An accounting challenge, by John Tizard

This post was originally published in Public Finance. John Tizard is director of the Centre for Public Service Partnerships (CPSP@LGIU)

The government may have dropped the national drive for ‘Total Place’ but increasingly local authorities and their public sector partners are either adopting or exploring the opportunities for what might be seen as Total Place approaches.

The public, of course, tend quite understandably to be less concerned about the powers and spending decisions of individual public agencies and much more concerned with the services available and the outcomes delivered.  So candidly, the latter is where the focus needs to rest – outcomes for citizens, their families and communities.

In the public sector, there is a growing recognition that without greater collaboration and co-ordination of budgets and indeed policy decisions locally, there are serious risks of ‘cost shunting’, disproportionate disadvantage for the same communities and/or service users, and a failure to maximise outcomes for local communities.

I believe there is a realisation that joint commissioning, shared staff, properties, assets and systems, and aligned budgets can all deliver better outcomes than is the case when agencies are inward looking and self-protecting.  I also believe that there is growing awareness of the opportunities to reduce duplication, to redesign services across institutional and professional boundaries, and to switch expenditure from dealing with symptoms to prevention.   The challenge, as ever, is to transform this ‘awareness’ into swift and productive actions.

Ignoring ‘personal’ barriers such as ego, professional and political protectionism, and status issues for the moment, the principal ‘bureaucratic’ and institutional obstacles to more such approaches being pursued, especially at a time of reducing resources, are the current accountability and accounting arrangements.

To be specific, if expenditure by agency A results in community benefits but the financial benefit accrues to agency B, agency A ought to be able to account for the benefit as well as the expenditure – but currently, that is not possible.  This challenge is compounded, sometimes exponentially, where such benefits arise from a number of interventions by several agencies, and where they materialise a number of years after the initial expenditure.

If there were one set of public sector accounts for a locality, this would be easier to resolve but, of course, every agency has its own budgets and accounts and different accountabilities to local people and/or Whitehall.

Related issues arise from current rules and regulations for the ownership, investment in, use of and benefits from properties, assets and systems.  And the issues outlined above will only be amplified as assets and services are increasingly transferred to or created outside the public sector by community and voluntary sector and social enterprise organisations.  It’s a bewildering bureaucratic and accounting minefield – the complexity of which tends to deter many initiatives from getting off the ground.

We are left therefore with a conundrum, Localism is commendable and can play a very important role in enhancing community wellbeing, making scarce resources go further and building social capital: fact.  Much can and will be achieved through effective leadership, commitment and drive in places: fact.

However, unless some fundamental issues are addressed by government, as well as local agencies, the full potential of localism and ‘place shaping’ initiatives is unlikely ever to be realised.  There is a huge danger of this all ending up in that too commonly used repository called the ‘Too Difficult’ box.

So, what’s the answer? Accountability is best addressed, I suggest, by recognising the democratic legitimacy and place shaping role of local government and empowering it with the necessary authority to fulfil this leadership role.

I know that the Localism Bill seems to be in two minds about the role of local government. However, it and other government publications are notably and deafeningly silent on the accounting challenge and its relationship to performance management and accountability.

Localism could stall and preventive interventions ignored unless this particular nettle is grasped.  It can wait no longer.  It’s time for action.  Professional and representative bodies, the national public sector agencies and audit bodies need to resolve to work together to find some solutions in 2011.