So, this is what I said …

A couple of weeks ago I had a little book launch at Warwick Business School. Professor John Benington and Eugene Walker of Sheffield City Council said some nice things about the book (and about me) and I gave a little response. Below is roughly what I said.

Let me tell you a little bit about why and how I wrote the book. As mentioned in the preface the book stemmed from a conversation John Benington and I had whilst spending about 12 hours in transit at Nairobi Airport. We were on our way back from spending a week in Juba, in what became two weekends ago the world’s newest country, South Sudan. We had been there to deliver some financial training to about 50 civil servants, an experience that I’m very proud to have and it led indirectly to my teaching here at Warwick and the writing of this book.

John was telling me that he and his colleagues had never found a finance textbook that was suitable for the public sector programmes. There are plenty of books in the business section that cover financial management for non-accountants, even WH Smith and airport bookshops stock them, but there’s nothing aimed at public managers. One thing, then, that makes my book (wow, my book!) unique is that it is about managing public money.

I think that is an important distinction. Despite the government’s current austerity policies, the public sector is very important to this country. One could argue that the existence of coherent, comprehensive public services is one of the ways that we identify which countries are developed countries. Developed countries have healthcare, good transportation links, literate and numerate citizens, safe and secure neighbourhoods, clean air, food and water. All things paid for by public money (more or less).

Perhaps the public sector is, for those same reasons, more important still in developing nations -- because they face challenges about lower life expectancy, illiteracy, lack of security and so on.

And public services are big business. Nearly 700 billion pounds in the UK. That’s a lot of money and it is managed by goodness knows how many public managers.

I wanted to write a book aimed at those managers. In fact, the book that I pitched to Routledge and some other publishers was more along the lines of How To Manage Public Money.

A few publishers said they liked the idea but didn’t know how to sell such a book (it wouldn’t be one to fly off the shelves at Heathrow) but Routledge offered me a contract on the basis that I fitted the book into their Masters of Public Management series. I thought “fine” but after looking at a couple of books in the series I realised that they had in mind something more academic than I was planning. It wrong-footed me for a while, until I had a workshop with some colleagues here and got the sense from them that the publisher needed a book and it would be fine if I wrote what I wanted to write. What you see today has got, I think, a more practical feel than many textbooks do.

I kept in mind when I was writing it the idea that it should be understandable to social workers, town planners and headteachers and each chapter has a section towards the end which are practical issues rather than theory. The final chapter with its ten principles for managing public money is a remnant from the original pitch, too.

I first met John on the introduction weekend for the Warwick MPA. One theme running through that course was the concept that public managers work to create public value. It’s a powerful idea and one which seems to me to describe very well the things I’ve seen and done in 20-odd years of public service. It was inevitable that if I wrote a book it would reflect the way that I see the world and, therefore, I make no apology for the inclusion of many references to the theory of public value.

I am not an expert in the theory but still I have put forward a couple of ideas that stem from it. First I have had to audacity to take Mark Moore’s public value triangle and translate it into a budget triangle. Later I have sought to conflate the idea that a public manager’s job is to create public value with the—now ubiquitous—expectation that everything a public manager does is value for money. I am suggesting that there should be a concept of public value for money.  It is a difficult concept to quantify. In a market trade the buyer and seller exchange things so that each ends up with something they value to be worth as much as, or perhaps more, than what they gave away. For a public service. on the other hand, there are multiple stakeholders who each place a different value on the service and, generally speaking, none of them are paying directly for the service (that is, they are not giving anything up in direct exchange for the service).

Finally, I learnt a lot from writing this book. I learnt a lot about the subject because I did plenty of research about the theories that related to aspects of financial management that I had only practical knowledge of.

I learnt, too, that sometimes things work out differently from how you expect. It had been an ambition of mine to be a published author. Five years ago I wrote a novel but my approaches to publishers were rejected 30 times or so. Perhaps I’ll never have a novel published but here I am, a published author. I even have an author page on Amazon.

The point of the book isn’t so that I can feel good about myself, but to be something that helps public managers learn about public financial management. To that end I sincerely hope that it finds an audience who use it, or parts of it, to improve the value for money of whatever services they provide to the public.

Does your budget reflect what mattered in the past or what matters now?

Last week I was teaching on the National Graduate Development Programme (NGDP) at Warwick Business School and one of my sessions was about budgeting. Although there are lots of possible approaches to budgeting, my experience of the real world means that next year's budget is based upon this year's. There might be some fancy work done around the edges to make the process a bit more rational but the bulk of budgets will be last year's budget with inflation added and a percentage applied for cuts.

There are advantages with this approach, not least that it is stable. But it is stable because it is understandable and it's understandable because there's a collective acceptance that "we had a budget for it last year, we must've needed it". But the pressure to find cuts emphasises the downside of this approach: it encourages us to continue doing what we've always done, perhaps a few percentage points more efficiently, rather than challenging what it is we're doing.

What I like about this blog post by Simon Pithkall is that he suggests a very simple way for leaders to establish what the purpose of their service is. It seems to me that after spending a day finding out what really matters to the real customers leaders would be armed with some very important information/evidence to help them work out (a) what they should be doing and (b) what budget they need to do it.

My book is out

Yesterday a courier delivered a cardboard box containing the 12 copies of my book that I have acquired for the book launch next week.
I am really proud of my achievement. It's nearly two years since I sent off my proposal to a few publishers, and 18 months since I signed the contract so it is great to get the book in my hand.
I've riffled through the pages but I daren't read it in case I see a typographic error or, worse, read a sentence I could have written better.
I know that there were pre-orders for the book so the next step is to face up to the reviews.

We can afford anything, but not everything

This Q and A by the BBC about public sector pensions makes an interesting distinction between whether public sector pensions are unaffordable and/or untenable. It reminded me of something that I would often say to councillors and managers when I worked as a finance director: "We can afford anything that you want to do, but we can't afford everything you want to do." That is pretty much the case for all public organisations. Generally they are big, with lots of money, staff, offices, computers and other resources so they could direct them to do almost anything that could be feasibly be demanded by society. The problem of public management is that society makes multiple demands and there have to be trade offs. If a pound is spent on service A, it is not available to be spent on service B. As the finance director of a large council I was, like my senior colleagues, looking for the councillors to make decisions about priorities against which we could allocate resources. The trouble is, for every decision someone is the loser. If you're elected to represent people it is very difficult to make decisions that make some of the people you represent worse off. It doesn't placate the losers to hear the politician say. "we had no choice" because, patently, they did have a choice and they made it. Unfortunately, this leads to politicians trying to avoid making decisions (despite every politician always claiming that they make the tough decisions whilst their opponents never make them). Such decision-avoidance is one reason that many organisations find themselves "salami-slicing" at budget time: ie they make (relatively) small cuts to every service/team/unit rather than protecting the budget of the most important and making large cuts (or abolishing) the least important services because if everyone is a loser in a small way then it's almost the same as having no losers at all.

Going back to the BBC article, it mentions that it is not possible to say public sector pensions are unaffordable because as a society we have not set out what proportion of public money ought to be spent on them. It would also be the case that if public sector workers did not receive pensions there might be higher salaries to pay now and in the future there might be more spending by government in state pensions and welfare benefits to workers who would no longer have as much money from an occupational pension to live on. 

So, it seems, after a year or more of the government saying we can't afford these pensions, the rhetoric is moving towards we don't want to pay for these pensions. At least that is more honest.

Audit Commission replies to Pickles's plan.

David Walker, journalist and former communication director of the Audit Commission tweeted today (@exauditor77): "Polite language, but Audit Comm is now saying Pickles' plan will ADD expense, leave public finances unguarded http://t.co/Bpk6fVs". I'm sure it will, too, in the longer term. Let's face it, it would be a remarkable fluke if an off the cuff policy decision was actually a good decision.

My book is published on 13 July

My book is published in just two weeks' time. I still haven't received my author copies but they should arrive soon. I'm excited about that. Seeing it all typeset when I was checking the proofs was great but the proofs were in pdf files and my corrections were marked-up digitally. Getting the book in my hands and being able to put it on our bookshelves will be the achievement of a long-held ambition.

I have no idea how many copies it might sell. The publisher, Routledge, must believe that it will sell enough to cover the cost of publishing it. I've had fun over the last few months watching my placing on the best-seller list at Amazon.co.uk. It has languished around 2,700,000th to 3,000,000th but just lately it has moved up and when I last looked it was at something like 140,000th. For all I know this might just be the result of 2 or 3 copies being pre-ordered. For me, I'm simply proud that I have written a book that a respectable publisher thought would be good enough to publish and that some people have been prepared to pay for.

I've been firming up the details of the book launch at Warwick Business School: 6pm on 20 July at the Scarman Road building. Get in touch if you would like to come along.