We report back on the events at CIPFA in the North East's Annual Conference
The 7th Annual Conference run by CIPFA in the North East was held at The Sage, Gateshead on Friday 1 December 2017. About 100 delegates gathered from across the region and across the country to attend.
Andrew Burns, director of finance & resources, Staffordshire County Council and President of CIPFA, chaired the day. CIPFA in the North East president Judith Savage welcomed everyone and thanked the volunteers for all their work organising the event. More volunteers would be welcome on Regional Council, she said, along with any fresh ideas they could bring. She also flagged up that nominations for the North East Accountancy Awards will be open soon – and that it would be good to get more public sector nominees.
Andrew Burns highlighted the three themes for his presidential year: medium-term financial planning, including balance sheet and capital; more joined-up public services; and the impact of AI and automation in financial management.
The first speaker, CIPFA Chief Executive Rob Whiteman, gave us some thoughts – or "mad ramblings" as he put it – on useful documents and downloads the Future of Finance. A straw poll in the room revealed that delegates clearly think that Brexit is the biggest issue facing finance professionals over the next 12 months - NOT Harry and Meghan's wedding. Artificial Intelligence may have more impact on the professions that the (first) Industrial Revolution. Unlimited processing power may allow machines to make better judgements than us. The breakdown of trust in society as a whole is an issue that is part of - but bigger than just - Brexit. How do finance professionals engage in a world where the public don't want to hear from "experts"? England is the most centralised state in the world - in contrast to the devolution in Scotland, Wales and Northern Ireland. The introduction of metro mayors may start to change this. Centralisation menas that the UK's allocative productivity (putting the right resources in the right place) is not good by international standards, both in the NHS and elsewhere in the public sector. Children's social services are likely to be next in line for Academy status, he predicted. He saw that finance will be less about transactions and more about business partnering; accountants as part of multi-disciplinary teams to problem-solve.
Jim Mackey, the Chief Executive of NHS Improvement, started with some reflections on the last two years. Pressures in the NHS had not abated. There is fragility in Primary Care and Social Care. There are workforce issues across the sector; agency spend is being reduced, but is still too large. Media negativity about the NHS in England can be soul-destroying for NHS staff. He outlined issues from the Autumn Budget affecting the NHS, including how to fund the pay award, capital spending, health standards and deficits. Much of what we've done on NHS funding (blunt and grippy instruments) has worked in the short-term, but isn't a long-term solution The commissioner/provider split is not helping; commissioning adds a further overhead to NHS costs. Health and social care integration hasn't progressed as well as it could nationally. Finance professionals need to provide more support here. But Northumbria is a good model here locally.
After a coffee break, Martin Cresswell, Chief Executive of iMPOWER Consulting spoke about 'Digital – new developments and challenges for the Public Sector.' Technology can help with service delivery. He noted that 26% of 18-34 year olds would willingly date a robot "as long as it looked like a human." A quick straw poll proved that the audience at the conference were not so keen! But robotics in front line services for social care could be even more revolutionary than AI in the back office. We know the challenges in Adult Social Care provision. Telecare is an established solution, but is limited in its effectiveness. Capital funding/investments can be easier to source at the moment than revenue growth - so technology for Adult Social Care can find funding, especially if it can replace revenue costs long-term. The problem with new systems implementations (both in the public and private sector) is that we love novelty - but are very fearful of change. The connection between a quality solution and effective benefits realisation is when individuals embrace and adopt the change. We need to focus more on the human factors in delivering change successfully - organisational culture, leadership, management, values & motivations and new skills. We may assume that people are more conservative-with-a-small-C ("Settlers") than is the case in practice. We can therefore end up communicating with "Pioneers" in the wrong way. Technology is here, and we need to take advantage of it, he concludes. But don't under-estimate the people challenges in change. This is just as true in Adult Social Care and Health as anywhere else.
Before lunch, Judith Savage, President of CIPFA in the North East announced the winner of the Joint EY/CIPFA in the North East Award for North-East Finance Professional of the Year. The winner was Clive Johnson of the NHS Business Services Authority.
Dr. Lindsey Whiterod OBE, Chief Executive of Tyne Coast College, kicked off the first session after lunch, including some "loud videos" in her presentation to keep us all awake! They were looking to continue using the four previous college names/brands under the new Tyne Coast College umbrella post-merger. The college is a leader in training for the merchant navy, both navigators and engineers. The ex-captain of the QE2 and Master of Trinity House is an alumni. The college also has a multi-academy trust which sponsors a primary school in the area. They moved it from "notice to improve" in 2010 to "outstanding" in 2017. A lot of work had also been done at South Tyneside College to turn it around from 2009 onwards. The government's Area Based Review led to the merger on 1st August 2017. There were new challenges for Tyne Coast and FE generally: Further cuts, Apprenticeship Levy and T-levels. The future could contain more mergers, expanding the multi-academy trust with more schools, and more partnerships overseas, including the Middle East.
Lord Andrew Mawson, Chairman of Well North, spoke about the experiences and opportunities he had had over the past 30 years. He emphasised the importance of small things in modern society - starting with smartphones. He believes that leaders need to understand the machinery of their business - sometimes literally. The modern world was about people and relationships. This was a challenge for the public sector, which naturally tended to view things from a macro perspective. He talked about his involvement in the Olympics and the post-Games regeneration projects - an 18-year project still running. Working at a micro-level is the only way to achieve effective change. You need to work with the people who are staying (residents), not the ever-changing policy wonks. Change comes not from processes and systems but from people. You need to chase opportunities rather than plans or strategies. The job of the public sector is to create the conditions where local/social entrepreneurs can develop - in untidy and organic development.
After a final refreshments break, Tony Travers from the London School of Economics did the final session of the day, on the future of Business Rates and Council Tax, noting how "weird" they are these days. 100% non-domestic retention for all is now NOT planned by 2019/20 - but there will be some pilots in areas with metro mayors. So Revenue Support Grant will continue. A Fair Funding reset of the underlying needs assessments - not updated since 2011 - will now be done for 2020-21. The 2018-19 local government settlement will be announced on 13th or 20th December 2017. Treasury plans are looking to reduce local government spending power - so any resetting of the system inevitably means robbing Peter to pay Paul. There are perverse incentives about new developments as opposed to improvements, and how these impact Non-Domestic Rates. Moving to CPI for rates uprating instead of RPI will also have a big impact. NDR retention will create incentives for local authorities to allow new developments, especially in the South East. But there will be big differentials across the country. NDR reforms are moving this tax from being a means of equalising needs and resources across the country to being a driver of economic growth. It will disincentivise opposition to land development. Commercial properties pay about the same overall in NDR as domestic properties do in Council Tax, but have much less of the property value. But Council Tax is the most politically-salient revenue in Britain, as it is actually billed for. There is no real public demand for reform. The experience of Poll Tax has made politicians cautious of local government funding reform. The system needs regular revaluations to keep council tax up to date. A wider number of bands, or use actual values (as per the old rateable values). This would act as a discipline/brake on property prices. Instead, Stamp Duty Land Tax is being used as a proxy for Council Tax reform, but in a very clunky way - it now collects £8 billion a year, but half of this from just a few London boroughs. Devolution in England has been slow - starting in London in 1965/2000 and moving to Greater Manchester in 1974/2004. It is spreading to other city regions now. Will a North of Tyne deal follow now?
Andrew Burns summarised the day; the public sector was having to deal with seismic shifts to people and processes. The day concluded with a drinks reception provided by our sponsors.
Copies of the slides from the presentations are available to download.