By Paul Dicken
11 November 2009
Jeremy Colman believes audit bodies should themselves be accountable. He tells Paul Dicken that, after an external review, the Wales Audit Office is in better shape to cope with recession
Wales’ auditor general offers sage advice on coping with the recession. Don’t panic, but don’t necessarily carry on just as before, Jeremy Colman says.
‘The temptation when public bodies are told they have to save money is to panic and to cut things in a very unsystematic way,’ he says. ‘And to unduly favour established services and selectively cut areas such as research and investment. I’m not just talking about the public sector here.’
Examples he cites of ‘silly’ savings range from a council cutting back on hot drinks at meetings to a 1991 decision by Price Waterhouse (now PricewaterhouseCoopers), when he was a partner, to sack trainees as growth slackened.
Colman is critical of a current approach to saving that focuses on protecting the money that goes into the health service. ‘The major parties are talking not about protecting the outputs from a hospital, but protecting the money they put in. It’s not obvious that’s the thing to do.’
Colman is not afraid to be different when it comes to efficiency or how an audit body should operate. This year the Wales Audit Office took a ground-breaking step when it commissioned a group of professionals to review its own operations.
He says audit offices need to show they are accountable. He admits he can ‘get quite bad-tempered’ when asked ‘who guards the guards’, as the arrangements for governance of the WAO are perfectly clear, if not well understood.
For the uninitiated, all of the statutory audit powers lie with the auditor general, rather than the WAO as an organisation. These powers and responsibilities reach across all of the activities of the public sector in Wales sponsored by the Welsh Assembly Government, across local authorities and the NHS. The WAO, which was formed out of the merger of the National Audit Office in Wales and the Audit Commission in Wales, has around 230 staff and an annual budget of £25m.
What seems to have prompted the decision to set up the review is a desire to show what type of organisation the WAO is – a shift from other audit bodies. The NAO in Wales ‘operated on the principle of never apologise, never explain’, Colman says, whereas the WAO is keen to show it applies the same standards to itself as it seeks to apply to other public bodies.
The decision to bring in an external body was praised by the review panel chair, Caroline Gardner, former CIPFA president and Audit Scotland deputy auditor general. She tells Public Finance that the organisation can be judged on this decision and it is ‘a feather in its cap’. Despite being relatively new, the WAO has established a good track record and won praise from the review panel for its Good Practice Exchange service.
If one aim of the review was external looking, the other was internally focused. Colman has made no secret of problems within the WAO following its creation.
‘I was concerned that the inevitable turbulence of a merger was not settling down as quickly as it should and that suggested to me that we needed to change something.’ One vote of confidence in this commitment was the Peer Review’s statement that the WAO’s own self-assessment was robust and honest.
Gardner says employee relations was ‘where there was still most room for improvement, but we think the signs are Jeremy and staff have turned the corner’.
Staff discontent has surfaced on more than one occasion, with several articles appearing in Wales’ national newspaper, the Western Mail, on the subject. Gardner says the review found a higher number of disciplinary and grievance cases than the panel or Colman would have liked and had faced a breakdown in partnership working with the trade union Prospect.
Colman believes the review has been well received, and that its endorsement of the WAO’s internal process was a vote of confidence. ‘I pay people to be sceptical and they don’t turn that off when they look at themselves. Managing the audit office has its own particular challenges. I’m told that running a business school has similar issues because every single member of the faculty regards themselves as an expert in how to run a business.’
To tackle the staffing issues – which included perceptions of ‘cherry picking’ in work allocation – a new management structure has been set up, with an executive committee for internal management.
Two major problems face the organisation: overhauling the inspection of local authorities plus pressure to lead the way on efficiency in the public sector.
Colman agrees that over-inspection is a big issue but believes the comprehensive assessment of councils introduced in the Local Government (Wales) Measure 2009 will help eliminate duplication. The new assessment has echoes of England’s former Comprehensive Performance Assessments regime and its new Comprehensive Area Assessments. But Colman is critical of ‘star ratings systems’, since they can lead to ‘gross oversimplification’ and game playing. He says the WAO-led reports on councils will still enable people to compare local authority performance and improvement, and will be accessible.
Implementing the new arrangements, with the first reports on the capacity of authorities to improve due next year, has meant a staff restructuring. Colman believes the changes in local government and audits of a restructured NHS will show the WAO can be more efficient.
Keeping a check on that progress will be the Welsh Assembly’s Public Accounts Committee. Committee chair Jonathan Morgan told PF that the committee does intend to commission a value-for-money study of the WAO, which it has not done since its creation in 2005.
‘If the committee were to agree on a value-for-money exercise, the committee would need to consider... whether the WAO has sufficient time to implement the peer review recommendations,’ he adds.
Morgan says the PAC has a good working relationship with the auditor general. ‘Regardless of whatever glitches the WAO may have had, bearing in mind it brought together the Audit Commission and the NAO, merging the different cultures together, it is very professional and the quality of the work is first class.’
If the auditor general can oversee improvements in internal management, it will no doubt make it easier to lead the public sector calmly through a period of austerity and promote efficiency.
Colman says there is now a sense of urgency in Wales to look for new ways of doing things. ‘Obviously with hindsight you could say it would have been so much better to have the new ways of working when there was a lot of money sloshing around, but those are exactly the circumstances where people don’t do it. Now is the time to do it, there’s a burning platform provided you don’t panic.’
11 November 2009
Jeremy Colman believes audit bodies should themselves be accountable. He tells Paul Dicken that, after an external review, the Wales Audit Office is in better shape to cope with recession
Wales’ auditor general offers sage advice on coping with the recession. Don’t panic, but don’t necessarily carry on just as before, Jeremy Colman says.
‘The temptation when public bodies are told they have to save money is to panic and to cut things in a very unsystematic way,’ he says. ‘And to unduly favour established services and selectively cut areas such as research and investment. I’m not just talking about the public sector here.’
Examples he cites of ‘silly’ savings range from a council cutting back on hot drinks at meetings to a 1991 decision by Price Waterhouse (now PricewaterhouseCoopers), when he was a partner, to sack trainees as growth slackened.
Colman is critical of a current approach to saving that focuses on protecting the money that goes into the health service. ‘The major parties are talking not about protecting the outputs from a hospital, but protecting the money they put in. It’s not obvious that’s the thing to do.’
Colman is not afraid to be different when it comes to efficiency or how an audit body should operate. This year the Wales Audit Office took a ground-breaking step when it commissioned a group of professionals to review its own operations.
He says audit offices need to show they are accountable. He admits he can ‘get quite bad-tempered’ when asked ‘who guards the guards’, as the arrangements for governance of the WAO are perfectly clear, if not well understood.
For the uninitiated, all of the statutory audit powers lie with the auditor general, rather than the WAO as an organisation. These powers and responsibilities reach across all of the activities of the public sector in Wales sponsored by the Welsh Assembly Government, across local authorities and the NHS. The WAO, which was formed out of the merger of the National Audit Office in Wales and the Audit Commission in Wales, has around 230 staff and an annual budget of £25m.
What seems to have prompted the decision to set up the review is a desire to show what type of organisation the WAO is – a shift from other audit bodies. The NAO in Wales ‘operated on the principle of never apologise, never explain’, Colman says, whereas the WAO is keen to show it applies the same standards to itself as it seeks to apply to other public bodies.
The decision to bring in an external body was praised by the review panel chair, Caroline Gardner, former CIPFA president and Audit Scotland deputy auditor general. She tells Public Finance that the organisation can be judged on this decision and it is ‘a feather in its cap’. Despite being relatively new, the WAO has established a good track record and won praise from the review panel for its Good Practice Exchange service.
If one aim of the review was external looking, the other was internally focused. Colman has made no secret of problems within the WAO following its creation.
‘I was concerned that the inevitable turbulence of a merger was not settling down as quickly as it should and that suggested to me that we needed to change something.’ One vote of confidence in this commitment was the Peer Review’s statement that the WAO’s own self-assessment was robust and honest.
Gardner says employee relations was ‘where there was still most room for improvement, but we think the signs are Jeremy and staff have turned the corner’.
Staff discontent has surfaced on more than one occasion, with several articles appearing in Wales’ national newspaper, the Western Mail, on the subject. Gardner says the review found a higher number of disciplinary and grievance cases than the panel or Colman would have liked and had faced a breakdown in partnership working with the trade union Prospect.
Colman believes the review has been well received, and that its endorsement of the WAO’s internal process was a vote of confidence. ‘I pay people to be sceptical and they don’t turn that off when they look at themselves. Managing the audit office has its own particular challenges. I’m told that running a business school has similar issues because every single member of the faculty regards themselves as an expert in how to run a business.’
To tackle the staffing issues – which included perceptions of ‘cherry picking’ in work allocation – a new management structure has been set up, with an executive committee for internal management.
Two major problems face the organisation: overhauling the inspection of local authorities plus pressure to lead the way on efficiency in the public sector.
Colman agrees that over-inspection is a big issue but believes the comprehensive assessment of councils introduced in the Local Government (Wales) Measure 2009 will help eliminate duplication. The new assessment has echoes of England’s former Comprehensive Performance Assessments regime and its new Comprehensive Area Assessments. But Colman is critical of ‘star ratings systems’, since they can lead to ‘gross oversimplification’ and game playing. He says the WAO-led reports on councils will still enable people to compare local authority performance and improvement, and will be accessible.
Implementing the new arrangements, with the first reports on the capacity of authorities to improve due next year, has meant a staff restructuring. Colman believes the changes in local government and audits of a restructured NHS will show the WAO can be more efficient.
Keeping a check on that progress will be the Welsh Assembly’s Public Accounts Committee. Committee chair Jonathan Morgan told PF that the committee does intend to commission a value-for-money study of the WAO, which it has not done since its creation in 2005.
‘If the committee were to agree on a value-for-money exercise, the committee would need to consider... whether the WAO has sufficient time to implement the peer review recommendations,’ he adds.
Morgan says the PAC has a good working relationship with the auditor general. ‘Regardless of whatever glitches the WAO may have had, bearing in mind it brought together the Audit Commission and the NAO, merging the different cultures together, it is very professional and the quality of the work is first class.’
If the auditor general can oversee improvements in internal management, it will no doubt make it easier to lead the public sector calmly through a period of austerity and promote efficiency.
Colman says there is now a sense of urgency in Wales to look for new ways of doing things. ‘Obviously with hindsight you could say it would have been so much better to have the new ways of working when there was a lot of money sloshing around, but those are exactly the circumstances where people don’t do it. Now is the time to do it, there’s a burning platform provided you don’t panic.’
