Rob Whiteman on combating the complacent
0Rob Whiteman, CIPFA’s new chief executive, isn’t shy of confrontation. Speaking to Gavin Hinks for Issue 2 of Room151 Quarterly, he explains why gerrymandering has to stop, how to strengthen local government funding and why localism and trust need to be restored.
Gavin Hinks: How have local authorities managed in the current funding environment?
Rob Whiteman: I think there’s a lot of strength in the finance profession. Finance professionals are good accountants but I also think they have a broad range of softer skills that you need to operate in public financial management. They’re very strong in communication; they understand the role of engagement; they really do understand government and accountabilities and how decisions are made in a political
environment.
I think what treasurers say to me though is, how sustainable is it over the next five years? Clearly most councils feel in a position to balance next year’s budget for 2014/15. But all councils, in all tiers, in all geographies, are saying that at the moment they don’t see easily how they balance 2015/16.
GH: How strongly do you feel complacency is an element in central government policy?
RW: On the whole, central government probably doesn’t feel it’s accountable for what local government does and, indeed, it isn’t because we have local elected politicians. I think that there is a degree of complacency. I think that government feels that its strategy of making significant savings in local government will be further achieved, and that more savings can be meted out. In fairness to the government, we must remember that they have helped local government. They have taken the ring fence off many grants. They have reduced regulations. They have reduced inspection and
regulation.
That said, do I think that the benefits that have come through from [removing] ring fences and deregulation are sufficient to counter the massive demand pressures that are building up? No, I don’t. I think there is a degree of complacency about the fact that the system of local government finance isn’t fit for purpose anymore.
GH: What are the risks from this complacency?
RW: The risk for the government is that all public service doesn’t achieve the value for money or the optimal use of resources that it can. And that isn’t just a problem about local government services per se but, actually, it’s a problem that local government isn’t able to fulfil its role. A really effective local government ensures value for money for the whole public purse, not only value for money for the bits that
local government happens to deliver itself.
GH: You’ve written about the need for innovation. Are local authority managers equipped to innovate?
RW: The capability is there and I think that there’s the capacity to develop it further. I think that you have to begin with the basics. The first job of the finance professional is to make sure that there is effective stewardship of public money, that we have proper reports, that we have proper processes in place, that we take measures in order to counter fraud.
Decision-makers can do things which are quite bold, quite radical, quite innovative. The job of finance is to help that to happen, so long as you’ve got the bread and butter issues right, and so long as people understand the opportunities that they’re not funding and that all these decisions are taken in the round. I think the risk for the finance profession, because we face such big cuts ourselves … is that [it] has to focus more on the bread and butter and the accounts, and doesn’t have time to devote to innovation and transformation. I unashamedly want to encourage the finance profession to ensure that if we’re thinking of something like an innovative form of service delivery like mutualisation, or using SMEs, or using charities, or the voluntary sector, we don’t want the accountancy profession to be the blocker to those things by pointing out what all the risks are. We want the accountancy profession to be the can-do place where those risks can be overcome and managed.
GH: You’ve complained that central government has failed to stand by its commitment to localism. Why is that important?
RW: You get better allocation of resources, better services and the better quality of community empowerment if people can have a local say and local discretion over how their public services are governed.
It is that one size doesn’t fit all. It is absolutely that. Different areas, different communities, are solving different problems and if you just try and solve it in one way, you are not allocating resources properly. When I went from Lewisham to Barking and Dagenham, they’re five miles apart, both of them had very high rates of teenage pregnancy for completely different reasons. Couldn’t be more different, like chalk
and cheese.
GH: Central government might argue that the crisis could only be resolved centrally.
RW: I would stand that on its head and I’d say, if there’s a view that government thinks that it delivered cuts through centralisation, I would say clearly that isn’t true. You’ve put more money into the NHS, you’ve put more money into many public services, you’ve cut local government to the bone. And you could only do that because it’s localised.
GH: You’ve called for an independent commission on local government funding – CIPFA and the Local Government Association are pushing ahead with creating one.
RW: The underlying driver is to ask a genuinely independent group of experienced people, from a wide range of sources, to compare our system of funding local democracy with other systems and to make recommendations on how local government should be funded. I also think that we want to take the political gerrymandering that takes place in local government finance out of the system.
Government should say what its policy is transparently, where it wishes to invest, where it believes savings can be made. What we have at the moment is simply decade upon decade of gerrymandering, financial gerrymandering, where governments look after their own and don’t mind delivering a hit on the others.
Secondly, the major issues that affect local taxation, an independent commission should advise on those. Across the rates and council tax system we’ve had one revaluation in 41 years …for a system of taxation that should be updated every four to five years. Ministers always think it’s politically expedient not to have a revaluation at the moment and here we are 41 years later, it’s been revalued once.
For me I think this is a Bank of England moment. When the incoming Blair-Brown government said, ‘we’re going to take interest rates away from government policy and give it to the Bank of England,’ it took a generational bit of bravery for politicians to decide to break the mould. We would call on all political parties, whoever is next in government, to take that sort of bold step and not to be tempted into simply fixing the system for their own set of councils but to once and for all make an independent commission that would do it fairly.
GH: You seem very comfortable with confronting central government?
RW: CIPFA is comfortable speaking on behalf of finance professionals in an a-political way. It’s our role to say where councils could manage their finances better. It’s also our role to say where we can see waste or efficiency, to speak on behalf of the profession… If I think of the present government, they deserve credit for removing ring fencing, they deserve credit for reducing audit and inspection. On the other hand, the council tax freeze grant is one of the most fiscally indefensible policies that most accountants have seen in their careers because it hollows out the tax base at a time when local government funding is so tight. So CIPFA should speak truth unto power on behalf of the finance profession. But it’s absolutely essential that everybody can see that we’re doing so in an even-handed way.
GH: You have said trust has been lost between central and local government.
RW: I haven’t met a leader of a council or a leading politician that objects to being accountable for the decisions that they make; they believe very passionately in their communities and decisions that they’re taking. But they do expect that the system of local government is itself respected and treated fairly, and I think what we’ve seen over the last decades, and particularly over the last decade, is a willingness to portray councils as inefficient and wasteful and not responding to community needs when actually it is. Local government needs central government to respect its role and to treat it fairly, and I think local government feels a breakdown in trust has occurred, where a good headline is often made at its expense by the department that should be sponsoring the important role that local government plays.
GH: What does the future hold for finance professionals?
RW: I think we’ll become, we’re clearly heading to become, a profession where the nature of delivery is more diverse. We will have more SMEs, more mutuals, more outsourcing contracts, more partnerships with other bodies, such as social care and health integration. So, actually, we’ve got to have the tools and the technical competency to be able to get that right.
