View from the Pew

I have just sent my annual renewal payment to Forward in Faith. That being so I reckon I have earned the right to offer an ill-informed opinion to the discussions on the latest proposals announced by the Archbishops of Canterbury and Rome on women bishops - and in particular the arrangements for parishes who would rather they kept with the traditional arrangements of men only priests and bishops. Its a perspective offered by a fairly worldly accountant (if there can be such a thing) who has helped organisations get their financial affairs in order.

Larger failing organisations - and I refer to those in the public or not for profit sectors - often get mired financially because it is not clear who is responsible for what. Its not practical for the Chief Executive to take every financial decision, so to make matters manageable the CEO will delegate to others in the organisation, responsibility and authority for financial decision making. Usually those responsibilities are consistent with the wider management responsibilities that individuals carry. Typically therefore I will get a budget to cover the costs of the staff I manage and maybe the costs of training, travel and equipment that allows them to do a good job.

Where this process gets more complicated is in larger hierarchies where the process of delegation carries on down through the chain of command; so that middle managers will get a slice of budget to manage on behalf of, say, their Director. The logic is the same: the manager is closer to the decisions that need to be taken and so they should be responsible for the financial consequences of their decisions.

However a scheme of delegation is not without its problems. Lets say that as Middle Manager A I am rather good at managing my resources. Near the end of the year I have a bit of spare cash and I would like to use it to buy some nice new IT kit for my team. However my boss has a problem in that Middle Manager B has got themselves into a financial hole. So my boss would like to raid other parts of their empire to make their books balance. If as Middle Manager A I am truly empowered, then I can in theory say, sorry boss, but the new IT kit is on its way in. If, on the other hand, my boss's view prevails then I hand back the nest egg I have built up, consoling myself that perhaps its for the greater good. That said, there is no guarantee that my boss having perhaps juggled the money successfully, got herself out of a hole and is now keen to thank everyone for a job well done with a 'Fun' team event does not then find themselves having to instead hand the money back to the CEO who has an even better idea.......

Often I have been through a process of saying to managers throughout the organisation: 'who is in charge of the budget when...........'. Because the answer to the question tells you where real accountability and responsibility lie. Some organisations genuinely try to push responsibility right own the line and absolve senior Directors teams of any formal delegation. That's fine when things are going well but not advisable if the going gets tough. Others tend to place effective control nearer the top of the organisation which can be a bit stifling for every day decision making but does at least mean that the Board are better placed to take take urgent resourcing decisions . What is clear though is that the answer to the question: who is really in charge when ......... can only have one person as the answer. Regardless of what the answer is, the real decision can only really sit in one place. Answers of 'one the one hand it could be, but on the other hand its also...' or worse still 'we don't know/we've never thought about it, people tend to make it up as they go along...' just do not work. This sort of ambiguity or decision-making vacuum is the recipe for the type of financial problems that caused you to ask the questions in the first place.

This slightly rambling piece was prompted by reading the Archbishops proposals because it seems to me the one question I would ask is this: 'Who is in charge when.......'. If its crucial to the parish and its a. The Bishop brought in to oversee the Parish - then its a Flying bishop; if its b. Its down to the Diocesan Bishop - then its no different to the current code of practice; and if its c. 'Well... both' then by my analogy with delegated management, the whole proposal would be doomed to failure.

Sunday, Sunday

Two Sundays this week. To begin with I made it to church twice: once for early Mass and once for the celebration of Corpus Christi. The latter was followed by the Forward in Faith AGM for the Rochester diocese. All in all an occasion to lift the spirits which you can read about here.

The other bit of Sunday was a bit of serious digging on my allotment - which sits behind St John's, Sevenoaks and was my first port of call after the 8:00 Mass. My wife is largely the inspiration for the increasingly pleasing results in the picture. But assuredly my back will testify that it too has played its part in ensuring that we don't get a letter soon telling us to get our plot up to scratch.

Legacy

A very much delayed postscript to the earlier sequence of thoughts on the election. That 'New' Labour probably spent a lot more of our money than was wise seems widely agreed. But was it all bad? That thought struck me recently as I was reacquainted with the journey up the A1 to Yorkshire. I have always taken the A1 in preference to the M1, not least because if there is a hold up there are plenty of easy ways round any delay. Not so on the motorways where there is no relief before the next official exit. Against that the A1 was always a tad slower, not least because a succession of roundabouts between Peterborough and the A1(M) in South Yorkshire added to journey times. Those have now gone - replaced by slip roads and flyovers at each major junction. The result was a much better journey, doubtless achieved at a cost but equally very tangible evidence that taxpayer's money was being invested for our collective benefit. I have also heard (and to some extent seen) the benefits of the Labour government's investment in schools and hospitals. They are now in far better shape than they were when Labour came to office in 1997.

All this was thrown into even sharper relief last week when I accompanied a number of others on a bus journey through the new Olympic Park.To be honest I was stunned at the progress - 2 years out from the Games, remember - that was being made. Many of the stadia are now nearing completion and some of the early landscaping of Olympic Park is underway. This surely is cause for some early national pride on a very professional approach to such a huge challenge.

The Olympic programme is not simply about hosted the Games. Its also about the regeneration of some of the most disadvantaged parts of London. Parts of the Olympic Park will after the games be transformed into areas of new housing. Meanwhile just down the road at Stratford, the new Westfield Shopping Complex will be one of the largest undercover retail centres in Europe. I hope that having embarked on such an ambitious project the new coalition does not lose its nerve and see this through to a fitting conclusion: a transformed East End of London.

On Thursday I will vote. I can honestly say that my mind is not yet made up although it is also fair to say that I live in a constituency where my vote will not make much difference. A goat wearing a blue rosette would probably be returned with a 10,000 majority. No disrespect to the sitting MP who does a pretty good job but this is not the sort of place that is ever likely to be other than "Con. Hold" when the results flash up on the screens on election night.

I have seriously tried to be a good citizen. In particular I have read the manifestos, watched the Leaders' Debates and read the papers. As a Christian I have been particularly struck by Choosing the Common Good, the booklet issued by the Bishops' Conference of England and Wales which basically seems to argue for a public life that is underpinned by virtue and a concern for others.

We cannot pretend, too, that the state of public finances is other than a cause for great concern: as a country we are living well beyond our means and early action is needed to bring public spending under control. I have therefore looked hard to see who can set about delivering a stronger economy and social justice within the framework of repairing society.

I cannot support Labour. To begin with I believe they waged an illegal war against Iraq and in justifying their decisions, misled the country. There is blood on their hands and the passing of time only reinforces that belief. For the rest I can only direct you to this website which sets out so starkly the binge spending that has taken place since 1997. Government spending is set to double over 13 years, debt has more than doubled. Had spending kept in touch with inflation spending this year would have been a shade under £450bn. Instead it is heading for £700bn. Whilst there have been real improvements in health and education in line with their priorities I think the current administration has shown less than ideal levels of stewardship. An opportunity to deliver both sustainable and affordable improvements in our public services has been lost.

The debate about virtue in public life so admirably articulated in Choosing the Common Good has sadly been overshadowed by concerns about immigration which, after the economy, appears to have been the other big issue of the campaign. As a result I think the Conservative's ideas of "Big Society" (and by implication, Small Government) have not been sufficiently prominent. I suspect the Conservatives themselves concluded that people for the most part were not interested. However if the Conservatives were returned to Government I hope they would return to the concepts of "Big Society". Under Labour the state has become increasingly overbearing and has pursued an increasingly secular agenda. It is hard to see that another term of Labour would see any softening of tone or a change of direction.

For me the last challenge is balancing the need for tightening of belts with social justice. To this end it seems to me that the Liberal Democrats rather than the Conservatives have made a better case. Raising the income tax threshold to £10000 coupled with the programmes for tackling youth employment seem more than substantial than anything on offer from the Conservatives. Whilst, too, I think the Lib Dems plans to bear down on tax avoidance as a means of paying for their pledge to support the lowest paid are a triumph of hope over experience they are still considerably better than the Conservatives plans to raise billions from efficiency, plans which are patently laughable. So, expect a VAT increase (20% basic rate with some further widening of scope) whoever gets in to Government.

Nobody in this campaign appears to have demonstrated the leadership and vision that this country badly needs. On that basis a vote for 'None of the Above' would be a fairly verdict on each of the three main party leaders. Sadly that option is not available.

Rather then that chaos should descend on Friday I would not be sorry to see David Cameron in Government: but with a majority of 1-5 seats, dependent on Liberal Democrat support to see difficult measures through. In return for that support legislation would be brought in to reform the current electoral system. Because even if the Conservatives confound the polls , are returned with a working majority (30+) and 40% of the vote, they will probably have done so with less than 25% of the people actually voting for them. That's a democratic deficit which needs to be put right.

Looking after the pennies......

With nine days to go before polling, the Institute of Fiscal Studies pronounced that not one of the three main parties seeking our votes was being sufficiently explicit about how they would tackle the black hole in public finances. The introductory remarks by Robert Chote are backed up by a wealth of analysis from other IFS speakers. But the overall point is the same: the gap in Britain's public finances is matched only by the gap in credibility displayed by the major parties in how they would cut the deficit.

Political parties do not tend to write manifestos that are too honest about what they would do if elected to office. Labour learned their lesson well and truly in 1992 when the late John Smith's Shadow budget proposals were rather too open about what would happen if John Major's Government were not re-elected.

So we now have obfuscation, evasion and less than transparent answers to awkward questions. The Labour Government should have had a spending review in advance of the election. They haven't because presumably the outcome would have been a sure-fire vote loser. Whoever takes over now will need to move pretty swiftly to fix budgets for the three year period from 2011/12 or the uncertainty around public finance will only increase. Whilst Labour are culpable neither the Tories nor the Liberal Democrats have offered us any real clues as to what they would do. No-one can object to more efficiency (Tories), or bearing down on tax cheats (LibDems), so that's where, we are told, the savings will be found. How is trust to be restored to political life if our leaders or would-be leaders cannot be honest about the difficult decisions they intend to take?

The latest slew of opinion polls suggest that maybe David Cameron is recovering some of the ground lost when the Nick Clegg bandwagon began to roll after the first televised leaders' debate. At 36% the Tories have a solid led over both Lib Dems (29%) and Labour (28%). But even at that level this is hardly a bandwagon, let alone a would-be landslide.

We are told that coalition government or hung parliaments make for weak and indecisive administrations. But how democratic is it that a party with barely one third of those voting (and probably less than a quarter of those eligible to vote) can be said to have a clear mandate. If the Lib Dems surge says anything it is perhaps that more representative Government comes from more than one party having a say in running the country. And after the expenses scandal perhaps it is better to have two-party government so that one lot can keep an eye on the other...........

Liberal with your money

Last week I had a look at the Conservative party proposal to fund £12bn of savings through a new Efficiency drive in the public sector. I concluded then the plans were unlikely to generate a fraction of the sums quoted. In part this was because they were covering ground that was already the focus of efforts to generate savings and in part because some of the proposals were based on full year projections when an incoming Government starting in May would not have a full year to start with.

So if I am sceptical about the Conservative's plans the Liberal Democrats financial proposals appear eye-wateringly fantastic. £17bn tax redistribution alongside a spend and save package aimed at generating a net £10bn a year after 2010/11. I am not a great expert on the fiscal arithmetic but the critique of the Lib Democrats tax proposals here is fairly balanced. It has been costed and independent observers generally believe the figures quoted are reasonable. What it fails to observe is that the projected savings may be eroded by the tax avoidance industry. Certainly the £5bn targeted from anti-avoidance measures strike me as a triumph of hope over experience. I also cannot believe that those home owners sitting on a £2m+ pile will not sit by and let the state take a 1% levy. Finally hitting the airline industry with a per plane duty may not be viable in the wake of the current disruption to services - huge losses are currently being suffered by carriers. So overall a creditable effort but not one that quite does it for me. Either those ambitions of a £10,000 threshold will need to be phased in or like all the other parties there will have to be an increase in either the scope or basic rate of VAT.

So on to the spend and save package. Here I think they have done a good job. The savings proposals for the most part in quite specific areas. Whilst many will welcome the end of the ID card scheme and biometric passports, they may feel less comfortable about the proposals on Trident and the reform of winter fuel payments. There are weak spots in these proposals. A lot rides on our old friend Whitehall waste. The Lib Dems also appear to dislike Quangos so much they are going to abolish them twice (once in Education and once everywhere else). These proposals may not withstand scrutiny once they see the light of day but I doubt whether any party does not have a bonfire of the Quangos in its sights. And we do at least we know what a Lib Dem Government would do to save money. And no-one - even the Labour and Conservatives who must now consider how to deal with resurgent support for the Lib Dems - can argue that the proposals lack transparency.

My challenge to the two main parties would be for equal transparency. Do I think we'll get it? If they want to recover lost ground I think they must. The two party cartel is having to deal with a challenge to its inalienable right to take it in turns to run the country. They should stop trying to tell us what they think we want to hear and tell us instead what we need to know.

Work in Progress

My very low expectations for this election campaign are not being disappointed. Yesterday the newspapers carried a story about how the Conservatives planned to finance their policy of reversing Labour's planned increase in National Insurance contributions - the tax on jobs you will recall. The Conservatives acknowledge that the NI policy - at a cost of £6bn - will need to be funded. Interestingly they have indicated that they have plans to raise £12bn with half paying for NI, the remainder to go back to the public sector.

The source of this funding - discussed in the FT by none other than that public sector efficiency guru Sir Peter Gershon - would be as a result of driving out further efficiency savings in the public sector. All very laudable except that the targets for driving out £12bn in a year seem for the most part very familiar - back office reform, better procurement, freezing IT projects and bearing down on consultants. I would be amazed if this shopping list was not already the focal point for many public sector organisations as they look to deliver on existing efficiency targets. For that reason I believe that most of the £12bn is accounted for in existing targets and plans - in short there is a huge amount of double counting here. Many public sector operations are already struggling to realise bottom line savings as a result of these initiatives (many of which have been worked on since "efficiency" and Vfm resurfaced in 2004) and so to believe that there will be a step change in improved delivery immediately after the election is hard to swallow - hence the leading cartoon. And even if there is a vast swathe of public sector organisations not yet 'doing' efficiency, many of the proposals here cannot be done either quickly or without a cost - and zero cost is implicit in the Conservative Party figures.

However that is not to dismiss the whole exercise as fanciful. The plans to freeze recruitment and allow savings to be generated as a result of not filling vacancies ought to meet the objective of generating savings in 2010/11 and at no cost. So this morning, with my trusty fag packet to hand, I did some quick figure-work.

The assertion I have seen is that turnover rates in the public sector is 8%. Lets assume that the 8% represents a net exodus from the public sector (questionable but still) and lets assume an average salary of £25000 or just over £2000 a month). The ONS statistics on the public sector indicate there are a staggering 6.1m employees. If 8% are leaving annually that is nearly 1/2m a year or more pertinently, 40,000 a month. So each month the public sector could find itself able to save £84m (40,000 leaving multiplied by £2000+ per month) simply by not replacing the people that leave. Now as we go month by month through 2010/11 the accumulation of savings is impressive. For example in the first month of 2010/11 (April) we save £84m; in May we save £168 - the £84m from the people who left in April plus a further £84m from the May departures. By my estimates that is worth £6.6bn by March. Impressive and certainly sufficient to pay for the NI policy.

But: recall that the savings have to be generated in 2010/11 at no cost. We're already into 2010/11 and there will be a flow of appointments already in train which are probably irreversible. So I have written off the first three months. No matter because by my estimates there are still potential savings of £3.8bn to be had even if the policy only starts to bite after three months. If we also assume that the promise to afford a degree of protection to front-line services would mean that only half the departures would not be replaced we could see a saving of £1.9bn being generated - in line with Conservative thinking here.

Just one small snag - the number of post losses to generate this saving in 2010/11 has been quoted as 40000. By my reckoning its rather more than that. Partly because the machinery to ensure an effective freeze could probably only operate for nine months in the year of the election; and partly because, on the assumption that this is being done by natural wastage, savings will be built over the year as people leave and not from Day 1.

By my reckoning the post losses that would need to be found to fund plans in 2010/11 are 182,000. It is only once we have a recruitment freeze running across the whole year that savings will start approaching target levels. My own estimate is that on the basis of an average public sector salary of £25000, one would need to lose 80000 jobs to save £2bn in a full year. That a bit less scary than the 182,000 required for 2010/11 but still more a good deal more than 40,000.

And bear in mind, thats the most do-able bit of the £12bn we have been told can be saved through efficiency. In short the whole thing is fantasy politics. Lets hope the rest of this campaign can be conducted on the basis that the British people are not idiots.