In the public gaze

In July 2006 I accepted an invitation from the then Scottish Administration to carry out an independent review of regulation, audit, inspection and complaints handling in the public sector: “The Crerar Review”. I reported to the new Scottish Government in September 2007. At the outset the project seemed very daunting, and so it proved, in both scope and complexity. It was, however, an extremely interesting experience and my primary aim has been fulfilled, namely that the product of over a year’s work is being treated seriously.

My review was supported by a small secretariat seconded from across the public sector, including scrutiny bodies. The final report contained 100 pages of background, analysis and recommendations, plus 650 pages of synthesised evidence support deriving from numerous meetings and events. Last summer was the most stimulating and challenging period as I sought consensus around the review team of the direction and conclusions of the review.

The remit was extremely wide ranging and required prioritisation within a tight timescale. It was clear to me at an early stage that even the scrutiny bodies believed that the time was apposite for change, as our public services had evolved and become more complex. Indeed, one of the main drivers behind the review was that many believed that public services were overburdened by scrutiny, and that detracted them from their principal purpose of serving the public’s needs.

The report contains 40 specific recommendations in relation to regulation, audit and inspection regimes, with additional recommendations in relation to complaints handling. The key areas covered are local government, health, education, care, and communities, taking in over 40 public sector scrutiny bodies. It was a considerable relief that there was a favourable media reaction following publication, and broad cross-party support in a parliamentary debate on 3 October.

The broad concept

The government published its formal response on 17 January. So what are the implications from that response for the likely picture of public sector scrutiny in the years ahead?

The response agreed with my overarching conclusion that we have an opportunity to create a leading edge public scrutiny and complaints handling model in Scotland. The government has set up five working groups with representatives from Parliament, local government, Audit Scotland and others to take forward the recommendations. I understand we will hear a progress report in the not too distant future. There is agreement that the scrutiny landscape should be simplified through a complaints handling system that has a consistent and understandable structure.

The response highlights some aspects of the review as crucial to meet this primary purpose. These include; government will work in partnership with the parliament, and should set out clearly what it expects of scrutiny as part of the reform of public services;

the primary purpose of scrutiny is to provide independent assurance that services are well managed, safe and fit for purpose, as well as representing best value for the public pound;

scrutiny organisations can play an important role in supporting and influencing a culture of continuous improvement, though the response agrees with the review’s conclusion that the primary responsibility for improvement lies with the service organisation.

To accompany the proposed structural change, the government recognised that the scrutiny and challenge functions should become proportionate. It supports the proposal that the “best value” process, pioneered in local government, should be rolled out across the public sector as a means of assessing the fitness of an organisation, most notably its leadership and its financial management along with performance outcome measurement. It also supported robust self-assessment within delivery organisations using outcome-based approaches – a key feature of the new public delivery landscape envisaged.

Apart from the foregoing broad conceptual support, the following recommendations, supported in the government’s formal response, will give the reader an understanding of the likely future shape of public sector scrutiny.

Principles of external scrutiny

The underlying principles of scrutiny bodies should be public focus, independence, proportionality, transparency and accountability (R1). Primary responsibility for demonstrating compliance with regulations and performance should rest with service providers and not with external scrutiny (R7); local government should be a priority sector in which self-assessment will become the core tool for such accountability (R37). Importantly, scrutiny bodies should give an account of their activities and use of resources to the parliament, with consequent adaptation of existing governance and reporting arrangements (R28). Additionally, the results of all external scrutiny should be reported simultaneously to the parliament, ministers and other stakeholders (e.g. local government and its elected members) (R23). 

The public voice

The government recognises the need for effective engagement with the public by service providers and scrutiny bodies, and agreed to work with both types of organisation, and consumer representatives, to ensure that scrutiny priorities reflect the interests of the public and of service users (R2).

Scrutiny bodies will take further steps to ensure that they involve the public in all aspects of their work, including determining priorities, gathering information, reporting and governance (R3); and will work with the other interests to develop outcome measures and to strengthen the user voice at all levels of public reporting (R4).

Reports will be written in a language that people can relate to, and should contain information relevant to what they want to know, and that is trusted. Scrutiny bodies will be required to make information more accessible, develop a common reporting language, and explore ways of explaining their findings as straightforwardly as possible (R5). Importantly, linked to these recommendations was the need to ensure proportionate associated costs: the government is to assess the cost implications of developing such effective public focus systems (R6).

New and existing scrutiny

The report made a number of recommendations about streamlining existing scrutiny and putting in place checks against its future development or proliferation. The government agreed that where a decision is taken in future that scrutiny is needed, if there is more than one existing organisation, only one will be asked to do the work, and will be fully accountable (R14). The creation of a new external organisation to deal with a new emerging issue should not be an option (R15). It also accepted in principle that any new external scrutiny initiative or programme should have a timeframe with a pre-set “sunset” clause (R16). New scrutiny should only happen where other options have been considered and ruled out, and in that case existing scrutiny should be removed or scaled back (R17). Importantly too, the parliament should be involved in all strategic decisions about new external scrutiny programmes (R22); and cost-benefit analysis should become a routine element of all decisions in relation to use of external scrutiny (R27). Audit Scotland is to develop a cost and impact measurement study to enable comparisons between scrutiny regimes (R26).

Priorities and risk

The government accepted the recommendations regarding the formation of a strategic framework to cover scrutiny activity in Scotland, and that priorities for external scrutiny, focusing on areas where assurance about public services is most important, should be agreed between it and the parliament (R9). These should include financial audit (R10); and performance audit should be aligned with the agreed strategic priorities (R30).

Core risk criteria will be agreed by ministers and considered by the parliament to assess the need for current and future external scrutiny (R11). The government is working closely with the parliament and the Auditor General to set out key priorities in this area. Importantly too, it has agreed (R29) that it should immediately assess existing scrutiny activity against the report’s recommendations, with the aim of reducing various levels of inspections. It also agreed that all reviews of specific inspection of regulatory functions should assess the scope for amalgamating bodies with common interests, reallocating responsibilities and sharing resources (including staff) accordingly (R31).

There were, however, recommendations where the government concluded that it needed to carry out further work. These included the creation of a single national scrutiny body in the longer term (R40). This aspirational recommendation is being considered an overall development of a structural framework. R39 also proposed the creation of an independent health sector scrutiny body involving the redistribution of resources and functions from within NHS QIS, the Scottish Government’s health directories and the Care Commission (its function in relation to private hospitals and related treatment). The government is to consider whether it is an appropriate redistribution of resources to obtain independence of reporting. In addition, further information will be sought as to whether or not one status of scrutiny body will be required in order to define clearly the lines of accountability to parliament and ministers. Finally, additional work is being carried out in relation to the radical reviews regarding complaints handling systems in Scotland.

Positive outcome

I very much hope that this outline of the government’s response will give an insight into the likely shape of public service scrutiny in the future. Such scrutiny is extremely important and provides us with the assurance that services are well managed, safe and fit for purpose. In addition, use of scrutiny should of course represent best value for the public pound.

Carrying out the Independent Review of External Scrutiny in the Public Sector was a stimulating and extremely worthwhile experience. To be part of change in a positive way is always a privilege, and in the Deputy First Minister’s statement “Firm Foundations – The Future of Housing in Scotland” issued on 31 October 2007, she advised (when also confirming the adoption of the single survey, as proposed by the Housing Improvement Task Force) that the abolition of Communities Scotland as a separate agency and the setting up of the Scottish Housing Regulator as from 1 April 2008, would be in line with the “thrust of the Crerar Review”. It is a great pleasure to evidence the work of the review receiving purposeful support, and that scrutiny regimes for Scotland in future will have a shape and logic in line with the review recommendations.

Reducing the burden

In relation to a particularly “over-burdened” sector – local government – the government agreed to ask the Accounts Commission to work with other scrutiny organisations to develop a single corporate performance audit (R36). The government has invited the Commission to co-ordinate scrutiny of local government functions until the recommended longer term changes are implemented (R38).

As for reducing the burden across the public sector, the government agreed that it should review all joint and multi-agency inspection programmes (R29); and that all existing scrutiny organisations should review the data they gather, with a view to reducing the information required and eliminating duplicate requests (R32, 33, 35). Government and scrutiny organisations should also develop an external scrutiny website or portal where all scrutiny activity will be logged (R34).