Where now for public services in 2013

The 2013 conference of the Chartered Institute of Public Finance and Accountancy (CIPFA) has the title “Beyond Austerity”. At first glance this seems a strange title since it seems to suggest austerity is now over and we are ready to move to sunlit lands. The truth couldn’t be more different.


In 2009 I gave my inaugural professorial lecture at Nottingham Business School entitled “Where now for public services”. The main thrust of the lecture was the future of public services, in the UK and internationally, at the beginning of an era which we now term financial austerity. I emphasised that we should be cautious about any idea that the UK economy would return to normal (i.e. 2-3% economic growth per annum) in the short term and we should think in terms of how we should organise and deliver public services in an era of limited or nil growth in resources. This would require consideration of matters such as

• The role and limits of the state in the provision of public services;

• Individual and collective responsibilities in relation to public services?

• The relative priorities for public service provision

• How public services should be paid for

• The balance between the use of incentives and greater authoritarianism in public policy;

• How the public sector should be organised and governed

• The role of the private sector in future public service provision


In 2010 the coalition government came to power with its primary objective of eliminating the public budget deficit by a combination of tax increases, public expenditure reductions and economic growth. Well, of course, we all know it hasn’t turned out like this. The UK economy hasn’t returned to “normal” and the annual public budget deficit is still large. While the government has reduced the deficit somewhat it will be nowhere near its objective of eliminating the deficit in the lifetime of this Parliament. While we have had large scale reductions in public expenditure in some areas (especially local government) we have seen increases in public expenditure in other areas. Although there has been much pain and suffering, especially by those who have lost jobs, it looks to me as if the broad landscape of public services is broadly unchanged. A bit less here and a bit more there but nothing too radical that will upset the electorate too much.

It seems to me that every one of the repeated statements from the Chancellor of the Exchequer since 2010 (in the various budgets, spending reviews and autumn statements that have taken place) have largely followed a similar pattern and give out the following two main messages.

• We are making progress in cutting the deficit and we must stick to it

• Economic growth forecasts have had to be reduced downwards but economic growth will return to normal in a couple of years

On 26 June the Chancellor will announce the findings of his latest spending review which will just cover the year 2015/16. What we can be certain about is that it will announce that:

• financial austerity will continue

• further large scale reductions will take place in public spending in some areas,

• there will be no material changes to the landscape of public services but there may be lot of spin to suggest that such changes will take place in a painless manner (e.g. the odd merger of a couple of government agencies or something like that)

• economic growth will return to normal in a couple of years.

As in 2009, I strongly suggest this is just not going to happen either in the UK or in Europe. We start from a position of stagnant economic growth and massive public and private debt. Private and business confidence is at rock bottom. We are sitting on top of a massive asset bubble which will burst and send more shockwaves throughout the financial system. The situation in the Eurozone is still very dangerous even though the crisis might have been stilled for a while.

As in 2009, I still believe that “normal” economic growth will not come to the rescue and we had better start getting used to the situation that we will be living in an era of nil or small economic growth for the forseable future. We need to recognise that this is a historical turning point that destroys the post-war political consensus on the welfare state and is the end of the upward march of economic growth (at least in Europe).

It therefore follows that we need to seriously start thinking about how public services can be funded and managed in such an economic environment so different from the past. Things to consider include:


• Are there situations where the state can withdraw from delivering and/or funding certain activities and leave it to private individuals (e.g. leisure, culture, sport)?

• Are there public services which should be converted from being universal services to targeted services whether that targeting be in terms of need, income etc?

• To make certain public services (e.g. preventative services) more effective, does the state need to become more authoritarian (e.g. does it make sense for planning law to allow a fast food restaurant to be built adjacent to a school full of obese pupils)?

• Do we need to significantly extend the charging regime for public services (e.g. waste disposal)?

• Should the NHS be financed by a newly introduced and compulsory health insurance scheme with individuals given a choice about insurer (public or private)?

The problem with this of course is that all of these will be incredibly unpopular with the general public who have been conditioned to believe that things will be back to “normal” in a year or two. Throughout Europe, electorates have clearly rejected austerity parties in preference to those who promise more public spending. Hence they are politically toxic and will be ignored by all UK politicians. Maybe this is why so many people are now voting for UKIP???

Are we sleepwalking into a totalitarian society?

Totalitarian rule is defined as a political system in which the state holds total authority over the society and seeks to control all aspects of public and private life whenever necessary. Most people would probably laugh at the idea that the UK might become a totalitarian society – are we not a beacon of democracy in a world of corrupt and authoritarian government?  However, if we are not careful we might easily sleepwalk into a form of totalitarian society by accident and neglect. There are many themes to consider.

In recent years we have seen a growth in the powers that Government exerts over its citizens. Many examples of this can be quoted including:

·         the massive increase in the use of CCTV,

·         the attempts to introduce identify cards into the UK,

·         the retention by police forces of DNA details of those without any criminal conviction,  

·         the record number of imprisonable criminal offences created by secondary legislation without any debate by Parliament

·         anti-terrorism laws – a former law lord, Thomas Bingham commented that “the real threat to society is not from terrorism, but from laws such as these.”

The list goes on and on. In 2009, the Conservative MP, David Davies, resigned his parliamentary seat to fight a by election on the issue of erosion of civil liberties. He produced a report which identified 50 measures since 1998 that eroded civil liberties. Davies commented: “We cannot actually trust politicians or the process of politics to preserve liberties. Our liberties must not go unprotected in the way they have for the last 10 years.”

Then we look at our electoral system. In recent years the proportion of those not voting at a general election has risen and polls indicate increasing dis-enchantment with politicians. These politicians shed crocodile tears at the low turn-out and then turn their minds to planning how to win the next election. The same politicians also increasingly ignore the views of voters and impose their own ideological ideas sometimes not even contained in their election manifesto. In pre-war Germany the Nazi Party gained only 2-3% of the vote during the 1920s. – never more. Then in 1929, history intervened with the "Great Economic Depression." The situation in Germany went from worse" to "horrible. The country was completely in chaos. Food riots and pitched battles in the street every night. Hitler’s twisted promises offered Germans a solution to their despair. The Nazis gained power out of desperation on the part of the electorate. Given the current economic conditions in the UK, who would say that could never happen here?

Let us consider two more recent developments. Firstly, there is the issue of a free press which is often regarded as a bulwark against totalitarianism. Currently we have the on-going debate over the Levenson Inquiry  into the culture, practices and ethics of the UK press following the recent phone hacking scandal. The recently published Levenson Report made recommendations for a new, independent, body (to replace the existing Press Complaints Commission) which would be recognised by the state through new laws. Since the publication of the Levenson Report there has been a huge row between the main political parties and society at large about the extent to which press regulation should have some form of statutory underpinning.

I suggest there are two key questions to consider here:

·         Are there not other ways through existing legislation that the victims of phone hacking could gain redress?  I think the answer to this must be yes although this would not necessarily satisfy certain “celebrities” (who have been very active in calling for statutory regulation) and who would prefer for the press not to investigate some of their more sensational activities.

·         Through the creation of statutory press regulation, do we really want to hand over power to regulate the press to politicians, which, in reality, means handing over such power to the Government of the day? Consider the many scandals in recent years, involving politicians; lying (Chris Huhne), being paid for asking parliamentary questions (Neil Hamilton), inappropriate business relationships (Liam Fox) and over-claiming expenses (a large proportion of MPs and some peers).  In the light of these and other events, can we really be sure that these people wouldn’t use the statutory press regulation process to muzzle a free press trying to report such mis-demeanours.

In the light of the above, I think we must see any form of statutory press regulation as something to be considered very seriously by all citizens (not just the three party leaders) and not thrown away lightly.

Secondly, there is the issue of free speech. This is one of the great freedoms of UK society which is now being threatened by the sin of “giving offence”. In a recent court case the judge decided that the Mayor of London did not exceed his powers in banning an advertisement on London buses which said “Not Gay! Ex-Gay, Post-Gay and Proud. Get over it”. The judge said that some people might be offended by this advert and so the ban was legitimate. However, the same judge seemed to suggest that an earlier advert stating “Some people are gay – get over it” might also have caused offence and might also have been banned had it come to court. It seems to me that “giving offence” is now one of the most heinous criminal charges on the statute book. If this carry’s on, we will need to redraft Voltaire’s famous saying: “I don’t agree with what you say but I will defend to the death your right to say it” to read something different. Perhaps the following might suffice: “I don’t agree with what you say, it offends me and I will take you to court to stop you saying it”. Where do we draw the line? Can vegetarians take meat eaters to court for giving offence by talking about the merits of eating meat or can Labour Party members take Conservative Party members to court for giving offence by promulgating Tory policies? The mind boggles at the potential scope of this.

The above trends of increasing state interference, a crumbing electoral system, the loss of a free press and loss of freedom of speech are grave threats to our democratic system which we would be wise to recognise. It is illusory to think that our democratic system is secure and will last for ever. Throughout the whole of human history some countries have only had democratic systems of government for a couple of centuries while others have never had it. Yet others again have had democracy and lost it. Democracy is very vulnerable and is being gradually lost in the UK – be warned.

Improving school standards in Wales: Is the Welsh Minister getting desperate?

Ami I the only person who sees the image of a drowning man in Welsh Education Minister, Leighton Andrews.


Obviously he has a hugely difficult task on his hands in turning round the Welsh Schools system. In my article (April 2012) entitled “Bottom of the Class” I drew attention to the parlous state of Welsh schooling (http://www.publicfinance.co.uk/features/2012/04/bottom-of-the-class/). It seems to me that since that time the situation has probably got worse not better.

Let’s get real about this - schools improvement is absolutely critical for the future of Wales. But let’s remember a number of facts:-

• Wales has a smaller population than any other part of the UK saving the North East Region of England and Northern Ireland.

• The Welsh economy is the least productive in the UK. In terms of gross value added per head of population, Wales is at the bottom of the UK league table

• The Welsh economy cannot exist in isolation but is inextricably linked to: the rest of the UK economy, the European economy and the global economy.

• If Wales is to compete in economic terms our children must have educational attainment comparable to the rest of the UK and other countries in the world.

In terms of school performance let’s look at the situation of Wales within the UK. Well if we take one key benchmark of school performance which is probably of most interest to parents that would be the percentage of children who obtain grades A-C in their GCSE examinations. What we see is a picture of increasing pass rates in both Wales and the rest of the UK over a period of years but with a sharp reversal in pass rates in 2012 with Wales showing a drop of 1.1% compared to a drop of 0.4% in the rest of the UK. The net effect of all this is that the pass rates in Wales still remains a full 4% below the rest of the UK and the gap has widened. The Welsh Education Minister was quoted as describing this result as “encouraging.” How complacent can you get?

The Welsh Government provides a comprehensive range of information on all Welsh schools but while this information is interesting, it misses the point. There is little point just comparing an individual Welsh school against other schools in the locality and throughout Wales. What we need is information which compares Welsh school performance with the rest of the UK (and perhaps the rest of the world) so we can see where we stand in the modern world. At the moment we do not stand very well.

Currently in Wales we have three of our 22 local authorities in special measures for education (Anglesey, Blaenau Gwent and Pembrokeshire) with two others (Merthyr Tydfil and Monmouthshire) set to join them. Thus almost a quarter of Welsh local education authorities are in special measures. To this we can add a number of individual schools in special measures plus another few local authorities who came pretty close to being placed in this situation (and probably would have been if there hadn’t already been an unacceptable number). Now the Minister is threatening to use his powers to close, twelve months earlier than planned, Llanrumney High School in Cardiff which is already in special measures. Is all this time, cost, disruption and political capital really worth the candle for twelve months – assuming the plan is actually feasible? It sounds more like desperation to me.

So what is to be done? Well until Ministers realise that they won’t get the sort of change they want by issuing threats and edicts from on high then we won’t make any progress. All the circulars, laws, inspections, advice, commissioners etc won’t get anywhere until we get back to basics and consider what are the factors which inhibit improvements in the Welsh schooling system (and conversely those factors which will facilitate improvements). Then we have to make changes to the education system to remove those barriers and effect change for improvement.

A significant barrier to improvement must be overcoming what is termed “provider self-interest”. The famous economist, Adam Smith, writing in the 18th century said:

“The interest of the dealers in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it.”

Smith is often described as a “right wing” economist but that is a caricature he, himself, would never have recognised. He was a professor of moral philosophy who recognised the negative impacts on ordinary people of unfettered capitalism and the impact of monopolistic suppliers (including those in the public sector) on the public good. His views about the dangers of monopoly suppliers would have been shared by Marx and many other political scientists.

In many parts of the public sector (including schools) I suggest most of the reforms being proposed in Wales will be stifled by the negative responses of those working in the schools sector namely the teaching professions and trade unions. Now while it is understandable that these organisations wish to look after the interests of their members, it is not necessary for the general public or the political classes to accept or support their views.

I suggest that if we really want to improve the schools system in Wales we have to introduce some degree of provider competition in order to shake up the existing monopolistic arrangements. Let’s face it, for most of us who are unwilling or unable to send our children to private schools, the schools system is a monopoly. We have a choice of schools run by our home local authority or home schooling. We have some freedom to choose individual schools but that is often severely constrained.

Why not permit other organisations (e.g. private, voluntary or faith-based) to bid for local authority funding to establish and run their own schools thereby breaking down the usual approach of local authorities using schools funding solely for the purposes of running their own schools. Such a move could improve the choices available to parents and provide the catalyst to breakdown monopolistic self-interest and raise standards. Endless objections will be raised to such a proposal but many of them will be found to arise from existing provider self-interest.

While some in the Labour Party may prefer a monopolistic provision of public services by the state on ideological grounds, this is not an underlying principle of Labour Party socialism in the UK. Many members of the Labour Party believe strongly that competition in public services is a good thing provided it is regulated Two well-known examples are Alan Milburn (former Labour Cabinet Minister and one-time Trotskyist) and the academic economist (and former Labour Government adviser) Professor Julian Le-Grand.

If Welsh Ministers just sit on their hands and don’t make the sort of radical changes needed, I suspect that in three years’ time we will still be bemoaning the Welsh schools system which may have got even worse. In a time of financial austerity (which isn’t going to go away) the only way we are going to get significant improvement in Welsh Schooling is by radical change. Isn’t it time the Welsh Government forgot about headline catching things like new law making powers or taking over responsibility for Policing services in Wales etc and concentrated on bread and butter issues like delivering substantial improvements on what is perhaps the most important public service of all and the one which has the greatest impact on the future of Wales.

How do we avoid a repeat of Mid-Staffs: Cultural Change?

The report on the Mid-Staffs NHS Foundation Trust makes appalling reading for any of us let alone those who were intimately involved. Worryingly, there is some evidence to suggest that this is not an isolated case. The media has reported that five other hospital trusts are to be investigated over their mortality rates following the publication of the Mid-Staffs report. Furthermore, a report in a Sunday newspaper stated that a firm of solicitors is representing relatives and patients with regard to legal action at ten NHS Trusts. If this is the case then I suggest we cannot just dismiss Mid-Staffs as an aberration but we must look for more systematic causes and solutions.

In spite of the length of the inquiry and the efforts put into to it by the inquiry team in coming up with 290 recommendations, I am not convinced it really hits the nail on the head and comes up with workable solutions. At first glance, it seems to me that the inquiry report is correct when it talks about the need for fundamental change and shifts in attitudes and culture in the NHS. However, it is also not clear to me that there is any evidence that the cultural changes needed will be achieved by: legislation, criminal charges, regulation, inspection, greater Ministerial supervision and other controlling methods. Changing cultures is much more subtle than that and as I discuss later there are established lessons on how and how not to effect changes in organisational cultures.

Firstly let us deal with the resource issues head on. I find it difficult to believe that patients being forced to drink water from flower vases and lying in soiled sheets for many hours is a consequence of financial pressures. For goodness sake, in many years over the last decade the NHS has had record growth in funding and more modest growth in other years. Furthermore, between 1997 and 2006 the Royal College of Nursing’s own figures show that the numbers of qualified nurses in the NHS grew by 25% in England and around the same in the rest of the UK. Can we really believe that this sort of behaviour can be put down to “lack of resources” or “pressure of work”? I know from personal experience that there are many many dedicated and hard working professional nurses but am I the only person to have noted in some hospitals several sitting at the central station in a ward chatting or texting while bells ring. It looks more to me that a lot of the problems of Mid-Staffs can be put down to a lack of proper professional leadership in the nursing profession not shortage of resources. That is a clear issue of culture which needs to change.

Secondly there is an issue about the role of effective financial management and control in an NHS Trust. The inquiry report comments that it was the board which took the decision to pursue a cost-cutting drive to achieve foundation trust status and it was the board which refused to listen to the complaints of patients and, at times, staff. Now whether the board went too far in a drive to cut costs I do not know but what I do know is that there is a balance that must be struck between the delivery of services and effective financial management and control. The reality is that NHS Trusts have finite resources and have to deliver services within that resource constraint. This problem will not go away how many inquiry reports are produced. The danger now is that NHS Trusts will go too far in the other direction and take decisions resulting in huge financial overspends. This is particularly a concern at present in a period of financial austerity where NHS Trusts are having to identify large scale savings. Research I have recently completed on financial governance in NHS Trusts suggests that there are significant weaknesses in NHS financial governance which will be exacerbated by the pressures of austerity (http://www.publicservice.co.uk/feature_story.asp?id=21388)

Thirdly, I would also focus on the relationships between managers and health care professsionals in the NHS. In my 35 years’ experience of the NHS it seems to me that this relationship is at best, somewhat distant and at worst antagonistic and lacking in trust. Health care professionals often see NHS managers (or administrators as they prefer to call them) as “the enemy” involved in collaborating with government to deny them the resources they need to treat patients as they think fit. On the other hand, NHS managers often see health care professionals as unwilling to accept the realities of finite resources, defensive about their own professional status and practices and unprepared to engage, fully, in the decision making process as to how resources should best be used. Anyone who doubts his situation exists should have a look at TV programmes such as Casualty or Holby City to see how NHS managers are portrayed.

This week I heard a debate on the radio about the NHS which involved a number of health care professionals and a politician (no, there was no NHS manager invited). As usual, the cry came up for a greater involvement by healthcare professionals in decision making in the NHS. Similar arguments were heard at the time the Health and Social Care Act 2012 was going through Parliament and indeed subsequent changes were made to take this on board. I actually think most NHS managers would welcome such increased involvement and engagement by health care professionals provided those health care professionals accepted the realities of finite resources and were also prepared to be fully accountable for those decisions that they were involved in and would not stand on the side-lines carping. Let me take an example to illustrate this point – the issue of budgetary management in the NHS. In my experience, health care professionals often argue for them to hold budgets and have more influence on the way resources are used. However, when we explore this further what this often means is that while they want to get their hands on the money, they do not usually want to:-

• Deal with the administrative workload associated with managing budgets

• Deal with, for example, problems such as high levels of staff sickness or maternity cover which impact on budgets

• Deal with the pressures of declining budgets caused by financial austerity

• Be fully accountable for the services they provide on the resources available

If any of the above take place the usual response is to pass the problem to managers or administrators to deal with.

In conclusion, I think it is essential that cultural change takes place in the NHS if we are to avoid repeats of the Mid-Staffs scandal. However, I am not convinced that the inquiry’s recommendations are the way forward. There has been much written about how organisational cultures can be changed and the first thing to say is that it is difficult. The other thing we could do is heed the words of John Kotter perhaps the leading global expert on cultural change in organisations. He makes a number of key points

• What is the nature of the problem? – firstly, virtually no one clearly defines what they mean by “culture,” and when they do they usually get it wrong. Secondly, virtually no one has read the original research that shows why culture, when clearly defined, is so important, how it is formed, and how it changes.

• How does culture get changed? – it changes by a powerful person at the top, or a large enough group from anywhere in the organization, deciding the old ways are not working, figuring out a change vision, acting differently, and enlisting others to act differently. If the new actions produce better results, then this is communicated and celebrated, and if they are not killed off by the old culture fighting its rear-guard action, new norms will form and new shared values will grow.

• What does NOT work in changing a culture? - Some group deciding what the new culture should be. Drafting a list of new values which are passed to the PR or HR departments with the order that they tell people what the new culture is. They cascade the message down the hierarchy, and little to nothing changes.

In Kotter's words: that’s the whole story. Which path to cultural change will the NHS take??

What is the Ministry of Defence doing with our money?

In the last few days we have seen a number of stories concerning the future configuration of our armed forces.


• Aircraft - MPs on the Commons Defence Committee have accused the Ministry of Defence of making a "rushed and flawed" decision concerning fighter aircraft for the Royal Navy's planned new aircraft carriers. The choice fell between the F35C carrier landing variant and the F35B jump jet variant. On the face of it, the carrier landing variant of this aircraft looked a better bet with lower costs, a longer range and it can carry more weapons. The previous Labour government favoured the jump jet variant but the coalition government in 2010 announced that it favoured the carrier landing variant. Last May the coalition government reversed its decision and went back to the jump jet option. The reasons for choosing the jump jet option is said to be fears that the costs of fitting the necessary equipment to the new carriers were thought to be going out of control which seems a strange thing to admit. The Committee MPs have also intimated that all this flip-flopping over the decision is wasting huge sums of public money.

• Ships - Four decommissioned Type 22 frigates HMS Cumberland, HMS Campbeltown, HMS Chatham and HMS Cornwall are currently moored in Portsmouth Harbour awaiting buyers. It appears that no proposals to preserve the ships have been submitted but there are bids to either recycle them or turn some of them into artificial reefs. These ships are about 25 years old. This comes just one month after General Sir David Richards, the UK Chief of Defence Staff and himself a soldier, told an invited audience that one of his main worries was the lack of Royal Navy destroyers and frigates.

• Soldiers – Last week the MOD announced plans to cut a further 5,300 posts as part of the Coalition’s defence cuts. This is the third “tranche” of Army sackings, which will cut the regular Army from 102,000 posts to around 82,000. This will be the smallest army since the Napoleonic wars.

Now let’s be clear about this. Most of us fully understand the nature of financial austerity and why we have to have it. We also understand the budgetary pressures being faced by the MOD even though some of these pressures are the consequence of poor decision making in the past. However, we we also emphasise the importance of good financial analysis and decision making when making complex decisions although some of us, based on personal experience, wonder how effective the financial analysis of public policy options in Whitehall really is. Finally, we also recognise that decisions about public services have to take account of a wide range of strategic and operational issues as well as the financials. It is not clear that this is what is happening in the MOD and it does look more and more like a cost cutting exercise with little strategic direction.

If we look across the globe we see a huge number of strategic challenges which may impact on the UK’s armed forces:

• The aftermath and legacy of the war in Afghanistan after withdrawal in 2014

• The future of UK military involvement in North Africa, limited at present but which may result in mission creep

• The instability in the Middle East and the potential future impact on oil supplies and shipping through the Suez Canal

• The potential for conflict between China and Japan over the Senkaku/ Diaoyu Islands which may drag the USA into any conflict and also other NATO countries

• The nuclear threats from Iran

• Given the anaemic state of the global economy the potential for trade wars and the possible need for a military response

• The wish for the UK Government (although perhaps not the population) to intervene in conflicts in other countries

It could be argued that defence of the real is the primary public service which goes back centuries. Does it seem that defence needs are really at the forefront of MOD planning or is it just a budget cutting exercise?

University Research Assessment: Measuring the pig instead of fattening it

Virtually all universities in the UK undertake a variety of research activity, across the range of subject areas, leading to the creation of new knowledge and, hopefully, benefits to society. In undertaking research they have potential access to three main streams of research funding:-

 

·         Public funding provided for research purposes by the various higher education funding councils in the UK (the so-called QR funding). This funding is not provided in the form of grants for specific research projects but is a stream of research funding given to universities and over which they have considerable discretion as to how it should be used. For the UK as a whole this funding is approaching £2billion per annum

·         Public funding provided by the various research councils who provide grants for specific research projects and programmes. Total research council funding amounts to some £3billion per annum

·         Funding from various other private, public and charitable sources who also provide grant related funding.

 

The QR funding allocations to universities are now to be informed (not decided) by a process called the Research Excellence Framework (REF) which is an exercise designed to assess the volume and quality of research output from universities. The current REF is the seventh such exercise (previous exercises went under the title of Research Assessment Exercise or RAE).

At the time of writing universities are enmeshed in the current REF process which involves expert peer review of their research activity. Universities are invited to make submissions as to their research outputs for the previous five year period with the greatest emphasis being placed on the publication of research papers by academic staff. These submissions are reviewed by a panel of academic experts and an overall research profile for the university decided. These profiles then inform future QR funding for the years ahead.

The REF is a very bureaucratic process which involves significant time and cost inputs by: the funding councils, the universities themselves and the expert panels. In 2003 I undertook an exercise which estimated the costs of the 2001 RAE exercise as being of the order of £100 million for the HE sector as a whole. This equated to almost 10% of the annual funding available at that time. There seems no reason to believe that the current REF is any less bureaucratic or costly to operate.

Somebody once said that you don’t make a pig any fatter by measuring it. Perhaps the same applies to the REF. The effort expended on this bureaucratic and time consuming exercise might better be spent improving the volume and quality of research output. Moreover the “quality” of research output is itself assessed in relation to narrow academic criteria rather than the benefits produced by the research to society at large. There are other issues too. Concerns are often expressed that the whole REF process is just a device designed to protect the older and better funded universities from predatory newcomers or even private research organisations. Finally there is little in the way of competitive forces in action with this process. With research council funding, universities do have to submit bids in competition with other universities and funding is given to the most suitable applicant.

Since 1996 the main university trade union has maintained a policy of opposition to the RAE/REF approach. In its view,

The RAE has had a disastrous impact on the UK higher education system, leading to the closure of departments with strong research profiles and healthy student recruitment. It has been responsible for job losses, discriminatory practices, widespread demoralisation of staff, the narrowing of research opportunities through the over-concentration of funding and the undermining of the relationship between teaching and research.

It is too late to do anything about the current REF process but thought will soon be given to its successor. In this time of financial austerity perhaps we should start thinking about having less complex and costly mechanisms for sharing out funds and look for something more likely to give value for money. One alternative approach might be to do away with the whole QR funding process and channel all the funding through the research councils. In this way government can more easily concentrate research funding in what are seen priority areas. Another approach might be to base research funding on some easily produced metrics which also has the advantage of greater transparency and objectivity compare to the current approach.

 

Why can’t central government control its expenditure?

Today the Office for National Statistics and HM Treasury published details of UK Public Sector Finances for December 2012. The figures, once again, make uncomfortable reading. Public sector net borrowing was £15.4 billion in December 2012 which was £0.6 billion higher net borrowing than in December 2011. Albeit overall borrowing for the first nine months of the year is considerably lower than for the equivalent period in 2011.

While tax receipts for December 2012 were relatively strong being 3.6% higher than the equivalent figure in December 2011, the overall growth in receipts for the nine months April to December was only 0.3% higher than for the equivalent period in 2011. This reflects weak growth in receipts of income tax, capital gains tax and national insurance contributions consequent on a sluggish economy.

However, if we look at the expenditure side, central government current spending is 5.4% higher in December 2012 than in December 2011 and for the nine months April to December is 2.7% higher than for the equivalent period in 2011. While some of these increases may be linked to higher payments of demand led social benefits this does not provide a full explanation.

For the last two years, local authorities have been faced with draconian cuts in funding and have had to take radical actions. While some have struggled to deal with cuts of this magnitude many have taken actions which have produced the necessary savings which have balanced budgets while limiting the damage to front line services. At the same time they have avoided raising council tax. This is clearly not the case in central government

For too long, local government has been accused by Ministers from all parties of having lax financial control arrangements. Maybe it is time Ministers looked at the plank in their own eye.