Margaret Hodge, the chair of the Public Accounts Committee, spoke about a number of issues that need to be dealt with by the public sector when she addressed CIPFA’s Governance Summit this week.
These ranged from personal service contracts (off-payroll arrangements for interims) that are seen as reducing income tax yield, through to the need for greater transparency on outsourced contracts so that ‘the National Audit Office can follow every pound of public money’.
Hodge noted an emerging view among parliamentarians that government officials must increasingly be better held to account for their decisions and performance. The traditional system of ministerial accountability, that has shielded officials from scrutiny, dates back to a time when government departments numbered their staff in the tens rather than the tens of thousands.
The counterweight to this concern was the conviction that officials must also have the confidence, and permission, to ‘speak truth unto power’ to ministers, in the public interest. In my view, when governance systems fail to deliver good performance, it is not usually because of coercion or fear of speaking. More often it is the result of a collective bias to optimism in organisations, whereby a given outcome is so desired by those involved that everyone invests in the belief that it will happen.
This, perhaps well-meaning, weakness is of course perilous when billions of pounds of public money is at stake, whether in the form of new programmes, on-going operations or making efficiency savings. We must recognise that when policy has not been subjected to heavy, and rounded, scrutiny, the risk of unforeseen financial problems is much more acute and the potential loss to the public purse therefore much more grave.
Another area in which CIPFA has been doing a lot of thinking recently is health care. I have been making a point of talking to as many chief executives, chief financial officers and other senior leaders from across central government, health, local government and policing as possible about health and social care integration.
There seems to be a concern about the evidence for cashable financial transformation through health and social care integration. Many make clear that there is great practice and that this leads to a better quality of service for the client/patient; but – whilst highly committed to delivering integration at greater pace and scale – many also say that we are failing to articulate early enough that the financial case, and what it means for the range of upstream and downstream budgets involved, is less clear. This uncertainty will hold us back at some point.
The context for this is of course a difficult one, and whilst I’m usually a ‘glass half full’ sort of person, there are significant financial problems for both health and local government outside of the overlap of integration:
• For health, many aspects of the new system feel raw and will take time to bed in. For example, many trusts are facing pressures and do not feel confident that the Nicholson efficiency challenge will be achieved, clinical commissioning groups are still under quite strong central direction, and the interface between Public Health England and local government feels clunky. But most of all the new system, which is intended in the round to ensure the investment in long-term commissioned outcomes, service transformation and prevention, seems to remain highly focused on the financial problems of acute services.
• For local government, adult social care has been cut to the bone and the definitions used for ‘vulnerability’ are a long way away from what most people would be comfortable with if they applied to their own family. Meanwhile, children’s social care has become so exposed that it is now hard to recruit directors of social services and the number of vacancies is perhaps unsustainably high. Local government is committed to integration, with a fundamental belief in reablement and earlier intervention, but there is a concern now voiced – on an almost daily basis – that the sector’s ability to make significant savings is taken for granted, and that further material cuts in the years ahead may be unsustainable.
I believe that bringing health and local government closer together requires an understanding of both, and not just at the interface of social services, public health or hospital discharges. The reforms should also bring housing, environmental health and mental health to the centre stage too. Sustained work is needed to see this through and is not made any easier by the pressures both systems are otherwise trying to manage.
On a more macro level this leads me to innovation. Comparative evidence shows that innovation usually arises at the sharp end of delivery, in finding new ways to look at old problems; but that high-level planning and service commissioning still play a vital role in setting the incentives to make this happen.
So to deliver integration on the scale needed – say where we see a foundation trust forming delivery entities with a collection of care providers to manage the moves between different types of care – will need financial flexibilities and incentives, a proven means to evidence and agree savings, and as wide a possible range of services involved. Therefore, we must not only build better whole of government financial models but encourage health and local government to work with each other across their entire delivery landscapes and not just the interface.
I look forward to meeting many more colleagues on my travels. If you have not had a chance to see them I have written a couple of articles over the last few weeks. Here are my thoughts on financial management in central government and the reform of borrowing rules to build more affordable homes as well as my previous blogs.
