Not all bureaucracy is bad

We're hearing a lot about the Government encouraging community groups and social enterprises to get involved in the delivery of public services and that this will remove bureaucracy and waste. And David Cameron was open about not having all the answers but wanting to try things out.

Well, it seems a positive thing, doesn't it, that local people take over the running of a swimming pool or library or even school. There's this idyllic notion that if we free these community organisations from the tyranny of local government (much of which is under the control of Conservatives or Liberals) they will flourish. Perhaps they will, but they will also still have plenty of bureaucracy to contend with. Here's just a few examples of red tape that I feel sure will still apply even to the smallest of community organisations:

• HM Revenues and Customs will require Pay As You Earn and National Insurance to be collected and paid over in respect of any employees (and as the owner of a business with just one employee I can assure you that there is plenty of electronic form filling required);
• VAT rules will apply (and this could cause an increase in costs because, for instance, local authority schools can recover the VAT paid on their supplies and City Academies can't);
• having employees will mean that health and safety and working time legislation applies so there will be risk assessments and so on to complete as well as keeping adequate records about employees;
• equalities legislation (because we can't have the local community running facilities that are discriminating against one group or another); and
• if the organisation chooses to be a charitable one then the requirements of the Charity Commission will apply in terms of annual returns and publishing information

These organisations won't be part of the local council's decision-making machinery so there will be a saving in time and effort there, but I suspect that there will have to be at least one board or committee in place to make sure that the organisation is being run properly. If these are to be run in the public interest rather than as private fiefdoms then there will at least have to be published agendas and minutes.

Which reminds me, there'll have to be audits, too. Currently a small establishment might have an internal audit every five years and its accounts are audited as part of the local council's corporate audit. As a separate organisation, unless it is very small it will have to have its accounts independently examined every year. A proliferation of small audits will be a useful source of new business for the smaller accounting firms.

Given our risk aware and litigious times anyone running such a community organisation will surely seek to have insurance. As part of a big organisation the liabilities would have been grouped together with the aim of getting a competitive insurance premium. Hundreds of small organisations, generally without a claims history, is going to find itself faced with significant insurance premiums and I suspect the aggregate premiums will exceed what the public sector is currently paying. Good news for City, but not so good for the the rest of us.

"Expect multiple train crashes"

Here is a terrific article by Polly Toynbee from yesterday's Guardian. As someone who has experience of negotiating contracts under European procurement directives I can't see how doubling the number of commissioning bodies will reduce bureaucracy. If the government think that a standard form of contract will simplify matters they only have to look at the experience under the Private Finance Initiative (PFI) to see how much is spent on lawyers and other advisors to make the standard contract fit each project's specific requirements. Let's face it, even changing the names of the parties in a standard contract will take some time and money to complete. Whilst I suspect that law firms and management consultants might have a difficult time in short term as public bodies take in the scale of cuts they have to make the chances are that new opportunities such as the reorganisation of the NHS will provide a significant income stream. Will all of this result in an NHS that is better value for money?

The Spending Challenge

Launched last week, the government has already received over 60,000 suggestions to the Spending Challenge. On the face of it, it is a great innovation—the people who best know how to improve a process are the people who carry it out so why not ask them. However, if the 31 ideas highlighted by the government here are anything to go by then HM Treasury has not got much to work on. Centralising the stationery cupboards in every public sector building is not going to save very much (and may perversely cost more because staff have to spend time travelling to and from the central cupboard whenever they need a new box of staples). Perhaps that's why the government has added a disclaimer that, "They are not ideas that have been shortlisted for further work or implementation but they will all be considered individually alongside the other 60,000 ideas that have been put forward."

Some of the ideas are more promising in terms of delivering savings on the scale that are being sought. Moving to open source software for instance. Large public bodies will spend hundreds of thousands of pounds a year for licences for Microsoft Office products whilst there are now open source alternatives that are free and offer the ability to inter-operate with Word and Excel files and so on. 

The trouble is, realising these enormous savings is not without problems. First, there is the comfort factor. It is much more risky for a chief information officer to promote a change to open source software than stick with the status quo. To paraphrase an old term, no-one got fired for buying Microsoft.

Second, in the past the threat of moving to open source software has prompted Microsoft into negotiating special terms with the public sector. Indeed, the Office of Government Commerce negotiated a 3-year deal in 2004 that got all public sector bodies a 50% discount on licence fees. There is now in place the Public Sector Agreement 09 to encourage public sector bodies to continue with Microsoft products. (And Microsoft also have a page debunking open source.)

Anyway, someone is going to have to sift through the 60,000 ideas (though presumably the number is still rising) and produce some sort of response to the public on what is going to happen with their ideas or else the credibility of this sort of consultation will be badly dented.

"An interview with Andrew Lansley"

Sometimes things are better said with humour. Check out this post at Flip Chart Fairy Tales for a satirical interview with Andrew Lansley about his speech on Monday.

The art of taxation

With tax rises on the cards, the easy part is deciding what the tax rates should be. The hard part is collecting the taxes. One suspects that banks and bankers will hiss more than most if this goes ahead.

The shirt off my back...

I used to be the director of financial services at Doncaster Metropolitan Borough Council. Fortunately I left in 2005, before the Council descended into its latest crisis. I have, as a result of my time there, a number of examples of good and bad financial management (and, indeed, good and bad leadership). I use such stories when I’m teaching to bring some life to the theory.

Anyway, here’s a quick story. I suspect every council has a handful of local residents whose grievance about paying council tax leads them to be regular correspondents. Generally speaking, as the director I would only see letters that were addressed to me if they required my personal attention; most letters going straight to the department that would be able to deal with them. One letter I did see came from a resident who stated his annual annoyance at the level of the council tax but this particular year he finished by saying that the council “might as well have the shirt off my back.” And enclosed with the letter was a brand new, white shirt wrapped in cellophane.

Of course, a shirt not being legal tender and council officers not being able to accept gifts, I had to return the shirt. The story still makes me laugh, though.