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PublicFinance P UBLICFINANCE.CO.UK

Issue 05 May 2018

GAP ANALYSIS

TA ST E R E D I T I O N

A deep dive into local gender pay gap data TAYLOR MADE

The RSA chief shares his design for public services DO THE ROBOT

MAY 2018 • ISSUE № 05

How AI is transforming the audit process

Wi

nn er Se s ann ei ns ounc i d e e d 20 18

Is gentrification a shot in the arm for communities or all froth?


Brokenshire replaces Javid at MHCLG

Whitehall bold on blockchain

James Brokenshisre has been appointed housing, communities and local government secretary. He replaced Sajid Javid who became home secretary following Amber Rudd’s resignation on 29 April. Brokenshire was Northern Ireland secretary until January when he stepped down for health reasons.

Government departments are considering using blockchain technology to address a “wide range of issues”, the culture secretary has revealed. Matt Hancock said the platform for digital assets had “real potential” to transform government services. “Its multifaceted nature means we all stand to benefit,” he said.

Ex VOA chief to lead business rate review Andrew Hudson has been appointed to lead the review of the business rates system by the Ministry of Housing, Communities & Local Government. Former communities secretary Sajid Javid made the announcement on 11 April. Hudson was director general for public services at the Treasury. He was also chief executive of the Valuation Office Agency. Javid said: “As we move towards local government retaining 75% of locally collected business rates, it is vital that the business rates retention system operates as smoothly as possible. “This review, led by an independent expert in this field, will ensure robust processes across the board.”

Call for certainty on business rates Revaluing commercial premises every three years rather than five could fuel appeals and leave councils out of pocket, sector groups are warning By Emily Twinch Whitehall must provide certainty for councils to stop changes to business rates costing them ‘considerable sums’, according to local government groups. CIPFA and the Local Government Association have expressed concern that the move to value properties every three years rather than five could result in more business rate appeals. They spoke to PF after a letter emerged in April suggesting the government had u-turned on a promise to compensate councils for loss of income due to the reversal of the so-called ‘staircase tax’. This is where businesses occupying more than one floor with stairs between were taxed for the separate levels as if they were different buildings. Reversing this will mean councils are collecting less in business rates. Chancellor Philip Hammond promised to reduce the valuations cycle in last year’s autumn Budget and in March brought the next valuation ahead a year to 2021. Jo Pitt, CIPFA’s local government policy advisor, said appeals can cost councils “considerable amounts” and “takes money out of the system for public services”. She said it was also possible the number of appeals could go down, since a ‘check and challenge’

�Shopping around:

businesses are to be revalued every three years rather than every five

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6 PUBLICFINANCE MAY 2018

system was introduced in April 2017, whereby companies have to provide evidence for an appeal. But she said the big issue for councils was uncertainty. “If you don’t know exact figures it’s harder to budget,” Pitt said. The Local Government Association said the number of appeals was likely to go up, as they could be made more often. “More than a million businesses have challenged their bill since 2010 and hundreds of thousands of appeals are yet to be decided,” the association told PF. When councils can collect 75% of business rate income by 2021, they will have to bear more of the cost of refunds, the LGA noted. “A transparent and fair system of valuation and appeals is vital to provide greater certainty of cost,” the LGA said. It suggested imposing a deadline on businesses putting in an appeal. David Phillips, associate director at the Institute for Fiscal Studies, believed the number of appeals could drop because there are likely to be smaller changes in valuations over three-year rather than five-year cycles. He suggested: “A centralised provision for appeals would be fairer because the councils are currently paying for appeals on valuations that are not under their control”. There were 1,210 valuation appeals between 1 April and 31 December last year, according to government figures – a 99.3% drop in challenges in the same period after the last system change to limit appeals took effect in 2010.

ALAMY

news


More nurses quit UK over Brexit Increasing numbers of EU nurses and midwives are leaving the UK because of Brexit, according to research by the Nursing & Midwifery Council. The NMC surveyed 3,496 people who left the register between June and November 2017 and found that 47% of respondents from the European Economic Area cited Brexit as a key reason for leaving.

Care work: failure to achieve a deal for the public sector could mean pay has to rise or more immigration from outside the EU

Mixed picture

Any deal needs to be flexible enough to cover both high and low level skills

EU workforce in the public sector That’s

5.6%

Bespoke Brexit deal needed for right staff mix It cannot be assumed that the UK will provide the public sector with the staff it needs, says CIPFA Brexit group

ALAMY

By Vivienne Russell It is not credible to assume British workers will fill public sector vacancies once the UK has left the EU, a report from CIPFA’s Brexit Advisory Commission for Public Services has warned. Only a bespoke agreement between the UK and EU would allow the public sector to recruit the right mix of workers it needs, it said. Any other arrangement for migration, such as free movement for particular groups or those with a job offer, a pointsbased system, a preferential system for EU nationals or a work permit system would not meet the recruitment needs of the public sector, the research found. Julia Goldsworthy, chair of the Brexit Advisory Commission, said an end to freedom of movement from the EU would mean a “seismic change” for public sector recruitment and retention.

“Indeed, even though we haven’t yet left the EU, there has already been a negative impact upon the health and social care workforce,” she said. “Considering a drop in EU migration would directly affect public services, the UK government must not decide upon their approach to the workforce settlement without seriously taking stock of how best to support the public sector.” A bespoke deal was the “best option” and should be pursued, she added. Any workforce deal needs to be flexible enough to allow public sector bodies and providers to recruit the best international talent in, for example, medicine and academia, as well as those with lower levels skills, particularly care workers. The post-Brexit system also needs to be able to respond to regional demands, avoid unnecessary bureaucracy and be consistent with likely funding levels. Failure to achieve such a deal is likely to result in trade-offs such as higher public sector pay or increased immigration from the rest of the world. CIPFA chief executive Rob Whiteman said: “Workforce is a piece in the Brexit

62,000 of the NHS workforce in

of the total workforce

England are from the EU

95,000 of the

social care workforce in England are from the EU

That’s

7%

of the total workforce

That’s

40,000 EU nationals work in public administration and defence

149,000 EU nationals work in education

2.1% of the total workforce

That’s

5.9% of the total workforce

25,000 EU nationals work in universities

That’s

15% of the total workforce

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jigsaw that we can’t afford to mess up. If we struck the wrong deal, it would have dire consequences for public services.” He urged the government to consider www.publicfinance.co.uk/subscribe extending the formal transition period to allow more time to get arrangements right.

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ps for  Tops ining: the training:

ment Government e Academy y Finance

Championing innovation in public sector finances has been at the heart of CIPFA’s activities throughout its 132-year history Andrew Burns, CIPFA president

of the box:  Out the BBC’s

Scotland editor Sarah Smith hosted the ceremony and shared what really goes on in the world of political broadcasting

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voice of the nations

In brief… H I G H WAYS

Extra cash for roads damaged in winter Scotland’s 32 councils are to get extra funds for road maintenance after this winter’s prolonged harsh weather. Finance secretary Derek Mackay has allocated £10.7m to be distributed by the Convention of Scottish Local Authorities. He said: “The severe weather led to local authorities incurring unexpected additional costs, and caused more damage to Scotland’s road network.” Cosla resources spokesperson Gail Macgregor said the Beast from the East had “led to a significant financial strain”.

S O C I A L CA R E

Capital limit for Wales care home costs up The Welsh Government has raised the capital limit for care home costs to £40,000 – the highest in the UK. People in England and Northern Ireland who have capital and savings of more than £23,250 have to fund all their residential care. The Welsh Government has committed to raising the capital limit used by councils that charge for residential care from £24,000 to £50,000 during the current assembly period. C U LT U R E

Arts funding in NI down by 4.7% The Arts Council of Northern Ireland has allocated annual funding of £13.1m between 100 organisations. Of this, £8.5m comes from government sources and the remainder from the

The potential productivity gains are massive, Gray argued, but government commitments to increase police officer numbers have limited flexibility in achieving the best workforce mix. However, this year’s budget contains a commitment to reducing policing numbers by 100 through a slowdown in recruitment, which has been approved on the basis that there will be no impact on frontline policing. A further reduction of 300 is being considered for next year, with the same proviso. “While there is pressure on the budget, it’s easy to say this is finance driven, but it’s not – it’s investment driven to create the capacity and productivity gains that allow us to balance the budget but also enhance the police service,” he said. Gray said he was optimistic that the next audit report would recognise the positive changes, with auditors already having noted improvements in budget setting, monitoring and forecasting.

National Lottery. This is a 4.7% cut and seven fewer organisations were funded than last year. The funding included £600,000 from the Department for Communities to support Belfast’s Metropolitan Arts Centre and the Ulster Orchestra. B U S I N E SS R AT E S

Rates collection ideas put forward Wales’ finance secretary Mark Drakeford has launched a consultation on measures to improve business rates collection. Rates raise some £1bn a year, but the government fears up to £20m could be lost through avoidance. Common abuses include avoiding empty property rates through artificial short-term occupation; not reporting a change of use; bogus claims for charitable relief; and using subsidiary companies to claim insolvency exemptions.

N O RT H E R N I R E LAND

Local emphasis on health to increase ⦁ Northern Ireland’s Department of Health is to increase its focus on primary care, changing the approach of general practitioner clinics and providing more care close to or in people’s homes. The department also wants to help

£

13.1m

Funding allocated by Arts Council of Northern Ireland to 100 organisations

people manage their conditions better and offer alternatives to hospital referrals. In a statement on problems faced by the health and social care system. DH communications director David Gordon said: “The most pressing challenges can often involve delayed access to care rather than the quality of care received.” He said far too many people were on unacceptably long waiting lists and emergency departments had been under severe stress. Users aged over 65 accounted for 42% of health and social care spending, but comprised only 14% of the population. Changing the emphasis to prevention would be neither quick nor easy but offered “a clear route to making it better”, Gordon said.

WALES

First minister stands down ⦁ Wales’ first minister Carwyn Jones is to step down from his position later this year after almost nine years in the role. Jones has been leader of the Labour Party in Wales and first minister since December 2009. Addressing the Welsh Labour conference in Llandudno on 21 April, he said he would stand down in the autumn in time for a new leader to be in place by the year end. “At that point it will make sense to have a fresh start. For my family, for my party and for my country,” he told delegates. “I am incredibly proud of what we have achieved together so far. The election victories. The landmark legislation. A better deal for nurses, for students and our businesses. Putting Wales on the map.” Jones has been under pressure over his response to the death of Carl Sargeant, who held a variety of ministerial roles. Sargeant took his own life last November after he was sacked following allegations of sexual harassment. An www.publicfinance.co.uk/subscribe inquiry into how the sacking was handled has been ordered but not yet begun.

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GOING UP IN THE WORLD

T

Gentrification isn’t just about hipster cafes and flat whites. Done right, it can mean real regeneration of local communities

he Haringey Development Vehicle was a public-private partnership that would create more than 6,000 homes and 20,000 jobs; it would transform a London By Kim Thomas borough burdened by poor housing, unemployment and high rates of deprivation. Alternatively, in the words of the Guardian’s Aditya Chakrabortty, it was “a scheme by the zombie Blairites running the north London borough to shove family homes, school buildings and libraries into a giant private fund worth £2bn”. Residents, angry at the lack of consultation and the decision to transfer public land and assets to private developer Lendlease, formed the StopHDV protest campaign. This led to the resignation of council leader Claire Kober and a decision by the local authority to scrap it. Gentrification is a touchy topic, especially in London, where affordable housing is scarce and poverty is rife, and where boroughs are coping with huge cuts to their budgets from central government. Attempts to improve shopping districts and build new housing are often met with accusations of social cleansing. Loretta Lees, professor of human geography at the University of Leicester, has described the demolition of council estates in inner London as “a visceral process of displacement”. In London, it has been calculated that 237 housing estates have undergone or are about to undergo regeneration, which often means tearing down old housing stock and replacing it with unaffordable luxury homes. In some boroughs, residents are being displaced outside London. Former leaseholders of Southwark’s Heygate Estate have moved to Slough, Ilford and St Albans so the site could be redeveloped, according to the London Evening Standard, while the Guardian reported that Barnet Council offered homes in Essex and Luton to tenants of Sweets Way Estate. Although the problem is particularly acute in London, grumblings about gentrification are not confined to www.publicfinance.co.uk/subscribe the capital. In Manchester, for example, some residents have been unhappy at the city’s destruction of ► treasured historic buildings to make way for office blocks and houses.

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cover feature

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interview / matthew taylor

I

Tech & Tools

t is in the nature of people who jump on the bandwagon that they don’t know how to drive it,” says Matthew Taylor. “Any council that pursues a strategy of commercialisation without having the sufficient capacity, skills and understanding of risks is tempting fate,” he advises. Taylor is good at coming up with metaphors. He offers several when PF meets him in his light, airy office at the top of the modernised Georgian home of the Royal Society for the Encouragement of Arts, Manufactures & Commerce. Taylor has been chief executive of the 260-year-old organisation for 12 years. One wall is taken up entirely with shelves full of books, as you might expect of someone with Taylor’s cerebral qualities. Although he is self-deprecating – “I spend most of my life feeling I’m not very good at lots of things” – it does rather feel as if he’s working on a higher intellectual plane than the rest of us. Behind his desk to the right is a whiteboard with circles and writing that looks like the result of an earlier brainstorming By Emily Twinch session. Again, this would be expected of someone as dedicated to ideas as the former Number 10 strategist. His guitar – which he says he isn’t all that good at playing, having taken it up only relatively recently, along with learning French – is propped up against the bookshelf. Taylor, a well-known supporter of West Bromwich Albion – he said in a recent tweet that the football team had “brought me little but misery for years” – is charming and never stuck for words. In a career with many notable achievements, his most recent is his review for the government on modern working practices. The Taylor review was published in July last year and came up with 53 recommendations aimed at ensuring all work in the UK economy was “fair and decent with realistic scope for development and fulfilment” (see box, page 33). ►

ON A

www.publicfinance.co.uk/subscribe

– with a focus on the future

30 PUBLICFINANCE MAY 2018

AKIN FALOPE

MISSION

TO ACCESS THE FULL VERSIONRSA OF PUBLIC FINANCEMatthew Taylor is determined to chief MAGAZINE, SUBSCRIBE HEREthe debate on public services reform restart


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gender pay gap

% local authorities

Median gender pay gap for all councils in England

Male staff in local bodies earn 7.7% more Analysis of gender pay gaps by CIPFA shows hourly income rates in all types of local authorities are higher for men than women

All 7.7% 1.9% London boroughs 2.4% English districts

What’s the overall picture? Median hourly pay by authority type

6.1% GLA 6.9% Unitaries 8.2% Fire authorities 9.5% Metropolitan districts 13.6% English counties 18.7% Police authorities TO ACCESS THE FULL

VERSION OF PUBLIC FINANCE , government’s gender pay gap website The data isMAGAZINE drawn from the SUBSCRIBE HEREcouncils but short of 31 districts. It also It is complete for all top-tier includes data from 37 police authorities and 34 fire authorities. www.publicfinance.co.uk/subscribe

34 PUBLICFINANCE MAY 2018

L

ocal authorities in England pay men 7.7% more than women on average, according to CIPFA analysis of the gender pay gap data available on the government’s website, writes Vivienne Russell. Since 6 April this year, all employers with 250 or more employees have been required to calculate and publish their mean and median gender pay gaps – the difference in the average hourly wage of all men and women across a workforce. Alongside this, they are required to publish data on bonuses, while public sector employers must also publish the proportions of male and female full-time equivalent staff in the lower, lower middle, upper middle and upper quartile pay bands. CIPFA’s analysis of this reported data shows that police authorities and counties have the largest median gender pay gaps at 18.7% and 13.6% respectively, while London boroughs have the lowest at 1.9% (see graph, left). Indeed, almost one third of London councils pay women more on average. David Caplan, CIPFA’s head of analytics and research, says: “The data shows there is a wide variation in the gender pay gap not only between different types of authorities but also between authorities of the same type. “Sometimes, these differences result from structural variations as some councils have large numbers of low-paid female workers – perhaps working in social care – and much smaller numbers of low-paid male staff.”


Top tips… Do ➊ Make your values clear so people can follow them

➋ Be aware of power ➌

imbalances, as staff will disclose only what they think is safe Get advice and training from HR

Don’t ➊ Ignore warning signs, no matter how subtle

People are often reluctant to complain about sexual harassment. They fear they will be judged or that others may think they have encouraged it, are lying or are being malicious. As a manager, you need to be able to pick up the subtle signals that something is not right. Do members of staff appear reluctant to work with a particular colleague? Is it obvious that a junior member of the team feels uncomfortable with a senior manager? Has a previously upbeat employee become anxious and withdrawn for no apparent reason? Managers have a responsibility to look after the welfare of their staff and to dig deeper when their sixth sense tells them that all is not well.

Make it easy for people to raise issues Power differences often get in the way of people speaking out about sexual harassment. Put yourself in the shoes of a young employee at the beginning of their career on the receiving end of unwelcome advances from a senior manager. They will be concerned that if they challenge the behaviour, it could be career limiting – or that they could even lose their job. Managers need to recognise that, no matter how approachable they try to be, staff will always monitor what they say and only disclose what they think is safe or politically acceptable. Research from Ashridge (Speaking Truth to Power by Megan Reitz and John Higgins) suggests that managers need to better understand what they can do to encourage

condoning bad behaviour

➌ Start formal action without consulting HR

“speak up” rather than “shut up” cultures. Sometimes even small, subtle measures, like meeting people on their territory rather than yours, can help to encourage more open dialogue.

reflect the values and hold them to account when they do not. It’s no good saying respect and dignity are core values if inappropriate behaviour is allowed to go unchallenged.

Be alert to warning signs

➋ Fail to act – you will be

Don’t turn a blind eye As a bystander, it’s all too easy to roll your eyes when the issue of sexual harassment is mentioned and suggest someone is making an fuss or has lost their sense of humour. It’s equally easy to perhaps feel uncomfortable about the behaviour or comments you are witnessing, but to think it’s all just a bit awkward, not really your business, and to walk away. Inaction is not, however, an option. If someone tells you they have experienced or witnessed sexual harassment, it’s important to both listen and do something about it. If you fail to act, you are effectively condoning the behaviour and allowing it to be brushed under the carpet.

Seek support from HR HR departments are often the last to know about problems in teams. Managers should seek support from HR at an early stage. If there is a clear case to dismiss an employee for misconduct, HR will be able to advise on the procedure and minimise the risk of consequent legal action. If it is possible to “rescue” the situation, HR practitioners will be able to call on expert help to facilitate a constructive conversation between the parties involved. Managers should not be shy of asking HR for training to help them deal with these kind of problems. If an organisation wants managers to take responsibility for creating cultureswww.publicfinance.co.uk/subscribe where staff can thrive, they have a duty to equip them with the competence and confidence to do so.

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numbers game Child funerals The prime minister has agreed to fund the costs of children’s funerals following a cross-party campaign. Each year, an estimated 4,350 children die before the age of 18 and parents are left to pay council fees for burials and cremations, which can amount to thousands of pounds.

Public has become more positive about immigration since Brexit vote On a scale of 0-10, has migration had a positive or negative impact on Britain? (0=very negative, 10=very positive); 0-4=negative; 5=neutral; 6-10=positive % saying immigration has had a positive/negative impact on Britain

March 2018

50

Positive 44%

40

Negative 30%

30 20

Neutral 20%

10 0 Feb 15

Aug 15

Feb 16

Aug 16

Feb 17

Aug 17

Feb 18

Don’t know 6%

Source: Ipsos Mori

Attitudes to immigration

49 38 17

www.publicfinance.co.uk/subscribe Labour

Lib Dem

Remain

Leave Source: YouGov

48 PUBLICFINANCE MAY 2018

CPI inflation

<2.3% Source: ONS

Centre forward?

Who are David’s Milifans?

General Conservative population

Quiche, raspberries and ready made mashed potatoes have been added to the ONS’s basket of goods used to calculate inflation. The basket contains 714 items, and 36 changes were made. Food items cast out of the basket included pork pies, edam cheese, peaches and nectarines. Girls’ leggings, body moisturising lotion and action cameras have gone in the basket, as have adult-supervised soft play sessions. The cost of lager in a nightclub has been removed as nightclub attendance has declined. Senior statistician Philip Gooding said: “Every year, we add new items to the basket to ensure that it reflects modern spending habits.”

The basket contains 714 items

% of people in each group who have a favourable opinion of David Miliband

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Basket cases

ONS’s shopping basket

Attitudes to immigration have notably softened since the EU referendum in June 2016, Ipsos Mori has found. The pollster said more people now have a positive than a negative view. Before the EU vote, attitudes to immigration were more negative than positive. However, Ipsos Mori noted differences by party support and between remain and leave voters. A majority (57%) of Labour voters expressed positive attitudes towards immigration, while Conservatives were split on the issue, with 35% saying it had been positive and 39% saying negative. Remain voters were also significantly more in favour of immigration than leave voters. Just over half (54%) of people want immigration to be reduced.

37

mil ion

With much talk of a new centrist party, attention has turned to who might lead it. Many eyes are on former Labour cabinet minister and Tony Blair protege David Miliband, who quit the Commons in 2013 to lead the International Rescue charity. But who really likes him? YouGov research found Miliband is most popular with Liberal Democrat voters, almost half of whom have a favourable attitude. He’s considerably less popular with Labour voters, where just 37% of people like him, and quite unpopular with Conservatives – only 18% have a favourable attitude.

SCOTT DE JONGE / SHUTTERSTOCK

60

£


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