Analysing the challenges honestly


By Joe Simpson, Director, Leadership Centre; John Sinnott, Chief Executive, Leicestershire County Council and Rob Whiteman, Chief Executive, CIPFA

Originally featured in LGC

Let us not begrudge the NHS in getting its new settlement last month, but instead consider where we now stand.  Treasury have raised the drawbridge lest anyone thinks more riches are to be found. They don’t refer to Brexit dividends but make clear taxes will rise to pay for the settlement, which we know has disquieted some MPs.   

An interesting November budget debate lies ahead, which will hopefully include the promised social care green paper. Meanwhile the pressures on council budgets increase. It is not just adult social care (demographic changes mean that pressure will become more intense), the volatility in children’s service budgets is even more dramatic.

Being more efficient and innovative than central government has not seen local government repaid with generosity, but an expectation that even more is possible. When we talk to colleagues we know this is not sustainable. In 2017/18 Northamptonshire was an outlier, but for 2018/19 or even more so 2019/20?  Even if the social care green paper leads to more cash, it won’t arrive soon, and repairing (most likely partially repairing) one element of the budget will not balance the books.

Much has been made of the departmental name change reflecting the importance of health and care integration. That is welcome but more than a name change is required to persuade Whitehall and NHS England that ‘social care’ is not just about elderly people in and out of hospital, that younger adults require social care in non-acute settings, and that children’s social care, someone else’s departmental responsibility, deserves equal attention in every sense.

When we think about integration it is hard to avoid the primary requirement, still mostly unmet, for the NHS to integrate itself. The apparent softening of the commissioner/provider split is promising but there is a long way to go. Similarly, the new funding settlement will no doubt carry a condition of reform/efficiency.  Excuse the cynicism, we’ve heard it all before and not seen any evidence.

We must have a platform to reflect on future strategies.  Here are three initial thoughts to stimulate debate.

First, the lesson of the last decade is that good local governance has been built on a strong relationship between leaders and chief executives.  Discussions can be robust, but in private, whilst in public there is unity. Now we need to reinforce the roles of the statutory officers to report more fully and openly on the financial challenges. Our collective and local reputations depend on there being no more ‘surprises’.  

We need this robustness internally (no hiding place) and externally. Chief executives need to speak about the ‘place pound’, what’s being spent by the public sector in our place. And if the NHS does have more resource, that means a new engagement with the STP/ICS roll out, but an engagement based on partnership not diktat. There are real opportunities for local leadership, particularly at member level.

We three are sufficiently long in the tooth to remember the last time there was a sustained squeeze on local government finances. To become a chief executive it was almost obligatory to have a finance background. Yet this time the squeeze has seen finance directors downgraded. We should reflect on why and how this happened, but without doubt we need more financial skills in our top teams.

Secondly, let us voluntarily raise the bar on expectations of audit. The dismal performance on some high profile private sector cases is likely to lead to significant new responsibilities on auditors.  Indeed the whole audit profession could be about to undergo profound changes, of a scale no one would have predicted even a couple of years ago. We should collectively encourage auditors to use their public interest responsibilities to comment on governance and the sustainability of decisions. Public audit has always had a value for money element, but that needs to be more robust and it has to be interwoven with more explicit commentary on financial planning.

Thirdly, let us review opportunities for leader and lead member discussions with peers. The calendar of events needs a refresh because we have neglected investment in lead members for finance and resources. Their status is as important as that of the director. We call on others to join us in addressing this imbalance. Everything we have learnt tells us their relationship is crucial when in the background public priorities for spend will usually see roads outweigh social care.

Taken together these three will not solve our problems, but they will give us a better chance of doing so.

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