Culture change will make or break devo Manc reform

While the personal stakes are obviously high for the loser, I am not alone in giving “be careful what you wish for” warnings to whoever forms the next government. The biggest political and service risk awaiting the next inhabitant of Number 10 is the NHS.

£6bn is destined for Greater Manchester but there are delivery risks to devolution, especially if there is not a clear local framework for accountability and decision making.

There are two elements to this radical move that have so far proved elusive to successive governments: effective healthcare commissioning and achieving better value for money through combined local interventions.

Without solutions to these, the national risk is to even more severely aggravate NHS deficits during the next decade.

‘Effective healthcare commissioning has so far proved elusive to successive governments’

For the half of trusts with deficits, the total now reported is £1bn.

Many have, out of necessity, used the release balance sheet reserves and provisions to manage down outturns. Without this and injections of government cash, deficits would be worse still, indicating the underlying run rate is higher than it appears and will be exposed more fully in 2016, 2017 and 2018.

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But reserves can only be spent once. Importantly, they are a proxy measure of risk and when risk is rising as now, so too should reserves. Contrary claims that reserves are somehow shortchanging the public of additional services are financially illiterate.

If all trusts were in deficit the financial woes of the NHS would be immeasurably worse and, like many, I foresee that come this autumn they will be at crisis point comparable to a decade ago. Then, in a system with a growing budget, whatever you thought of the top-down control and targetry, there was a sense of grip that gave confidence to the Treasury.

Since then the world has moved on. A constitution has established patients’ rights and operational leadership is devolved after Lansley. At the heart of health and wellbeing boards lies the hope that local community leaders and politicians share a need to effect change.

Appearing uniquely well placed, Manchester presents an opportunity to legitimise and empower commissioners to genuinely build local and sustainable system leadership by encouraging local, lateral programs to integrate through capitated budgets.

All change

Historically, standalone technical productivity initiatives have been successful in achieving economies of scale, replicating models and better procurement.

But now devolution may help overcome successive governments’ failure to improve strategic allocative productivity by committing resource to the actions that prevent the scale of acute expenditure later on.

‘Commissioners understand that housing and criminal justice are just as important as health and social services to community wellbeing’

Hitherto such initiatives like Total Place haven’t gone beyond pilots or research. Manchester offers the chance of bringing down spending overall, but also ensuring that integrated health and social care does not become the new silo, because local commissioners understand that housing, education and criminal justice are just as important as health and social services to their community’s wellbeing.

Any policy change such as this requires three vital elements:

• an agreed settlement on the role of competition and the private sector;
• creating a bias to medium term and sustainable financial outcomes; and
• developing the management culture to act in the public interest across whole systems and not out of organisational self-interest or gaming.

Puerile jibes about weaponising or, alternatively, privatising the NHS, damage the debate by creating an anxiety in the system that poorly thought through and non-consensual change will result.

Time to self-assess

The development of a menu of the models of care, devolved commissioning and payment innovation to vary tariffs locally may be the solution where local government has made extensive use of the market, especially for social care.

Vitally, as the NHS develops from an organisation to a system of organisations, it is essential that bodies self-assess their maturity in governance and financial management systems; they should ask themselves: “Are we in control?”

Not: “Are others overspending too?”

For the Chartered Institute of Public Finance and Accountancy’s part, a financial framework for integration will be ready this summer. But let’s not forget, culture eats strategy for breakfast.

‘Sustainable frameworks for competition and underlying culture change will make or break this reform’

Financial incentives, structures of accountability and external regulation cannot succeed if the needs of the organisation supplant the needs of the client. A decade of fiscal austerity could move us culturally the wrong way unless we extol the public value of collaboration.

Committing budget to the priorities of another budget holder (or indeed another organisation) has to be the right thing to do if it improves outcomes – after all it is public money. If not team players, the leaders of autonomous public institutions could be even more dangerous than when their organisation was less autonomous.

Devolution to Greater Manchester may be the answer to allocative productivity, commissioning for better social outcomes and long term sustainable change. But transformative change will take time, not everyone is ready, and sustainable frameworks for competition, medium term financial discipline and underlying culture change will make or break this reform.

Rob Whiteman is chief executive of the Chartered Institute of Public Finance and Accountancy