Efficiency Review - Releasing Resources to the Frontline
Comments from ACCA
21 November 2003
The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on the Efficiency Review: releasing resources to the frontline consultation document. This response has been prepared in consultation with members of the ACCA's Public Sector Technical Committee, a group of experienced accountants working in the public sector.
As the consultation paper says, the Efficiency Review was announced in the Chancellor�s budget speech in April of this year. So it is disappointing that, six months later, we are asked to respond to a paper which is only two and a half sides long. The brevity of the document raises some concerns that this initiative is more in the nature of a public relations exercise rather than a serious attempt to ensure that public sector spending is targeted at the most important areas. We also note that respondents are given less than five weeks to respond rather than the Government�s good practice of at least 12 weeks.
The consultation document does recognise that "back office functions� are essential to support frontline staff doing their job and to manage resources effectively". The use of phrases such as "the bureaucracy faced by frontline professionals" will, however, inevitably encourage the popular prejudice against so called "public sector bureaucrats".
It is true that the number of accountants working in the public services has increased significantly in recent years. However, this has been absolutely essential to support the current Government�s policies of, for example, continuing the introduction of accrual accounting, the Private Finance Initiative and the devolution of services to front line organisations. The introduction of foundation hospitals and the financial flows reforms in the health services, for example, will inevitably lead to the requirement for the employment of more accountants who will be essential for the success of these initiatives. Characterising accounting professionals and essential support staff as "the bureaucracy" will not be helpful to their morale.
The National Audit Office and the Audit Commission (and the auditors it appoints) have undertaken an extensive range of value for money reviews over the last 20 years. Each of these reviews has resulted in recommendations which, if implemented, should release significant resources which could be used to further improve the quality of public services provided by both national and local government. The National Audit Office claims that it saves £8 for each pound that it costs to run the office.
Each of the value for money reviews undertaken by these institutions takes several months to complete and involves the input of significant levels of resources. The cost of the average value for money review undertaken by the National Audit Office in 2002, for example, was approximately £200,000. In the light of this, it appears to us to be impractical for the current Efficiency Review Team to undertake a comprehensive review "covering the whole of public services" by next summer.
ACCA would certainly agree with the first two of the areas which the Efficiency Review proposes to explore. In both of cases, however, the problems are well known and some action has already been undertaken to address them.
The fragmentation of the public sector over the last twenty years has inevitably led to some instances of inefficiency. There are many examples, however, where this problem is being addressed. Many public sector organisations utilise common purchasing organisations, others are members of consortia for the provision of common services, for example, internal audit. In the health service and some other areas this concept has been developed further with the use of common service organisations to provide facilities such as financial services to a range of different organisations.
Against this background, it seems inappropriate for the consultation document to suggest that "new ways of sharing services can be developed" as if this was a new idea. Indeed, last year ACCA itself published a pamphlet on financial shared services in the public sector. We do welcome, however, the suggestion that such shared services will be further encouraged in future.
We note that many public sector organisations do not necessarily introduce what is considered to be best practice. For example, many of the recommendations identified in Audit Commission value for money reviews are not implemented in all local authorities or health service bodies. We believe that in many cases there are good reasons for this and that it is mistaken to jump to the conclusion that this is due to the lack of "incentives to adopt best practice".
Rather than considering the introduction of "further pressures and rewards to incentivise the transfer of proven best practice" we suggest it may be more effective for a number of National Audit Office and Audit Commission value for money reviews to be monitored to try and discover why some of the recommendations have not been universally implemented.
This may lead to an extension of the "invest to save" initiative. In many cases the recommendations require the investment of significant resources to ensure that the benefits are actually achieved including extensive input from key senior officers. The extensive public sector reforms in recent years and the severe financial pressures under which many public sector organisations opperate may be an important cause of the failure of many public sector organisations to introduce what is considered to be best practice.