Category Archives: Campaign4Change

Mutuals and SMEs under spotlight as government responds to EC procurement green paper

Posted on 07/09/2011 | Leave a comment

By David Bicknell

A post on Public Service Europe has argued that the govenment needs to explain its positioning on some key public procurement issues, notably in relation to mutuals and SMEs.

The post, written by a UK lawyer, argues that the government’s proposals sound ‘refreshingly promising’ but may reflect some  contradictions in wider policy.

It suggests that “the penny seems to have dropped in government that procurement policy is central to getting the economy moving again and not simply the esoteric occupation of a small number of professionals. The government has now published a Procurement Policy Note (05/11) setting out how it intends to engage with the commission on the reform of the rules. The note states that the rules as they currently stand are too complex, onerous and costly and encourage a risk-averse and over-bureaucratic approach to procurement within the EU.”

It adds that, “The note confirms that the government will be actively influencing the commission, other EU member states and the European Parliament in the run up to the publication of the commission’s proposals for revised and updated directives, and calls on those in the public procurement community who may have links to such bodies or other stakeholders to participate in that process and push the UK message. Whether the government will be successful; only time will tell. In the meantime it could let us know where it stands on the above issues.”

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Posted in Campaign4Change, mutualisation, mutuals, procurement, public sector, public services, SME

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Letter to No 10 opens up energy prices and climate change policy discussion

Posted on 06/09/2011 | Leave a comment

By David Bicknell

It seems as if with the party conference season not far off, discussions are taking place around the edge of government over energy policy, which may have some implications down the line as far as business energy costs and climate change legislation are concerned.

It follows a leak to the Daily Telegraph of a note to David Cameron  discussing the impact of energy and climate change policies on energy prices, Although the focus of the letter is on consumer energy prices, it is possible that a wider review may also need to examine the effect of government policies in the form of climate change legislation on businesses.

The letter suggests that four policies stand out as having the most significant impact on household energy bills: carbon pricing (both the carbon price floor and the EU emissions trading scheme), the new Energy Company Obligation, the Electricity Market Reform package and the Renewables Obligation.

The letter goes on to ask whether policies can be opened up, particularly support for relatively high-cost technologies such as offshore wind, in a way that minimises cost and disruption to investment.

It’s possible that, as the Guardian suggests, the leaked letter is part of a sabre-rattling exercise ahead of the conference season. On the other hand, with consumers strapped for cash, energy prices on an ever upwards spiral, and businesses struggling in a stagnant economy, a healthy debate over energy policy is  perhaps not a bad idea, though, as the Guardian headline puts it, that risks pitting fossil fuels against renewable energy.

There is some more background to the story here:

http://www.businessgreen.com/bg/james-blog/2106683/10s-criticism-decc-lacks-credibility-energy-ideas

http://www.guardian.co.uk/environment/damian-carrington-blog/2011/sep/05/greenpolitics-energy

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Posted in Campaign4Change, Climate Change, environmental, greentech, sustainability

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Capita event added to the public service mutuals ‘conference season’

Posted on 05/09/2011 | Leave a comment

By David Bicknell

The autumn conference schedule is already starting to fill up, with an update of the current landscape for public service mutuals high on organisers’ subject agenda.

The widespread interest in the mutuals concept means a busy diary for Mutuals Taskforce Chair Julian Le Grand, who indeed will be on hand for the latest, from Capita: Public Service Mutuals is the title of the event to be held in Central London on 7th December.

Other speakers include Heather Mitchell, Acting Chief Executive, NHS Swindon;  Margaret Elliott OBE, Director, Sunderland Home CareAssociates; Ben Jupp. Director Social Finance; Carole Leslie, Director of Policy, Employee Ownership Association;  Councillor Steve Reed, Leader, Lambeth Council; John Telling, Group Corporate Affairs Director at the Mitie Group; and Patrick Lewis, Partners’ Counsellor at John Lewis.

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services

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Civil service “full of brilliant people terribly managed”

Posted on 01/09/2011 | 3 comments

By Tony Collins

Andrew Adonis was transport secretary in Tony Blair’s government. Last year he became director of the Institute for Government which Adonis describes as a thinktank that speaks truth to power.  Among other things it produced the excellent System error: fixing the flaws in government IT which advocates an agile approach to innovation at the front line.  

Now in an interview with Politics.co.uk  Adonis points out the institutional weaknesses of the civil service.  “My criticisms are about the machine,” he says. “My own view is that the civil service is full of brilliant people who are terribly managed.”

One of the biggest problems is what he calls the  “laughably” named permanent civil service. People change jobs because of a merry-go-round culture which makes no sense, he says.  It’s not a problem that’s going away: since the general election ten of the 16 departments of state have had changes in their permanent secretary.

“The machine really is very badly run,” he says.

Comment

What Adonis says is important because institutional resistance to change and innovation is largely because what exists is said to be work well. It doesn’t work well because government administration costs tens of billions much more than it should and the National Audit Office has found that fraud and error in two of the biggest departments, HMRC and DWP, are at unacceptable levels. 

It’s time that the point made by Adonis, and many others of some authority, is given more credence.  Systems within government need changing and, particularly, simplifying  – not in a rush and not without proper thought and testing.

The old argument that government administration aint broke so leave it alone doesn’t stand up to independent scrutiny. It is broke and it needs intelligent, inventive and cheap-to-implement change.

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Posted in Agile, Campaign4Change, change management, Government IT, innovation, Lean, managing change, procurement, public sector, public services, reforms, SME, Uncategorized

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Why corporate sustainability strategy is now part of the CFO’s role

Posted on 30/08/2011 | Leave a comment

By David Bicknell

The organisational politics around sustainability are an ongoing issue. So far the need for a  sustainability strategy has touched those responsible for corporate social responsibility (CSR),  marketing (because of the brand and reputation implications of Carbon Reduction Commitment (CRC) league tables) and IT and Facilities who are having to manage and measure energy usage.

Now, an Ernst & Young report recommends, it is the CFO’s turn to pick up the baton.  As this piece suggests, sustainability trends are shifting the role of the CFO in three key areas:

  • Investor relations:  “Shareholders are speaking much louder and much more stridently than they did just a few years ago.  During the 2011 proxy season, 40 percent of shareholder resolutions were related to ESG issues. And over a quarter of ESG-related resolutions gained a 30 percent “Yes” vote, which Ernst & Young describes as a critical threshold (other observers say anywhere from a 10 to 20 percent vote can motivate companies to rethink their policies).  Mutual fund companies are paying more attention to sustainability related issues, and the rating companies (which have received, ahem, a fair bit of scrutiny lately) are directing more focus towards ESG matters as well.  All this leads to a shift in the duties of companies’ investors relations staffs; and CFOs, according to Ernst & Young, will lend more than a few hands with the demands placed on IR departments.
  • External reporting:  More than 3000 multinationals issue sustainability (or CSR or ESG) reports, and many of these companies now provide more than static or trite glossy PDFs.  Companies including UPS, Timberland, and Microsoft are raising the bar in offering frankness while encouraging increased stakeholder engagement.  To that end, more companies are having their sustainability reporting audited by third parties (such as the Carbon Disclosure Project for carbon emissions performance).  And that experience with third party performance falls into the CFO’s lap because they know how to balance the challenges and opportunities that arise from third-party verification.
  • Operational controllership and financial risk management:  Early last year, the Securities and Exchange Commission issued guidelines to companies on how to disclose risks possibly related to climate change.  Carbon data, and more frequently, water data, is becoming financial data because of these resources increasing price.  What was once tangential to the costs of running businesses has and will be central to the financial risks that come when running a company.  Whether evaluating the costs of large capital projects or ascertaining the reliability of sustainability data, CFOs and the departments they head will be careful when ensuring that all this data is accurate.”

Admittedly, currently this is probably a more US-focused development. But then it’s probably only a matter of time before CFOs here have to start considering the sustainability implications of their job, if they are not doing so already.

Here are five immediate actions CFOs can take to enhance corporate value through sustainability:

• Actively pursue a sustainability and reporting program.
• Ensure that those responsible for sustainability matters do not operate in isolation from the rest of the enterprise — especially the finance function.
• Enhance dialogue with shareholders and improve disclosure in key areas, particularly those related to social and environmental issues.
• Ensure that directors’ skills are relevant to the chief areas of stakeholder concern, including risk management tied to social and environmental matters.
• Consider using nontraditional performance metrics, including those related to environmental/sustainability issues.

Ernst & Young report: How Sustainability has Expanded the CFO’s Role

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Posted in Campaign4Change, environmental, sustainability

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Mutuals Taskforce urged to guarantee a level playing field exists for service providers

Posted on 26/08/2011 | 1 comment

By David Bicknell

An article has appeared on the Civil Society website which seems to muddy the waters over the creation and role of public services mutuals.

The article says that Acevo, the Association of Chief Executives of Voluntary Organisations, has warned that new public services mutuals which have spun-out from government, risk inhibiting other providers in the voluntary and private sector, as they are guaranteed business from the state to support their incubation.

The piece quotes Sir Stephen Bubb, chief executive of Acevo, warning that new spin-outs from government have guaranteed business from the state to support their incubation, so risk inhibiting competition.

“Care must be taken to ensure that mutualisation does not block or slow down potential service providers from other sectors,” he says. “And the Taskforce should seek evidence that this is not happening with any of the pathfinders or their predecessors in the NHS.”

Sir Stephen is  also quoted as saying that there is a danger that some public sector agencies may see mutual spin outs as a way to get wages and costs off their books.

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services

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Some ways to change government practices

Posted on 23/08/2011 | 1 comment

By Tony Collins

Mark Foden, a consultant to the public sector, says that transformation is much more likely to come about through collaboration and small incremental changes than strong-arm tactics such as mandation and regulation.

He also suggests that rather than pay high-cost contractors, government should pay more for talented specialists – and possibly pay them much more than their managers.

Foden has worked within government for many years and has seen some of what works and doesn’t. He advocates the use of internal social networks within and across departments.

He sets out his views in a critique of a report of the Public Accounts Committee on Information Communications and Technology in government.

Foden’s views are to some extent in line with the so-called “nudge” non-regulatory approach to behaviour change. Nudge was used originally by Richard Thaler and Cass Sunstein who define it as:

“… any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not”.

These are some of the points Foden makes:

– Systemic change. It isn’t enough to change policy, process and structure and hope that deeper, more systemic, changes will naturally follow.

Targets. There is a deep-grained, almost unquestioned, culture of using targets to control performance. “Often, targets drive target-meeting behaviours rather than performance-improving ones…Measuring, on the other hand, is crucial; but it must be used in the spirit of learning and developing rather than explicitly for controlling…”

Language. Be careful how you use expressions such as “buy-in” and “deliver”.  Buy-in suggests something that is decided by one group of people then ‘sold’ to another. This is just not a great model for helping civil servants feel involved and empowered. “If people are going to play an important part in achieving something then they must be, and feel, involved from the beginning. Just using terms like this creates the wrong dynamic. Rather than cautioning about not achieving buy-in the Public Accounts Committee should be encouraging more-open, more-inclusive behaviours.” Deliver, says Foden, is too transactional. “I just can’t get the ‘deliver a parcel’ sense out of my head: something neatly packaged then sent to a recipient at a specific time. Managing change is just not about this.”

SMEs. “To get benefit from working with SMEs Government will need to bend, in perhaps significant ways; and people will need to behave differently. This is new territory: time should be taken to experiment and find out what approaches flourish. The useful approaches should be developed – incrementally – in much the same way the strategy proposes IT be developed. And this may take years.

Lean. “Change cannot be made by feeding new policy into an old machine. “Government will need to reshape (and that’s not ‘reorganise’) itself dramatically – perhaps using ideas like Lean – and, to do that, it will need to foster new behaviours; like being more open, being naturally collaborative and being more entrepeneurial. The Efficiency and Reform Group [of the Cabinet Office] should attend explicitly to nurturing such new behaviours.

Pay specialists more than their managers? “If government wants more talent, then it must be able pay the market rate for the people it needs and then provide them with hugely satisfying work in an affirming, supportive environment so that they stay around. This will be far cheaper and, in most cases, better than hiring long-term contractors. If this means paying specialists (sometimes considerably) more than their managers, so be it. There’s a real cultural hump to be got over here.”

More on Mark Foden’s views

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Posted in Agile, Campaign4Change, change, change management, collaboration, Government IT, innovation, Lean, managing change, public sector, public services, reforms, SME

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Hammersmith & Fulham mutual Pathfinder expected to launch in January 2012

Posted on 22/08/2011 | 1 comment

By David Bicknell

One of the Government’s flagship employee-led mutual Pathfinder pilots is now expected to be launched in January 2012 and be up and running by Spring next year.

The mutual, which is being led by the London Borough of Hammersmith & Fulham, but is part of a tri-borough business model with Kensington and Chelsea and Westminster, will have ‘social enterprise status’ and will deliver existing education support services to schools and some services back to the Local Authority.

A recent report on the mutual plan published by Hammersmith & Fulham proposes a pilot scheme to set up an employee-led mutual to deliver services to schools and the council (with the council commissioning some services from the mutual for a four year period). These services are currently delivered by schools resources division within the Children’s Services Department. The pilot proposal follows the council’s five stages of transition for staff wishing to develop so-called “New Ways of Working.”

The guiding principles of the proposed scheme are that:

• Staff and financial risk are transferred out of Hammersmith & Fulham

• The pilot will have the opportunity to develop its market share not only within the three boroughs, but much wider, such as with Independent Schools and Free Schools. The council says this will enable a more robust delivery model and further financial benefits through economies of scale

• A form of Mutual (John Lewis Partnership) model of staff ownership encourages business focus. It is intended that all staff will become shareholders, with shares allocated proportionally to responsibility/commercial value

• The mutual offers more than just delivery of the council’s medium term financial strategy plans, but presents opportunities for the Council to further benefit from the outset and again if the venture proves highly successful

• The mutual is part of the tri-borough merger and follows the principle of removing the direct delivery of discretionary services

One of the key drivers for the mutual is the council’s desire to drive a more “commercial” approach to service delivery whilst delivering efficiencies in line with its medium term financial strategy. It has  proposed that the Schools Resources Division which currently offers support to the Council as well as trading directly with Schools, offers a unique opportunity to pilot these ‘new ways of working’ whilst further driving efficiencies in Children’s Services.

To put the drivers into context, Hammersmith’s Schools Resources Division must deliver annual reductions totalling £475k of savings over the next three years; a 34% reduction in its baseline spending. It says, “Maintaining the confidence of schools through effective service delivery efficiencies requires creative solutions. This proposal provides an opportunity for piloting a ‘New way of Working,’ whilst exceeding the proposed medium term financial targets. It offers a broad package of services that by externally trading provide opportunities for expansion to deliver savings, whilst taking advantage of additional opportunities available through the tri-borough merger.”

It adds, “As part of the development of the business model, tri-borough partners in Westminster (WCC) and Kensington and Chelsea (RBKC) have identified opportunities to expand the scope of the mutual to provide IT services to schools in RBKC and WCC. Any tri-borough partnership will be subject to all the respective Cabinets’ approval, although the opportunity supports the joint strategy of progression for the three directly managed services.”

Although it is possible numbers might change, the report indicates that the proposed mutual “will be comprised of 21 Hammersmith & Fulham staff from the onset, with the additional inclusion of 12 ICT staff from Kensington and Chelsea (subject to RBKC Cabinet), and a further 7.8 ICT staff from Westminster (subject to Westminster Cabinet and further due diligence). Both Councils are expected to join the proposal between January 2012 and April 2012, depending upon the most appropriate timings for their respective Councils.”

The anticipated launch date of the proposed mutual is 9 January 2012. Hammersmith & Fulham says this date is a realistic one and is confident of an April 2012 start although further work is being undertaken to establish if the timescale can be accelerated. Hammersmith & Fulham says the inclusion of the other two boroughs will significantly develop the schools market and provide the business with a larger base to manage its operations from.

Some other points are covered in the report:

  • “The Council envisages that all staff will transfer from the Council(s) to the new company under TUPE (The Transfer of Undertakings (Protection of Employment)) Regulations with the possible indemnity for the first twelve months redundancy in line with other outsourced contracts”
  • “In addition, the mutual will reinvest a percentage of its net profit back to the local authorities(where the business is receiving income) for the enhancement of learning for young people, as identified by the Councils. This will be enshrined within the contractual relationship between Hammersmith & Fulham (and other Councils) and the mutual for the four years of the pilot phase where the Council(s) is also commissioning services.”
  • “For the first four years of the mutual the other 50% net profit will be retained by the business to provide a profit for any partners and develop a growth fund and develop the business on a secure footing. Given the national circumstances it is envisaged that there is unlikely to be any pay awards or dividends to the mutual staff in the first few years of the business, although this will be determined by the business and its partner in line with the business progress.”
  • “At the end of the four year period the Council will be tendering the strategic contract and the mutual would be able to compete with other providers and may or may not win the contract. By allowing the mutual four years it can effectively build its client base and develop its offer to schools, such that it should have sufficient capacity to re-direct resources should it be unsuccessful in the Hammersmith &Fulham contract.”

Andy Rennison, Hammersmith &Fulham’s assistant director for schools’ funding and the future director of the mutual, said: “What we do makes a big difference for schools and while we have solid systems, a solid approach and strong brands as boroughs, the status quo is no longer an option for us. We are working against a backdrop of massive financial pressures and that, along with changes in government policy around academies and free schools, means we must fundamentally change the way we deliver our business if we are to survive and grow. Becoming an employee-led mutual gives us a real opportunity to take control of the agenda and further develop a strong and sustainable service going forward.”

Questions and Answers

Q. Who is the lead council on this?

A. Hammersmith & Fulham Council

Q.Do staff from all councils get the opportunity to go into the mutual to work? 

A. Staff from the three boroughs who are engaged in this specific area of work will get the opportunity to go in to the mutual

Q. Are the timings in the report up to date – i.e. when it is planned to be set up (September 2011) and begin (April 2012)? 

Yes, we aim to have it running by April 2012.The mutual social enterprise is currently in the process of being set up and the council plans to go to market in September to procure a private sector partner to assist with its establishment. The tri-borough mutual social enterprise plans to go live from the start of April.

Q. Has this been approved by all three councils and what are the next steps?

A. The proposal to set up a mutual social enterprise was part of the tri-borough implementation plans in education services for all three boroughs. H&F council has approved the option appraisal and initial business plan, which includes authority to go to market to procure a private sector partner. Discussions are still taking place in the Kensington and Chelsea and Westminster boroughs about the final arrangements and staff affected. A tri-borough staff consultation is planned to take place in October.

Hammersmith & Fulham Mutual Proposal Report

Tri-borough Proposals Report

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services

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Mutuals and SMEs remain at risk of EU procurement rules despite government calls for change

Posted on 22/08/2011 | 3 comments

By David Bicknell

A recent article on EU procurement has raised the possibility of the risk of a challenge to the government’s plans to make procurement easier for fledgling mutuals and social enterprises still trying to get their feet off the ground.

There are also implications for SMEs battling to gain a foothold in government procurement.

The piece  argues that even though the govenment is trying to change EU procurement laws, that itself is likely to take a couple of years. So, it asks, if the UK government is making a proposal around mutuals now, what will it do regarding procurement in the meantime?

In the UK government’s recent formal response to the European Commission Green paper on the modernisation of EU public procurement policy, the government said:

The UK welcomes the Green Paper on modernising public procurement, and the commitment that proposals to simplify the public procurement directives will be published at the end of 2011 or early 2012. The UK strongly agrees with the Commission’s comment on the need for streamlined and flexible procurement procedures, so that purchasers can obtain high quality goods and services, while delivering value for money for the public purse. Radical simplification is needed for the benefit of small and medium-sized enterprises (SMEs), other suppliers and public purchasers alike.

The main priorities in the revision of EU public procurement policy should be:

To make clear that contracts could be awarded directly for a period of, for instance, three years, to employee led organisations/mutuals, to enable employees to gain experience of running public services prior to full and open competition

Reducing lengthy and burdensome procurement processes that add cost to business and barriers to market competition

Providing more flexibility for purchasers to follow best commercial practice, so that the best possible procurement outcomes can be achieved, and

Supporting measures to enhance SME access to public procurement, where such measures are non-discriminatory and are consistent with a value for money approach.

The full response is available here

The article goes on to suggest that changes should be made to simplify and harmonise ‘dynamic purchasing’ techniques such as framework purchasing agreements, which need to be made more flexible to benefit SMEs.

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Posted in Campaign4Change, EU procurement, mutuals, public sector, public services, SME

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MPs criticise PFI value for money and the MoD’s failure to invest in effective logistics systems

Posted on 19/08/2011 | Leave a comment

By David Bicknell

Two parliamentary committees, the Treasury Select Committee and the Public Accounts Committee, have today made strong criticisms about the use of private finance initiatives (PFI) and of IT systems for defence logisitics.

In its report, the Treasury Select Committee suggested that PFI funding for new infrastructure, such as schools and hospitals, does not provide taxpayers with good value for money and stricter criteria should be introduced to govern its use.

The Committee’s chairman, Andrew Tyrie MP, said:

“PFI means getting something now and paying later. Any Whitehall department could be excused for becoming addicted to that. We can’t carry on as we are, expecting the next generation of taxpayers to pick up the tab. PFI should only be used where we can show clear benefits for the taxpayer. We must first acknowledge we’ve got a problem. This will be tough in the short term but it should benefit the economy and public finances in the longer term.

“PFI should be brought on balance sheet. The Treasury should remove any perverse incentives unrelated to value for money by ensuring that PFI is not used to circumvent departmental budget limits. It should also ask the OBR to include PFI liabilities in future assessments of the fiscal rules. 

“We must also impose much more robust criteria on projects that can be eligible for PFI by ensuring that as much as possible of the risk associated with PFI projects is transferred to the private sector and is seen to have been transferred.”

In its report on the defence logistics supply chain, the Public Accounts Committee was critical that the MoD had made little progress in resolving long-standing problems with its supply chain information, despite giving previous assurances to the Committee.

Its recommendations for improving future performance include the following comments:

“The Department accepts that historic underinvestment has meant its management information systems and the underlying IT systems are not up to the task. In particular, its spending on IT systems has not kept pace with the need to upgrade those systems.

 “The Department has made investments in new data systems – for example £66 million has been spent on the Management of the Joint Deployed Inventory system which tracks equipment in theatre – and more is planned.

“In 2010, the Department signed an £803 million, 11-year contract with Boeing for the provision of the Future Logistics Information Services project. Under this contract, Boeing is required to bring together 270 different data systems operated by 50 different contractors, which should provide a complete and coherent set of data for managers to use.

“Separately, the Department has now approved an additional £75 million to upgrade some of the defence base inventory management systems that are now at critical risk of failure.

“The implementation of the Future Logistics Information Services project, including the additional upgrade to the warehouse inventory management IT system, will not be complete until 2014. The Department told us it would take a long time to upgrade systems and data, in part because of the need to ‘cleanse’ the data – otherwise the poor quality information the Department currently holds would simply be transferred onto a better IT system.

“We are very concerned that, until the systems are fully rolled out in 2014, the high risk of system failure will remain in systems that are critical to supporting front line troops. To ensure that there is no further slippage in this critical area, the Department has provided us with a plan of the scheduled projects for improving data systems and has promised to report back in six and twelve months on how it is performing against its milestones.”

(Tony Collins is away this week.  But he’ll be back shortly to offer his unique insight on Government and public sector IT projects)

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Posted in Campaign4Change, Defence, Government IT, Value

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