‘Embrace reform’, accountants told

Posted on August 4, 2015 · Posted in AB Public

Reform must be embraced, not resisted, ACCA members were told at its 2nd Local Government Summit in London.

Former Westminster City Council chief executive Sir Peter Rogers gave the opening plenary speech, with an upbeat message about public sector reform. “Achieving lasting reform in the public sector is ever so easy,” he told the conference. “You need clarity of purpose; certainty of funding; a realistic plan and ambition for what you are trying to achieve; and you need a really effective machine to make it happen, with a committed workforce open to change.

“That is what you need. So what have you got? Politics, economic turbulence, fiscal retrenchment and a very mixed bag of organisational competence. So achieving lasting public sector reform is not the finished job and never will be. It is merely the transition from one state of public sector delivery to another.”

Sir Peter – who now chairs Capacity Grid, bringing together local authorities to share data, assets and ideas – reflected on the three periods of major public sector reform he has experienced. The Thatcher reforms reduced the size of the public sector through privatisations and compulsory competitive tendering. There was a clear ambition, plan and communication strategy.

The Blair years brought more money into public services and introduced greater choice. “Many services did improve and citizen satisfaction went through the roof,” said Sir Peter. But, “there was no financial imperative to change behaviour.”

“And now we have the coalition. Whether by belief or necessity, it has launched another Thatcher-type era – smaller state, Big Society and financial austerity.” This has forced people in the public sector and amongst the public to settle for “lower expectations of services.”

Yet the cuts in funding of local government have not always translated into greater efficiency, Sir Peter argued. “We have been cutting services while we still have surplus capacity in our organisations,” he suggested. So, remaining instances of bad practice must change. These include child protection, where agencies fail to work together; addressing housing shortages; and improving the planning system. “We need to think about different ways of doing things, and we don’t need to think about artificial boundaries between the public and private sectors,” he urged. “Think about the solution and then find the means to do it.”

Sir Peter finished with questions to the audience. “Are all your services really effective and are they all really required? Are you genuinely financially resilient and able to meet further reductions in funding? Are you genuinely prepared to look at the concept of best provider, who is not necessarily in-house? You should champion the best provider concept and not give the job of reform to people who have previously failed to reform. If the answer to any of these questions is no, what are you going to do about it?”

Helen Randall, partner at solicitors Trowers & Hamlins, warned councils they face further uncertainty and change. We do not know what government will emerge from the General Election, it is unclear what new devolution settlement will be agreed following the Scottish referendum and the UK might leave the European Union. All these factors affect local government’s operating and contractual environment.

“If [devolution] promises are adhered to, we are probably going to have different legislation in different parts of the UK,” said Ms Randall. “If we come out of the EU this affects not just procurement, but also state aid rules, employment law – no TUPE – and most of our environment law will change.” A lot of existing and new contracts could operate within a different legal framework.

Ian Knowles, director of resources at West Lindsey District Council and a member of ACCA’s Public Sector Panel, warned councils to be strategic as they innovate. “If we are all setting-up waste businesses we will end up competing with each other,” he said. “We need to consider how we organise and how we benefit from that.” He added: “We should expect some local authority failures. Some local authorities will misjudge investment risk.”

Dame Jane Roberts, chair of the New Local Government Network and former leader of the London Borough of Camden, suggested the terms of the debate on public sector reform should be re-evaluated. “In the 1990s there was a reason to think of the public sector as a single sector,” she said. “I wonder if that time has passed. I think this can lead to an unquestioning approach. It implies that the public sector is the only sector which needs to change. What is the public sector trying to provide? This is a simple question too often not properly considered.”

Local government leadership should be praised for performance improvement over two decades, said Dame Jane. “I think the performance of local government is much better than that of central government. There are some really impressive authorities out there.” But she added: “Local government is under huge pressure now – existential pressure really. There is no choice but to change. Local government will have to do things differently.”

Greg McIntosh FCCA, KPMG’s director of public sector audit, considered the role of governance in reforming public services. “If you do introduce new ways of working, you need to ensure your governance keeps track,” he said. “Accountability is an important part of this. You have to demonstrate to your stakeholders that you are delivering. Leadership is critical. But democratic oversight is equally important. You have to have powerful people driving through change, but you also need democratic accountability to ensure they do not go off their trolley!”

Councils need to ensure they retain collective organisational knowledge and experience during reform programmes. “How many people do we know who came in as chief executive and sacked all the other executives?,” Mr McIntosh asked. “Just to impose their will on the organisation. How does that maintain corporate knowledge?”

Lord Andrew Adonis, winding-up the conference, told delegates of his experience in implementing major reforms – the creation of academy schools, fast track training for teachers through ‘Teaching First’, introducing tuition fees and establishing a consensus for the HS2 rail link. Lord Adonis spoke of the need for the ‘three C’s’ to cement reform in place. There needs to be convincing evidence of the need for change, a credible plan for reform and a political consensus behind proposals.

Producing and sharing evidence are building blocks for achieving lasting reform, Lord Adonis argued. “Absolutely crucial from my point of view for building a consensus is to be absolutely open with the sharing of information. That is essential if you are going to have any chance of building a consensus.”