The Reluctant Armchair Auditor

Sorting spending fact from fiction

Posts Tagged ‘public spending cuts

Living in the past or Fantasy Island

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It’s probably an age thing but increasingly these days I seem to living in a state of perpetual deja vu. Suddenly it’s the early 90s or 80s again as fear and pestilence stalk public sector land. So much so that I am considering looking out my Don Johnson pastel jackets, raybans and ditching my pringle socks. Loafers don’t need socks.

In many ways it’s a great shame that our national predilection for dressing up in ‘historic’ costumes for ‘living history’ weekends does not extend to reenacting public policy screw-ups. Nope. Each generation of political leaders can re-heat whatever garbage they think the electorate has forgotten about before serving it up fresh.

No one out there is going to get all grumpy because they’ve suddenly remembered that the Big Society sounds eerily similar to the good old days of … well the good old days. Yes, I do mean Back to Basics and the spinster on her blessed bike still cycling to evensong. Although in the Big Society presumably she would have had to deliver some home care support, done a shift at the nearest community asset and filled in some pot holes before getting to church.

Of course ‘no more boom and bust’  has had more outings than an Australian XI. This is even-handed grumpiness on my part. I’ve worked with and for politicians of all views (and none so far as I could tell). What unites almost all of them though is an inability to see the perfectly forseeable consequences of a given policy decision. Or, if they do own that skill, to be pathologically unable to utter in public what they must know to be true.

My first day back post-Christmas with my abacus has found me trying to help clients deal with the impact of CSR2010. My attention was drawn to a highly – unintentionally so – amusing set of comments by a minister from CLG. I’ll not name names because I’ve come to the conclusion that it only encourages them and the SPADs with whom they spend too much time.

Apparently it is only ‘lazy councils’ that will go looking for frontline blood to let to implement the cuts in council spending that CLG was in such a hurry to agree with the Treasury. Here’s the quote from the Sunday Times:

If local authorities cut out excessive chief executive pay, share back offices, join forces to procure, and root out wild overspends, they can safeguard key frontline services. Only lazy councils will attempt to use residents to boost their bank balances.

Let’s run an armchair auditor’s rule over those frontline service savers in some more detail.

‘ … cut out excessive chief executive pay … ‘

A great ministerial favourite this one. Let’s examine the premise. Reducing all Chief Executive pay to let’s say £120,000 – that’s a good £22,ooo less than the garbage comparison of the PM’s pay – would stop 9% reductions in council spending hitting the frontline? Really? A client of mine is looking for around £3 million of savings in 2011/12. Deleting every post in the corporate management team would barely yield 10% of the savings figure needed.

‘ … share back offices … ‘

Procurement takes time. Good procurement takes even more time. Merging back office functions sounds easy doesn’t it? I’m not sure any businessman or woman who has tried it would agree. Getting the Morrisons/Safeways issues sorted took years. Few, if any, of the organisations I am familiar with have not already got various partnering arrangements underway. In any event there’s a perfectly respectable stream of thought that argues that maintaining integrated back and front line functions serves customers better and at less cost too.

‘ … join forces to procure … ‘

There’s always more that can be done on procurement as lots of reviews have shown over the years. So I would cede some ground on this one. But I would offer just one thought. Great procurement depends on clarity about knowing what you want as a customer and having outstanding service providers working with you to achieve just that. At the minute everyone is so focused on putting out the fire in their part of the public service woodland that it’s getting near impossible to see the forest as a whole.

Frontloading cuts to encourage councils to be super innovative sounds pretty clever in a sixth form debating society in the real world in defies believe. In the few weeks now available to sort the 2011/12 budgets scope for innovative procurement approaches will be pretty narrow.

‘ … root out wild overspends … ‘

No evidence was offered here for the sort of overspend the minister had in mind. The thinking behind the quote is the most interesting thing though because it does the thing that upsets Mr Redwood so much. It confuses a structural problem – CSR2010 – with a current account issue. Sorting out an overspend means you return to the spending level of the agreed budget. Of course what CSR2010 does is to lower the budget ceiling. So just sorting out the overspend is not enough.

There comes a time in the life of almost all political administrations when the contest between hope and reality gets too obvious to avoid. Administrations at the end of their lives tend to the fantastical to avoid facing inconvenient truths. The deeper the problems the wilder the statements. It’s unusual for a relatively young administration to be reaching for the hyperbolic but I suppose it shows the depth of the problems it thinks it’s got.

The trouble is that the ‘trouble’ has barely begun yet.

I boggled on Sunday while watching the PM on the Andrew Marr programme. He said that sorting out the public finances was last year’s problem. This year’s was all about growth. That’s an unusually stark illustration of the gap in experience of almost everyone in our national political life. Announcements, interviews, news releases and leaks do not deliver anything except sentiment.

The problem is that the public finances have not yet been sorted. Doing that depends on the work of ‘lazy’ organisations at the sharp end. It’s going to be bloody.


Written by reluctantarmchairauditor

January 11, 2011 at 7:47 am

Coalition roasted on Quango bonfire

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Many public sector professionals will, like me, have sighed and shrugged a resigned shoulder this morning in reading today’s report of the Public Administration Select Committee Shrinking the Quango State.

Those unfamiliar with the formulation of public policy and its implementation probably still find the flaws PASC found in the government’s review of Quangos shocking. Sadly. I don’t. Here’s a sample of what the committee found.

This review was poorly managed.

There was no meaningful consultation.

The tests the review used were not clearly defined.

The Cabinet Office failed to establish a proper procedure for departments to follow.

The Bill giving the Government the power to bring about these changes was … badly drafted.

The Government has failed to recognise the realities of the modern world.

Much will be written about the report today. What is striking to me is the no-holds-barred language used by PASC. The Committee was deeply unimpressed by what it found. The findings themselves leave me, as an armchair auditor, deeply pessimistic about the government’s stewardship of public funds.

Let’s start at the beginning. Any change process in any business usually has some rationale for being started: the business case. PASC found the business case for the changes proposed by government had shifted around. It was about saving money. Then it was about improving accountability. No, wait a minute it’s about both. With such a muddled start no wonder MPs found such a mess when they looked at the decisions the review had given rise to.

The early confusion led to a set of criteria used in the review that were unclear and a dearth of guidance to individual government departments. So Quangos with broadly similar terms of reference, albeit in different fields, have ended up being treated entirely differently. It’s a dogs’ breakfast and contrasts hugely with the diligence applied by local public sector organisations to their own decision-making. What is also striking is the lack of meaningful consultation and engagement between the reviewers and the reviewed (and their stakeholders).

What is deeply troubling is that all the flaws PASC identify could have been addressed if anyone had paid any attention to the findings of one of the many reviews of governmental lash-ups over the years produced either by the NAO or, indeed, the Audit Commission. Institutional memory seems to be in short supply now the government has declared Year Zero.

For us armchair auditors the PASC report raises ominous question marks over the quality of decision-making in other key areas such as the NHS reforms where similar rumblings about decision-making are already growing. The government has embarked on a radical reform agenda which it has often clothed in the threads of spending reduction. As PASC says,

… the Government faces the much larger challenge of successfully implementing these reforms; any organisation would struggle with changes on this scale.

It’s not at all clear that the machinery of government is up to the task particularly as ministers chop capacity out of their ‘back offices’ i.e exactly the people you need to deliver change if you want the frontline to really focus on the frontline. It’s a recipe for confusion that management consultants everywhere will be looking on and smacking their lips with anticipation.

We risk ending up where other reform programmes have found themselves: vast amounts of money spent with no noticeable improvement in public services or their accountability. Bad enough in economic good times surely indefensible given the problems we face right now.

Written by reluctantarmchairauditor

January 7, 2011 at 9:46 am

Greetings from the Planet Vulcan Earthlings

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Accountancy is a staid professional. I can see that. So any colourful intervention into the somewhat humdrum lives of finance professionals – even semi-retired ones like me – is always welcome.

I’ve just read this opinion piece from John Redwood reproduced on the Public Finance magazine’s website. Apparently all of my former colleagues busy cutting costs in the public sector are operating under some strange compulsion unwarranted by the different laws of financial physics that operate in deep space.

I was particularly struck by the following section of the post –

Whilst there are cuts in planned spending, total spending carries on rising in cash terms, so all the deficit reduction planned happens through increased tax revenues. The increases in VAT and National Insurance are an important part of delivering this tax-based approach. As we have seen, the main reason increased cash spending delivers some unpleasant cuts is the rising inflation. Bad public sector management in some councils and Quangos adds to the stresses.

Only a politician could have written the first two sentences. Or a practitioner of the old huckster’s art of misdirection: ‘Don’t look at these cuts, look over here at these tax rises.’

The only proper response to the next sentence is one I heard from a youngster on a bus recently: ‘Yeah, right.’

As for the last sentence. Well, there is already sufficient evidence from such well-known left-leaning journals like the Telegraph that cutting Quangos has nothing to do with deficit reduction either.

All of which leaves me with the ‘bad public sector management by some councils’ comment. Local government has consistently outperformed almost every other area of public services. Not only have services generally improved councils have also delivered year on year efficiencies. Real ones. The sort you can spend. A minimum 9% cut in local government funding is more than a bit of stress in the system and it definitely isn’t caused by poor management in any council however much government might wish it were.

Local government leaders have begun to wonder out loud what planet some politicians are living on. I think the answer is obvious isn’t it?

Written by reluctantarmchairauditor

January 6, 2011 at 5:43 pm

Localism: the reality ‘pothole’

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I spent Christmas on retreat with a large parcel of reading to catch up with. Anyone who thought coalition government would strangle the volume of paper flowing from the initiative engine room down by the Thames was clearly barking up the wrong tree. Each department seems to have decided it’s Year Zero.

In my experience there’s an absolute correlation between the quality and quantum of the capacity available to deliver change and its success. Public sector careers are littered with experiences of sweeping up after disastrous change programmes whose benefits were sketchy to start with and never got close to being realised.

For the first time in the experience of almost anyone but the hardiest veterans of public service we face rapidly reducing public expenditure coupled with enormous and complex reform of public services. Less money and fewer people to do more work. All the ingredients of a perfect public policy storm.

A certain amount of change is inevitable with any new government but my clients have now suffered a severe sense of humour failure. But, although the lights are on in Whitehall, there’s no evidence that there’s anyone home listening.

Instead what local public service organisations get for raising queries about the direction and pace of change is the chance to get publicly rubbished by an administration which seems fixated on rubbish collections.

I listened to a minister from CLG yesterday on my way home, interviewed alongside the Leader of Exeter. The minister had written to all councils to admonish them for failing to collect household rubbish over the Christmas holidays. The Leader at Exeter – a council in the ministerial sights – made two not unreasonable points: it had been a tad snowy; and, even if his troops had worked throughout Christmas the Council would have had nowhere to stick the waste collected because it’s not the waste disposal authority (WDA). The WDA’s dumps were, of course, closed on the public holidays over the break.

Few things seem to galvanise the CLG ministerial team more than the question of rubbish collection. Yesterday the minister repeated the old canard on the radio that the move by councils to alternative weekly collections of waste and recyclables was forced on them by a government/Audit Commission plot. Local politicians will tell you this isn’t true. The Audit Commission has also made it plain that this simply is not true. Perhaps if it gets repeated often enough it might become true in some magical and unexpected way. (Sorry, I happened to see Peter Pan over the holidays and yes, I believe in fairies.) You can read the Audit Commission correspondence here.

Changing these arrangements made economic sense and was good for the environment too. In many cases local elections have been fought and won with the issue of changes to local refuse collection arrangements as a hot topic. In any event surely this is a prime example of a local issue where local politicians should be held accountable through the ballot box rather than to ministers’ letters? Perhaps I have misunderstood what this localism malarkey is all about.

I had just about recovered some sort of mental equilibrium when up popped a transport minister to talk about potholes. He said it was up to local councils to sort it out and the government shouldn’t get involved in prescribing what happens locally. But surely, I thought to myself, that’s just what CLG have just been doing over its fixation over bin emptying. The minister boasted that councils had got £3 billions in the spending review to spend on roads and said poorer performing councils should learn from the good practice of the good ones. Quite how that is going to happen was left unexplained.

However, a whacking thump from the suspension as I hit yet another pothole brought me back to the issue at hand. On the final miles home I mused about the £3 billion figure. Here’s the fruit of that musing.

There was a Ministerial statement in the Commons on 13 December. This did indeed announce the £3 billion mentioned. But it’s £3 billion over 4 years. I had a look then at the length of the road network maintained by councils in England. You can have a look at the details here on the Department for Transport website.

Highways experts may correct me but it looks like councils have to look after around 182,000 miles of road. So councils have just over £4,100 a mile to work with each year. That does not seem like an awful lot of money to me. Just think how much it costs to get a drive skimmed with a new layer of blacktop. Of course it looks even less generous when you realise that this money will not be evenly distributed across the road network. Some roads will clearly see not a penny of this £3 billion.

In the interview the minister made the point again that some councils have ‘lots’ of money in reserves. If they do then, as I have said before, this is for genuine un-budgeted for emergencies. If money is needed for planned highways schemes then it is almost certainly already earmarked.

My overall point is that while the government may be intellectually committed to localism it seems pathologically unable to deal with its consequences. This makes for poor relations between Whitehall and local decision-makers who I know are becoming fed up with the constant second guessing that flows from this aggressive authoritarian localism. The ever excellent Local Government Chronicle is reporting today on the local government response to all this noise from the Whitehall machine.

As I pick up the traces from December and clamber back into harness I sense this growing disconnect will increasingly dominate the debate over public service ‘reform’. I haven’t even mentioned what my NHS contacts are saying about what’s going on in that service. That is a whole new post.

There’s certain to be a lot of work for us armchair auditors in the year ahead.

By the way, Happy New Year.

What ‘The Snow’ tells us about the limits of localism

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By all accounts the Secretary of State for Transport is a good minister – at least that’s what I hear from people I respect who should know. He is learning a hard lesson at the moment about how the blame game works when public services don’t work as well as the great British public expect they should.

Here he is yesterday on ITN talking about keeping the roads running.

As a (reluctant) armchair auditor I’m finding what’s happening with ‘The Snow’ interesting. The government is very big on localism. It – apparently – believes in shunting decision-making to the nearest possible point to the action. It believes too that local communities should decide on their own priorities and be free from Whitehall interference in how they are chosen and pursued. Coalition politicians are gambling on there being a host of willing participants in priority-setting, decision-making and service delivery. Years of public service experience leads me to doubt that this belief is well founded but the government is entitled to hold it.

What I think peoples’ growing fury about the impact of the current freakishly cold weather on their lives tell us is this: ministers should beware.

Scotland’s Transport Minister lost his job because the roads couldn’t be kept clear. It makes no difference there were plenty of severe weather warnings that people could have acted on. Like every other day of their working lives they got on a bus or in their car and expected to be able to drive home. When they couldn’t, they got cross and politicians took the heat. There’s always a price to be paid for wanting to lead.

Let’s fast forward a bit to autumn 2011. The cuts I’m now helping to design are really beginning to bite.

The children’s centre your children used to attend has scaled back it’s activities. Your kids no longer get the range of activities they did.  The leisure centre has scaled back its hours too so you’ve had to re-arrange your life to keep up your classes. They also cost more so you’ve knocked some on the head. At your kids’ school you notice that the planned building work and upgrading of the IT facilities hasn’t yet happened. A bit of a ruck is developing over whether the school should pursue a change in status. Would there be some more money on the table if it did?

You notice how bad the roads still are after the winter of 2010/11 the surfaces of many make your car rumble and vibrate. There’s a couple of impressive potholes that you know now to slow and swerve for. Experience gained at the cost of a new tyre and alloy wheel.

You’re worried about your parents as they now have to pay quite a bit more for the care package they have. They are seeing a succession of care workers now after the service was outsourced. They’re bit worried about the rent now as well as they think it’s going to be going up. Their utility bills, and yours, have gone up too.

Quite a few of your friends have been laid off either from the council or from jobs that depended on the council. You’re worried about your own business. The high street has been getting quieter and there’s been a bit more anti-social behaviour in the precinct. The local policing team has been reorganised, there was a story about it in the local paper.

You’ve also heard something about some reorganisation in the NHS. But no-one you speak to is very clear about what it’s all about. The campaign to save the local community hospital has started up again. A friend of your wife who works as a finance assistant in the medical centre said that they are working on a ‘big deal’ with a private company and that’s taking up more of the GPs’ time. They’re all really excited by it.

Your oldest child who was thinking about going on to university after sixth form has decided instead to get a job and will stay on at home.

When you get together with your friends you talk about all of this and more, in the way friends do.

I am labouring to reach my point so here it is. Clearly an act of God like snow can drive the public to fury with politicians. So how are they going to react when it’s much clearer the falling quality and availability of public services are directly the result of changes directed from the top. Snowy roads – Philip Hammond; duff council services – Eric Pickles; distracted Health Services – Andrew Lansley; ropey schools – Michael Gove; university fees – Vince Cable; and, so it goes on.

If the fury over the current transport problems is a guide all ministers can expect some troubled times ahead. Localism will not protect any national politician from being the object of fury when people in local communities find their lives harder and less full of flavour.

As I said there is always a price to be paid for wanting to lead. Localism doesn’t do anything to change the essential characteristics of that equation.

For armchair auditors the challenge will be to sort out where responsibility for cuts actually rests. Where’s that abacus?

Written by reluctantarmchairauditor

December 19, 2010 at 2:56 pm