Time to practise what I teach

Building a new dormitory at Ibba Girls School in December 2014
Building a new dormitory at Ibba Girls School in December 2014

As someone who thinks of himself as something of an expert in public financial management, for most of the last ten years I’ve done strategic things. As a consultant I tend to work as an advisor on projects; as a lecturer I tend to talk in class about general concepts like budgeting (although I like to include stories from my real-life experience); and it is much the same when I’m writing. Next month, however, I’m going to roll my sleeves up, literally, and do some practical financial management at a girls school in South Sudan.

Ibba is a small village in Western Equatoria state, close to the Ugandan border. Ibba Girls School opened in March 2014 with a single class of 40 girls. Those girls will return for their second year in February and they will be joined by a class of 40 new girls. The school has been funded by a UK charity, the Friends of Ibba Girls School of which I am now the treasurer. (I’ll write about how I became involved with the school in a later post. It's connected to the story in the foreword of my book.)

There are lots of challenges in running a school in a country as fragile and poor as South Sudan. Nevertheless, the school got through its first year and can point to evidence from tests given to the girls at the start and end of the year to show how valuable it is. In 2014, a volunteer couple from Australia took on the roles of co-head of the school and business manager. They did some brilliant work despite being outside their comfort zone but they returned to Australia last November. We have had difficulty in recruiting someone to take on the duties of business manager that we could afford. Qualified and experienced finance managers in South Sudan can get good jobs with aid agencies, etc and therefore they ask for salaries in excess of $2,000 a month, beyond both our budget and the amount we pay to the school’s headteacher.

Anyway, to cut a long story short, we think we might have someone who can take up the job but probably not until March. Meanwhile the staff need to be paid for January and February and the school needs to buy food, etc for the girls (it is a residential school). And, that’s why I’m going to Ibba at the beginning of February.

Why am I telling you all of this on a blog about managing public money? Because I thought it would be interesting to write some blog posts over the coming weeks about the experience. It’s all well and good to sit in England and write/talk about good financial governance but how do those things translate to a small African school?

Let me give you an example. Friends of Ibba Girls School can only send money to the school through the international banking system in US dollars so the school has to exchange the dollars for South Sudanese pounds in order to buy food and whatever else is needed. The exchange rate in a bank might be SSP4.00 to the dollar, but the illegal, bush exchange rate could be SSP5.00 to the dollar. Good governance would say that the official rate should be used so that there is paperwork, receipts and no risk of prosecution, but the “cost” of sticking to that principle is a 20% reduction in spending power. What is the answer?

There is a second reason for writing this blog post (and the ones that follow). I want to raise the profile of Friends of Ibba Girls School and the work it does. If you would like to know more please check out their website (it includes a really good, short film shot at the school last summer) and if you like what we’re doing please consider making a donation to us. You can donate here. Or if you are in the UK you could text PENCIL to 70660 to donate £5 (just like Stephen Fry and Harry Enfield did).

Stephen Fry Harry Enfield
Stephen Fry Harry Enfield

Fair Tax For All?

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Fair Tax logo

I guess financial in the public sector boils down two things: getting the money as efficiently as possible and spending it as effectively as possible. My previous post was concerned with fraud which can lead to reduced income or wasted spending. This post focuses more on the collection of income. Or rather, maximising the amount of income to be collected.

Governments have many sources of income but principally they levy and collect taxes. The last year or so, in the UK at least, has seen much more of a debate about the tax planning activities of multinational companies. Indeed, Starbucks, Google and Amazon have all been in front of the UK’s Public Accounts Committee to explain themselves. And some wealthy celebrities have been exposed for investing in tax avoidance schemes. (In the UK, tax avoidance is lawful; tax evasion, on the other hand, is unlawful. What's the difference? Tax avoidance is managing your affairs to reduce your liability for taxes; tax evasion is not paying taxes that you are liable to pay.)

I suppose there have been people campaigning against this sort of activity for years but recently it must be resonating with the public mood and the issue has risen high up the public agenda. I don’t know why that would be. My take on it is that it is a corollary of the general public’s sense of unfairness—that they are paying for the bankers’ greed that caused the recession. They’re learning that not only have bankers been very well paid for causing this mess, they don’t pay their fair share of taxes. The public are receiving less public services, they’re losing their jobs (for example, the UK public sector has lost 22,000 jobs in the first quarter of 2013).

Today has seen the launch of the Fair Tax Mark. Number 1 in their list of activities is to use the Fair Tax Mark methodology to publish credible assessments of whether large companies are acting transparently and paying fair tax in the UK.They have issued a report today on 25 of the UK’s top retailers, assessing only two to be awarded the Fair Tax Mark (see this article on Reuters). You can see the marks here.

In today's press release, Meesha Nehru said:

People are increasingly expecting companies to pay the tax that society demands of them or to at least explain why not. They’re not paying, and they’re not explaining and neither are acceptable – and that’s the message of this report

They have got the backing of Margaret Hodge, the chair of the Public Accounts Committee  for their work. She hopes the impact on a company's reputation will act as a deterrent.

Undoubtedly this sort of scoring and ranking will be criticised for its methodology, not just by the companies it ranks but by observers, too. Nevertheless, I think it makes a contribution to the overall debate. Just as there are increasing demands on government to be transparent to its public, this mark is assessing, in part, the transparency of the tax arrangements of the companies that the UK public buy from every day. For that reason I’m planning to keep an eye on its development over the next weeks and months.

If you’re interested in more about this you can check out the Fair Tax Mark website and/or follow them on Twitter (@fairtaxmark).

Can a strategic partnership reduce the cost of policing?

Back in November I gave a presentation to a conference of police authority treasurers and police force finance directors about strategic partnerships in policing and I posted my slides here. In that presentation I tried hard to make sure that my comments were balanced, giving both the positive messages that advocates of private sector involvement would make and the counter-arguments. As a result of having some time on my hands I've boiled down my presentation into a one pag document which you are welcome to download. Can a SP save money

 

The future of public audit

I've just read a pamphlet called The Future of Public Audit (published by Solace Foundation Imprint). There are about a dozen articles/short essays in the pamphlet and, rather like the stereotypes of auditors, they are worthy but rather dull. Or, perhaps, a better adjective would be "earnest". The articles incorporate interesting ideas and insights about things like trust, transparency, the demise of the Audit Commission and self-improvement but they don't sparkle. Perhaps part of the reason for this is the subject matter itself but should articles about audit will always be so dry?

 

Perhaps it is the writers rather than the subject. All of the authors of the pamphlet I read were male, white and most were, to be polite about it, substantially experienced. We could do with some different people writing about this subject (and other aspects of financial management) to get some diversity of views and to do for the subject (in a small way) what Brian Cox is doing for science: making people interested in it.

 

I guess I have to be part of the answer. Here I am blogging about public finance so it is incumbent on me to make what I write interesting. I certainly hope to do that with posts like the one about the film Moneyball. I also try to do it in my lectures by including video and images in presentations and telling stories from my experience in order to illuminate the subject. But, nevertheless, I can't rest on my laurels. During the 1996 European Championships, Ruud Gullit coined the phrase "sexy football" to describe teams whose play was artistic and entertaining as well as effective. I don't think we can have "sexy audit" but could we at least have some sexy articles about audit? That's a challenge I've set myself.

Ruud_gullitt

Is Ruud thinking about how to make public audit sexy?

Minor roadworks

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I live in the north west corner of Derbyshire where there aren't major roads or motorways. Over the last few weeks I have come across roadworks on lots of the local roads. Not major roadworks, just one of those machines that scrapes off the top few centimetres of the road surface so that it can be replaced with fresh, smooth tarmac. However, I am sure that I won't be seeing any more of these small schemes next week, or again until next March because it is the end of the financial year.

If I were being cynical I would suggest that these works were only being done to make sure that the budget for 2011/12 was as fully spent as possible. That might be the case but I don't know because I don't have the budgetary control report for Derbyshire County Council. What I do know, though, is that public managers still measure their importance and their success by how much money they spend. Until a few years ago the value of public service as measured in national statistics was deemed to be equal (exactly equal) to how much was spent. So, spending more on the roads (or in hospitals, schools, libraries, wherever) meant more value was created. That's changed now (but I won't go into the detail here) but for many managers it is still the case that if they spend more on their service, they deliver more outputs and that must mean they deliver more value for the public. Sounds fair enough, doesn't it?

If I were being more positive, though, I could suggest that these schemes are taking place now because the council's managers operate in the same way that most people do when faced with a deadline; they leave things until the last possible minute to start and then finish just in time.

Whatever the reason, there are several hundred metres of improved roads all around my neighbourhood and, as a cyclist I value it because it will make my riding in the summer a bit faster and a lot smoother and more comfortable. If they hadn't done it no value would have been created but the question is, would more value have been created if they spent the money on something else?

What's Brad Pitt got to do with managing public money?

I recently saw the film Moneyball and I enjoyed it. Brad certainly deserved the award nominations. I also like baseball (at least, I like it as much as a non-American might like it) but the film's not really about baseball. It's about how Billy Bean, the general manager of the Oakland A's, figures out how to make his team competitive even though he has a much smaller budget than the others. First, he does what anyone would do and asks the owner for more money. He's told he's got to live with the money he's got. He realises he can't carry on doing things the old way because he can't get players on high salaries. Instead, he looks for players who are cheap but good at getting on first base (ie they are undervalued). This is based on the idea that the more that players get on base the more runs will be scored and the more games won. There was no fairytale ending with the team winning the World Series but they came close and on the way they managed the longest winning streak in history.

So, what has all this got to do with managing public money. Well, public managers are in a similar position to Billy Bean. Their budgets aren't big enough. They've tried asking for more money but the government has been clear that it is not changing its spending limits. So now public managers have got to accept that they can't continue doing things as they've always done. If they were being asked to find efficiency savings or two or three percent then they might be able to meet the target by belt-tightening, etc but reductions of 10 to 20 percent require radical thinking.

In the film Brad Pitt is advised that he doesn't need to buy players, he needs to buy wins. Translated to public services, managers don't need to buy inputs, they need to buy results (outcomes is the usual jargon). When services are looked at from the point of view of the end user and results that are needed it becomes possible to think of alternative ways of achieving the results and some of those will be cheaper than others (ie undervalued).

There won't be any fairytale endings for public managers but I think it would be helpful for them to think in terms of buying results rather than just managing expenditure.