prepared when the web turns 30? APRIL 2014 PublicFinance 43

18/03/2014 12:42

NEED TO KNOW

Professional development How to build a much better business case Management decisions based on hunches and intuition resemble 17th century medicine – witchcraft with added leeches. So, asks Alasdair Robertson, how do you assemble a business case that appeals to both heart and mind, without neglecting basic facts? Business cases to which people say ‘yes’ are a combination of art and science. It’s not difficult to write a compelling argument for savings that makes the numbers dance before your audience’s eyes. But the evidence shows that while a sound economic case is necessary, it is not sufficient. Real-world decisions are made less by our rational brains and more by emotive thinking than we dare to admit. As someone once put it: ‘No one ever won a business-case argument based on the facts’. In my work in the NHS I am often struck that when experienced professionals make clinical judgments they are based on extensive evidence, garnered from years of patient experimentation. But, when it comes to management decisions, these are often based on little more than hunches and intuition. It’s almost as if some management decisions are at the same stage that medicine was in 1650 – a time when we believed in witchcraft, bloodletting and leeches. If this sounds like management decision-making in your organisation, then it’s time to recognise that as social beings we need to have the right context to make good decisions. It’s not an issue about quality of thought; it’s about how we frame decisions in situations of complexity, uncertainty and sometimes high emotional stakes. This means that how you produce your next business case matters at least as much as what you put into it. Experience is defined as the knowledge we gain just after we needed it, which is why we learn best from mistakes. The tips below will equip your business case so that it can be right first time.

THE EXECUTIVE OVERVIEW

If you’re like most of us you will be delighted that your glossy, polished 200-page report is finally complete and even more that it met the deadline of Friday 5pm. Three months’ work complete, including the executive overview … the point-bypoint summary that for many of us would be started at around 4.45pm. Yet, this is the one part of the document you know will be read (after that, people will look at the pictures… if you’re lucky). This means that the executive overview must be written at least three weeks earlier to give time to proof it, user-test it, get feedback, refine, polish, revise, re-draft and perfect. 44

GIVE YOUR READER THE WILL TO LIVE

Turgid, dense technical prose may eventually achieve submission, but never conviction. Research shows that very often the simple things aren’t done. You can really help if you set the page out well, use bullet points, white-space and separate key points from the body of the text to highlight them. Above all, get it read by a non-specialist and use plain English.

CO-CREATE THE DOCUMENT

If you’re the sort of person who likes to work alone in a darkened room and come back three months later, saying ‘ta da – here it is,’ then it’s unlikely you’ll get too many positive reactions.

PublicFinance APRIL 2014

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18/03/2014 12:45

1. Write the overview early 2. Use plain English

DON’T

3. Get the maths right

NPVs and ROIs – aka net present values and returns on investment). But very few are genuinely exciting. Very few of us came into the public sector to cut services and make our colleagues redundant (with possibly a few notable exceptions). The business cases that get a ‘yes’ set out exactly why this is the oncein-a-career opportunity to do something better and different and taps into why we entered public service in the first place… and happens to be cheaper. The ones that reverse this usually get, at most, a very reluctant ‘yes’.

HOW TO DEVELOP THE STRATEGIC CASE

It is important to get all the stakeholders (staff, customers, managers, decision makers) working through what you want from the change. List, group and distil until you have a clear set of decision criteria from all perspectives. Then devise options and score against the criteria. Finally, weight the criteria and, often as not, the decision makes itself.

The art of business cases is to co-create the outcomes with those involved. This means that your key skills are facilitating, enabling, collaborating and creating the right tone.

GREENFIELD CULTURE

No doubt whatever you’re doing will involve change and a fresh start. This means you have the chance to establish a greenfield culture, and you only get to do this once. By the time the business case is agreed, it’s too late. You have to set the tone as part of the set up.

PASSION Many business cases clearly articulate the economic and financial case (lots of lovely

Illustration: Natalie Wood

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DETERMINING THE OPTIONS TO EXAMINE

Mostly, business cases involve clever people thinking up and assessing options to present back to decision makers. What’s wrong with that? We once picked up the pieces of a business case where this had been the approach and five options had been presented. And guess what? The decision makers liked a bit of option 4, some parts of option 2 and a good dollop of something else. Much better to say, ‘ok, what options do you consider viable?’ and then go away and explore these.

COMPOUNDING THE ERROR

Avoid common numerical errors. One mathematical mistake crops up on many occasions. The logic goes like this: we can do four things that each save 10%. Boom... we can save 40%. Wrong. The four lots of 10% saving were all to come from the same group of staff. If this were correct, it would imply that if you find 10 ways to save money you could provide the service with no

1. Work alone 2. Use jargon 3. Overstate the savings

staff at all. In reality, this should be treated as a compounded saving. Start with 100 staff and save 10% to leave 90. Then reduce the remaining 90 staff by 10%. And so on. The correct result is that 65.6 staff are needed (that is 9% more than the oversimplified version suggested).

THE PROPER WAY TO ASSESS RISK

Imagine that your business case includes five main activities. Each of those could be delivered early, on schedule or late. The actual benefits could be more than expected or less. The same goes with the costs. That’s an awful lot of unknowns, but traditional budgeting says that you have to pick a single number. Optimism bias and reviewing the likelihood and impact of risks helps here, but this only goes so far. Fortunately, to mathematicians this is a very solvable problem in applied probability. For those who prefer to let their software do the computational heavy lifting, this can be solved easily using something called Monte Carlo analysis. How much is there to worry about? One situation we looked at assumed savings of £2.1m, but it turned out that the chance of getting that was about one in 500.

NEVER NEVER LAND

My final error is the most common of all and it is simply forgetting that investments have to happen before any returns are realised. Crucially, transition costs are not just about the money. It is also the management capacity that is somehow going to ‘emerge’ (are you really going to deliver a multi-million pound change programme as a bolt-on to your existing job?). Failing to do a proper capacity plan usually results in the botched implementations that doing proper sums and the appropriate planning could well have avoided.

Alasdair Robertson is a director of i-three analytics, an associate lecturer with Canterbury Christchurch University and a tutor on CIPFA’s Better Business Case programme APRIL 2014

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NEED TO KNOW

Statistics

Numbers game PF’s monthly roundup of statistics covering the public finances, economic growth, unemployment and more Austerity continues for the public sector, but there has been a huge improvement in the performance of the economy. This became clear when George Osborne delivered his fifth Budget on March 19. The chancellor announced improved growth forecasts, better public finance figures and record levels of employment. According to the Office for Budget Responsibility, growth will reach 2.7% this year – up by 0.9 percentage points from the estimate in Budget 2013. This, the chancellor pointed out, is the biggest upward revision to growth between Budgets for at least 30 years. He also boasted that the UK economy was now growing faster than Germany, Japan and the US. ‘In fact, there is no major advanced economy in the world growing faster than Britain today,’ he added. OBR analysts said that borrowing would be about £108bn in 2013/14, £12bn less than suggested a year ago. They predicted regular falls in borrowing until 2018/19 when a surplus of nearly £5bn is expected. The Budget coincided with the announcement of the latest employment statistics. Unemployment continues to fall – by 63,000 over the quarter to January 2014 – and employment reached a record level of 30,191,000. However, public sector employment showed a further reduction to 5,507,000. This is a fall of more than 150,000, although the vast bulk of this was due to the privatisation of Royal Mail. Overall, the public sector could take little solace from the Budget. The chancellor said that ‘pay restraint’ would continue and that Lord Hutton’s reforms to pensions would be implemented. A £1bn reduction in departmental spending – previously announced for 2015/16 – would now become a permanent reduction, he confirmed. Osborne did promise an extra £140m for flood defences and £200m for pot-hole repairs. But the fiscal pain is set to continue for some time to come.

UK GDP GROWTH (%) Actual

2.5

2.0

1.5

1.0

0.5 0.0

2012

2013

2014

2015

2016

2017

2018 Source: OBR

FORECAST UK BORROWING (£bn)

107.8 95.5 75.2 44.5 16.5 2013/14

2014/15

2015/16

2016/17

2018/19

2017/18

-4.8

Source: OBR

AVERAGE WEEKLY EARNINGS – TOTAL PAY 2013/14 (£)

495

Public sector

Whole economy

Private sector

490 485 480

FORECAST GDP GROWTH, 2014

475

2.7%

470

Forecast

3.0

465 460 455 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Source: ONS

PublicFinance APRIL 2014

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Nov 2012 – Jan 2013

Aug – Oct 2013

May – July 2013

Feb – April 2013

2,326

2,388

2,487

2,511

2,516

UK UNEMPLOYMENT (000s)

Nov 2013 – Jan 2014

The number of people unemployed fell by 63,000 to stand at 2,326,000 in the three months to January 2014. This is a fall of 191,000 over the year UK PUBLIC AND PRIVATE SECTOR EMPLOYMENT* (000s) Private sector

Public sector

Source: ONS

UK PUBLIC SECTOR EMPLOYMENT* (000s)

6100

Total 100%

6000

30,191

5,507 18.2%

5900 5800 5700

24,684 81.8%

*Total to December 2013 Source: ONS

5600 5500

Sep 11

Dec 11

Mar 12

Jun 12

Sep 12

Dec 12

Mar 13

Jun13

Sep 13 Dec 13

*the fall in public sector employment in December 2013 is mainly due to reclassification of Royal Mail. English further education colleges and sixth form college corporations were also reclassified from the public to the Source: ONS private sector from the June 2012 figures onwards CPI INFLATION (%) Actual

5.5m

Forecast

2.8 2.6 1.9

2.0

2015

2016

2017

2018

Public sector employment, Dec 2013 2012

2013

2014

Source: OBR

APRIL 2014

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NEED TO KNOW

CIPFA Events CIPFA, the leading public ﬁnance and accountancy body, is the major event and course provider for the public services. Our events range from technical updates to conferences on strategic issues. Covering ﬁnance, governance and performance topics across all the public services, they are not to be missed. Some of the forthcoming ones can be seen below.

April 10

London

CIPFA South East Spring Conference and AGM

CIPFA REGIONS Regional events developed by CIPFA volunteers allow members and students to share best practice, network and explore how strategic issues apply locally. Many are free or at a nominal cost. For more information, visit www.cipfa. org/regions

April 2 April 9

Leeds Sheffield

CIPFA in Yorkshire and Humber: speaking of finance These workshops are a friendly and informal introduction to the principles of communicating financial information. This session begins by setting out the basic principles of data communication. It goes on to cover tips and advice on how to get across a financial message without losing or confusing your audience. The event will also explain why PowerPoint is a poor tool for financial communication and offer a few tricks on using it effectively. www.cipfa.org/events

CONFERENCES

CIPFA runs key conferences across a range of areas, from technical guidance to debate, with food for thought provided by leading speakers, experts and commentators. Search under ‘conferences’ at www.cipfa.org/events for our full listing.

CIPFA in the South East’s conference and AGM is your opportunity to take stock and look to the future. After years of gloom and recession, we now have a strengthening economy and considerable experience of adapting to change. Attend this free event to hear from expert speakers about how you and your organisation can continue to adapt and succeed. www.cipfa.org/events

April 11

Chester Zoo

CIPFA in the North West: The long migration to growth This event, taking place in the setting of Chester Zoo, will explore the impact of austerity on organisations, how they are surviving, what they are doing to overcome it, and in some cases how they are being successful during tough times – proving that there is nothing like a crisis to bring out the best in people. Reduced entry fees have been negotiated for delegates who want to explore the zoo afterwards. www.cipfa.org/events

April 11

Chester Zoo

CIPFA in the North West AGM The North West region annual general meeting will include: review of 2013 and address for

May 14 - 15

Winchester

Audit Conference The leading audit event in the public sector calendar is this year subtitled ‘Leading and achieving: audit in 2014 and beyond’ and addresses how the challenges of audit can be met through enhanced leadership. The event once again provides strategic insight and practical support for those working in public sector audit and features top speakers including National Audit Ofﬁce director Mike Sufﬁeld and Bill Jamieson, former executive editor of the Scotsman and a distinguished economic commentator. The programme

2014 by Gill Kilpatrick, North West president; annual report, election of ofﬁcers and co-options to Council, by Gill Kilpatrick; and annual statement of accounts, by David Hodgkinson, CIPFA North West treasurer www.cipfa.org/events

May 7

Leeds

CIPFA in Yorkshire and Humber with IRRV: Why a corporate approach to tackling ﬁnancial imperatives and fraud is more important than ever Attend this event to learn about corporate fraud and the associated ﬁnancial imperatives and rules. This session will provide background, updates on current fraud issues, and explain why a corporate approach (across partners if possible) is the best course to take. www.cipfa.org/events

Volunteering in the Regions Regional events are a success due to the hard work and enthusiasm of the team of volunteers in each region. If you would like to give your time to supporting members and students in your region then ﬁnd out more about becoming a volunteer on our website. There is a broad range of opportunities and huge personal and career beneﬁts to be had in volunteering. www.cipfa.org/Regions/Regionalvolunteering

addresses a wide range of topics including audit professional standards, key risk areas, improving the effectiveness of internal audit and changes to the delivery of external audit. The conference will also feature coaching sessions to support auditors in their role. www.cipfa.org/events rikki.ellsmore@cipfa.org

July 1 - 3

London

CIPFA Annual Conference and Exhibition – Book your early bird

Sustainable Future’ and, once again, it is a key date in the public finance calendar. Speakers confirmed so far include Daniel Finkelstein, Justin Webb, Emily Maitless and Chris Giles of the Times – with more thought leaders, commentators and leading practitioners to be confirmed shortly. Discover the secrets to achieving long-term success through the many workshops and network with over 1,000 industry professional peers. ww.cipfaannualconference.org.uk Coming soon These events will be on our website shortly with full programme and booking information

May 23

London

CIPFA Housing Conference Contact michael.lewis@cipfa.org

June 18

Birmingham

IT Audit Seminar Contact hannah.harding@cipfa. org

July 15 and 22

London and

Midlands/North

Local Government Accounting and Finance Conferences The leading accounting conference for those working in local authorities is an essential event if you want to keep up to date with the latest topics, guidance and insight. Sessions will include: The 2014/15 Accounting Code and Future Developments, Whole of Government Accounts, Setting the Code - The Role of CIPFA/ LASAAC and LAAP; Guidance vs Standards, Simplifying the Accounts Please visit the ‘conference’ tab at www.cipfa.org/events for updates. Or contact rikki. ellsmore@cipfa.org for more information.

This year the theme is ‘Risk, Resilience, Reform: Creating a

48 48 PublicFinance PublicFinanceJUNE APRIL 2011 2014

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Smart solutions, supporting change

recruitment services Looking to recruit high calibre interim or permanent staff? We can help. With over 20 years’ expertise in the ﬁeld, CIPFA Recruitment Services place the best people in interim and permanent roles across a range of organisations and senior positions in the public sector, from local government to social enterprise and education sectors. We offer a tailored service for each of our clients and we provide support at every stage of the recruitment process, including search and selection, advertising, interviewing and assessments along with career development and coaching. To ﬁnd out more about our recruitment solutions and to view our latest permanent jobs and interim assignments visit www.cipfa.org/recruitmentservices or contact us on 020 8667 1144.

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Recruitment To advertise in Public Finance or pfjobs.co.uk please call 020 7880 6234

Management Accountant, Strategic and Corporate Victoria, Australia | Salary AUD82,199 to AUD92,569 p.a. plus 17% superannuation

The Management Accountant, Strategic and Corporate will perform a pivotal role to ensure that the Financial Planning and Budget Section meet responsibilities in terms of reporting, compliance and the provision of financial information across Federation University Australia. The emphasis of the position will be to provide significant support to the Associate Director, Financial Planning and Budget in the execution of their role. The Management Accountant, Strategic and Corporate will be responsible for reviewing existing practices and developing/leading changes which will assist budget holders with managing resources. It will be essential that this role fosters and maintains relationships with those areas of the institution which are pivotal in providing that data and information. The Management Accountant, Strategic and Corporate will also have significant input into projects. It will also play a significant support role in key projects which will involve detailed financial analysis.

This is a key role in a dynamic and forward-thinking team that is aiming for financial excellence in one of Australia’s leading regional universities. For more information and to apply: www.pfjobs.co.uk or careers.federation.edu.au

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Clinical Auditor Based in the United States Full time Competitive Salary

The Clinical Auditor (CA) from IMARC Research, Inc. will work with a sponsoring company or CRO in the auditing of pharmaceutical or device trials with an emphasis placed on ensuring the highest ethical and clinical standards. The primary focus of this position is to coordinate auditing activities, manage the auditing staﬀ, and perform routine audits at clinical sites. The CA’s role is to perform clinical quality assurance (CQA) duties and audit trial conduct at investigative sites against ICH GCP regulations and guidelines, FDA regulations, Sponsor SOPs, Sponsor monitor plans, and audit-speciﬁc SOPs. The CA may also perform audits of Sponsors and CROs. The CA will serve as a resource person for the Sponsor, CRO, auditors and/or monitors, and advise on corrective action planning to make processes more compliant with regulations and guidelines. Additionally, the CA will be expected to manage the internal Quality Assurance program for IMARC Research, Inc. This position requires travel up to 50% - 60% of the time. International travel may be required.

Knowledge, Skills, and Abilities; • • • • • •

To apply please see:

http://www.pfjobs.co.uk/ job/7665/clinical-auditor/

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PFRecruitmentApr14.indd 50

• • •

At least 3 years of applicable experience in the clinical research industry (5+ years preferred) RN or BA/BS in a health-related science area Clinical research certification preferred Knowledge of medical terminology Working knowledge of US federal regulations related to clinical research studies, ICH Guidelines and GCP Ability to follow strict ICH GCP guidelines, FDA regulations, and audit-specific SOPs Ability to acquire knowledge of investigational products and different therapeutic areas of study Excellent organizational and communication skills Detail oriented

•

• • • • •

•

Time management skills and problem solving abilities, including the ability to put a problem into context and suggest pragmatic and practical solutions Ability to assimilate information rapidly and adapt to diﬀerent situations/demands Ability to work independently and with a team Excellent writing skills Ability to present self in a highly professional manner in all settings Computer proﬁciency, including the use of standard software (word processing, databases, e-mail) and the use of the Internet Salary commensurate with experience.

20/03/2014 12:43

www.pfjobs.co.uk

20/03/2014 12:50

pfJobs PLAN YOUR NEXT MOVE

ON THE MOVE

New features available through your smartphone See the latest job listings View all the jobs from the website Search or browse to find the right opportunities Create and update your live email job alerts View jobs directly from your email alerts Save and apply for jobs Save jobs to your profile Email jobs to yourself or friends Apply for the right jobs first using your saved CV Keep track of all your jobseeking activity

Âť Go to www.pfjobs.co.uk

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grow your own talent CIPFA Finance Apprenticeships The CIPFA Finance Apprenticeship scheme aims to recruit and train talented young individuals as an alternative route to university. We are looking to partner with employers across London, Birmingham and Manchester to give as many keen and enthusiastic young people the chance to gain vital work experience, as well as the opportunity to obtain an accountancy qualiďŹ cation. Joining our employers will help ensure that the practical skills your organisation needs will be provided for in a cost-effective way â&#x20AC;&#x201C; together we will help harness fresh new talent.

Find out more The next intake will run from September 2014 to August 2015. Recruitment, managed by CIPFA will begin in June 2014. Any public service organisation across London, Birmingham and Manchester can participate. e: apprenticeships@cipfa.org t: 020 7543 5757 www.cipfa.org/apprenticeships Ref: MA14E16PA5

PQ magazine

AWARDS

2014 FINALIST

Finalist for the Innovation in Accountancy award

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