Three-Eleven

Three-Eleven. This chilling-sounding number refers to 31st March 2011. Just over a year hence. When Government spending for the next three years will be set. When the world as we know it today, begins to end – and cuts kick in.

For those too young to remember, there are broadly two approaches to cuts: Salami-Slicing and Downsizing. Salami-Slicing takes a bit off everyone, so that everything looks the same - just 10% smaller, slower, worse .

Downsizing, on the other hand takes three forms. One is just abolishing recently added bits of Government spending that nobody will miss. Another is just offering less of something than before and asking the parent, patient or householder to make up the difference. The third is to still offer it - but find someone to do it who is better, faster and cheaper than the state.

We will, of course, see both Salami-Slicing and Downsizing from the next Government. What will be interesting will be the mix. My guess is that Downsizing will be the main order of the day. Because you cannot, in reality Salami-Slice 30% from most public services any more than you can take a blade off a helicopter and expect it to stay in the air.

You need a whole new way to fly.

Enter the third sector. Many of us are very nervous about Downsizing because a lot of what we do is discretionary - added-value, icing-on-cake type stuff. Activity easy to slew off without bad publicity. So should we be living in fear? Well, some of us, yes.

But the opportunities presented by Downsizing may well exceed the risks. We do things differently. We We speak to the needs of our time. The sheer weight of former state services that might fall our way could dwarf current Government funding to the sector. A future Niagra next to today’s gentle stream.

David Cameron is right about one thing: it’s all over for the big state. Never again will the Government be viewed as the natural provider of all health, education and welfare, offender-rehabilitation services. Yes, Government will fund, yes it will commission and keep us all accountable. But its clock is ticking down. Ours, by contrast, is coming up to the hour.

And there are other trends too which push our way. The Iain Duncan-Smith `Broken Society’ agenda plays straight to our incredible community sector. New money will flow here, if nowhere else. New bidding consortia such as 3SC, will help innovative third sector players to find those new ways to fly. And new social enterprises will shoot off from the NHS and local government as these sclerotic empires are, at last, broken up.

So Three Eleven need not chill your blood. Indeed it may even warm your heart!

The Public Interest

Last week in a quiet police station in Bury St Edmunds, a phone rang. It was a man well known to the police, a section one offender (a sex offender to most of us) calling tosuggest that the newly bought and equipped children's home that Suffolk County Council were about to open next door to him might not be such a great idea, given his history of multiple rape, long-term imprisonment etc.

That this gentleman made the call should be applauded. That Suffolk County Council didn't do the usual reckie to make sure that the children in its care were being placed somewhere safe is, let's say, a rather large mistake. One in the eye for multi-agnency working (the police sort-of knew where he lived, apparently).

Those four children all currently live in my Division. I am their Councillor. My job at these times is to speak for their interests to those in control - their `corporate parent', Suffolk County Council.

So I write a fairly nice letter to the Cabinet Member for Children's Services. No reply. Another to the Director of Children's Service. Same. To the Leader of the Council. Zilch. I write to the local paper. No, they won't run this story. Half a million quid wasted (they can't sell the house now, of course). Kids made vulnerable. Massive management failure. Sorry, not interested. Spooky. Are they all Masons, I ask myself.

In despair, I contact the Chair of Children's Scrutiny Committee. Can I raise this at our next meeting? I ask. She's not sure if the rules allow this.

Local democracy in action. Had I been ranting and raving I might have understood people going to ground. But my letters were, if anything, understanding and placatory, suggesting system-failure not blame.

As those kids' Councillor I now feel, after pretty much a week of silence, angry and ignored. Parties with 55 of 75 seats don't need to listen to Opposition Members. Scrutiny is sidelined and chaired by their own side. Resultingly the Council becomes, more like a private members club than a representative body.

And when this kind of culture is modelled at the top, in which other views are ignored and the usual checks and balances are disregarded, it easily takes hold lower down.

From which arise the kind of royal fuck-ups that see us opening children homes next door to serial rapists - then acting like nothing happened.

Bad? It's disgusting.

The Ownership State

A new day, a new piece by the brilliant Phillip Blond. This time about how to change the state. Blond,predictably, attacks the sclerotic, centralising Target State. But he also attacks the New Public Sector of outsourcing, managerialism and internal markets.

Instead he proposes the Ownership State. What does he mean? Essentially, he sees a third way between the privatisation of the state and a Government-owned public sector. The `Ownership state' sees the conversion of public bodies into lots of little John Lewis Partnerships. Employee-owned in the main. Profit-making. Democratic. Front-line-led.

Blond clearly spent his years of obscurity reading very widely. For you see in his work all sorts of influences, including the radical `empowerment' gurus like Ricardo Semler, Henry Mintzberg and Rosabeth Moss Kanter. Theory now put into practice by companies such as Harley Davison, Google and Goretex.

What do I think? On one level I find Blond very inspiring. He captures the problem very clearly and his solutions are original. Nevertheless, I find myself, as a product of my time (choice, competition, management-leadership), a little unconvinced.

However hard I try, I struggle to see public sector workers becoming more productive if given less rather than more management-guidance. And, having seen the chaos in some so-call democratic organisations, I have an abiding faith, however misguided, in role of a strong, insightful leadership in setting direction - and then incentivising and tracking it through solid operations-management.

But, as Blond says, my way has failed. We have tried all this stuff in the public sector and it's still there, on the floor, failing. Perhaps we do need to go one step further. Try some new stuff, like his employee-owned `civil companies' in which management `facilitates' and front-line staff `lead'.

Fills me with horror, but, hell, it's not as though we have much to fall back on.


Read more at
http://www.respublica.org.uk/sites/www.respublica.org.uk/files/The%20ownership%20state%20FINAL_0.pdf

Meeting the Monarch

My turn came. [Voice from side] "Mr Craig Dearden-Phillips for Services to Social Enterprise".

I walked three paces, turned to face the Queen, nodded, walked forward. Her hand hung the medal on a clip that had been affixed to my suit and, he asked me how things were going at Speaking Up. "Shall I tell her about the merger?, I thought for a nanosecond before saying "Very well your Majesty".

Then she said "I believe this isn't your first Award". Wasn't sure quite how to respond but just said "No Maam, but nothing really touches this one!" before a hand was offered to shake, I walked backwards, nodded again, turned and walked off the stage.

The Worst Generation?

No, I don't mean the young. I actually mean the old. Or old-ish to be precise: the Baby Boomers. Born between 1945 and 1960.

Why so? Well, unlike their parents, the wartime generation, which, essentially "gave", this is, arguably, this generation that "took". While the generation that followed (Generations X and Y) tend to "cope". In the global time lottery, the Boomers won the star prize: Rising house prices, a growing state, free higher education, good pensions and a massive rise in living standards.

Meet your typical sixty something - Roy. He divorced at 47 (2 kids, then 13 and 15, now in careers) now living with Linda, his former PA who is ten years younger than him. Roy retired at 60 on a final salary scheme and now regularly travels the world with Linda. They own a five bedroomed house and two cars. Roy is investing his inheritance, which his parents (both now dead) scrimped-by over 50 years, in a couple of properties in France. Not that he will be leaving anything for his kids (this is his money) and he wants to live till he is 100!

And the grandchildren. Well, he's so busy he doesn't see them that much. It's never been the same with his kids since the divorce. He does get involved in the community. Sort of. He rings the local council when the leaves are building up on his path. But he's far too busy to sort it out himself. Things to do, you see. Golf, Bridge, garden.

Recognise the caricature? Well, that's because you will probably know someone who fits the mould. For this was the generation which thought it could have it all. Not just materially, in other ways too. You, me, the state, society, the earth even, could be said to be paying the price, now and tomorrow, for the life-choices of people like Roy.

The awkwardness on my part in writing this is, of course, that this is my parents' generation. My dear parents who I love dearly. In truth, they don't fit this caricature particularly well. They are still married. Their pension, like many, is in a mess. They live relatively modestly. And they structure their lives very much around their grandchildren.

But this doesn't detract from my broader point. The generation that lived before and the one that followed face bigger challenges. They took, we cope.

Those born after 1970 face the environmental crisis and the evidence-able knowledge of what happens when families go wrong. We know that flying around the world for fun is literally going to suck the air from or grandchildren's lungs. We know we will probably never fully retire.

Therefore we go about our lives with a little less hubris. Unless, we're completely ignorant, those of us under 45 know that it's not just about us.

The worst generation ever to have lived? Probably.

Playing a Straight Bat

We always like bosses who say it how it is. Or do we? I count myself as a heart-on-sleeve CEO. One who is happy to have an open conversation. To this end, I have been sharing my fairly unedited thoughts on the future environment with my staff through our newsletter.

In the last one I basically told people that I thought the game was up in terms of doing things the way we have this last ten years. The money I believe won't be there in anything like the same amount from 2011. I asked people for a conversation. About changes in working practices. About using volunteers. About working only with those in the most dire need. Stuff that needs to be considered, at least.

It's interesting what power does. Being CEO, my words were taken not as an invitation to a conversation but a pronouncement. A decree that we would do all these things. Quite a few people were genuinely worried that now going to happen an my announcement was simply my way of telling them.

I haven't yet responded to the staff who wrote to me, which include some of our key people. I think I will firstly apologise for scaring them. I know that often CEOs only say ANYTHING when the hammer is just about to fall. And even then dress nasty stuff in nice-sounding language.

But, in my response, I will also highlight that I was actually seeking dialogue. The truth is that we do have time. About 18 months to rethink things. Enough time. And that we need them to help us to do this.

The learning for me is that it maybe isn't always possible as a CEO to say it just how it is. People bring their own fears to the table, understandably so given the previous experiences of many people. A CEO friend of mine winced when I shared the story. She did the same thing once and people thought she was announcing the end of the organisation!

Two conclusions. One is that the CEO role brings a responsibility to take extreme care with one's communication. You are seen as all-powerful and anything you say on paper has an atmosphere of diktat about it.

The second is that people don't always prefer bosses to tell it how it is, whatever they might say. Enjoying Alan Sugar is one thing. In one's own workplace I suspect it might be a different matter.

Customer or Citizen

I notice, upon viewing some correspondence between officers and a resident here in Hardwick, that we refer to people as customers of the Council.

While I see, on one level the logic of this – the need to instill modern ideas of service into Council employees – I am wondering whether the language of “customers” is the right one to be used in the public space going forward.

A time in which we need to see ourselves less as “consumers” of public services, more as citizens with responsibilities as well as entitlements. The social capital agenda which we are all seeking to develop I believe increases such a need for a change of language.

A language of responsibility, of reciprocity, of contribution. "Citizen" I think fits better this need than "customer". If we’re asking people to partner with us, to co-produce or to do more for themselves, we may find ourselves tripped up badly by the customer mentality.

I say this not only from conviction but from experience. Even a few months into my time as a Councillor, I come up all the time againstpeople who see the Council as the would see a service centre run by Dell or Hotpoint. “We pay, you deliver” is the mentality.

So people won’t pick litter, clear leaves or call on their elderly neighbour because that’s, in their words “Your job”.

By treating people as consumers rather than citizens, I fear we are encouraging an attitude of mind which could be incimical to our aspirations as a Council - to build the kind of place we are seeking to create. One of citizenship, as opposed to one, simply, of consumerism.

Tough Choices Ahead

Reading the latest from think-tank the National Economic and Social Research Council (NESRC) makes me realise that hardly anyone gets it yet. We are all in denial, of some sort. Kind of believing that what we're doing will, somehow, be spared or beyond the scope of cuts. It's a natural human reaction, to bury one's head and wait for the hammer to fall.

And fall it soon will. When the Government will probably either a) Raise income tax by 7% (not likely) b) Cut all `middle class benefits c) Start to reduce ordinary public spending to pre-1997 levels to bridge a £100m annual deficit. Fewer health service staff and police officers. Crumbling schools again.

Is this inevitable? Yes and no. I am a pessimist when it comes to achieving change in the way the state does its business, so part of me believes that it will be every bit as shit as I imagine.

But a part of me believes that we can waylay the looming cataclysm. Use the coming horror to galvanise a response that takes public services - and people themselves - to a better place.

The most important thing is to change the state. Locally and nationally, the era of diktat is now viewed mostly as a failure. Robbing all involved of energy and costing a fortune. Creating a litany of complexity, a destruction of trust and a system that, in the end, grew its impact far slower than its expenditure.

But we must also change people. For we have become consumers alone, when it comes to public services. I pay, you do. I see this all the time in my work as a Councillor. People won't brush leaves from their path. They would rather spend the time complaining to me to get the Council to do it.

This `entitlement' attitude is particularly prevalent among many (but not all!!) of the 50-65 year olds I encounter. The Baby Boomers. Very different to the wartime generation who, I find, just get on with it. And the young, who seem more willing to get stuck in and sort things out.

Lots of questions but do I have any answers? I am beginning to feel that the ship of my life is beginning to steam in these directions. For all I rail against the state and call for its reduction I am not doing this from a Sarah Palin small-government place. Pro-state and anti-state in this country have meant Left and Right respectively.

Now that the state, in its current form, has been discredited, we need a new place for those who see themselves as `progressive' (and I number myself thus) to gather, exchange views and engage - without being branded as right-wing wolves in sheep's clothing (a view recently expressed far more eloquently by Matthew Taylor, CEO of the RSA on his blog)

For what is it worth, this is what, of all the ideas I have seen put forward by others, what we most need to do on both sides of the equation:

The State
1. Reduce the number of civil servants across all Government Departments by 25% over the next five years and freeze most public sector pay for three years.

2. Break-up the NHS into smaller, free-standing institutions (like Universities)and integrate PCTs into local authorities. Sign over the asset base to these new institutions. Allow private operators and social business to challenge the NHS for all contracts.

3. Allow all schools to opt out of local authority control and move to a voucher system.

4. Promote the Easy Council concept - and out-source as many services as possible.

5. Move all social care users to personal budgets by 2015.

6. Abolish most regulatory quangos and hand their responsibilities to central government or local authorities.

7. Keep all public sector pay under £200k pa - this may encourage the concept of public service among public servants.

8. Move all care-management services into existing or new community-based organisations that were mostly run by non-specialist, non-professionals.

9. Raise the retirement age to 70 by 2020.

10. Restore the 10p tax and reduce corporation tax to 10% on small businesses of up to £100k turnover.


The People.
1. Issue a Charter of Rights and Responsibilities to all users of Government services.

2. Expect some form or voluntary or community service from all people - and use the organs of the state - and local budgets - to encourage this.

3. Offer seed funding for a Development Trust for every locality.

4. Allow people to set up schools which can obtain state funding if demand is there.

5. Put information online as to spending priorities and trade offs (again Matthew Taylor's idea, not mine).

6. Use PR to choose all elected officers and run regular ballots on contentious issues.

7. Reduce the number of tiers of Local Government from up to three to one for all areas.

8. Offer start-up capital of 5k for any unemployed person to start their own business.

9. Accept that you will need to either pay for your own care in old age or pay for the insurance required to cover that eventuality from your own resources.

10. Redefine yourself from `Consumer' to `Citizen'. Ask not what your country etc...

Breakfast with the Minister

The place. `Fifteen' in Hoxton. The time. Eight thirty AM. The people. Twelve or so Social Enterprise Ambassadors plus Third Sector Minister Angela Smith and her entourage of four (yes, I know) from the Office of the Third Sector. The purpose. To tell Angela to keep this mainly pro-bono programme funded beyond 2011.

But let's start with the food. Breakfast was distractingly good. A kind of muesli-porridge followed by sausage and bacon baps and lashings of scrambled egg. The kind of food it is very difficult to have in front of you while politely waiting for someone to finish their spiel. I resisted at first - but couldn't stop myself. Fifteen it is definitely delivering its `taste bottom-line', as well as its financial and social ones!

We kicked off with intros. Very interesting to hear how people's businesses have grown, including bag-maker EAKO, toplining £2m from only half a million just a couple of years ago. Then Angela. She was, I have to say, very energetic and likeable. Quite chilled and healthy-looking for a Minister too.

She clearly grasps the sector - her own VCS background helping a little here I think. Unlike previous Ministers, she is keen for us to mark the ground clearly between what we're doing and the rest of the third sector, despite the similarities in some of our organisations.

Sam Coniff, the suave Founding CEO of marketing social business Livity chaired magisterially as ever and there were presentation on both public services and young people's services.

The theme across both was the need we have for our wider social offer to be taken seriously by commissioners who are often working to extremely narrow service-specs. Social clauses are a big requirement and we let the Minister know this.

I used my spot to say that our offer is well-suited to the age of austerity in which we can no longer afford full-price public service. Her response, perhaps predictably for a Labour government minister, was to stress that we shouldn't be primarily competing on price. I didn't want to say that I am already am . Forced to by commissionrs , even this early in the game.

Photos outside and then whoosh, she was gone in the Ministerial Prius. Overall we acquitted ourselves well. We come across as a dynamic, can-do bunch. Not your typical charity sector miserabilists.

So well done to all, especially the young woman who organises us all, Pauline Milligan, who is classy - in every sense.

The Man from the IFS

Two years ago I had the privilege of sharing a platform with Carl Emmerson, who is the Deputy Director of the highly respected Institute of Fiscal Studies (IFS). He was telling a rather uncomprehending crowd at NCVO that it was game-over for big public spending increases. And this was before the crash.

The IFS, for those that don't know it, run a model of the UK economy that at least rivals that of the Treasury. Some would say they predict things better than HM Government. Which is why you will often hear Carl or his boss, Robert Chote, on the radio in the morning. In short, the IFS normally get it right.

My motivation in catching up with Carl was to find out what his thinking was on the forward picture for public spending. I know what my instincts and my patchwork-knowledge tells me. But I wanted Carl's view - as a non-political, independent economist.

What he had to say was interesting. Basically, the UK's tax-take has dropped massively to the tune of about £100m pa - or roughly 15%. This is a recurrent deficit that we have to bridge. This is different from the Deficit we hear about on the news - which is the bill so far. The £100m, without corrective action, is what we will spend above what we get in EVERY YEAR from 2010-11 onwards.

Therefore we have choices. One unlikely choice is that we become Sweden: we accept current levels of spending, jack up taxes to Scandinavian levels and just live with that.

The other more likely one is that the Government immediately both raises certain taxes AND withdraws particular benefits (or Transfer Payments as they are called by economists) from groups who don't need them. Things like Universal Child Benefit, child tax credits and other "middle class" benefits come to mind.

These changes, if they are to be made, are likely in the first budget of any new Government (probably weeks after its election).

This led me to ask Carl whether a new Government would seek to implement departmental spending cuts too in that year. Carl thought probably not because budgets for 2010-11 will have already been set - and anyway, it would be likely, given the suddenness of any immediate changes that the "wrong cuts" would be made.

2010-11, therefore wouldn't be the year for actual cuts, beyond the immediate cash saving mentioned above, but the year in which cuts were planned for implementation in 2011-12, the first year of the next three year spending-period.

Interestingly, he pointed out that all of the cuts mentioned by the Tories only constitute a very small amount of the total amount to be saved annually. The truth is that the news will get a lot worse. Governments will probably need to tax more and spend considerably less for a long period.

Politically the question will be whether this period can be allowed to go on for the best part of a decade - or whether the next Government will seek to get it mostly done these next five years - to allow some light at the end of the tunnel rather than a message of "four more years of pain" in 2014.

If it is to be a shorter period, it will be altogether nastier to take out the effects of a recurrent £100m shortfall - and to pay down the existing deficit too.

I asked Carl about whether turning off the taps now, as Labour argue, would stymie recovery. He doesn't think it would be possible to do that in one go anyway and that the "now or later" question will be resolved by the fact that later isn't very far away now.

Might this kill recovery anyway? This worry, he says, needs to be offset by the risk that the markets (whose activities have a big bearing on interest rates) may be made very jumpy by any Government or prospective Government they didn't feel was committed to keeping the growing fiscal gap under control. From this point of view, a Government with this commitment and a firm majority would be the most welcome. Not the best of news for Liberal Democrats!

What was most striking talking to Carl is just the size of the gulf between what we are spending recurrently and what is being brought in - a gap currently funded by Quantitative Easing of monetary policy (or printing money). We cannot just grow our way out of this one. And while we cannot continue spending, it is worrying that neither party is publicly talking about how we can bridge that Grand Canyon.

Indeed if we were building a rope-ladder right now, even George Osborne's proposals would only stretch a few metres across!