No Growth, Low Growth or Local Growth?

Can anyone help with a conundrum that has been bothering me?

We are, notoriously, living through an extended period of low or no growth as measured in terms of GDP. Commentators are falling over themselves to debate whether we are now in a depression rather than simply a recession and there is on-going speculation about a triple dip and a sense that as a country we will remain well below the trend rate of growth for many years.

On the other hand, when one looks at the figures for the growth in GVA at local authority level right across the country the picture looks very different. Growth rates of 7% or more over the last two years are not uncommon.

Can these both be right? And if they are, what is the explanation for the apparent difference between a flat lining national economy and what would seem to be significant growth rates in the value of goods and services in local economies across the country?

In simple terms the relationship between the two is that GDP is equal to GVA plus taxes on products (such as VAT or excise duties) less subsidies on products. GDP can only be calculated at national level given these adjustments. There are also some important measurement issues to consider; for example GVA is estimated on a nominal basis (so there is no adjustment for the price of goods and services across the country) and GDP is at market prices. However, nominal prices would serve to explain differences between different parts of the country not to explain differences between GVA and GDP when the tax and subsidy adjustments are taken into account.

My initial hypothesis, however, picking up the last point, was that the difference between aggregate GVA and GDP might be explained by movements in those taxes and subsidies. For example, taxes may be down due to the recession (although GDP does not include business taxes such as corporation tax which we know has seen a substantial drop over the last year). Subsidies on products may have increased. In that scenario the combination of reduced tax and higher subsidy might explain the wider difference.

Another possibility is that the explanation lies in shifts in terms of the performance of different sectors. However, all other things being equal one might expect that such differential performance would be reflected in both measures although there will be a different balance between production, taxes and subsidies for each.

Yet enquiries to the ONS suggest that the movement in taxes and subsidies is not generally considered to have a significant effect although there have been increases in tax rates (most notably VAT) which would have an impact at the time at which the changes took place. An increase in rates does not translate automatically into an increase in tax take but the trend on VAT take has been upwards since 2009 and is forecast to rise further.

The ONS has also suggested that the significantly greater GVA growth compared to GDP is not a consistent phenomenon and that ‘since the beginning of 2008 GDP growth has been higher in four quarters, GVA in five quarters and level in the remainder’. I will admit to finding those figures quite surprising.

So can someone settle this once and for all and provide an explanation for the apparent divergence which otherwise seems to suggest relatively healthy growth in many parts of the country but a flat lining economy when considered nationally; they can’t both be right, can they?

I now prepare to be embarrassed by a statement of blinding simplicity which will put me to shame and send me scurrying away with my tail between my legs.

Accountability System Statements: To Whom, About What and Why?

The increasingly convoluted attempts to reconcile Ministerial accountability to Parliament for spending public money and greater devolution of decision making about the use of such funds can sometimes appear designed solely to avoid the blindingly obvious conclusion that more local decision making requires more local accountability. 

It would, however, also help if there were a clearer distinction between the things for which Government Ministers should properly be held to account by Parliament  and the current focus on ensuring that other decision making bodies are up to the job and can, if something goes wrong, 'expect to be held to account ….. by Ministers and the Accounting Officer'. But not, note, by Parliament.

We can illustrate some of this by reference to major local transport schemes since yesterday saw publication of the latest of the accountability system statements that the Government sees as providing reassurance to the PAC that Ministers retain the necessary level of control and influence:

http://assets.dft.gov.uk/publications/accountability-system-statement/accountability-system-statement.pdf. 

These system statements contain a lot of perfectly sensible elements and this one in itself largely repeats stock approaches. It does, however, follow hot on the heels of announcements by Transport Ministers on devolving major local transport schemes to local decision making which raise significant issues in the context of accountability.

First, there is the ‘key role’ for Local Enterprise Partnerships which will work with local transport authorities (LTAs) in new Local Transport Boards (LTBs). LEPs have the most extraordinarily confused accountability both locally and nationally given their wide range of governance and other structures, highly variable membership, frequent lack of corporate personality and private rather than public sector leadership. Had funds been devolved to the LTA the whole apparatus of propriety, audit and value for money that applies to local authorities would have been engaged immediately.

As it is, we now have a whole new set of arrangements to ensure that LTBs are operating properly in their role to agree, manage and oversee the delivery of a programme of transport schemes. Whilst the Government clearly want to emphasise LEP leadership, the bottom line is that locally elected politicians from the LTA (or LTAs) will have the majority vote. There is a legitimate issue about scale in some areas but there are Combined Authority and Integrated Transport Authority structures which can be used where LTAs wish to work together.

Secondly, whilst there is a 'key objective of removing Whitehall from the process of making decisions on which local schemes should or should not go ahead’ Ministers retain a responsibility ‘to ensure that the new local decision makers have arrangements in place to achieve the value for money … and we will shortly publish detailed guidance on [local assurance frameworks]'

These frameworks will cover governance, financial management, accountability, meeting value for money and environmental considerations and will need to be approved by the Department. These are also said to go beyond the general local authority accountability statements because they include elements that are specific to the approval and funding of major transport schemes.

There are indeed specific approaches to appraisal of transport schemes but these can, and indeed probably will be, a continuation of those already used. Beyond that the likelihood is that the statements will form a set of detailed accountability documents with each LTB which will tell us precious little that we didn't already know.

The further irony is that whilst an LTB might do quite a lot, one thing it won’t do is the actual delivery of the transport schemes. That is devolved to a body such as, well, a local authority. And the accountable body for holding the transport scheme funds will also be …. the local authority.

Thirdly, the original consultation document on the new devolved approach says:

‘This is not about passing the buck of responsibility from the centre, but enabling decision-making to be genuinely local whilst ensuring continued accountability for public funds to the national taxpayer.’

In fact, shouldn't it be precisely about passing the buck. Or perhaps less pejoratively about handing on the baton and expecting those making the decisions about priorities and about value for money to be held directly to account.

This is fundamentally about putting responsibility where it lies.

In fact with a system of delegated funding of the kind envisaged, one could argue that regularity is unlikely to be a problem and propriety should be assured by the accountable body doing its normal job. Value for money is likely to be determined by whether the scheme did what it should have done and was well managed. On that score, local responsibility seems the right answer, and if necessary the relevant LTB should answer to Parliament directly.

The other side of the coin, however, is about the use of the envelope of resources as a whole and whether in overall terms the approach that is being pursued secures value for money.

These are the issues on which Minsters should be called into the frame and on which there are some meaty questions including:

-the decision to allocate resources across the country on the basis of population with no account taken of transport need or other considerations or indeed wider priorities between areas and (whisper it) regions

- the whole notion of entrusting LTBs with responsibility for making decisions without any regard to wider outcomes from the programme as a whole.

Rather than the minutiae of individual schemes, the question of whether the programme should be more than just the sum of its locally agreed and perfectly accountable parts then starts to come into view.

Instead we seem to be ploughing straight on with a new and detailed apparatus which incorporates many things that are already requirements or expectations (and others which might have been unnecessary had the Audit Commission not been removed) but which focus on Ministers and Accounting Officers answering to Parliament for local failures rather than on the decisions that they actually made which determine the overall value for money from the majors programme. That does seem a touch odd.

Leaving Whitehall

My piece for the Guardian Public Leaders Network:

http://www.guardian.co.uk/public-leaders-network/2012/sep/11/civil-service-whitehall-voluntary-redundancy

Aggregating Poverty: Cheap Houses in Cheap Neighbourhoods

A blog piece for New Start on the Policy Exchange proposals to 'end expensive social tenancies':

http://www.cles.org.uk/yourblogs/aggregating-poverty-cheap-homes-in-cheap-neighbourhoods/

The most transparent truth about transparency

Having been away for a week I spent some of today catching up with reports that have been published whilst the Olympics have dominated the headlines. I was particularly seized by the Public Accounts Committee's treatment of transparency which amounted to a severe mauling. A well deserved one in my view. As the PAC press release says:

It is simply not good enough to dump large quantities of raw data into the public domain. It must be accessible, relevant and easy for us all to understand. Otherwise the public cannot use it to make comparisons and exercise choice, which is the key objective of the transparency agenda.

Amongst the further criticisms made by the PAC is the lack of any coherent account of the perceived benefits of transparency. In this regard, the Government has identified three main objectives for it's approach:

- to strengthen public accountability

- to support public service improvement by generating more comparative data and increasing user choice

- to stimulate economic growth by helping third parties to develop products and services based on public information.

At the moment, in my view, it fails on all three. But just to take the first two objectives:

- it beggars belief that public accountability is strengthened more effectively by putting raw data in inconsistent formats and with no standards about accuracy into the public domain as opposed to more carefully selected, directly comparable and contextualised information. As ever, rubbish in, rubbish out

- the fundamental distinctions between data, information and knowledge have been wilfully ignored.The former is of interest and use to a small number of people but it constitutes basic building blocks which must then be subject to interpretation in order to derive meaning. So it is information - or even better the kind of practical information that constitutes knowledge - that is potentially of interest to all. An approach that was truly interested in accountability would put information at it's heart not just data since it would be focused on  'giving an account'. But an approach that even the least cynical amongst us might see as being driven in part by a desire to govern by anecdote would of course embrace a focus on data: as many commentators have pointed out, one anecdote trumps any amount of hard information

- the silo nature of the approach. As with so many other elements of the approach to localism espoused by the Government each local body deals with it's own information. What hope for the idea that there could be merit in putting some of this together across different bodies in the locality and with some proper context in the way that had started to happen under the auspices of the now derided CAA? The increasingly fractured nature of the local public service environment exacerbates this with academies, work programme providers and other private firms delivering public services not currently subject to the full rigour of the transparency requirements

- the failure to put benefits alongside costs. The focus of transparency is always on what something costs not what has been achieved. I've blogged before about the way that local spending reports have been completely lost from view but the fundamental point is that when the focus, particularly from a local government perspective, is on any item of expenditure above £500 identified separately it is hard to see any interest in also giving an account of what that money buys as opposed to the mere fact that some cash has gone out of the door.

The most obvious conclusion to draw from all of this is that the approach is not just flawed but falling between two stools. At the risk of being highly schematic one can discern three sets of motivations for a greater emphasis on transparency.

One which owes much to those who see tax and spend as being the hallmark of any government whether local or national have found transparency in the form of large amounts of data about small items of expenditure (but only expenditure) a very good way of being able to find and then deploy specific examples of purported waste in order to damn entire organisations and policies. A related element within this kind of underpinning is the argument that making raw data available can remove the requirement for other kinds of regulation (and to some extent information in other forms).

A second is among those with a genuine interest in being able to play around with and mash up data and some people are making good use of information (although the libertarian wing among the geek community often consider that everything should just be available as a matter of course). Quite what the appetite is for this kind of activity and the real costs and benefits of it remain moot.

The third is among those who are more genuinely interested in the performance of organisations and a more developed form of accountability to citizens. In this guise transparency could be a powerful way of helping organisations improve by understanding how they compare to others (which hopefully the LG Inform project will be able to demonstrate although the struggle to really understand unit costs across many services remains a major problem) and providing citizens with a better understanding of the way that things work in their locality and what is being achieved with public resources.

Under such a dispensation transparency would be driven by:

- comparable standards which allowed consistent interpretation and as a result genuine information and knowledge to be generated

- a focus on outcomes reflecting some greater sense of multi-organisational responsibilities all of which are subject to the same standards and requirements

- an emphasis on benefits not just spending.

Currently, however, the fundamental truth about transparency in a local government context is that the abiding focus on penny packets of expenditure means that transparency is falling well short of what it could achieve and is still largely focused on the kind of approaches advocated in small state, possessive individualists play book.

[This is a revised version of the piece originally uploaded on 6 August]

The Municipal Philosopher graduates to the Guardian

The recent piece on the municipal philosopher was picked up by Guardian Society daily: http://www.guardian.co.uk/society/2012/jul/23/society-daily-email?CMP=EMCSOCEML657

Brancusi and leadership (revisited)

A piece from a little while back originally written for a book idea by a friend and colleague Jon Harvey which he has now turned into a website which is well worth a look: http://inspirationleadership.blogspot.co.uk/2012/07/simplicity-is-resolved-complexity.html

Jon wants the website to grow and to gain contributions from others and I know would very much welcome hearing from anyone with an interest.