Read Roy Irwin from the Audit Commission's speech below from our Value for Money Conference back in March
I am going to give some interesting housing context. We have to think of where we are now in the economic cycle of public spending and where we might be in less than a year. Currently, we've got strong national direction we've got low interest rates, we've got a suppressed housing market where only those who are cash rich can afford to move. So values have been kept high by limited set of transactions. We've got high capital investment in public services. Both in revenue and capital. Despite that we've got relatively low house building. The changing position will be less national direction of services, less regulation to support that direction, higher interest rates, less public capital to support house building. More dependence of the house building market on private investment, therefore I would suggest over the next 2 years even lower house building than this year. So things are going to change quite considerably. This is important as it sits alongside the TSAs co-regulatory approach with less regulation in general on public services but also there will be less money for public services. And probably increased demand for public services. The focus of success will be on the governance of organisations. And the governance of partnerships.
Often authorities in a strategic housing setting are not using their resources sensibly, value for money, the commission thinks that value for money doesn't go out of fashion it just changes in importance depending on how scarce resources are. Resources are going to be incredibly scarce so value for money will go up the agenda. This might be seen as efficiency and cost effectiveness but value for money is going to increase considerably.
After the election the thing you will hear most about will be money. The commissions work will be about what the value a particular resource will achieve. In that setting risk management is going to be important. Singularly organisations will not be in command of their own destiny- they will have to work together. The ability to work well in partnership is important.
We've seen how poorly complaints have been handled by organisations. It's the frustration that people have with the inability to deal with complaints sensibly, that drives the push for a higher code to bring concerns to. I sit next the commission's complaints team in the Bristol office. You can't help overhearing comments like can the commission do something about ‘x'. ‘X' not being about what we have done about but about what somebody else has or hasn't done. The number of complaints is really interesting around getting an authority to do something, getting a housing association to do something, getting the officer to turn up. Anything to do with public services and the inability of organisations to handle those things drives people to go to various other quarters. The better the complaints are handled the better the systems will be across all services.
Another important thing with the co-regulatory agenda is that tenants should be involved with monitoring and improving services. The involvement of tenants is really important going forward.
The commission and CIPFA sometime ago agreed that good governance would be important going forward and they are still important, around the purpose of the organisation. You often come across organisations that are acting contrary to their purpose because they have forgotten their purpose. Although people have strategies, visions and strap-lines on their correspondence or website; which comes out of the leaders of organisations. The reality is that it's what you do and what you believe in not what you say. Some of these issues of people forgetting what their purpose is quite powerful.
I talk to the TSA about the piece of work they were doing just in general terms looking at what the purpose is of housing associations, what does it say on their friendly documents and how do they act? The documents that get banded around - is that different to the board member experience the first time they arrive in an organisation?
In these complicating arrangements of partnerships clearly defined functions are necessary both so that officers don't become chairs and chairs don't become officers. Values will be important. Leadership should come from the top and be more accountable. One of the things that the internet has brought public service across the board is information requirements and demands. There is an expectation there is a right to know everything. One borough in the South of the country has made the first step towards this; they now publish on their website every financial transaction. Bit by bit that open, accountable, covering all the angles information will be normal.
In the absence of less national direction local discretion and governance will become more important. Given that partnership working will be required by most agents especially when there is less resource then how your work outside the organisation will be important as well.
One of the things we will be looking at in the area assessment (CAA) is partnership working. What real conversion did they have about the child abuse case? So think about what partnership you are involved in. How open and honest are they in coming up with solutions? Or is a meeting that has to be seen to happen? And is the purpose to get through it without committing anything? Is the frequency sufficiently vague as to make sure that no decisions could possibly be made outside the organisation?
One of the things that's been looked at over the last three months is something called Total Place. Tot al Place came out of a bill from Parliament. It states that a public investment into a place should be recorded and produced in one set of accounts. The treasury in a speech last year announced Total Place. The intention of total place is to account for every pound of public spending both capital and revenue going into a local authority area across England. You can find the list of pilots on the treasury website.
The two things I have seen form this is that Birmingham- the area and city of Birmingham- estimated outcomes are £7.1 billion. For the million people who live there that is a lot of money each. No doubt if that was how they saw the money invested in that place the obvious question people would be asking is where did £7.1 billion go? That's what the total place pilot is about. It's about at least calculating the quantum. The second issue is you're spending streams that amount to £7.1 billion - how closely are they aligned? Are they contradictory? Are they not securing maximum value for money? Total Place is an industry next step around looking at public resources. At the same time the treasury asked the audit commission to look at how it might go ahead with making a value for money judgement at the place in total.
So each organisation needs to be clear about what its purpose and what its functions are and how it supports wider council strategies. Value for money in that bigger context will also require testing out whether delivery by yourself is the best decision. The big make or buy decisions that organisations don't always grapple with very well because of the emotion about whether they are a poor provider will be challenged by public service investment reduction. In Worcestershire 3 districts are collaborating on a housing benefit service, by working across three districts. How people use their procurement arrangements will be really important. Housing associations are generally not that good at buying in services. They tend to do it themselves. Perhaps that needs to change.
I mentioned that value for money is important. In these testi ng times values are more important. So what the organisations stands for, how staff and hired and fired is really important.
The other thing is risk. Risk is sometimes seen as something that doesn't need to be dealt with, it just needs to be accounted for. I think the risk of changing company roles and groups and short term decisions and the absence of long term financial assurance is going to be really interesting going forward. In this less regulated world risk management is going to be more important.
You will need to think in a co-regulatory way in the housing world, make you own decisions, to interpret the TSA standards, to make your local offer, to understand what the resource implications are will be very important. During this time you need to make sure (board) roles are not only up to scratch but they need to be strengthened as more rests on their shoulders going forward.
Making sure stakeholders are engaged and the accountability is important. With the internet it makes it easier for people to find out what's not provided and therefore to challenge. Accountability in housing associations will need to be stronger and accountability in all agencies will need to be stronger.
In the new world of less regulation, less national specification but less local resources, leading not following, starting and finishing, means demand and supply not supply and demand, say what you mean and mean what you say. National agencies - that means us- clearly need to understand their roles and responsibilities. We need to work together around the organisations issues, local authorities being the ones that bring it all together and housing associations to a certain extent. We also need to understand places. We need to understand how the information flows both separately and collectively. We need to account that we are actually sharing information so we are accountable. We need to apply this to ourselves and they way we work to the principals of public life, integrity, objectivity, and honesty.
The TSA has been going for a year now. For 6 months we will be using the exiting Key Lines of Enquiry. After that we will be doing something different. And we will be consulting on our new inspection arrangements. It will look and feel different. And it will be less comfort for organisations, there will be no descriptions of anything. It will be set out what the TSA standard is and it will ask what co-regulation has happened to make that right. There will be no proposed codes that you will have to follow. That's why governance and co-regulation becomes important, because the self assessment and Key Lines of Enquiry will not be there.
In terms of the bigger picture one place is a website that the inspectorates will use to tell the story of your area. You can Google the place you live and click on the map and it will tell you the story of that place; its performance and its weaknesses. Across the website there are 72 red flags for poor performance, fourteen of those are housing related. Most of them relate to the strategic function. It is around trying to tell the story of public services and the value. The next step is to report the total cost against the total value in each community.
So good governance for us is about clear priorities, transparency and accountability, leadership and it should be legitimate. Making decisions, managing risks, using information well. The key information for governance is the information that governance arrangement provides on decisions.
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