governance

Taxing questions for Scotland

All the parties are promising further devolution of fiscal powers to Scotland in the event of a No vote. So what might that mean in practice? Read more

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Getting the best from the board

The role of boards and their chairs is crucial to the successful performance of organisations in the public sector and beyond. Boards must demonstrate both good governance and good leadership Read more

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Welsh lessons on scrutiny

Scotland has developed a number of radical policies in recent years, but has its financial scrutiny process been left behind? It could learn a lot from the system introduced in Wales Read more

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The real cause of the Greek crisis

Greece has finally agreed a deal with its lenders to enable the latest bailout to go ahead. But what actually caused the crisis in the first place and how can the country avoid repeating the mistakes of the past? Read more

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AV for all? By John Tizard

It is extraordinary that this Thursday as millions of people vote in local government elections they will only be asked to vote ‘yes’ or ‘no’ to electoral reform for the Westminster Parliament but not for council elections.

Of course, the parliaments and assemblies in Scotland, Northern Ireland and Wales have long discarded the first-past-the-post system of electing their members.  Scottish and Northern Ireland local authority elections are also not held under the FPTP system. The same is the case for directly elected English local authority majors. So why does this week’s referendum not also include a question on the local government electoral process?

The arguments in favour of introducing the Alternative Vote (AV) for elections to the Westminster Parliament apply as much to local government. It is vital that council candidates have to fight for every vote; can claim to represent at least 50% of those who actually vote (and ideally of the ward that they represent); and that in parts of the country where one political party is dominant there is a greater opportunity for opposition members to be elected to ensure that the council is more representative of its residents – the electorate.

Indeed, there is a case for going further (as I would contend there is in respect of the Westminster parliamentary elections) and introducing some form of proportional representation for English local government elections – perhaps based on AV-plus in order to maintain the vital relationship between the councillor and her/his ward.

Ever since the last New Labour Government legislated to change the internal governance arrangements of local authorities with indirectly elected leaders (strong or otherwise) or directly elected mayors, cabinets, and overview and scrutiny arrangements there has been a failure to adequately address the role of councillor as local representative.

The current emphasis on localism and the introduction of ‘community organisers’ provides the opportunity to revisit the importance of the ward councillor.  This should never be seen as a secondary role to that of leader and/or cabinet member.  It is the core of our representative system of local government. Above all it is political.

In England we have fewer elected councillors per thousand residents than most of our European neighbours. Admittedly, we often have the complexity of two or three tiers of local government representation especially in the shires.  The role of community councillor is critical.  It should involve a community leadership role with the councillor working closely with local voluntary and community organisations to understand local issues, concerns and aspirations, building community capacity and ensuring fairness with particular regard to access to local services; listening to and communicating with local residents; acting as a conduit for those residents with the local authority and other public bodies, the utilities and others whose activities impact on the community; resolving issues on behalf of individuals and organisations in the ward; and being the community’s voice in the town or county hall.

This is a significant role. It requires time, resource and support.  It has to be respected by the council’s political leadership, its officers, other local public bodies such as the NHS and police, and those organisations contracted to deliver public services.

To fulfil this role a councillor has to be able to build her/his relationship with local residents; to have the necessary time and access to support and information; and above all represent a ward of the size where she/he can be visible and accessible – and in turn can themselves access.

These conditions point towards smaller rather than bigger wards.  There would be merit in moving to more if not entirely single-member wards in order to build that direct relationship and ensure clear accountability for the councillor to her/his electorate.  Such an arrangement would be enhanced if the elections were based on either AV or AV-Plus – the latter would also enable the council to have some members who took a wider role though such a system could raise issues about local community representation if some members did not represent wards.  This has to be debated.

In her or his scrutiny role a councillor should be able to draw directly on the experience of her/his ward and its local residents, businesses, and voluntary and community organisations.  Of course, all councillors would wish to take a pan-authority view too.  The councillor’s role on overview and scrutiny is vitally important. It should be recognised as such by members and officers. It has the power to shape future policy and practice in the authority and across a range of local public and business organisations. It has to be focused on place not institution and it has to have its foundations in the democratic legitimacy of councillors.

There is often much talk about the desirability to enhance the calibre of councillors.  Of course, there is a need for councillors who are capable of providing political leadership to large and complex organisations; and to hold the executive and professionals to account. There is equally a need for councils to reflect local demography, ethnicity and gender balances.  It is also essential that there are councillors elected who want to champion their wards and to be active in them.  There is little merit in a council being comprised solely of those who want to hold a major portfolio – though all members have community and ward responsibilities.  This is not a matter of professional qualification but of elected authority and legitimacy.

The political parties could review their own selection processes and criteria to ensure that the electorate has the opportunity to vote for potentially excellent councillors. In order to re-enforce the relationship between ward and councillor some form of open primary would add credibility to the candidate selection.

There is very much a case for reforming local governance – a constitutional position for local government; primaries for selecting candidates; some form of electoral reform for electing councillors; strengthening the community leadership role of every ward councillor; moving to single member wards; and enhancing the importance and remit of overview and scrutiny.

Whatever the outcome for the parliamentary voting system, we must now start a longer and more comprehensive debate about local democracy and the political system that underpins it.

John Tizard is director of the Centre for Public Service Partnerships (CPSP@LGIU)

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All aboard in Whitehall? By Jonathan McClory

This week saw the first ever meeting of the government’s new cadre of Lead Non-Executive Directors. Bringing together the recently appointed top Neds for their respective departments, the meeting introduced the group to the workings of Whitehall, the government’s reform agenda, and how they fit into ministers’ overall strategy.

Charged with the task of bringing the government’s Whitehall boards reform plans to fruition, they face a challenging road ahead. Getting to this point was no small job, but more remains to be done for Whitehall boards to reach their potential.

While a seemingly novel innovation of public management, boards in government departments have existed in one form or another for nearly 20 years. Their evolution as a fixture of Whitehall governance has varied significantly by department, as some have embraced them more readily than others.

Previous, soft-touch attempts at reform have been largely ineffectual in standardising or empowering departmental boards – not least because the remit and accountability of boards remain muddled. Prior Institute for Government research on Whitehall boards, found in our report Shaping Up, reached the central conclusion that the role of these is often poorly defined, leaving many boards unable to make an impact on the department.

Recognising both the potential added value of boards, as well as their shortcomings, the coalition government is currently bringing through a number of structural reforms aimed at ramping up board effectiveness. Secretaries of state will now chair departmental boards – previously left to permanent secretaries – and they will be backed up by newly recruited Lead Non-Executive Directors.

While these structural reforms aim to improve departmental governance, they fail to resolve the core issue afflicting departmental boards – namely that neither the government nor departments have clearly addressed the remit and accountability arrangements for boards. The recently updated guidance suggests they will be advisory, while in a recent Public Accounts Committee hearing, Lord Browne described the new boards as both supervisory and advisory – a somewhat contradictory description.

Under existing arrangements, departmental accountability rests with the secretary of state for policy and performance; and with the permanent secretary for the stewardship of departmental resources. If the secretary of state and permanent secretary share ultimate responsibility for the management of their department, what is the board accountable for? In changing the dynamic of the board without resolving the issue of accountability, the new enhanced protocol may further confuse, rather than clarify, the role of the board.

But written codes and guidance only goes so far in making a board work. Much will be down to the people around the table. In analysing over 40 interviews with Whitehall board members, our findings reflect a boardroom culture where consensus takes precedence over independent thought, candidness and challenge.

Behaviours one would expect to observe in high-performing private sector boards, such as ‘analytical thinking’, ‘candidness’, and ‘leadership’, were among the least commonly observed by our interviewees. This will make for an interesting transition as new Lead Neds move from the boardrooms of the private sector to those in Whitehall.

There is enormous potential in the Cabinet Office’s proposed reforms for departmental boards. But several key challenges remain to getting these reforms off the ground. First, the role, responsibility, and decision-making powers of the board will need to be clearly defined and understood by all members. Second, secretaries of state will have to learn to chair their new boards effectively and stay committed to the process.

Finally, Lead Neds will need to be given adequate support from the centre and from their department as they seek to make an immediate impact in their role. They will also need to support their secretary of state taking on their new role as chair.

As it stands, departments themselves will have to address these challenges. If they do, these new-look boards could be a powerful mechanism for driving better departmental performance.

Jonathan McClory is a senior researcher at the Institute for Government and co-author of the report All Aboard? – Whitehall’s new governance challenge

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Executive error, by John Tizard

Of late, I have noted increasing discussion and even some momentum for ‘executive mayors’ and ‘executive leaders’. The simplistic argument seems broadly to go along the lines that such appointments will: save on the salaries of too highly paid chief executives (the proponents of executive mayors and leaders argue that they are too high not me); lead to clearer accountability and visibility of who is ‘in command’; and attract candidates with managerial experience.

Meanwhile, best practice in the corporate sector (at least in the UK) requires the separation of the role of chair and chief executive – recall the noise when Sir Michael Rose combined the two roles at Marks & Spencer, even when the company was delivering successful results?

While one always needs to be careful about drawing too many parallels between private and public sector governance, it is worth noting that Cadbury and other major reports on governance have consistently and strongly advocated the separation of the two critical leadership roles.

It is also to be noted that those ministers proposing executive mayors and executive leaders are not (at least, as yet – though I suppose one must give them time) advocating that they combine their own roles with those of their permanent secretaries.

There have been previous attempts – however unofficial – for political leaders to claim managerial control of their authorities.  We need to learn the lessons from this small number of examples.  And of course, there have been and remain many council leaders who see their role, in part, to ‘manage’ their authorities and in these circumstances, there is and has been a clear potential conflict with their chief executive.  I suppose that it is inevitable that this temptation will always be seductively ‘enticing’ for some politicians whatever their competencies and motivation.

Sadly, as is so typical in this country, we have arrived at where we are in terms of political governance of local authorities without considering the wider implications for the whole of each organisation, including its professional management.

I suggest that before we embark on a new form of hybrid ‘political–executive leader’, there is a case for review of the role of leader/mayor (noting that the two are very different, with different accountabilities and political relationships) and chief executive; and indeed possibly between the cabinet member and chief officer.

The political role is political.  It should and must remain political.  This is more than a self-evident statement.  It is the defining definition.  It is about:

–       developing and promoting a vision for the place and for the local authority

–       developing, and introducing strategies and policies to fulfil this vision

–       listening to and leading local communities

–       shaping and influencing the policies and programmes of other public, community, voluntary and business organisations in the locality

–       mediating between conflicting and competing demands.

The politician is and must be accountable for her/his policies and the performance of the local authority.  Thus, the relationship with the electorate and wider community is a political one – and ultimately they can be voted out of or back into office.

With few exceptions, the political leader or mayor will be the representative of his/her political party and play a political party role.  Even leaders and mayors who are not party politicians will have to undertake political duties and sustain political relations with the electorate.  This is legitimate and important.

The political leader or mayor should not want to, and should resist being drawn into managerial activities. These will consume too much precious time and deflect thinking away from the core political role and duties.  It will mean too much time spent in the town hall and not enough in and with the community.  It will lead to involvement in internal office politics and sorting out detailed managerial matters rather than holding true to strategic vision for the locality.  Political leaders and mayors should be driven by political values and principles, and not MBA text books.

All that said, first and foremost political leaders and mayors must be accountable for the performance of their authority.  This means that they cannot and should not ignore managerial leadership.  In the current arrangements, one of the most important (and challenging) set of duties that a leader/mayor has is to ensure the appointment of a competent chief executive – a vital and complex task for which they often and rightly need access to advice and support.

For all leaders and elected mayors, the relationship with the authority’s chief executive (note ‘the authority’s’ and not ‘their’ chief executive) is one of, if not ‘the’ most important single relationships in any local authority.  The leader has to: hold the chief executive to account; agree objectives; undertake appraisals; discuss critical issues and take professional advice and challenge from the chief executive; and respect the chief executive’s professional and statutory role and responsibilities.  A leader should expect the chief executive to ensure that her/his programme is delivered.

In turn, the chief executive has a responsibility to deliver this programme but also to advise on any problems, unintended consequences, financial or legal constraints.  In extremis, the chief executive has a duty to intervene and prevent unlawful or fiduciary unsound decisions that a leader/mayor may wish to pursue – although usually the relationship will be of the nature that enables such matters to be addressed well before there is a need for such intervention.

Leaders and elected mayors may wish to have special advisors to provide political advice but the chief executive also has a duty to provide professional advice to the leader – as well as to the whole council and every councillor.  Of course, most chief executives, like permanent secretaries, will be mindful of their leaders’ policy and programmes when giving such advice.

The core role of the chief executive is clear. It is to turn the political will of the leader/mayor and council into outcomes for local communities.  It is a managerial leadership role leading a large organisation – often to lead change management programmes – and ensuring that outcomes are achieved through behavioural change, partnerships, networking, commissioning, service delivery and contracting.  It is a vital ‘executive’, but not political role.

In practice, the role of chief executive and his/her relationship with the leader has evolved considerably over the past decade as the political governance arrangements of local authorities have themselves changed.  Many leaders and chief executives have relationships which mean that the leader’s word is ‘law’ for management. However, many, probably also find chief executives themselves having to do what in other authorities would be undertaken by their political leaders.

And similar situations can arise between cabinet members and senior directors.  The chief executive should be managerially responsible for senior directors (though appointments are usually jointly taken with politicians) but the leader/mayor must provide ‘management’ of the cabinet member who in turn will set policy and monitor performance at a strategic level.

Over the years, many shades of grey have developed between the role and responsibilities of politicians and executive officers.  Accountabilities have changed – politicians remain accountable to their electorates but some national ministers have required designated senior officers to be, in part, accountable to them directly.

Localism should mean that all local authority officers should be accountable to their councillors and elected mayors.  However, the proper officer roles of chief executives as ‘head of paid service’ and section 151 finance officers requires that they retain their professional accountabilities. And senior professional officers such as directors of children’s services also have a professional duty to fulfil though this should be through their advice to leaders, councillors and chief executives.

The current call for executive leaders and executive mayors, if pursued, will alter the nature of local accountability. It has the potential to weaken service delivery and, ironically, may well diminish the political authority of political leaders.

Time, I think, for a full and informed debate nationally and in every local authority about the respective roles of leaders and chief executives.  Time to provide the opportunity for new definitions that best meet local circumstances within a national legal framework.

And my starter for ten?  Contrary to the current ‘noise’, I think that the two separate roles are much to be valued – and that an effective pairing/duet is a perquisite for good governance and excellent well-being for local communities.

John Tizard is director of the Centre for Public Service Partnerships (CPSP@LGIU)

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In defence of tick boxes, by Colin Talbot

The Conservatives shadow Health Secretary, Andrew Lansley, was yesterday widely quoted as condemning the government’s health “targets” regime for forcing staff to “focus on ticking boxes not patients.”  We’ll leave aside why anyone would want to tick patients, and concentrate on Mr Lansely’s opposition to ‘ticking boxes’.

He obviously has not read the latest book by US surgeon and best-selling author Atul Gawande, “The Checklist Manifesto”. Dr Gawande makes a simple point very well: ticking boxes can save lives. Using examples from airlines and building, he shows how well designed checklists help reduce complexity, put in vital ‘reality checks’ and generally supplement professional expertise without replacing it. [‘The Checklist Manifesto’ sounds unfortunately trite and like so many other ‘snake-oil’ solutions to complex problems – but reading Atul Gawande’s book quickly dispels that first impression.]

For Mr Lansely, riding on the popular antipathy to “the audit society”, checklists are just a bureaucratic imposition. We should instead ‘trust the professionals’. But as Dr Gawande points out, in medicine the professional get it wrong – causing unnecessary infections, complications and deaths. Not all the time, not even in a majority of cases, but even a small minority of errors can result – given the volume of medical activity these days – in significant extra illness and loss of life. And hard research evidence shows that check-lists, designed well and used properly, can help prevent a significant proportion of these errors far more effectively and efficiently than any other change (e.g. extra training).

Mr Lansley, and the many others like him who condemn “box ticking”, should look at the evidence before they pronounce quite so glibly.

[For a good short review of Gawande’s book see Raphael Behr in the Observer]

This post first appeared on the Whitehall Watch website

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Non-executive nightmare, by Malcolm Prowle

The recently published report into the appalling failings of the Mid Staffordshire NHS Foundation Trust brings the issue of organisational governance once more back into the spotlight.

Anyone who reads the report will see that it is not possible to blame these terrible events solely on ‘NHS administrators’ or  ‘budget cuts’ but, in all probability, the mass of people (who will read the newspapers rather than the report itself) will come to just that conclusion. Clearly, health professionals and their working cultures had a large part to play in these serious events but, by and large, the media doesn’t like to criticise doctors and nurses when managers and directors are an easier target.

Nevertheless, it is obviously the case that ultimate responsibility for these events must rest with the board of the trust and this once again raises the question of what is wrong with health service governance arrangements that permit these failings to take place. However, it would be a mistake to assume that governance is just a problem in the NHS, since failures in governance can be identified in other parts of the public sector such as education and quangos.

We can go further and recognise that there have been severe governance failings in the private sector. I have often asked myself the question: ‘What were the non-executive directors of Lehman Brothers doing at the time of its collapse?’ They were either unaware of what was happening or they were aware but did nothing. Either way it seems a failure of governance. Also I did wonder at the time the Lloyds HBOS merger was announced, after brisk and emergency negotiations, whether the non-executive directors of either organisation had been consulted or had any idea what was happening.

Thirty-five years ago, in a devastating criticism of the ineffectiveness of non-executive directors of companies, the late Robert Townsend (the then boss of Avis) wrote a book entitled Up the Organisation. In relation to non-executive directors he made a number of irreverent comments such as:

  • In all the years I spent on company boards I never heard a suggestion from a non-executive director that resulted in action.
  • Non- executive directors meet once a month to gaze at window dressing, listen to the chief executive and his team talk superficially, ask a couple of dutiful questions, make token suggestions (courteously recorded, but subsequently ignored) and adjourn until next month.
  • Non-executives are usually friends of the chief executive (or executive chairman) put there to keep him safely in office.
  • Be sure to serve a heavy lunch and cocktails before the meeting so that some of the older directors will fall asleep.

While Townsend’s comments may be seen as extreme and designed to shock, they contain germs of truth that have applicability in the public sector. Clearly, the bulk of non-executive directors in the public sector are both committed and conscientious, but the key question is whether they are effective in terms of governance.

After 30 years experience of the public sector as a manager, academic, consultant, auditor and non-executive, I have observed a number of governance failures in many different sectors. In the light of this, I have come to one simple conclusion about organisational governance: no amount of guidance manuals, training courses, codes of practice, auditors, inquiries and regulatory bodies will compensate for the lack of non-executive directors with sufficient ‘nous’ and courage to ask difficult question and not be fobbed off by unsatisfactory replies or professional mystique.

The boards of public sector organisations (including NHS trusts) actually require a sufficient number of people prepared to make waves and rock the boat. It is not sufficient to just say: ‘We weren’t told’. This is not just my opinion. If you look at some catastrophic events that have taken place in the past, such as the Challenger Space Shuttle disaster, it is clear from investigations that the absence of people prepared to stand up and ask difficult questions was a major contributory factor to the incidents.

However, in the public sector we often find that the same people seem to pop up as non-executive directors in a number of public sector organisations. Such people are often referred to as being ‘sound’, which seems to imply that they won’t be controversial, ask difficult questions, upset people or embarrass the government. However, we must also recognise that non-executive directors have a tough job. They are often squeezed between an appointed chair and executive directors who want to keep their jobs and a government that wants no bad publicity. Not surprisingly, they don’t ask tough questions.

Is this what happened at Mid Staffordshire NHS Foundation Trust? If it is, we must question the methods by which non-executive directors and chairs are appointed and whether they are in need of review.

Malcolm Prowle is Professor of Business Performance at Nottingham Business School and a visiting professor at the Open University Business School. He can be contacted via his web page www.malcolmprowle.com

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