16 June 2006
Town hall finance chiefs are retreating from the challenges thrown up by local government reform, according to the man reviewing the function and funding of councils.
In an excoriating address to the conference on June 14, Sir Michael Lyons criticised the contradictions and 'mixed messages' from the finance managers he had consulted in his inquiry.
'Treasurers want more flexibility but don't want any reduction in grant,' he told delegates. 'If you want a spoon-fed arrangement, that's what you'll get.'
Lyons added that he had also been accosted frequently by 'senior CIPFA members' who were all too ready to dismiss relocalisation of the business rate – a recommendation that could be included in his final report – as too difficult and bound to be rejected by business.
But he said councils were likely to find a more 'subtle response' from the commercial sector if they would only engage with them. Businesses might be open to the idea of relocalisation in exchange for getting some of their other priorities back on the local agenda.
Speaking to Public Finance after his session, Lyons said: 'I've been surprised that [financial managers] seem so comfortable. There is an unwillingness to recognise that if they want a different future they're going to have to argue for it.'
He said finance managers needed to re-examine the very nature and purpose of their jobs.'You have a decision to make as to whether you are the chief financial officer for the civic centre or whether you are the finance director for the council and community,' he told delegates. 'Your contribution could be critical… Are you up for difficult choices? Some of you are not.'
Commenting on Lyons' remarks, CIPFA chief executive Steve Freer said: 'After 30 years of false dawns – starting with Layfield and ending with the Balance of Funding review – it is little wonder that finance practitioners are sceptical about what the Lyons Inquiry will actually deliver.'
But he accepted that Lyons had been right to be critical. 'If we fail to make the case for positive reforms, they definitely won't arrive complete with gift-wrapping. Ultimately, it's up to each of us to argue the case passionately for a stronger local tax base.'
Lyons' final report on the functions, form and financing of local government is due to be published in December, but the two interim reports to emerge so far have called for greater flexibility for local government, with councils taking their lead from their communities rather than Whitehall.
Lyons criticised the current lack of effective engagement with communities as a 'major system failure' in local government. 'If you think you're doing it well enough at the moment, the answer is you ain't,' he said.
'Byzantine' government confusing citizens, warns MP
Governance arrangements in modern societies have become so complex that accountability structures have failed to keep pace and require 'intelligent' reform, a leading backbencher has warned.
Tony Wright, chair of the Commons' respected public administration select committee, told delegates that citizens no longer understood exactly who was responsible for delivering huge swathes of public services.
The situation, he said, had led to a 'vicious circle' in which the public attached responsibility for almost all matters of public policy to the government and ministers were now scared to let go of responsibility for key services.
This 'yawning chasm' in governance arrangements 'is having a profound impact on the relationship between citizens and the government', he argued.
Delivering the inaugural CIPFA/ PricewaterhouseCoopers accountability lecture on June 14, Wright told delegates: 'Modern government – indeed “governance” – has become a gigantic, Byzantine structure. We all know the arguments around the accountability [it requires], that we all want “full” and “proper” accountability.
'It is a warm-glow word that makes us feel better by just saying it. But today that gets in the way of improved thinking around the issue.'
Wright questioned whether the current monitoring functions across the public services had developed 'in a coherent way' and whether it could be viewed as 'a mess'.
A system was needed that allowed the institutions of governance space to innovate but that clarified governance arrangements to make it easier for the public to understand.
'Diffuse government should not mean diffuse accountability,' Wright argued. 'What we need is someone or something that takes a look at accountability in the round.'
Bundred urges move to co-production
Audit Commission chief executive Steve Bundred this week urged public bodies to overhaul service delivery by directly engaging the public in consultation over reforms.
Bundred also rejected accusations that the fledgling 'co-production' initiative – whereby users enjoy direct input into the way that services are designed and implemented – contained inherent contradictions that would extend the 'top-down' approach to policy-making.
Addressing the conference on June 14, Bundred said that the time was right to take the concept of user engagement beyond the simple 'choice' agenda to new models of co-production.
Bundred acknowledged that although choice had been successful in some areas, it had not always been cost-effective because it required the retention of additional capacity.
That, combined with an expected tighter 2007 Comprehensive Spending Review, meant that organisations must find new ways of delivering better services for less money.
'So to combine the benefits of increased satisfaction that comes from greater choice and the increased efficiency that comes from innovation, we need to move beyond choice to co-production,' Bundred urged.
He cited the Community Speed Watch project in Avon and Somerset – where local villagers used speed guns to help police identify speeding motorists – as an example where public input had been used to improve local conditions with scarce resources.
Almost a third of police forces in England and Wales are now pursuing similar initiatives.
Speaking later to Public Finance, Bundred rejected criticisms that co-production would be hampered because the public has different ideas about the services they want and little understanding of the costs involved.
'If you look at the health sector, the idea of co-production has operated very effectively in chronic disease management,' he said. 'Intense discussions between asthmatics, their GPs and hospital doctors, for example, have allowed services to be better developed around the patients' day-to-day needs, with fewer hospitalisations and, additionally, a system that contains cost savings.'
Rachael McIlroy, public services officer at the Trades Union Congress, said it would support a system that put users at the heart of public services. But she warned that this could also lead to an extension of co-payment relationships from, for example, the social care sector into health services. 'We would be worried about how such arrangements for vital services would be monitored.'
She also feared co-production could lead to wide variations in service quality locally.
Civil service held up public service reform, says Barber
The former head of the Prime Minister's Delivery Unit has tacitly criticised former Cabinet secretary Sir Andrew Turnbull for holding back improvements in public services by dilatoriness over civil service reform.
'One of the things that has made reform a struggle for Blair is that civil service reform was too slow in his second term,' said Sir Michael Barber, who left the unit for the consultancy firm McKinsey last summer.
He added that civil service reform had 'speeded up' since Sir Gus O'Donnell took over in September last year and praised his introduction of Departmental Capability Reviews.
Barber was responding to a question from a local government delegate, who complained there was no equivalent pressure on Whitehall to improve standards and performance to that generated by the Comprehensive Performance Assessment.
Despite praising O'Donnell, Barber told the delegate he was right: 'There are too many civil servants. You need fewer, better people at the heart of these organisations.'
He also said that, although devolution of power was the right policy, government still had to take responsibility for ensuring the right calibre of staff were leading local public services.
'It's not enough for [Health Secretary] Patricia Hewitt to say “we've devolved to primary care trusts”. No one believes that. She has to know what's going on; we need real-time information,' he said.
Barber told Public Finance that Hewitt had been correct to take personal responsibility for the attainment of financial balance in the NHS by April 2007. 'If you're a reforming civil servant and you devolve, your secretary of state doesn't get off the hook.'
Public sector 'on target' for Gershon, says OGC chief
The public sector is on course to beat the procurement savings target identified by Sir Peter Gershon, according to the government's efficiency chief.
John Oughton, chief executive of the Office of Government Commerce, told Public Finance he was confident that public sector organisations would 'significantly' exceed the £7bn of procurement efficiencies outlined in the Gershon report, although he refused to put a figure on by how much the target would be surpassed.
As head of the OGC, Oughton is charged with implementing and monitoring the Gershon programme, intended to deliver annual efficiency savings totalling £21.5bn by 2007/08.
Oughton told CIPFA delegates that the programme was ambitious but entirely deliverable, with latest figures showing everything was on track.
'Through the process of planning and executing and monitoring and reporting, my estimation is we will comfortably achieve the £21.5bn,' he said.
But he added that the public sector had to move from a target-based approach to efficiency to one that was mainstreamed into the way it did business.
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