This is an extraordinarily important time for coherent policy, planning, and performance – the “3 Ps” – for delivering the SDGs and other core public policy objectives.
The SDGs present an extensive range of essential service improvements that are applicable across the world. The threat posed by climate change has become a major international issue with immensely ambitious remedial targets and huge spending requirements. Governments are also under pressure to introduce gender responsive budgeting and digitalize their public finances, reforms that offer huge benefits but also challenges and costs in the short to medium-term. At the same time, the Covid-19 pandemic has devastated many economies and produced huge fiscal burdens, increasing the challenge of delivering the SDGs and better environmental outcomes.
A coherent delivery framework
It is important that governments take decisions within a strategic framework that represents an appropriate timeframe and deals clearly with policy goals, service responses, resources deployed, and outcomes achieved. The various elements of this framework include:
A vision having a 10-year perspective expressed in terms of outcomes.
Objectives set with a 3-5 year delivery time frame, consistent with achieving the vision.
Delivery targets for each of the next 3-5 years in terms of service outputs relevant to the performance outcomes.
3-5 year budgets for agencies or programs that reflect the delivery outcomes and performance targets that each budget represents.
Annual accounts that set out executive responsibilities, annual performance outcome and delivery targets and the actual performance achieved.
Training and recruitment plans that enable public agencies to operate the systems and deliver the services that have been approved.
Delivering change
Successful reform is an elusive concept. Any initiative worth doing must have a benefits realisation plan specifying the steps necessary to ensure that progress is being made and that the end results are achieved.
Services and changes to service provision should be protected by risk management strategies that seek to mitigate internal or external events and shocks that may otherwise hamper delivery or destroy valuable assets.
Review and accountability
The various elements of the framework must be consistent with each other. When major new commitments are proposed, or it becomes obvious that major targets are no longer achievable then a review of the framework should be undertaken. In addition, there should be an annual review of the framework as part of the annual budget preparation process, perhaps as part of a wider spending review. Policies, plans, performance, and the results of review processes should be made public. There is no aspect of the planning and delivery process that cannot benefit from public scrutiny and comment. It is the responsibility of all public institutions in a democratic country to make themselves open and responsive to such a dialogue.
The PFM challenge for developing countries
The relatively poor condition of PFM in developing countries shown in the chart suggests the difficulties that developing countries face in planning, managing, and maintaining their existing budget systems. The SDGs and other global pressures to increase spending represent additional challenges for PFM systems to face. Multilateral decisions on the SDGs and climate change must therefore take account of the consequences for developing nations given the likely dependence of successful outcomes on their cooperation.
Conclusion
The immense pressures on governments worldwide to fulfil the global obligations and pressures described above often require concerted action. If governments are to succeed without making over-extended commitments, wasting time and money on impractical solutions, they must make decisions within the rigours of a fully operational policy, planning, and performance framework. Multilateral agreements, economic, social and technological considerations will all feed into framework construction but the integrity of the framework is key.
Framework development will inevitably present hard choices but that is a strength of the process. It should also provide a coherent basis for democratic accountability if, as a result, drastic life changes are required, freedoms are curtailed, and personal costs are increased.
This article was first published by the International Monetary Fund’s Public Financial Management Blog on 20 September 2021.
[1] David Fellows began his career in UK local government where he became President of the Society of Municipal Treasurers and a pioneer of digital government. He followed this with appointments in the UK Cabinet Office and the National Treasury of South Africa. He is a Director of PFMConnect.
UK Governments can no longer claim that EU rules prevent necessary changes to improve the UK economy or the life prospects of UK citizens. The UK’s decisions may have some tariff consequences but there is no EU veto or imperative that would lead us to doing those things that run counter to our best interests. After the deal was done in December the PM remarked “freedom is what you make of it”. Surely this will be his epitaph but will it be a celebratory one?
The time is rapidly approaching when we must learn of the Government’s detailed plans for fulfilling the PM’s promise to level up the regions. We shall then see what effort and risks ministers and senior civil servants consider appropriate to honour the pact with those who made Brexit possible by changing allegiances at the last general election.
Challenges abound for all participants. Local authorities, for instance, can offer valuable insights and assistance with delivery. Naturally they will want to put their own stamp on initiatives. In doing this some may make untenable demands, vilifying Government merely for political purposes. Making a start with the most constructive partners is surely important. An advance guard must be identified capable of identifying the route to success.
The adequacy of key public sector organisations must be considered. For instance, how is the private sector to be effectively incentivised to participate? Can the woeful state of skill training be improved and properly presented to those who could benefit? How are start-ups and small businesses to be supported in a practical manner? How should business regulation be simplified to encourage enterprise while maintaining British values? How and to what extent could universities be tasked to make a meaningful contribution with funding skewed to reflect support for local enterprise development? How is the huge heft of public procurement to be employed? Is this the moment to create regional investment institutions to support private enterprise and if so, in what form?
The private sector must be invited to make a major contribution to this agenda. Brexit has not shown the sector’s representative bodies in a particularly constructive light. They must demonstrate a capacity to contribute or be circumvented. One way or another the sector must be encouraged to provide ideas and resources that are appropriate and of long-term benefit to regional development.
No one has ‘the’ answer. The public sector is diverse, resource hungry and often politically divided. The private sector is competitive, risk averse, self-interested. Representative bodies of all kinds have limited, common-denominator agendas. Consultancies tend to provide answers that they hope will lead to repeat business. This is not a task to be resolved purely by conference or working group. The answer must be derived from an unruly discourse that generates ideas from a series of interactions across all issues involving many different organisations and individuals, producing contributions that are more revealing than manicured.
The general public must also have an understanding and an opportunity to contribute to this agenda. The remaking of the regions and the consequent clarification of the opportunities for London and the South East are about reshaping opportunities for communities, families and individuals.
The task entails the rebalancing of the relationship between the wider London area and the regions. Ultimately the responsibility for a successful outcome of this immense task lies with Government. It should be approached with this clearly in mind. There must be both local and national ownership, public and private sector engagement. The national contribution is pivotal and should be recognised through branding and governance.
This may not seem the best time for such an adventure. The virus has caused serious economic and personal damage. Restrictions will continue for some time while huge expenditure has already been incurred. Some say that this is the time to recognise and reinforce what works, time to throw everything behind the pulling power of London and the South East. They caution against forsaking the golden goose. Of course this is a fallacy borne of anxiety when the currency is realism. London does not work nor do the regions. The one lacks liveability, the other lacks opportunity both need attention. It is time to face facts, there was never a golden age.
The digital technology had been slowly revealing our needs and suggesting options. Covid-19 has caused us to build on these developments, changing our attitudes and behaviour with astonishing speed. The Covid-19 experience has also provided Government with invaluable lessons about joined up working and the need to achieve steadfast alignment between messaging, planning and execution.
Things will never be quite the same again. It is time to embrace change, we just need to do it properly.
[i] David Fellows has worked extensively in UK local government and in the Cabinet Office
as an advisor on local government reform. He is a director of PFMConnect, a
public financial management and digital communication consultancy: david.fellows@pfmconnect.com
Digital Media, Transparency and the War Against Corruption
Corruption is highly damaging to economic and social life through misappropriation of public funds, restriction of open market activity, favouritism towards families of those in power, and the many detrimental effects of rent seeking. In this piece we review evidence for the power of transparency to reduce corruption and improve economic performance. We then consider the increasing relevance of digital media, particularly social media, to the transparency agenda and how its application can be encouraged.
Economic performance, transparency and corruption
The IMF’s‘ Framework for Enhanced Fund Engagement’ 2018 noted that (i) transparency is significantly correlated with a perceptions-based indicator of the control of corruption; (ii) higher levels of corruption are typically correlated with lower growth; and (iii) corruption and governance are significantly associated with average long-run per capita growth, investment, and revenue. The IMF’s Fiscal Monitor: Curbing Corruption (April 2019 edition) shows that the least corrupt governments can collect considerably more in taxes than those at the same level of economic development. In a blog announcing this guidance Christine Lagarde, then Managing Director of the IMF, affirmed the importance of transparency by commenting that; ‘At the end of the day, the most durable “cure” for corruption is strong, transparent, and accountable institutions’.
How governments may involve digital media
The World Bank Document ‘Enhancing Government Effectiveness and Transparency: The Fight Against Corruption’ (September 2020) details studies in which developing countries have sought to combat corruption by improving transparency.
It instances:
The identification of corruption relating to infrastructure projects in Columbia by the Government urging citizens to publicize unfinished projects.
The introduction of participatory budgeting in Brazil where one study found that adopter municipalities achieved a 39% higher tax collection than those that had not.
The use of Beneficial Ownership declarations in the Ukraine where online access to records promises significant advantages following a chequered introductory experience.
Public reporting of Supreme Audit Institution (SIA) findings in Ghana, and India’s practice of encouraging the public to comment on SIA reports and provide evidence of misdeeds.
These are all public engagement activities that can most readily be undertaken via digital media.
The impact of social media
Social media is a growing phenomenon across the developing world. It can be used by governments to encourage citizens to make their views known (figures in million).
Note: *Kenya’s Anti-Corruption Agency has 293,000 Twitter followers
A survey of Kenyan social media users conducted by SIMELab in 2020 suggested that social media use was becoming highly age specific.
The survey identified the three most used media as WhatsApp (89%), Facebook (82%) and YouTube (58%). TIFA Research has identified Facebook as the current most effective advertising platform.
The African public accountability movement Connected Development (CODE) based in Nigeria uses digital media to help marginalised communities monitor public service investment employing its ‘follow the money’ slogan. A current focus is COVID-19 expenditure.
We have analysed the correlation between Transparency International’s 2019 CPI scores for the 48 best performing African Countries included in the index where both Facebook and Twitter services were available. There are strong positive correlations between social media user numbers and perceived corruption levels. This result seems consistent with the transparency/corruption relationship found in the IMF Framework for Enhanced Fund Engagement, reflecting public interest in government affairs and corruption.
A growing relationship between formal digital media and social media
Over the past year online news media have reported government initiatives against corruption and investigated acts of corruption. Two examples:
On 11th November 2020 the Cyprus Mail commented that: ‘without (greater) public support, anti-corruption groups are unlikely to attain their objectives, because the politicians will have no reason to take any notice of them’.
On 21st November 2020ABS-CBN News reported that a task force investigating Philippine Government corruption led by Justice Secretary Menardo Guevarra had received at least 60 complaints during the previous two weeks.
These causes could benefit from social media use by community activists (Cyprus) and the government (Philippines).
Conclusions
The economic impact of the COVID-19 pandemic on developing countries brings the prospect of reduced national resources unless and until these countries can address their corruption challenges.
Formal online media have helped increase transparency in recent times. Further, social media is fast becoming an important form of popular communication throughout the developing world. The targeted use of social media platforms presents an effective opportunity for online public engagement that makes messaging easy to assimilate and respond to.
Governments can use social media to seek public support for reporting anti-corruption activities, complaining about unfair decisions and exposing the accumulation of unexplained wealth by politicians and officials. Such engagement is, however, dependent on the demonstration of government integrity, the recognition of public priorities, and the provision of basic information on services and funding to local communities.
The international development community can encourage governments to uphold press freedom, protect whistle-blowers and use social media as part of the transparency process, and scale up its support to countries that are pursuing effective anti-corruption policies.
[1] David Fellows is an international development PFM advisor who previously worked extensively in UK local government finance and in the Cabinet Office. He was a leader for the introduction of digital communication in UK public service delivery. John Leonardo is a PFM expert with extensive worldwide experience. They are both directors of PFMConnect, a consultancy providing online support in the fields of public finance and digital communication (david.fellows@pfmconnect.com).
Levelling up opportunity – redressing social and economic disparities in the UK
By David Fellows(1)
This is an extraordinary time for the country and the Government. Despite the terrible consequences of Covid-19 and the challenges of Brexit, this is also a time that bears the seeds of a renaissance. Our new found freedoms, new ways of working and new sense of shared responsibility provide the means to redefine Great Britain for the 21st century.
Well before the Covid-19 struck digital technology had introduced new forms of remote working, shopping and entertainment but the virus has accelerated adoption. Greater flexibility of work location has been established and physical proximity to London is no longer the advantage it once was. This has improved the feasibility of ‘levelling up’ the regions, a commitment made by the PM on taking office. Levelling up also carries the potential to reduce pressure on accommodation in the London area and alleviate the worst of the capital’s housing crisis. With a little imagination levelling up could be seen as a win win prospect for the whole country.
Levelling up commitments
Recovery is always an aspirational project and we have a PM who epitomises this quality. His early call to use levelling up as the route to recovery from Covid-19 captured the public mood and certainly chimed with the expectations of Red Wall voters.
The Conservative manifesto for the 2019 election commits to ‘agenda for levelling up every part of Britain, investing in our great towns and cities, as well as rural and coastal areas’. Under the heading ‘Levelling up’ the March 2020 Budget asserts to need to ‘raise productivity and growth in all nations and regions for everyone, addressing disparities in economic and social outcomes’.
Regional disadvantage
The regions are suffering from long-term underperforming economies giving rise to the steady destruction of social structures as young professionals and skilled workers drift to the London area. This regional situation is to be contrasted with London where the City and Central Government directly and indirectly provide huge economic impetus. The concentration of media, major cultural venues, law courts, international tourism and a host of vastly resourced academic institutions add enormous weight.
This constitutes a system of self-serving parochialism that produces a continuous flow of advocacy for endless public and private sector investment. The thought of major institutions locating outside London has become almost risible. Some suggest that there is a spill-over effect from London to the regions but where this happens it consists of low-paid back-office jobs, call centres and branch plants that can be axed or offshored at a moment’s notice.
Levelling up challenge
It is worth considering the concept of levelling up in terms of the current socio-economic challenges facing the country and the regions: the attenuated international supply chains; overly heavy dependence on manufactures from across the world; the steady drain on young talent from the regions to London leaving behind increasingly vulnerable communities; the narrowing of employment opportunities in the regions that fit the skill sets, interests and monetary ambitions of regional communities; and the stagnant regional economies that require regular, and often resented support, from the national exchequer.
It is astounding to reflect that the UK has proportionately the smallest manufacturing sector of any OECD country (Gudgin & Coutts 2015 – see Bickerton below). In terms of shared prosperity a recent House of Commons briefing paper gives the GDP per head for the devolved administrations and English regions. The astonishing fact emerges that London’s value is £54,700; the South East £34,100; and the remainder are below the national average, mainly in the range £30,100 to 25,900 with the exception of the North East £23,600 & Wales £23,900. It is a crude but interesting comparison.
Apart from the extremely wealthy, London too has its problems. The housing crisis is borne of excessive demand compounded by a dysfunctional housing sector, an overly restrictive spatial planning system and political inertia. It is also worth considering the cost of continuing to develop the already congested and expensive London infrastructure. It has taken Covid-19 to emphasise the inherent risk entailed by an enormous concentration of cost and livelihoods invested in a London area public transport system that is reliant on a huge passenger throughput. The changing demand habits of the travelling public have shown the inbuilt risks to this system.
These factors suggest the potential benefits of rebalancing in favour of regional economies. This could include some reshoring of production, strengthening internal regional markets and developing the capacity to recognise and exploit regional economic potential.
For instance, there may be particular local relevance to the development of renewable energy technologies and support services; battery technology; high insulation house fabrication industries; and digital technology applications supported by local graduates from higher education (perhaps helping to develop local businesses). More specifically, computer aided design expertise offers support for improvements in the efficiency of manufacturing and agricultural processes that may help to offset the potentially higher costs of repatriated production and smaller companies may be prepared to collaborate in the creation of local skill sets required by emerging local industries.
The levelling up offer
As yet there is no clear indication from Government about the objectives, details or total spending commitment to be attached to the levelling up commitment. Colin and Carole Talbot in their paper ‘On the level’ considered the feasibility of interpreting the concept in terms of increasing regional public spending per capita to that of the capital. They concluded that a 6% rise in public spending would be required. In his thought-provoking paper ‘Brexit and the British growth model’ Christopher Bickerton traces the breakdown of the British socio-economic compact and asserts the need for a new social settlement in Britain. This could be taken as the underlying subject matter of a levelling up agenda.
The March budget’s reference to levelling up as cited above itemises infrastructure spending of £650bn up to 2024-5 for roads, railways, communications, schools, hospitals and power networks across the UK. A close-ended infrastructure dominated commitment would clearly suit the Treasury control instincts but such investment alone is unlikely to make a significant dent in the problem.
In his recent speech to the Conservative Party conference the PM affirmed his intention ‘to spread opportunity more widely and fairly’. Perhaps levelling up opportunity this is where the answer lies. But what sort of opportunity? I suggest this refers to people having an appropriate choice of work giving them the chance to earn a good living in a satisfying social and physical environment. The work depends on the individual’s aspirations: something reasonable in terms of pay, security and interest. The environment clearly includes friends and neighbours, safe streets and pleasant surroundings.
Admittedly this is not graphically clear, it does not have a specific price tag, its interpretation will certainly change over time and it can never be ticked off the to-do-list. Refinement will embrace a greater diversity of employment, wider spread of earnings, higher proportion of national wealth and personal income for the regions. It is the ultimate political task of continuous engagement and interpretation with the voters judging the results. To a large extent, the environmental aspect requires familiar public services to be properly delivered but the economic aspect requires some radical new thinking. The approach must be much more diverse, agile and collaborative than hitherto.
Levelling up tools
The general election manifesto asserts the need to give the regions ‘more control of how that investment is made’ and ‘to trust people to make decisions that are right for them’. Does the PM really wish to succeed by devolving responsibility for ‘levelling-up’ to local judgement on the basis that locals know best? A cursory inspection of the project will quickly find that the game is not in regional hands.
It is essential that local authorities, local businesses, local universities, local FE colleges and a plethora of regional organisations are seriously engaged. Many will have a major stake in the delivery but any plan that does not require Government to play a pivotal role in shaping and delivery has, in my opinion, no significant capacity or ambition to move the dial towards regional regeneration. How are the various bodies to be engaged if not by Government? Are Government departments not to make a significant contribution in the fields of taxation incentives, the creation and oversight of an investment vehicle, new procurement regimes and simplification of regulatory systems? The distancing of Government from regeneration is the story of repeated failure.
So what measures might a more appropriate regional revival scheme look like? The levelling up agenda could include: the use of Government procurement to promote regional economies and help develop emerging businesses (Government taking the risk of awarding high value work to the latter); a system of enterprise zones and free ports with tax incentives for business to relocate and invest; deregulation to encourage enterprise; the creation of regional investment institutions (to make good the lack of commercial appetite for regional business ventures); the introduction of integrated regional government export advice centres; and a properly decentralised Civil Service. The Government is also the paymaster of the higher and further education sectors that have a substantial contribution to make and this must surely be designed into proposals.
Low interest rates make infrastructure a superficially attractive proposition but it must be justified in terms of its relative benefits within the entire spectrum of measures that are potentially available. Its importance must not be overrated.
This exercise is a massive and complex undertaking with diverse elements: local and national, private and public, established institutions and new ones. Government departments must be effectively engaged. Emerging businesses will require special attention. Local business services will need to be kept in touch. . Local business services will need to be kept in touch. There must be a learning system that develops knowledge of what works in what circumstances, how to roll out and revise. Predecessor programmes failed to offer a sufficiently comprehensive framework but are a starting point for such learning.
In reality this cannot mean that every town that has been hard hit by decades of decline will be comprehensively revived in these terms. It will be necessary to spread the effects of the employment regeneration into established towns that become new suburbs but with the arrival of remote working that distinction will become increasingly blurred.
A new regional geography
There is also a requirement, in my view, for the creation of large regional economic development areas to facilitate the process of regeneration. There may be a temptation to restrict attention to the midlands and the north but this will be rightly challenged by other regions facing neglect. For instance, there could be four such regions: the North from Cheshire to Cumbria and across to the east coast; the West Midlands from Shropshire to Wiltshire; the East from Lincolnshire to Suffolk; and the West from Cornwall to Wiltshire and possibly up to Gloucestershire and out to Hampshire.
These four regions would form a powerful arc around London and the South East. There would be no intention to redraw local government boundaries to achieve this. Each economic development region would be an amalgam of its various regional institutions. It would be designed to explore and refine the key development levers made available to it. It would provide the basis for the development of a country that is much more robust and interconnected than it is today.
Timescale
The displacement effects of Covid-19 and, to a lesser extent, Brexit are enormous. There is not the financial or organisational capacity to complete the levelling up process and other key Government commitments in the course of a single Parliament. This is a programme for the next decade. Nevertheless, this is the time to articulate the broad vision and present an outline programme of measures to give it effect. Early decisions must be taken on the first tranche of initiatives linked to the vision. Perhaps initial proposals for the current Parliament could be developed for announcement alongside the postponed autumn budget if this were scheduled for the spring.
The rumoured relocation of a substantial proportion of the Treasury to Leeds could offer evidence of intent for an extensive programme of departmental relocations. Such a programme would be more about a shift in departmental attention to the regions than the regionalisation of public spending.
Future domestic issues
Of course there are many other related issues requiring attention: NHS management and the reform of social care; the allocation of responsibilities within the state schooling system given the decreasing role of local education authorities; the modernisation of the Civil Service and Cabinet Government; the future role of the armed services; and devolution within the UK. All these issues and more are important to the nation’s development but they are inevitably subservient to the blue print for economic recovery and its key theme of levelling up opportunity.
Conclusion
In his recent speech to the Conservative Party conference the PM affirmed his intention ‘to spread opportunity more widely and fairly’. It could be said that ‘levelling up opportunity’ is his key commitment to the country.
If this is the task then measures taken by Government must go far beyond a programme of infrastructure development since that cannot begin to have the impact required. The real task requires Government to take a major role, contributing muscle and breadth of attack.
The concept of levelling up opportunity must now be supported by a clearly articulated vision and an outline of the mechanisms for delivery and subsequent refinement over the next decade. This must constitute a key element of the early post-Covid economic revival. There may never be a better chance to put this vision into effect.
(1) David Fellows has worked extensively in UK local government and in the Cabinet Office as an advisor on local government reform. He is a director of PFMConnect, a public financial management consultancy: david.fellows@pfmconnect.com
(2) A short video discussing the issues raised in this blog is available here.
