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Improving Public Sector Governance

Rob WhitemanCEO CIPFA

International guidance developments

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We have all seen the recent wide reaching and devastating consequences of poor governance

Even as crisis subsides huge global risks and downsides We all need to tackle the on-going ramifications of the crisis But CIPFA sees that future challenges are just as great:

Population growth Continued stratification of society & growing inequality Natural resource scarcity Continued globalisation & interconnectedness Technological advances & cyber expansion

Governance in context

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Good governance is at the heart of tackling these challenges and ensuring they become opportunities

Recent Oxford Martin Commission for Future Generations says in its report: Now for the Long Term:

“We need governance to ensure that resources are well-managed, growth is sustainable and that poverty can be reduced.”

We cannot be short sighted or fight yesterday’s battles We need to be more attentive to the future, planning and

building the right structures to ensure our collective success. If we get the foundations right now, we can use the

opportunities presented to us and mitigate the risks.

Governance in context cont..

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CIPFA is working in the UK and internationally to build better governance in the public sector.

In the UK we work with SOLACE to produce Delivering Good Governance in Local Government: Framework

Internationally since 2011 CIPFA & IFAC have been working on an international frame work for good governance.

The CIPFA/IFAC public consultation on our International Good Governance in the Public Sector document closed for comments in September.

We are aiming to finalise and bring forward a final version of our Good Governance Principles for the Public Sector in the new year.

CIPFA’s work on Good Governance

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Our work internationally comes from our foundations of on-going work on governance in the UK for example:

The Good Governance Standard for Public Services (CIPFA/Office for Public Management (OPM)) (2004)

Delivering Good Governance in Local Government: Framework (CIPFA/SOLACE)― Framework Addendum (2012)― Guidance Note for English Authorities (2012 edition) ― Delivering Good Governance in Local Government: Guidance

Note for Police (2012) CIPFA Board Governance Essentials

Public sector governance: Supporting UK guidance

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An International Framework for Good Governance in the Public Sector

Builds on previous work by both CIPFA and IFAC International Reference Group (IMF, OECD, World Bank) Founded on the work each organisation has done:

― CIPFA Whole System Approach to Public Financial Management

― Integrated Reporting <IR> Framework Underwent an initial (limited) consultation to guide

development

CIPFA/IFAC project overview:

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Public Financial Management: CIPFA Whole System Approach

www.cipfa.org/Policy-and-Guidance/Reports/Whole-System-Approach-Volume-1

OutcomesSustainable social benefit

Public Financial Management

Institutional Framework Enablers

Governance

Demand for services and projects

Stakeholder consultation

Delivery of services and productsDelivery of services and productsDelivery of services and products

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<IR> Framework: Value creation process

Source: IIRC (2013) Consultation draft of the international <IR> framework

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The arrangements necessary to ensure that the intended outcomes for citizens, service users, and other public sector stakeholders, are delivered in a transparent and accountable manner that is efficient, effective, ethical, and sustainable.

Plus six principles of good governance

Governance: Initial working definition

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• International principles-based public sector governance framework (15 of 17 respondents)

• Framework and principles should be relevant at both entity and whole system levels ( 14 of 16 respondents)

• Proposed governance definition as starting point but:― Clarify ‘arrangements necessary’― Discuss ‘ethical’ in more detail― Emphasise accountability and social outcomes

• Framework should address:― Nature and composition of the governing body― Integrating sustainability

Support for initial consultation proposals

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• ‘Arrangements’ include:― Political― Economic― Social environmental― Administrative― Legal

Governance: Revised definitionThe arrangements put in place to ensure that the

intended outcomes are defined and delivered

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Governing body: Definition

• Applicable to different structures:― Separate legislature and executive― Different executive and non-executive structures― All levels – use of term ‘entity’

The person(s) or group with primary responsibility for overseeing the strategic direction and

accountability of the entity

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The Public Interest: Definition

• Key factors: ― Independence― Competence― Adherence to due process― Participation― Transparency― Accountability

The net benefits derived for, and procedural rigor employed on behalf of, all society in relation to any action, decision or policy.

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Framework structure and approach• Two overarching principles required for acting in the

public interest• Five additional principles• Sub-principles plus supporting commentary• Examples• Assessment questions• Further reading

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Good Governance in the Public Services: InternationalFramework

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A. Strong commitment to integrity, ethical values, and the rule of law; and

B. Openness and comprehensive stakeholder engagement

Acting in the Public Interest requires:

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Achieving good governance in the public sector also requires:

C. Defining outcomes in terms of sustainable economic, social, and environmental benefits

D. Determining the interventions necessary to optimise the achievement of intended outcomes

E. Developing the capacity of the entity, including the capability of its leadership and the individuals within it

F. Managing risks and performance through robust internal control and strong public financial management

G. Implementing good practices in transparency and reporting to deliver effective accountability

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• Revised framework put out to full public consultation which ended September 2013.

• Generally responses have been largely supportive and have had some positive comments:

The Framework and its ...principles are comprehensive, well thought through and thoroughly elaborated; the examples and evaluation questions are well selected (FEE)

• CIPFA & IFAC are analysing the comments we’ve received and are looking to issue final guidance in Spring 2014.

• This will of course lead to the eventual revision of UK guidance as well.

The next stage