Transcript
Speaker: Welcome back, croeso yn ôl to episode two of The Exchange, which is one-off podcast. It's a chance to listen to the man who, for the last eight years, or nearly eight years at this point, has been keeping a very close eye on how we spend our money in Wales on our public services I'm Betsan Powys This is Adrian Crompton. Welcome back, Adrian.
Speaker: Adrian is the outgoing or soon to be outgoing Auditor General next summer. um And this time in this podcast, we're going to look and discuss the huge challenges ah faced by the public sector in Wales. And we know there are issues. huge ah we have to say anybody who watches the news will know of the challenges facing public services in Wales and you'll probably be feeling them in your everyday lives as well so come on then aden a few things off your chest and a few things to spell out follow the money is what they say so let's start making you talk and start with that biggie financial pressures so spell it out for us sure um
Speaker: We can't talk about anything in this role without talking about the money. You're absolutely right. And over the last couple of decades, ah we've seen really consistent and quite severe squeeze on the public finances in Wales.
Speaker: um Here at Audit Wales, we take a look at all of that. If we start um with our ah perspective on local government, what we're seeing at the moment is, in many cases, local authorities which are right on the cusp of financial sustainability, I would say,
Speaker: um So, to their credit, um local authorities across the country have a pretty good grasp on the here and now and how are they going to manage their budgets in year. um But they're living for that short-term time horizon. And some authorities are dipping into their reserves just to balance the books, and that's unsustainable.
Speaker: I was about to say, by the way, the alarm is sounding for public spending. There's an alarm sounding somewhere, so forgive us, but there's nothing we can do about that. So we'll stick to the alarm. we can we can't talk So when you say on the cusp of financial sustainability, does that mean that they're going to wake up one day and think, well, we can't afford to do what we have to do? We can't keep things going.
Speaker: Well, that's what you've seen across the border in England in a number of cases. You know, ah really high-profile, big authorities, like Birmingham Council, for instance, um ah have essentially found themselves bankrupt.
Speaker: um Now, we've not um had any such instances in Wales, which is testament to the skill, the dedication of politicians and officers across the country.
Speaker: But as I said, what our work... um tells us is that some authorities are right on the edge of that position and they face um you know really sharply rising costs in in a number of areas but children's services and it obviously an obvious one but also in the provision of temporary accommodation um these are demand-led services that they have to respond to um and so in some cases it won't take very much to tip those authorities over the edge I fear.
Speaker: So are we saying that, you know, you might be you know chief finance officer for a local authority? and I don't know, a few families move into the area with great demands on your service, um perhaps children who need special need education and so on.
Speaker: but are we saying that that might be enough in some cases to cause real issue for authorities who handle millions and millions of pounds? Are we at that point?
Speaker: We are at that point in a small number of cases, you know, not for the sector as ah as a whole, but in a small number of cases, i believe, yes, we are. ah Across the whole of the sector, I would say, um ah the whole of the sector does need to really get a a stronger grip on its medium and longer term financial position.
Speaker: So some are in a health healthier position than others. but all need to really tighten their grip on that longer-term perspective. But you're absolutely right. you know Local government is often under a statutory duty to deliver services, and those services, if they're demand-led...
Speaker: you know can can cause ah an issue financially if if the authorities are right at the edge. And of course the other challenge is that we keep telling these people that they'll be in the news and there'll be terrible headlines about them if they make a mistake in the here and now, if they can't keep their schools open.
Speaker: you know Huge problems in the NHS that are on the news every day. We're also telling them, yes, you must start thinking about the long-term future and putting things right. So you can see that it's a pretty difficult bind, isn't it, for those in charge? Absolutely.
Speaker: Leadership roles in public service are phenomenally difficult jobs. And, you know, I recognise that all the time in my work. And, know, it's really important to recognise that, I think, because it's all too easy for people like me and others to call out and criticise when things are going wrong. But these are really difficult roles, as you say, under a lot of pressure.
Speaker: And it's testament to my my colleagues in the public sector that they do such a phenomenal job most of the time. you know, we've spoken about local government, you know, the and NHS absorbs the biggest chunk of funding for us ah in Wales.
Speaker: At the start of devolution, ah about a third of all the money um that term was was devolved to Wales was going to the NHS. Today, we're up above 50%. fifty percent That's a huge fundamental change in the shape of public finance.
Speaker: And A decade ago, the the Senedd legislated to say ah our health bodies in the and NHS must break even financially over a three-year period.
Speaker: And they also have to have forward-looking, ah medium-term financial plans that they're going to agree with the government. So that's the law. What our work at Audit Wales demonstrates is that most health bodies are simply not meeting that break-even duty.
Speaker: ah So as as an auditor general, I've qualified their accounts. You know, that's a serious statement. You've got the red pen out. Exactly. um But that is in spite ah of...
Speaker: Record levels of investment in the NHS and to the NHS's credit, record levels of identified savings as well. ah But the money is simply insufficient to keep up with ever rising demand for services.
Speaker: So again, that model for me is simply unsustainable. Something more fundamental needs to change. ah because we can't simply ah keep shifting an ever-growing proportion into the and NHS, especially when it's unable to keep up with rising demand.
Speaker: So are you telling them that they have to bring it down? You know, it can't be over 50%. We all know, you know, that it's such a key part of the Welsh budget. Everyone else, I guess, has to take considerably less because of that increased spending, which you say has gone up so much during devolution.
Speaker: And yet I imagine that many of those listening, some of those watching will be saying, yeah, but NHS is, we can see it's really struggling. ah It is a you know, the money pit is just enormous.
Speaker: Do they have to redress that balance in the budget? Yeah, look, I don't um underestimate how difficult this is going to be. um And it's not for me, thankfully, to make those really tough political choices about where the funding goes.
Speaker: However, it is my job to call out what I see. And as I've described, i you know, I see a pretty fundamental change in the shape of public financing.
Speaker: ah and ah examples on the ground that tell me that that situation is unsustainable. You know, I mentioned the the the forward-looking um financial plans that that um the and NHS bodies are expected to have.
Speaker: By and large, our health boards don't have those in place. So I don't see, you know... light at the end of the tunnel in in that way. does It's a bit scary, isn't it? Well, it's daunting, absolutely. This is a huge, huge sum of money, fabulous people delivering brilliant service.
Speaker: um But I'm afraid it's my job to to step back and take a ah slightly colder look at the numbers. And that's what I see. OK, and well, let me remind you, solutions are to come. So we're not going to duck that one.
Speaker: But for now, we're talking about the problems. Can just raise one thing, though, which is before we go on to trust and confidence? Well, I suppose it's the start of trust and confidence, which is another huge challenge facing public services um that has been undermined.
Speaker: ah And it's one of the reasons it's been undermined um that people have heard, say, from the United States, other parts of the world, come on, new administrations coming in, slashing spending on you know, the public sector.
Speaker: ah It needs to be done. It has to be done. um Why can't that happen in Wales? The next administration, whoever they are next May, they need to come in and slash public spending and sort it out.
Speaker: When you hear that sort of thing from far away, do you hear echoes of it here now? And can millions and billions be saved? um you know that that That narrative about um ah efficiency in government spending has always been around. it's It's meat and drink to us at the audit office. We're all about...
Speaker: ah trying to encourage and and identify value for money. um It feels to me, at the moment, it has a slightly different flavour, undeniably.
Speaker: um I guess what I would say from my seat is, number one, it is not as easy as people think. um ah ah Through my work, you know, I see... ah examples of of waste, of fraud, of error ah in the system, which have to be taken out of the system undeniably.
Speaker: And they are not there are not insignificant sums that can be delivered in that way. In the scheme of that 28 billion pounds of public spending though, those things generally speaking are at the margin.
Speaker: um And stopping ah one program here or one initiative there is the right thing to question politically undeniably. But in in terms of the big picture of public finances, some more fundamental transformation is required, I would suggest, in the whole model of ah delivery.
Speaker: I suppose as ever you'd say if it was easy then it would have been done well before your time let alone in your time. it It's you know some of the the things I'm sure we'll we'll talk about require us to shift um to a longer term mindset to a focus on greater prevention rather than dealing with the the symptoms of issues These things are easy to say.
Speaker: Everyone agrees with them, but very difficult to to affect. They take time, and that time may be out of kilter with political cycles and so forth.
Speaker: ah It's also the case that not always is the are the benefits seen by the organisation taking some of the pain. um So you've got to do the hard stuff, take the nasty headlines, and by the time things are better, you're long gone. Exactly, yes. Yeah, yeah.
Speaker: So from the point of view of the public, we'll be voting in Wales if they choose to do so next May. um You're already hearing an awful lot of people saying, gosh, we spend so much of this, but it's not doing that well because their experiences of problems, um of buildings falling down, of things looking poor, you know, they're not standing up and saying public services in Wales, we can be proud of them after 25 years devolution.
Speaker: devolution They can see there are problems, but they want solutions. So, you know, how do you rebuild that confidence at a time when actually you still at the moment have to be cutting and you still have to be making things, you know, you're trying to make them more efficient, but actually what you're doing is not pouring in more money.
Speaker: How do you get that confidence back? Absolutely. That is ah tough question. And actually, I should be saying, come on, spell out how and how how the confidence has gone at the moment as opposed to the solutions, which we'll come to in a minute. so So I think public um ah trust and confidence, you know, this is it is is is low and and diminishing in Wales in you know our political and public service delivery models. But that's not unique to us. That's ah that's a global phenomenon. So there are many, many factors at play.
Speaker: some of which are out with our control. You know, the the global media landscape and how we access information and and the truth these days is not sadly within our gift. um ah However, some things are in our control.
Speaker: So we we discussed in the previous episode, you know, some of the phenomenal work that the public service delivered ah in emergency times, in the pandemic and other ah points. It
Speaker: the the Part of the feature of those times was the pace with which we delivered and the effectiveness of what we delivered. And it's some of that, I think, that we really need to focus on to try to win back public trust and confidence.
Speaker: You know, whenever the public see, as you say, services that they're trying to access of poor quality, not improving, moving in the wrong direction. seeing a doctor. Exactly. Of course, they they feel that that reflects not necessarily on the individual bodies necessarily, certainly not on the individual staff that they engage with, but with the system as a whole. There's something wrong with the system. um so So pace and delivery absolutely is key. And and some of our work at Audit Wales shines a really sharp light on that.
Speaker: The other thing which I would say is very definitely within our gift is governance. And that's another of my responsibilities to keep an eye on how organisations in the public sector are ah being governed.
Speaker: Sounds a dry topic, but it's super important, I'm afraid. um Because by and large, you know, the message I can give and the assurance I hope I can give to people is that the vast majority of our public service, the vast majority of taxpayers' money is well managed and well governed.
Speaker: However, there are occasions where where that is not the case. And I've had cause to call that out over the last um seven and a half years. And is that because the structures aren't right or people aren't doing the right thing? They don't care enough. They're not keeping a close enough eye. you What are the reasons? It's all of that, I'm afraid. it's you know It's not unique to any part of the system. I've reported on governance failings in the Welsh government itself.
Speaker: Parts of the NHS, parts of local government, arm's length bodies, right down to small town councils. um Common features, I would say, are always an element of process, you know.
Speaker: boring stuff but we've got to get it right and if we've got procedures and and processes in place let's follow them properly but i would say the more significant uh element which is common uh is people you know um and behaviors and actions that people take And sometimes that's ah not a reflection on them as human beings, but they just do the wrong thing. Other times I fear that people under pressure can lose sight of some of the values and behaviours um that we all want to see in public service leadership.
Speaker: And I'm sure brought people in ah to that sphere of work in the first place. And... I'm sure they appreciate that you're choosing your words very carefully. It's a small number of cases, but in a way that doesn't matter.
Speaker: Because I think ah every time i call out some governance failing in a part of the ah the public service, it it pollutes the whole system. You know, it colours the public's view of of all of us.
Speaker: So there's a i I'm very conscious when i I speak about this subject that I can come across as a bit holier than thou. You know, this is a difficult word to operate in difficult roles. People are under a lot of pressure.
Speaker: But it matters to me so much because, as I say, you know, just a single example affects public perceptions of the whole system. And we've got to squeeze that out.
Speaker: and mean I would say the same thing, it's it's easy to to point a finger. um But certainly it feels and it felt like in the past couple of years in Wales that there were lots of organisations, public organisations, where things were going wrong um and they were being called out.
Speaker: And yet when people were having to leave or choosing to leave because things weren't going that well... they did seem to leave with some fat cheque And from a trust and confidence point of view, you know, that doesn't help, does it? When people say, well, if they got it wrong, you know, I'm not getting a fat check when I leave my job. Why are they? Absolutely.
Speaker: I couldn't agree more now. um Not everyone who leaves um public service is doing so with a fat cheque And not everyone who leaves with a fat cheque is doing so illegitimately. But a fat cheque is also shows how well old I am. I think cheque but there we are you know what i mean but you know you're absolutely right you know the the the cost of um uh poor governance the cost of relationship breakdown especially when it's near the top of an organization um comes with a financial cost that people see in the shape of settlement agreements and payments uh legal fees consultancy fees and so forth those are not insignificant at all
Speaker: More significantly, I would say, it's also a weakening of the leadership of of an important organisation, you know, and if there's distraction of an organisation away from its primary purpose, that the costs of that are harder to quantify, but far more serious, I would suggest.
Speaker: And is that one other quote I wanted to, um or you on this sort of subject? um you You brought out a report on cancer services in Wales. It's always a report in which there is great interest. It affects so many people.
Speaker: um And I just checked back on the headline, because I remember it hitting me at the time. The headline, was a BBC headline at the time, bosses meant to improve and NHS are making it worse.
Speaker: And it just struck me... It is kind of what you said, but you haven't certainly said it in in those sorts of words. um And that it must be getting harder and harder. And another challenge for public service is getting those leaders in now who will do these roles.
Speaker: Yeah. Well, that headline, I'm sure, wasn't an Audit Wales headline. That's not the sort of language we use here. But you're absolutely right. It does, you do identify important issue there that, you know,
Speaker: why Why would people want to put themselves in into those sort of positions? you know Because the potential flak that comes your way if you get things wrong is really serious.
Speaker: The crucial point that I was trying to make in in that report on on cancer services, um well, it was a classic example, really, where um you know we've we've put ever more resource into that area, well above inflation increases in in funding, and are super important, clearly, affecting lots of people and their loved ones in the population.
Speaker: And yet what we're seeing are poorer results, growing waiting times and so forth. um The critical point that we were trying to draw out there was the need for the Welsh Government, especially, and what's called the NHS Executive at the top of the and NHS, to provide much clearer and sharper leadership of the whole system.
Speaker: Because everyone involved in that sphere of work is desperate to do the right thing, clearly. But what we needed to do, in my view, was to knit together and give a clearer steer on priorities and strategy for the whole system.
Speaker: And is it sometimes too complex at the top? I mean, perhaps we can come to this as a solution, but you sometimes get the impression that there are new names all the time of organisations, and I can't keep up with them, who are keeping an eye on things and running things. And does that just mean sometimes that although done with the best will in the world, it means it's more opportunity to finger point it. Well, it's not our fault, it's them. And I thought they were doing that and we yeah that sort of thing. Yeah, yeah. um You know, we're a small country, three million plus people. want It ought to be positive, shouldn't It is a positive and it ought to be something we can leverage to our advantage. You know, that's that's big enough to be and strategic and to to do some things with weight, but small enough that we can be nimble and collaborative and so forth.
Speaker: um Boy, oh boy, do we make the system complicated. so you know, as an illustration, my line of sight is on auditing the accounts of all parts of the public service.
Speaker: I sign off the accounts for the best part of 100 significant public sector organisations of one form or another. That's busy to start with. Layered on top of that, we have a a myriad of different um collaborative and partnership arrangements which are there to try and help us solve some of the wicked issues that can't be solved by a single organization, need different parts of the system to work together.
Speaker: So we have things called public services boards. We have regional partnership boards. We have ah corporate joint committees. We have city deal regions. We have education consortia.
Speaker: The list goes on. And and the the motivation and the idea behind it each of those bodies and structures, I'm sure, is positive.
Speaker: They're for a good reason. But you put them all together... And what you're left with is a system that is overly complex. And now the consequences of that um are many. you know yeah Those structures and bodies are often populated essentially by the same folk who have to go to different meetings and play a part in different spheres.
Speaker: So that stretches their capacity really thinly. But it also potentially leads to a system which is fragmented in its delivery and possibly a bit slow as a result in its delivery.
Speaker: So that pace you were talking about goes... That pace is, sometimes that's at at its root. um But it it also, from a citizen perspective, makes it hard to understand, you say, who's responsible for what. You know, I don't really care.
Speaker: i just know i need you know access to X, Y or was Z. But navigating that system when it's so complex from ah from a citizen perspective is ever more difficult.
Speaker: So listen, before another train goes by, and don't suppose Transport for Wales would thank us for stopping their train, so we can't help that either. So we've talked about less money, more demand, ah less trust and confidence, more complexity.
Speaker: Any other challenges to set out there? Or have we more or less gone through the challenges but before we bring this episode to an end and talk about possible solutions? That would be enough. But sadly, there are many others. Go on. quickest But, well, I will give you a quick list, but maybe, you know, the one we cannot ignore are the things that are outwith Wales, affecting the whole globe.
Speaker: Yeah, so so geopolitical events overseas, you know, the war in Ukraine drove inflationary pressures ah across the world. And that comes home to roost in the cost pressures that our public services face.
Speaker: um Staying with Ukraine, you know, the the the government ran a program to resettle Ukrainians in Wales. I wrote a report on that.
Speaker: was super positive, in fairness to the Welsh Government, about the collaboration and focus um that we could see across the system to deliver that. um Perhaps the biggest of all facing us um and having a real effect on public services here is is climate change.
Speaker: yeah that That manifests in real world short term costs when we have to deal with extreme weather events or or focus more on flood protection or whatever it may be.
Speaker: um But even bigger than that, work that my office has undertaken has indicated there are very significant but as yet unquantified sums which are necessary if the the the public sector, let alone the whole of of Wales,
Speaker: is to to move towards net zero. um So a massive challenge for the whole public service to ah put a number on that bluntly, and because we have to do that before we can do the the even harder job of working out how we're going to to meet that demand.
Speaker: So those external global pressures, we can't ignore because they have real impact on us at home. So listen, just before we go on to episode three, and we're going to start being positive and talk about opportunities for improvement and so on, let's just end this episode with with a thought from you on we are 25 years into devolution. We have, to a great extent in Wales, done things our own way.
Speaker: um and there'll be people listening from all sorts of backgrounds, all sorts of political backgrounds, some fans of devolution, some not. Some voted for the successive Labour administration, some not. So let's put all of that aside, but just say,
Speaker: 25 years in, we do hear a lot of headlines of things are doing better in parts of England, certainly no education results, waiting lists. Wales still seems to be struggling.
Speaker: What is that? Is it a disappointment? Is it a failure? What is it? How do you quantify it? Hmm. um i'm not going to get into the ins and outs of but of of where um measures might look more positive or less positive in wales or england because we could all play that game and pick and and choose our our statistics um uh My line of sight is on the situation in Wales, not in England.
Speaker: And what I see, absolutely some massive challenges, undoubtedly some need for for pretty fundamental change in in how we go about things here.
Speaker: um But we're holding it together at the moment through phenomenal efforts on the part of public servants, politicians, senior leaders, frontline staff, right through the system.
Speaker: And there's a lot that is good about our public service delivery. um We have unique features in it, which the world looks to for leadership.
Speaker: Most prominent, I suppose, is ah the work the that um the public service delivers around future generations thinking. um I'll say more on that because I think there's more that we need to do.
Speaker: But undeniably, as as ah a piece of forward thinking, legislative and policy delivery, that's genuinely world leading. And many other ah examples of good practice that we see through our work.
Speaker: always seeing the negative on things you know one of the things unfortunately despite being a small really connected networked country we still aren't very good at at making good practice flow through the system you know and joining that up and making it something that we all benefit from so there's more that we need to do in that space it links to the the point we made earlier about the um fragmentation and complexity of the system.
Speaker: Perhaps that's one of the barriers that gets in the way. But there's lots to be really proud about in in the the the Welsh system, undeniably, but we can definitely do better. Fine.
Speaker: So, episode three, we're going to be more optimistic, or we're going to try and go through, well, is it optimistic or try and be realistic about what can be done so that we're not just listing problems. So, if you want to know...
Speaker: what you think, Adrian Crompton, the future ought to be and what ought to change, then please join us for episode three. For now, thank you. Bye-bye. Thanks for tuning in to this episode of the Exchange Podcast.
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Speaker: You'll find all the relevant links and contact details there. You can also visit our website at audit.wales. If you have any questions or thoughts, we'd love to hear from you.
Speaker: Music
