Public Finance March 2019 Taster

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Issue 03 March 2019

RIPPLE EFFECT

TA ST E R E D I T I O N

Mental health woes pile pressure on other services ALLY IN THE HOUSE

MP Clive Betts on standing up for local government STRINGS ATTACHED?

MARCH 2019 • ISSUE № 03

Aid from China may not be a straightforward benefit

OFF TARGET

How universal credit is still failing to hit the mark

London’s Garden Bridge costs mount

Fraud fighters’ efforts recognised

London’s plans for a Garden Bridge, scrapped in August 2017, have cost the taxpayer a total of £43m. The Department for Transport and Transport for London spent £19m and £24m on the project respectively. A further £5.5m will be given to a charity in charge of the bridge’s construction as part of a cancellation deal.

This year’s Government Counter Fraud Awards were handed out at a glitzy event in London. Several public sector organisations have been recognised for their efforts in tackling fraud. The awards are hosted by CIPFA, the Cabinet Office, the National Crime Agency and City of London Police. See bit.ly/2IoKrRU and Fraud File, p41.

Business rates retention plans ‘too complex’ Plans for appeals in raising the level of business rates councils in England can retain, from 50% to 75%, have been called complicated and confusing.

The Institute for Fiscal Studies said the appeals proposals were “confusing, imprecise and appear to be internally inconsistent”.

London Councils said: “The funding local councils are required to set aside in provisions for appeals could otherwise be spent directly on service delivery and local priorities.”

The District Councils’ Network called on the government to delay its planned change, due in 2020-21, by a year. “The complexity of the changes introduces a risk of destabilising the system if all the planned changes [including the fair funding formula] are introduced in the same year,” the umbrella group said, responding to a consultation on the move.

Anger over fair funding review Council leaders call for local government funding formula to take into account areas’ deprivation levels

By Dominic Brady Umbrella groups have railed against the government’s decision not to include deprivation in its new funding formula for English councils, saying poor areas will be worse off.

Responses to the consultation – which finished last month – on the fair funding formula called for deprivation to be included in the calculations for allocating government money to local authorities.

London Councils, in its response, said the group was “surprised and extremely concerned by the proposal not to include deprivation in either the upper- or lower-tier foundation formulae”. The proposal “should be reversed and deprivation should be included”, the group said.

In its response, the Local Government Association said: “We believe that the starting point should be for deprivation to remain as a factor in the foundation formula, with development of a clear evidence base for the weighting for this cost driver.”

The Society of Local Authority Chief Executives, which represents 1,500 chief executives and senior managers in the UK public sector, said deprived areas were likely to need higher funding allocations because of the greater demand on their services.

“Deprived individuals, and particularly income-deprived individuals, are more likely to access certain services than more prosperous individuals,” Solace said in its draft consultation response. prospect: �Bleak omitting

deprivation from the formula would hit urban areas such as Manchester

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Solace also wrote to the government to state that the decision was “odd” given there was widespread support for the inclusion of deprivation in a previous consultation on the fair funding review.

A summary of the 312 responses on the funding review published in December 2017 found 86% of respondents favoured taking deprivation into account.

The Institute for Fiscal Studies think-tank warned the omission of deprivation would hit urban areas such as London, Manchester, Birmingham, Newcastle, Bristol and Hull, where deprivation levels were highest. The formula, it said, would benefit wealthy counties in the South East of England, whereas Cornwall, Lancashire and County Durham would suffer but not to the same extent as deprived urban areas.

David Phillips, associate director of the IFS, said: “Statistical analysis to justify not including deprivation in the funding formula for many key services does not stand up to full scrutiny.

“If the government does go ahead with plans to base the needs formula for services like homelessness, public transport and libraries on population only, our analysis suggests deprived councils will lose out.”

The Ministry of Housing, Communities and Local Government justified its omission of deprivation in the consultation document by saying that population size was the main driver in variation of council spending. A MHCLG spokesperson told PF: “We will carefully consider the feedback before responding.”

ALAMY

news

Probation firm in administration A company responsible for running probation services in England and Wales has gone into administration. Working Links ran three ‘community rehabilitation companies’, one of which was deemed “inadequate” by a recent HM Inspectorate of Probation report.

out of �Getting jail: sentences

under a year could be replaced by a community order

Call for shorter sentences Move towards community orders could save millions a year that could be used for rehabilitation services

ALAMY

By Dominic Brady Abolishing shorter custodial prison sentences in favour of community orders could lead to jail closures, which could in turn save the public purse millions of pounds a year.

That’s according to Frances Crook, chief executive of the Howard League for Penal Reform, who told PF the money saved could be given to local authorities’ drug and alcohol rehabilitation services.

Justice secretary David Gauke, in a speech to the Reform think-tank in London last month, set out his vision to abolish sentences under six months. He said he wanted instead to move towards a “robust community order regime”, which he suggested would ease pressure on prisons and reduce re-offending rates.

Crook told PF: “If you get rid of sentences under a year, you could start a

programme of prison closures, which would save money.

We should be able to invest in local authorities to give them money for supported housing and drug and alcohol

rehabilitation services.”

Crook said that a big inner-city prison could cost between £20m and £30m a year. And she added: “Managing people in the community is much cheaper.”

Answering a question from PF at the Reform event, Gauke said local authorities had a “key” role to play in housing ex-offenders or those serving community orders. “One of the biggest barriers to rehabilitation is housing. There’s a question about what you do with somebody who might have a job, but who struggles with accommodation – working closely with local authorities on this area is key,” he said.

Martin Tett, housing spokesman at the Local Government Association, said: “Housing is a key issue to stop offenders from reoffending and, where possible, local authorities aim to form multiagency partnerships to provide support to individuals who rely on council services, such as housing.”

Crook believed Gauke’s announcement was a step in the right direction but remained sceptical at the lack of legislation to bring this about. “If he is going to achieve what he said he wants, that means legislation,” she said.

She told PF there was a significant link between prisons and homelessness.

Bearing the brunt

The prison service is one of the areas hit hardest by austerity measures

Big house blues Data for prisons in England and Wales, from the Institute for Government and CIPFA’s annual Performance Tracker:

16% 9,000

The proportion by which real-terms spending on prisons has fallen since 2009-10.

The number of assaults on prison staff in 2017-18, which has almost tripled since 2009-10.

33%

The proportion of prison officers in June 2018 who had less than two years’ experience on the job – compared with 7% in March 2010.

£291m

The amount committed in the 2016 autumn Budget to tackle a fall in prison safety levels.

2.75%

Prison officer pay rise for 2018-19.

“A significant proportion of the people living on the street have either been in prison recently or are about to go into prison and come out,” she said.

“Local authorities have the most important role to play because they can solve the problems. They must have the resources to do that.”

Prisons are one of the public services www.publicfinance.co.uk/subscribe that have been most severely affected as a result of austerity measures (see box).

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MIND THE GAP

A

Mental health funding cuts and a fragmented service provision are piling the pressure on public services

s chief constable of Dyfed-Powys Police, Mark Collins is witnessing firsthand the impact mental health issues are having on public sector organisations.

Responsible for the biggest police force area in Wales in geographical terms, he says an increasing amount of his officers’ time is taken up with responding to calls relating to people having a mental health crisis: “If two of my officers go to somebody who’s having a psychotic episode in Aberystwyth, for instance, and they take that person for a mental health assessment in Llanelli, they can be on the road for two hours to get there, two hours to get back, and potentially

By Kim Thomas wait three or four hours to be seen as well.

That takes two of my officers off the streets for hours and hours.” During that time, those officers are unable to deal with calls relating to burglary, domestic violence or any other core policing business.

A report last year by Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services, Picking up the Pieces, also concluded that police forces are spending increasing amounts of time dealing with incidents relating to mental health. While the report did not provide an exact figure, owing to different forces recording statistics in various ways, Rick Muir, director of think-tank the Police Foundation, says it is understandable that mental health incidents – where someone is threatening suicide or harm to someone else, for example – are taking priority over call-outs such as www.publicfinance.co.uk/subscribe house burglaries, where the perpetrator has left the scene: “If you’ve got someone in immediate distress who has a mental health problem, they will go out to that.”

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Almost every police force in the country, the Picking up the Pieces report pointed out, now employs a mental health triage team to attend calls with officers.

Collins employs mental health staff to work alongside his officers from 4pm to midnight every night of the week. About 80% of the people seen by the triage team, he says, “are engaged with the [mental health] service or recently disengaged with the service. The capacity is not there in terms of crisis care or community care to manage the demand that the health service has got”.

The increasing role of the police in dealing with mental health crises is one part of a bigger picture, relating not only to the underfunding of mental health services but also to commissioning arrangements and the wider impact of austerity.

The organisation of mental health services is fragmented, and shared between clinical commissioning groups (CCGs), local authorities and the NHS. Local authorities have been particularly hard hit by funding cuts, which means that some of the public health services they provide, such as smoking cessation ►

Cuts to early intervention services can mean that people are more likely to reach crisis point, which in itself increases demand for emergency responses

feature

Alison Cobb, Mind

30%

REDUCTION IN BEDS FOR ACUTE MENTAL HEALTH CONDITIONS SINCE 2009

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interview

After 26 years representing his constituents in parliament, Clive Betts has become a part of the Westminster furniture, but, as PF discovers, his passion for local government is far from wearing thin

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C

By Dominic Brady

live Betts is a self-confessed workaholic. His record speaks for itself – an MP of 26 years and counting, with the past nine years of those sitting as the chair of the housing, communities and local government select committee.

“I’m a bit of a workaholic,” he admits. “I can’t keep away from my emails, whether it’s on my phone or on a tablet – it’s an addiction.”

After more than a quarter of a century in the Westminster spotlight, however, Betts tells PF he is just as committed as ever. And there’s certainly plenty to keep him engaged. After all, he took over from Phyllis Starkey as communities and local government committee chair just days before then chancellor George Osborne delivered his austerity budget of 2010 – which has put the former economist at the forefront of scrutinising brutal cuts to local government funding for almost a decade.

I’m a bit of a workaholic...

I can’t keep away from my emails, whether it’s on my phone or on a tablet – it’s an addiction

An eye on Westminster

Betts’ understanding of local government runs deep, having started out as an economist for Derbyshire County Council in 1973, before moving to South Yorkshire County Council a year later.

He went on to be elected as a Labour councillor in the Firth Park ward at Sheffield City Council in 1976, and would later become council leader in 1987. Betts, though, always had one eye on Westminster, and early failed attempts to become an MP in Sheffield Hallam and Louth, in 1974 and 1979 respectively, did not kill his ambition. In 1992, he successfully contested the seat for Sheffield Attercliffe, and has remained in place since.

After 26 years representing his constituents in parliament, Betts has very much become part of the Westminster furniture, but his experience has not given way to ego. As he strolls towards our meeting room, Betts is stopped by colleagues with whom he exchanges friendly words. He is at ease, but this does not come across when he begins to share his thoughts on local government.

He speaks fast and with great urgency, as though failing to make his point quickly risks another chunk of funding being stripped away from councils. His succinct responses sound ► like they have been refined after years of falling on deaf ears in Whitehall.

LOCAL GOVERNMENT

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feature Tech & Tools

$38bn

THE AMOUNT CHINA SPENT ON INTERNATIONAL AID IN 2014 MAKING IT THE WORLD’S LARGEST INTERNATIONAL AID DONOR

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36 PUBLICFINANCE MARCH 2019

FRIEND OR

T

FOE?

OLIVER BURSTON / IKON

China has emerged as the country that donates the most international aid. But is it really the force for good it claims to be?

wo years ago, Kenya opened its biggest-ever infrastructure project 18 months ahead of schedule. Built and financed by the Chinese government, the new

By Victor Smart £2.5bn railway line, running 470km from Nairobi to the port of Mombasa is named the Madaraka Express, in commemoration of the day Kenya attained internal self-rule. As president Uhuru Kenyatta pointed out at the launch ceremony, the railway supersedes the ‘lunatic express’, built by the British more than a century ago when Nairobi scarcely existed as a town.

The symbolism could not be much plainer: China is helping the developing world realise its potential now that it has rid itself of the colonial yoke. In Africa, Asia and – to a lesser extent – South America, a vast array of Chinese-backed projects such as airports, stadiums, electricity grids and gas storage are now improving many lives materially.

Given the world economy’s hunger for development finance, China’s arrival on the scene has been welcomed. According to the McKinsey Global Institute and the World Bank, unmet global infrastructure needs over the next decade will run at more than $3 trillion annually if they are carried out in a low carbon and socially inclusive manner.

But in the three decades since Beijing stepped up to become a big international aid donor, even the direct recipients have had cause to worry about China’s motives and whether its development push is a force for good or ill. Though the new Kenya railway, for example, provides affordable travel, it provided relatively few construction jobs for locals, and Chinese managers were relied on to run it. Meanwhile, in the longer term, the Madaraka line will bind the whole of East Africa into Beijing’s controversial multi-trillion-dollar Belt and Road Initiative infrastructure, radiating out trade routes from China.

In sheer money terms, China is the world’s largest international aid donor country. It spent $38bn a year – a quarter more in total than the US and roughly the same per head as Greece or Portugal – in 2014, the latest year for which figures are available. Seven of the top 10 recipients are in Africa. Others on the list are Cuba, Cambodia and Sri Lanka.

As Beijing frequently reiterates, it practises a non-interference aid policy: unlike preachy Western donors, its support comes without political strings, lectures on human rights, or www.publicfinance.co.uk/subscribe demands for a commitment to controversial policy reforms, such as deregulating financial markets. Politicians from the developing world applaud the fact that deals can be done swiftly and without fuss.

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►

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management development

Change management: are you ready to take the leap?

It may be that your organisation has no option but to change, however there are ways to make the process positive, productive and relatively pain-free

C

Why do you need to change?

This begins with the argument for change. You must have absolute clarity as to why the change is necessary, and exactly what will change. This is a core question for any organisation, as it is about knowing that the change is a business necessity.

It means being clear about the hard outcome objectives of change, having a vision for what the future organisation will be like and how it will work, which individuals can grasp and relate to themselves. There must be a clear understanding across the organisation, not just by the change manager or senior leadership.

Often this requires providing the wider context, ensuring people do not look at the risk of change in isolation. For instance, jumping into a cold sea from the deck of a ship is a big risk; but, if the ship is the Titanic, the greater risk may be staying on Brendan McCarron www.publicfinance.co.uk/subscribe board. People must see for themselves is head of training that the risk of not changing is at CIPFA

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➋

How will you go about it?

You also need to know the process for how change will be made. A major motivator is the confidence people have in the way change will be made. They need to believe it will be successful – and feel supported. This is normally communicated by a plan, which must look realistic to the people involved – especially if they have prior experience of unrealistic, poorly thought-through change initiatives.

Your people must feel involved in the process. The biggest failure I’ve found when it comes to implementing a change plan lies in communication – not a little under-communication of the message but massive under-communication.

It always takes extraordinary efforts to involve others for whom the change may be only a part of their jobs, and change leaders should be prepared to take extra steps to include them. Involvement breeds understanding and enables people to see where they fit in the future.

NATALIE WOOD

➊

hange is a necessary part of the life cycle of any organisation. It is something we have all been through, and we will all have seen some truly successful projects, as well as some which never quite made it off the ground. We all know how disruptive change can be, and should all be able to agree that it needs careful management.

Done right, change helps ensure your organisation remains relevant, able to perform and able to provide value for money. However, there are many pitfalls along the way. A failure of resources, leadership, or communication of the vision can all sink a project. And, in the public sector, there can be serious consequences, including a significant loss of trust and damage to your reputation.

One of the most crucial parts of any change project, which can sometimes be overlooked, is ensuring that you have the culture in place to support your vision. This is why I always encourage organisations to ask basic questions about the readiness of their people before they embark on a project, to ensure they will join unacceptable, so that, in context, the risk of change in on the change journey. is clearly and significantly reduced.

Top tips…

Do ➊ Spell out why rejecting ➋ ➌

change isn’t an option – and could actually be worse Remember, the devil is in the detail – be specific Make sure the benefits outweigh the negatives

Don’t ➊ Be selective – get as many

➐ ➌

➍

Look for loyal supporters Another question you should ask is who is supporting the change. This includes both within the leadership team, and from the wider organisation. People with relatively less power are very good observers of people in power, and they see and interpret every word and action.

Leaders must be aware of the effect their actions and words have on others, and they must model the behaviours they wish to encourage.

Any disloyalty, perceived disloyalty or slacking of support by leaders will be very quickly observed, analysed and acted upon. Make sure you know who your champions are among your staff.

Most people are more comfortable when they conform with the actions of their peer group. If peers are visible to each other, they can see changes easily. Problems arise when peers have low visibility, which is common among managers who have fewer opportunities to interact with peers than staff who work together. Peer effects can also be problematic when respected peers have reservations about change. Their actions signal a general slowdown of acceptance.

What’s in it for them?

Lastly, you must ensure that people know what they will gain. It’s important that this is spelt out clearly. This is about clarity of valuable, specific, observable benefits and how quickly they start to appear. The clearer, more valuable, specific and the earlier the answer, the better.

➋ ➌

people on board as possible, no matter how peripheral Forget to choose people to champion your project Start a change programme without being able to answer every question below

Linked to the first question, these positive benefits must clearly and significantly outweigh negative impacts of change. The critical relationship is between people and their immediate supervisors. Supervisors are relied upon for direction, information and feedback on performance. These are especially important commodities in change, where existing expectations, behaviours and ways of working must be left behind and new ways picked up.

I strongly recommend that, before you start your next change project, you make sure you can answer the questions below.

➎

Core questions to ask yourself ● Is the change, and the reason for it, understood clearly

by everyone involved?

● Do people see the risk of not changing as being worse

than the risk involved in the change?

● Does the plan look like it will work, are the timescales

realistic, and is it sufficiently resourced?

● Are staff involved and, even more important, do they

feel involved?

TO ACCESS THE FULL VERSION OF PUBLIC FINANCE work publicly and clearly supporting the change?

MAGAZINE, ● Are people satisfied with the answer to the question SUBSCRIBE HERE ‘What’s in it for me?’

● Are leaders publicly and clearly supporting the change? ● Are people who staff respect in their peer groups at

● Do people feelwww.publicfinance.co.uk/subscribe they have the support they need to make

changes, especially from their immediate managers? ●

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numbers game

bn

Surgical scheduling under par Improving scheduling efficiency would enable an additional 291,327 routine operations to be carried out in England each year, according to NHS Improvement. A third of operating lists started 30 minutes or more late between January and December 2017, noted a joint report with audit firm Deloitte, published in February.

9% 3% 8% 64% 16%

I expected him to be good, and he has been I expected him to be good, but he has been bad I expected him to be bad, but he has been good I expected him to be bad, and he has been Don’t know

Donald Trump has been American president for two years. According to a YouGov poll carried out in January, after a 35-day partial federal government shutdown – the longest in US history– more than half (64%) of British adults said that, prior to him entering office, they had expected Trump to be ‘bad’, and believed he had not been a good president. Just under one fifth (9%) expected him to be good, while 8% said they expected him to be bad but had been positively surprised.

The most – and least – corrupt nations Denmark 88 pts

Syria 13 pts

South Sudan 13 pts

Somalia 10 pts

Over two thirds of countries around the world have scored less than 50 on a scale from 0 (highly corrupt) to 100 (least corrupt), according to Transparency International’s 2018 Corruption Perceptions Index.

The average global score in the index was 43 – the same as in previous years. Denmark and New Zealand top the index with 88 and 87 points, respectively. Somalia, South Sudan and Syria are at the bottom of the index, with 10, 13 and 13 points, respectively. The US was knocked out of the top 20 for the first time since 2011, losing four points since last year with a score of 71. The UK sits in 11th place joint with Germany, with a score of 80 – down from eighth place.

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New Zealand 87 pts

Referendum defines Brits The EU is now the issue people see as most important to themselves and their families, crossing political and demographic differences, according to a poll by campaign group Hope not Hate. Most people – 58% – consider themselves as a hardline Remain or Leave voter.

With parliament now deadlocked, 60% of people support a new public vote on Brexit, according to a poll of 32,757 people conducted by YouGov and Populus. But the polling also found that people who voted remain and leave were concerned about civil unrest if a second referendum was held – particularly leave voters (see graph). With political gridlock, 42% of people think it would be sensible to delay EU departure by a few months, but 38% of respondents felt any delay would be betray the 2016 referendum.

How concerned are you, if at all, that holding a second referendum could lead to civil unrest? (%) 70

72

Source: YouGov

Leave voters Remain voters

Total

60

54

50

50

46 40

36 30

20

20 8

www.publicfinance.co.uk/subscribe 0

Concerned

48 PUBLICFINANCE MARCH 2019

11

10

Not concerned

5 Don’t know

SHUTTERSTOCK

Does Trump make a good president?

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