Public Finance September 2013

PublicFinance

The business monthly of the public sector

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Issue 09 September 2013

PublicFinance SEPTEMBER 2013

Peter Wilby asks who’s included in Gove’s education revolution

His members’ voice Exclusive interview with new CIPFA chief executive Rob Whiteman

Health diagnosis Noel Plumridge says finance is at the heart of the NHS’s problems

The balance sheet Steve Freer looks back on 13 years of public sector reform

Philip Johnston Who’s up and who’s down ahead of the party conferences?

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PublicFinance

CONTENTS

September 2013

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Features 24 COVER STORY Put to the test Michael Gove talks the talk about ‘liberating schools’, but there’s little evidence that the growth of academies and free schools is benefiting children. Peter Wilby reports

30 The voice Rob Whiteman has run the UK Border Agency and a London borough, and now he’s the new head of CIPFA. The opera-singing chief exec spoke to Mike Thatcher

34 Accounting for change The past 13 years have been a turbulent period for the public services and the accounting profession. Steve Freer looks back on the thunderclouds and the silver linings

‘GOVE HAS ALLOWED HIS NEO-LIBERAL BELIEFS IN COMPETITION TO OUTRUN THE EVIDENCE’

38 Safe in whose hands?

The NHS has suffered more than its fair share of disasters recently. But could its financial structure have played a part? Noel Plumridge investigates

Regulars 4

Leader To market, to market, but not in too much of a hurry

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Second thoughts Philip Johnston says don’t write off Ed Miliband just yet

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34

Need to Know 42 43

CIPFA conference news The PF team report back from CIPFA’s annual conference in London, including keynote speeches from Lord Heseltine and Lord Sutherland

On Account Is forecasting a mug’s game or an important business planning tool?

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Opinion Views from Nehal Panchamia and Derrick Anderson

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Management Development How to be more emotionally intelligent,

by Kerrie Fleming Smart Thinking?

Watching us, watching you

48

Numbers Game

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News Clive Betts on the latest combined authorities; Camden’s council tax plan queried; cooperatives warning on Whitehall’s mutuals push

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Cipfa Events

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30 Subscribe today for the latest expert comment on public policy and finance

Voice of the Nations Are arm’s-length bodies in Scotland taking money from ‘real’ charities?

22

Watchdog Watch

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CONTACTS

Leader Are we being served?

B

ack in the days when full-blown public sector markets were but a distant dream, Labour government advisers used to deliver homilies about producer ‘capture’ and consumer choice.

Public services should be designed around users, not employees, they stressed – and competitive markets were the best way to ensure that.

Times have moved on. Contracting and outsourcing are no longer hotly contested issues, and even politically sensitive areas like health and education have been thrown wide open to marketisation.

The mantra of ‘what works’ – as against public-knows-best dogma – has now become established orthodoxy.

But, as the influential Institute for Government (Opinion, pages 10–11) has highlighted, the old debates are far from settled.

A rash of public sector market failures – from NHS 111 to the Ministry of Justice tagging fiasco, to repeated care home scandals – have re-raised the question: who pays the price when the market patently does not work?

As Peter Wilby argues in this issue (Put to the test, pages 24–29) Michael Gove’s education revolution is transferring control of schooling from local authorities to a handful of commercial chains. The whole edifice is presided over by the secretary of state himself.

A minority of pupils in Gove’s ‘little platoons’ of free schools and highperforming academies may benefit from his reforms. But the vast majority of school children face increasingly marginalised and under-funded local education services.

As the IfG points out, many academy chains are further undermining parental and pupil choice by focusing on specific parts of the country: a big problem if one of them fails.

Similar issues arise in the newly reformed NHS, where clinical commissioning groups are under pressure to seek competitive tenders for care services – and the acute hospital sector is keen to follow suit.

However, squeezed payment-by-results tariffs, private health sector failures and a succession of care scandals (Safe in whose hands? pages 38–41) have tempered commercial appetites.

All of which underscores the IfG’s advice to Whitehall to slow down the pace of marketisation, test out new delivery models more thoroughly (in particular, for ‘gaming’) and insist on full commercial transparency.

Without these vital checks and balances, the only interests being served by the government’s market reforms will be those of near-monopoly private sector providers.

Public service users – as ever – will be last in line.

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

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PublicFinance SEPTEMBER 2013 2011

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Second thoughts pfOpinion

■ Philip Johnston

Season of tiffs and trepidation Despite Ed Miliband’s difficult summer, it’s all to play for as the party leaders prepare themselves for their annual conferences Not that long ago, after the Eastleigh by-election debacle, there was talk of a plot to unseat David Cameron. The rules of the Tory party, introduced after the coup against Margaret Thatcher in 1990, require 15% of the parliamentary party to notify the chair of the backbench 1922 committee that they have no confidence in the leader in order to trigger a vote.

It was rumoured, though without much evidence, that the 1922 chair, Graham Brady, was in possession of 30 or so letters from disgruntled backbenchers – just 16 short of the benchmark. Yet the prime minister seems to have weathered the storm.

Instead, it is Ed Miliband who has experienced a wretched summer and who approaches the conference season with trepidation. Not only has he had a bruising run-in with Labour’s union paymasters, but there are mutterings of discontent on the backbenches and from the shadow cabinet itself. The view that Miliband is unelectable and is failing to articulate what his party would do in office is gaining traction in the party.

It would, however, be premature either to write off the Labour leader or to think that the coalition parties are out of the woods.

For the Conservatives, the UK Independence Party surge that threatened to put the skids under Cameron may have diminished, but it has not disappeared. Next year’s elections for the European Parliament could well see Ukip top the poll or come a close second, not least because most people will see their vote as disposable.

That will cause panic in Tory ranks as marginal MPs see their seats threatened by even a modest Ukip showing at a general election.

Although a sharper and more populist message has been framed by the Tories’ Australian campaign guru Lynton Crosby, it may not win back enough defectors to burst the Ukip bubble. Nigel Farage, Ukip’s leader, will even stage an audacious raid on the fringes of the Conservative conference in Manchester to attend a Bruges Group event. The apparent collapse in Tory Party membership (Central Office declines to provide precise figures) reflects the disdain felt by traditionalist Tories for the current leadership.

The gradual recovery of the economy

IT WOULD BE PREMATURE TO WRITE OFF LABOUR LEADER ED MILIBAND, OR TO THINK THE COALITION PARTIES ARE OUT OF THE WOODS Photo: PA, Illustration: Thea Brine

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will help the coalition frame a narrative that austerity has worked. But the uncomfortable fact remains that by the time of the next election in 2015, most people will be worse off than they were in 2010. Moreover, there is the potential for further personal embarrassment for Cameron when his former communications director Andy Coulson stands trial shortly on charges arising out of the phone-hacking scandal.

Received wisdom is a dangerous bedfellow. For instance, there is a view among commentators that Nick Clegg has had a good summer, yet his party remains below Ukip in most polls. He can expect a fierce fight at the LibDem conference in Glasgow with activists who want to break with coalition policies on Trident, welfare, immigration and austerity before they are saddled with them in the election.

The party establishment might want to spend the week slagging off Labour, but the grassroots will be eager to position themselves for a possible linkup with Miliband in the event of another hung parliament.

Traditionally, the summer break is the time when the Opposition tries to make the political weather. This year, Labour may have managed to botch their seasonal offensive, but the bald truth is that few voters will have noticed, even if the news-starved media have lapped it up. Most opinion polls still have Labour on around 40%, and it should be remembered that, unlike the Conservatives, they can win an election with 36% of the vote.

Anyone writing off Miliband at this stage of the Parliament after a bad few weeks in the dog days of summer would be making a big mistake.

Philip Johnston is chief leader writer of The Daily Telegraph SEPTEMBER 2013

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News Local government

South Yorkshire city region backed

BY RICHARD JOHNSTONE

Plans to create two new combined authorities in England are likely to form a ‘template’ for further local government reforms across the country, the chair of the Commons local government select committee has said.

Clive Betts told Public Finance that plans revealed in August for combined authorities in both South Yorkshire and Merseyside faced a number of challenges, but could act as a basis for greater collaboration in other city regions.

A proposal for a single authority to take responsibility for transport and economic development across six councils in the Liverpool city region stated the scheme would improve the effectiveness of business support.

South Yorkshire’s combined authority, which will bring together nine councils, is also intended to boost economic growth. Welcoming the publication of the plan, Sir Stephen Houghton, leader of Barnsley Council

and chair of the shadow authority, said the move ‘puts the Sheffield City Region ahead of the game compared with other areas of England’.

Betts, who represents the Sheffield South East constituency, told PF the reforms could replicate the success of the existing combined authority in Greater Manchester.

‘We did a select committee report on regeneration a couple of years ago, and went to Greater Manchester and flagged up the excellent work we thought they were doing in this regard. I think the committee was impressed at that time and saw it as a way forward for others, which indeed it has now become.’

He said the creation of combined authorities was an important step in helping ‘shape the governmental arrangements to fit the economy, rather than the other way around’.

The development of the South Yorkshire authority was particularly important as it established the principle

Moorland model: the South Yorkshire Combined Authority will bring together both urban and rural areas

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that councils from outside the ‘settled’ boundaries of the old metropolitan counties could join combined authorities, he said.

Under the plan, one council from Nottinghamshire – Bassetlaw – and four from Derbyshire – Bolsover, Chesterfield, Derbyshire Dales and North East Derbyshire – will be combined authority members.

Such changes to traditional boundaries make it ‘a possible template’ for authorities based around other cities, Betts added. Similar proposals are also being developed for the Northeast and West Yorkshire.

‘At its heart are the four authorities that comprise the old South Yorkshire metropolitan county, but it goes beyond that now, as part of the population is in north Derbyshire and north Nottinghamshire districts.

‘So it is a different sort of area. It’s still about seeing the city – Sheffield – as an economic driver, but with the population coming from a wider area, including quite rural areas where people need to get access to the city for jobs.

‘This is a challenge in some ways. The councils are different in scale, and it will be interesting to see how that works. It could be replicated in other places.’

Jonathan Carr-West, chief executive of the Local Government Information Unit, agreed there were likely to be more combined authorities across the country.

The ‘logic’ of government policies such as City Deals and the planned Single Local Growth Fund pushes councils ‘relentlessly towards those combinations’, he said.

‘There’s clearly a lot that can be achieved through that, in terms of a more strategic approach to economic growth, infrastructure planning, transport, skills development and employment opportunities, so they have a value.’

He added that the plans for South

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publicfinance.co.uk/news

HousingShortage ■ Mark Smulian

Camden views doubling council tax as an ideal homes solution

by Betts Yorkshire were ‘very interesting’ and would help establish where else in the country the model could be applied.

‘It seems to me that in a city region we’ve shown how this works.

Manchester is a very good example of it, and Merseyside is now doing it.

However, how it works in a more diverse, or a rural or a two-tier area, is harder to see [so far],’ he said.

Ben Harrison, director of partnerships at Centre for Cities, also welcomed the combined authorities, which he said allowed local areas to take a strategic view on how prosperity can be delivered in an area matching the economic footprint of cities.

He told PF: ‘Such arrangements could be designed to include both urban and rural areas. Given that people who live in rural areas often travel to work in cities, combined authorities that encourage better partnership working between cities and their rural hinterlands could also be beneficial.’

Public sector reform

Mayo: don’t ‘taint’ mutuals

A London borough wants to use council tax to stop international investors from speculatively buying homes and then leaving them empty, but housing experts have queried how the scheme might work.

Camden has called on the government to allow double council tax to be charged on unoccupied homes after successfully using existing powers under the 2012 Local Government Finance Act that allows 50% tax to be charged on homes left empty for more than two years.

Now the borough wants this rate raised to 100%, applied after one year and extended to cover residences claimed by international investors as second homes.

Commenting on the proposal, former Housing Corporation chief executive Steve Douglas, now a partner at housing consultancy Altair, told Public Finance: ‘Camden has done well so far, but the challenge would be how to define an [absentee] overseas buyer and tax them.’

Alistair McIntosh, chief executive of the Housing Quality Network consultancy, said anything that brought empty property into use was ‘laudable’.

But he added: ‘I’m not sure how they would frame something around foreign investors.’

A Camden spokeswoman admitted to PF that the council had not worked out how a law might be framed to catch such people without penalising

Double dosing: Camden wants to charge double council tax on empty homes those who genuinely live in the borough for part of the year.

‘We’ve asked for the power.

If we got it, we would need to go into the fine detail,’ she said.

Camden’s call came in a letter to Communities and Local Government Secretary Eric Pickles from Theo Blackwell, cabinet member for finance. He said the 50% rate had already helped to reduce the number of long-term empty homes in the borough from 248 to 162.

Blackwell wrote: ‘While the additional council tax income from premiums is relatively modest and recycles back into the collection fund for the benefit of all taxpayers, its real effect of bringing empty homes back into use can be clearly seen in Camden.’

He added: ‘We would also like to see a change to the law in relation to unoccupied, furnished property to prevent what the press have called “buy-

to-leave international investors” from storing a few sticks of furniture in a property in order to claim it is a second home and thus avoid the premium.’

Camden council estimated this would bring a further 190 homes back into use. It worries that even if only the very wealthy can afford properties typically used as ‘second homes’, their high values may cascade down the property ladder, making modest housing less affordable.

The National Housing Federation gave the proposal a cautious welcome. Policy leader John Bryant said: ‘Bringing empty homes back into use is an important way of tackling the country’s housing crisis.

‘We welcome Camden council’s proposal to further increase council tax for empty properties, however there are occasionally legitimate reasons why homes are left empty for longer periods of time.’

BY RICHARD JOHNSTONE

Ministers have been urged to adopt a new code of conduct governing public service mutuals to stop poor practice ‘tainting’ other firms in the sector.

Cooperatives UK, which represents mutual companies, said they were concerned that not enough of the government’s flagship staff-owned public sector mutuals offered employees a ‘genuine voice’ in running the new businesses.

Around 70 mutuals have been formed through the government’s Mutual Support Programme, Cooperatives UK said.

However, secretary general Ed Mayo warned the scheme could undermine Photo: Alamy

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the rest of the sector unless changes were made.

Although there have been examples of good practice when mutuals have been formed, Mayo highlighted issues such as the lack of a controlling stake for staff in some organisations as a concern.

Cooperatives UK has published a best practice guide with the Trades Union Congress after fears were raised that some mutualisations were ‘forced through’ against employees’ wishes.

Among the recommendations, staff should always have a majority stake in the new firms, Mayo told PF. In cases such as the mutualisation of

pensions administrator MyCSP, the biggest single stake in the new outfit was given to a private sector firm, while the employees accounted for only 25%.

Mayo said that, without giving a controlling stake to the beneficiaries of the cooperative, the government was ‘out on a limb in terms of what it includes as mutual businesses’.

He added: ‘Cooperatives and mutuals are well recognised in society, and it’s our brand and our name being used by this government. We don’t want to be tainted with government getting this wrong, and we’re genuinely trying to contribute to getting this right.’

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Conference

News THE PF TEAM REPORTS FROM THE CIPFA ANNUAL CONFERENCE IN LONDON, JULY 9–11 Local pot

Growth funding a ‘start’, says Heseltine Lord Heseltine has described the government’s proposed funding for the local growth pot as a ‘significant start’, despite it being well below the figure recommended in his No stone unturned report.

The former deputy prime minister had originally called for £49bn over four years plus £9bn from European funding to help stimulate growth and boost local areas. In the June Spending Review, however, Chancellor George Osborne only promised £2bn a year.

But Heseltine told delegates at CIPFA’s annual conference that the actual figure on offer was £20bn. This comprised the £2bn over six years, £5bn of European money and £3bn from the Regional Growth Fund and City Deals.

‘Is £20bn a fixed sum of money that anyone else can remember the government making available for local people to spend? I can’t remember any initiative of that sort in my life. So it’s a start – a significant start,’ he said.

Speaking later to Public Finance, Heseltine suggested that the sums available for the local pot could grow over time.

‘The chancellor described the funds as “rising” through the period. I think it’s his intention to get the thing under way, to see it as part of a long-term trend.

And it is now up to local people to prove that the faith that is being shown in them is justified.’

Health/care divide

Sutherland: ‘We can’t afford NHS’ The National Health Service cannot be afforded over the long term in its present form, Lord Sutherland told the conference.

Sutherland, who chaired the 1999 Royal Commission on The Long-Term Care of 8

Lord Heseltine: ‘It is now up to local people to prove that the faith that is being shown in them is justified’

the Elderly, said greater longevity would cause serious financial problems for health and care services as larger numbers of older people came to depend on them.

‘I don’t think we can any longer afford the health service we have,’ he said.

He attributed much of the problem in financing health and social care to a ‘fissure’ created 60 years ago when the NHS and social care were set up as separate systems, with the former national and the latter local.

The result was that it was impossible to join up the budgets for the two services, so both wasted resources.

Sutherland gave the example that people might have to remain in hospital longer than necessary because a local authority had no social care space for them, and even if it had, it might be unwilling to provide it since any saving would accrue to the hospital.

‘We must try to get rid of these perverse incentives in the system,’ he said.

The £3.8bn that the Spending Review would take from the NHS and give to social care was ‘a good start but does not tackle the systemic problem’.

Protected services

‘Honest debate’ needed on cuts The new CIPFA president called for a ‘proper conversation’ about the future of public services amid spending cuts in her speech to members.

Jaki Salisbury said that an ‘honest debate’ about the future of services was critical when it was unclear how long the government’s austerity programme would last. However, such an open approach required that all spending was up for discussion, without some parts of Whitehall being protected, she added.

Salisbury said that it would ‘work best if there were a proper conversation about whether schools, the NHS and international development should be priorities’.

CIPFA and its members were uniquely well placed to help in the transition to new regimes, she said, as they sat at the top table of so many of national and local public service organisations.

See interviews from the conference on www.publicfinance.co.uk/cipfa2013

PublicFinance SEPTEMBER 2013

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■ Let the buyer be aware, by Nehal Panchamia

■ Doing the Lambeth walk, by Derrick Anderson

Opinion ■ Nehal Panchamia

Let the buyer be aware Public sector markets are here to stay. But a series of highprofile failures demonstrate how government needs to be a lot smarter about the way they are rolled out NHS Direct recently announced plans to pull out of all 11 of its regional contracts providing telephone triage services for the government’s new 111 non-emergency NHS number. The Royal College of Nursing, the British Medical Association and much of the press lined up to denounce the ‘chaos’ and branded the policy a ‘failure’.

This isn’t the only negative headline that has been generated by public service markets recently. Justice Secretary Chris Grayling recently attacked G4S and Serco for allegedly overcharging taxpayers for the tagging of non-existent offenders. And, not too

long before that, abuse of patients at Winterbourne View, a hospital operated by a private company, cast serious doubts on the government’s ability to act on warning signs and take appropriate action to address them.

These high-profile stories of failure spread fear that markets can never work in public services, but they can – and often do – if government gets it right.

This requires thinking much more systematically about how to design better markets in the first place.

In a recent report, the Institute for Government argues that there needs to be genuine competition for public service markets to work. NHS Direct’s decision to withdraw from the market does not necessarily mean that ‘chaos’ will ensue. Unless any of the other providers pull out, you could argue that the market has simply ejected an inefficient provider – a sign that the market is, in fact, ‘healthy’. In the

Virtual tagging: Justice Secretary Chris Grayling recently attacked G4S and Serco for allegedly overcharging taxpayers for tagging non-existent offenders

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meantime, NHS Direct has agreed to operate the services until replacement providers are found.

When there is genuine competition, the failure of one provider can open the door to success for another. As the Southern Cross care homes case demonstrated, as long as the contracts can be provided at a profit, they are likely to be taken on by other, more capable providers.

So providers pulling out shouldn’t automatically be considered a ‘failure’ of the public service market, but there are still reasons for concern. The Institute for Government’s recent report identified weaknesses in government’s ability to design and manage effective public service provision in employment services (the Work Programme), care for older people, probation services and secondary education.

We found that competition is not sufficiently prioritised. As academy chains expand across the school system, many are focusing on specific parts of the country. This not only undermines parental choice, but could lead to massive service disruption if one of them were to fail. The problem is that the Department for Education does not appear to be monitoring levels of provider competition, and has yet to develop a proportionate failure regime that could anticipate and reduce the risks around provider failure.

It’s noticeable, too, that some large providers now have the potential to dominate entire areas of service provision in particular regions. The problem, again, is that there appears to be no one in government who can provide facts and figures on whether this is happening or not.

Photos: PA

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publicfinance.co.uk/opinion

Dial 111 for failure: The new nonemergency NHS number has been branded ‘chaotic’ by the medical profession

Across all four sectors examined, ‘gaming’ was a recurrent problem. In the Work Programme, providers often ‘park’ users with complex needs and ‘cream’ those who are easier to support, and therefore more profitable to serve.

The reasons for this are complex, but include providers bidding aggressively for available contracts, to the point where they have to cut corners to break even.

This ‘must play’ mentality has resulted in many providers offering drastically

reduced services to the hardest-to-help jobseekers.

This behaviour is by no means unique to profit-making organisations. In education, we have always had ‘teaching to the test’ and exclusions of tough pupils, but we found that schools under threat of closure were even more likely to engage in such practices.

There is, however, some cause for optimism as government is getting better at managing markets. The Department for Work and Pensions

‘Gaming’ is a recurrent problem.

Work Programme providers often ‘park’ users with complex needs and ‘cream’ those who are easier to support

has introduced ways of penalising underperformance in the Work Programme – either through reduced workload or outright contract termination.

Probation trusts, meanwhile, have collaborated with local partners to co-commission services such as health, employment and housing support that together can help reduce re-offending.

And, following the collapse of Southern Cross Healthcare, the Department of Health has begun to develop a systematic approach to anticipating and managing failure of large care providers.

But before creating or expanding public service markets, these problems need to be addressed. Our report made a series of urgent recommendations including: • a statutory obligation to publish a ‘competition impact assessment’ to be conducted by the Office of Fair Trading (or a similar body) before implementing outsourcing programmes worth more than £100m; • full transparency on the contracts, income, performance and subcontracting arrangements of all private, voluntary and public sector service providers. We are pursuing this recommendation with the Information Commissioner; and • more thorough advance testing of new market models, using highpowered commercial advisory boards (excluding those with a specific commercial interest), and scenario and simulation exercises to predict potential pitfalls.

With these conditions in place, providers exiting the market need not be a negative headline, but a sign that the market is in fact working.

Nehal Panchamia is a researcher at the Institute for Government and a co-author of the report Making public service markets work – an in-depth analysis of four public service markets. It is available from: www.instituteforgovernment. org.uk/publications

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Opinion ■ Derrick Anderson

All together now: Lambeth is trying to put the citizen at the centre of what it does, focusing on what matters to local people and on outcomes

Doing the Lambeth walk Local government needs to do more than just talk about ‘enabling’. Co-operative councils, like the London Borough of Lambeth, are showing how it can actually happen in practice ONE OF THE themes of the 2013 CIPFA conference was how, in this period of austerity, public services can deliver a fairer society.

What is fair, of course, is a politically contested issue. But what matters to me is getting on and doing the things that will achieve a fairer future – and how, in particular, local government can help shape people’s lives.

This role as ‘enabler’ is central to the complex relationship between citizen and state, and is one that we take very 12

seriously in the London Borough of Lambeth.

Collective wisdom tells us that by the 2020s, there will be: more people; more people living to old age; generational tensions; and an increasingly squeezed middle in our economy. Job security in any sector will be reserved for a privileged few, while those at the ‘bottom’ will be poorer. And technology will play a bigger role.

In all likelihood, there will be a growing gap between a small minority who are financially and socially secure and who insure themselves against the

need for public services, and those who feel threatened by a state that is more intrusive and probably less supportive.

The way these phenomena interact with each other will either increase tensions or fashion a more self-reliant civil society with supportive communities. I am working hard for the latter.

The prospect of at least two more ‘austerity general elections’ might tempt some to hunker down and hope for the best. But we need to overcome the sense of doom and fatalism embedded in the austerity language. Historically, upheavals followed by periods of high

We’ll see a mixed approach to public services with, on the one hand, increasing private sector involvement and, on the other, co-operative council approaches, built on values of responsibility, fairness, reciprocity and relationships

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publicfinance.co.uk/opinion

pfBlogs

A DIGEST FROM THE WEB national debt have brought great social changes – the Great Reform Act, the NHS and National Insurance – and there’s no reason why the same shouldn’t follow now.

A hard look at the economics suggests that we can afford decent public services; the question is whether we want to pay for them and who will provide them, and how?

Local democracy and civic life matter in the creation of strong, resilient communities. Putting the citizen at the centre of what we do in local government and focusing on people, place and outcomes, as we’ve done in Lambeth, is a huge part of the answer.

To do this, public servants must start thinking of themselves as enablers, encouraging citizens to deliver in ways that make sense of the way people actually live their lives.

By 2020, I’m certain we’ll see a mixed approach to public services with, on the one hand, increasing private sector involvement and, on the other, co-operative council approaches, built on values of responsibility, fairness, reciprocity and relationships.

There has been a growth in activism beyond normal politics and a growing interest in alternative forms of economic organisation, such as mutuals. This is something we are actively encouraging locally, which will surely gain even greater momentum in the years to come.

Both approaches are based on the need to rebalance the relationship between the citizen and the state, but in very different ways for different political ends.

In Lambeth, we are seeking to do just that by working to give power and control back to our communities, so that they can find ways of helping themselves and others to lead the lives they want to lead.

By enabling our communities to help themselves, we can give them the power to change their lives in ways that make sense of their needs and circumstances.

That’s what local government should be about, and that’s what Lambeth’s Co-operative Council is attempting to do.

Derrick Anderson is chief executive of the London Borough of Lambeth. He addressed CIPFA’s 2013 conference on the themes discussed here Photo: Alamy

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‘The key for Bank of England governor Mark Carney’s forward guidance is to make it conditional.

That is, based on what is happening in the real economy rather than time-based, so the Bank can change tack if necessary’ Patrick Nolan, chief economist, Reform

‘People displaying age hysteria are easy to identify, particularly when the OBR publishes its long-term fiscal projections. It’s an increasingly virulent and contagious condition that leaves the afflicted prone to making doom-laden predictions’ James Lloyd, director, Strategic Society Centre

‘Despite local government’s new responsibility for public health, many councils are remarkably insouciant about employees’ and residents’ need to answer the call of nature. But cutting loo provision means short-term gain for long-term pain’ Heather Wakefield, head of local government, Unison

‘Eric Pickles talks in emotive terms about protecting the environment. It seems to have escaped his notice that not all of the 6,000 square miles of the sacred Green Belt is wisteria-clad cottages in rolling green hills’ Michael Ware, corporate finance partner, BDO

pfObituary Ian Bowler 15 November 1956 to 11 July 2013

CIPFA member Ian Bowler sadly passed away on 11 July 2013.

After a brief career in the Royal Navy, Ian worked for East Staffordshire Council, Derby City Council and British Rail. He joined Nottingham Trent University in 1990, and many members will have known him in his role as lecturer and course leader for the Nottingham Business School CIPFA programme.

Ian was an examiner for a number of subjects on the CIPFA professional qualification,

and he made a significant contribution to the training and development of CIPFA students, both regionally and nationally.

He was awarded the National Student Forum’s Excellence in Education award in 2003 and the Tom Sowerby award for outstanding service to CIPFA students in 2012.

Martin Jones, Nottingham Trent University

Stephen Joyce, Uttlesford District Council, adds: I was extremely shocked and

saddened to learn of the tragic and untimely death of Ian Bowler.

Ian was an inspiration to me during my CIPFA studies, and he was instrumental to me gaining the CIPFA qualification.

I remember him fondly as a genial but insightful lecturer, with great wisdom and superb taste in designer cardies.

A justified winner of the prestigious Tom Sowerby award in 2012, Ian made a tremendous impact on my own career and that of many other people.

SEPTEMBER 2013

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Voice of the

Nations NEWS FROM THE DEVOLVED ADMINISTRATIONS Scotland

Aleos accused of siphoning funds

BY KEITH AITKEN IN EDINBURGH

Leaders of the Scottish voluntary sector are to launch an inquiry into local authority arm’s-length external organisations (Aleos), following claims that their charitable status is draining money away from ‘real’ charities.

The investigation, being undertaken by the Scottish Council for Voluntary Organisations, is expected to begin in the autumn.

It will use Freedom of Information requests to build up information on the governance, role and finances of a selected sample of Scottish bodies, and specifically on whether they are siphoning off funding intended for the charity sector.

Critics claim Aleos – which are often council-dominated bodies providing arts, sport, regeneration and other services – use their legal right to register as charities in order to reduce tax liability and shift accountability from councils.

‘We will be looking at a sample of governance models and whether they are getting funds from third sector sources, such as the Big Lottery, trust funds or Scottish government funding for charities,’ John Downie, public affairs director for the SCVO, told Public Finance.

‘I would also be interested in knowing the tax perspective – have we got organisations being set up as Aleos because local authorities are then able to avoid tax?’

But Downie’s suspicions were dismissed by the Convention of Scottish Local Authorities. ‘SCVO want the best of both worlds for themselves. The sad, ironic truth is that SCVO is home to some of the largest businesses in Scotland, who all benefit from charitable status,’ a spokesman claimed.

‘When will they realise that we see through this, and that everyone knows they are not disinterested observers and, indeed, that they have a real vested interest?’

Inverclyde: The local regeneration body has been criticised for failing to meet job-creation and housebuilding targets

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Downie pointed to critical reports on two prominent Scottish Aleos. A consultant’s report on the Greenock regeneration body, Riverside Inverclyde, which is predominantly funded by Inverclyde Council, suggested that, midway through its projected lifespan, it had met only 7% of job-creation targets and 5% of target housebuilds.

This followed criticism in January by the Office of the Scottish Charity Regulator of another Aleo, the Glasgow East Regeneration Agency, over a severance deal for its chief executive.

OSCR’s report on the Glasgow agency stated: ‘A very considerable sum of the charity’s assets, which should have been used to further the charity’s purposes, was removed from the charitable sector by the charity trustees for the private benefit of a former employee.’

The Accounts Commission for Scotland has also voiced unease about Aleos. A 2011 report, while acknowledging efficiencies, identified concerns about accountability, governance and ill-defined boundaries with council functions.

Downie added: ‘The public has a perception of what a charity is, and if you were to ask them, I’m sure large regeneration companies controlled by local authorities would not be what they had in mind.’

In recent years there has been some blurring between local authorities and the third sector. Many voluntary bodies are increasingly reliant for funding on council contracts, and there is pressure from Scottish Government ministers for closer co-operation.

Downie thinks the time is ripe for a review

by Holyrood of charity law, which last underwent major reform in 2005.

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publicfinance.co.uk/news

InBrief DEVOLUTION AND TAXES Stamp duty ‘ripe for reform’ The Welsh Government has urged Westminster to devolve stamp duty land tax to Cardiff, after a consultation on how this could be done. Finance Minister Jane Hutt said she was pleased the Treasury had moved quickly to get the exercise under way, following a recommendation by the Silk Commission on devolution last November. The consultation is seeking views on the impact devolution would have on the construction industry and housing market. Hutt said the tax was ‘ripe for reform’. She added: ‘We are keen to build on the discussions we have

already had with stakeholders in Wales about the ways in which we can make it fairer and simpler, and use it to help boost jobs and growth.’

with £131m last year, £129m the year before and £111m in the inaugural year of 2009/10; and the new figure takes the cumulative total above £500m.

THE FUTURE’S BRIGHT

POOTS’ PROPOSALS

SFT saves Scotland £0.5bn

Executive outlines care review

The Scottish Futures Trust, set up by ministers to develop innovative approaches to funding capital projects, has recorded its fourth successive year of increased savings and other benefits to the public purse in Scotland. In its annual Benefits Statement, the SFT reported independently verified savings worth £132m in 2012/13. This compares

Northern Ireland Health Minister Edwin Poots has set out the next steps in the executive’s attempts to develop a reform plan for health and social care. Poots said the Department of Health, Social Services and Public Safety would now develop proposals for change, including reforms to how the adult care system is funded and how people contribute.

and disseminate best practice in public expenditure, shared services and digital delivery, amongst other things,’ he said.

‘It is in that capacity, as part of a strategic centre making our agreed objectives in government operational realities, that I see DFP helping others in the executive to get the big and difficult things done.’

Wales

Lottery ‘should support services’ Councils in Wales have called for money from the National Lottery to be used to support local services.

The Welsh Local Government Association warned that reductions in council funding could mean non-statutory services such as leisure, libraries and museums face cuts of 30% in the future. It called for the Big Lottery Fund, which distributes money from the National Lottery, to ‘step in’ and work with councils to protect local resources such as libraries and leisure centres.

WLGA chief executive Steve Thomas said this would require a change in the fund’s constitution to allow it to support mainstream public services.

‘What we are suggesting is that a revision of the Big Lottery Fund’s existing constitution would allow for a far more strategic approach to be taken between local government and the charity sector in terms of how their activities and projects can be made to complement one another,’ he said.

‘This is not a matter of the lottery being used to deliver statutory services such as social services, education or waste collection.’

Northern Ireland

‘Relentless’ drive to find savings Northern Ireland’s finance minister Simon Hamilton has created a public sector reform unit to undertake a ‘relentless pursuit’ of public spending improvements.

Photos: Alamy

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Scotland

Up to ‘60% of cuts’ are still to happen Simon Hamilton: The Public Sector Reform Division will ‘stimulate innovation in service delivery’ in the province

Speaking after his appointment to the position in July, Hamilton said the ‘very difficult budget settlement’ faced by the Northern Ireland Executive meant that there was a need to improve the effectiveness of spending.

The impact of an ageing population, along with the likelihood that funding from Whitehall would be cut up to and beyond 2018, made change inevitable, he said.

‘Coupled with the ever increasing expectations of an understandably demanding public, it is clear that tough times lie ahead.

Meeting those demands with ever fewer resources will be the underlying context of my time in the Department of Finance and Personnel,’ he said.

He added that the new Public Sector Reform Division within the department would help ensure savings can be made to improve procurement and human resources practice in the administration.

‘It will seek to stimulate innovation in service delivery and it will gather

The Scottish Government’s budget to 2017/18 will fall in both cash and real terms, the Centre for Public Policy for Regions has said.

The University of Glasgow-based centre added that, although the Scottish Government’s day-to-day resource spending would fall, its capital spending would rise if its loan-support programme for business were included in the total.

‘Such loan support is intended to engender more private sector activity,’ the centre said.

‘Including the loan support will mean government-related capital spend rises in both cash and real terms. However, removing it means there is a further cash and real-terms fall in investment spend for Scotland.’

The briefing noted that only 40% of cuts due to day-to-day resource spending planned by the UK coalition government in its deficit reduction strategy had so far been made, but those on capital had largely ended.

The Scottish Government has avoided outlining where it would seek to make cuts after 2015/16, the centre said, which ‘might be explained by the potential change of circumstances brought about by a “yes” vote in the [independence] referendum’.

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widen your horizons

Registration deadline is

29 November 2013 for courses starting

January 2014

Become CIPFA qualified, quicker At CIPFA, we recognise that experience and professionalism go a long way – that’s why we have developed the accelerated route that lets you become CIPFA qualified in just two years.

Accelerated route for senior professionals Exclusively designed for senior executives who do not hold a professional accountancy qualification and work in roles with substantial responsibility across the public and third sectors, the accelerated route to CIPFA membership will let you become CIPFA qualified, quicker.

What are the benefits?

Fast track to chartered accountancy status Get formal recognition of your credentials with the designatory letters CPFA.

Demonstrate your commitment to a career in public finance In these challenging times, effective public finance skills are vital.

Strengthen your knowledge and skills Gain the skills to be a leader in public finance.

Increase your networking and learning opportunities Access CIPFA’s member support with our events, publications and much, much more.

‘Becoming CIPFA qualified will present career opportunities for me in the future that aren’t open to me without the qualification. It is improving my performance in my current finance-facing role, so my Department gains too.’

Phill Wells, current Accelerated route student, DWP

Get in touch: T: 020 7543 5656 E: students@cipfa.org www.cipfa.org/accelerated

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