- 11 Jan 2008
The Scottish Government has already broadly welcomed the report published by Professor Lorne Crerar into regulation, audit, inspection and complaints handling of public services in Scotland (the Crerar Review). We agree with Professor Crerar when he says that we have an opportunity now to create a leading edge public scrutiny and complaints handling model, and we are committed to making that happen. In this response to the report, we set out the key areas where there is agreement on the way forward, and where we will take immediate action. We are also clear on those areas where we need to consider further and carry out more detailed work.
To turn the report's recommendations into immediate action where appropriate, and to consider others more carefully first, the Government is establishing five short term action groups with partners such as the Parliament, local government and Audit Scotland. For example, on complaints handling we agree that the current arrangements are too complex and inconsistent for the public to grasp, so we have already set up a fixed term group to bring workable proposals for improvement forward by March 2008. Further details on the fixed term groups are set out at paragraphs 30-31.
We agree that we should simplify the scrutiny landscape and place scrutiny and complaints handling under a more consistent and understandable structure. So alongside the work of the action groups in response to the Crerar Review, the Government will separately consider a structural framework which will act as a basis to achieve a simplified and more coherent approach to delivering scrutiny. Over time, our intention is to rationalise the scrutiny and complaints handling landscape to improve ease of access to, and understanding of, our scrutiny and complaints handling systems for the public.
This is consistent with our broader approach towards achieving smaller and simpler Government. We will speak to the sectors and bodies concerned, as well as to the Parliament's Corporate Body, to assess risk factors associated with structural rationalisation by the end of March 2008, at the latest, to allow more detailed plans to be taken forward. Changes in the organisation of scrutiny bodies in themselves are not likely to eradicate overlap or the need for joint working, but we believe a structural solution will go part of the way to minimising this.
There are three key actions which Government wishes to highlight as crucial to our approach to simplifying the scrutiny and complaints landscape:
Government, working in partnership with the Parliament, to set out clearly what we expect of scrutiny as part of a reform of our public services. We agree that the primary purpose of scrutiny should be to provide independent assurance that services are well managed, safe and fit for purpose and that they represent the best value for money. This is paramount for Ministers. However, we would emphasise that scrutiny in Scotland also plays an important role in influencing a culture of continuous improvement and striving towards excellence. We support the judgement of the report that the primary responsibility for improvement lies with the organisation providing the service. But while models of self assessment and improvement are now more prevalent in Scotland they are not yet embedded across all of our public bodies - there is a need to continue to drive this improvement and there will always be a need for a challenge function which is independent of both the body providing the service and the body setting the standards. We will take these principles into the development of strategic risk criteria, working closely with the Parliament as recommended in the Crerar report.
Secondly, to accompany structural change the scrutiny and challenge function should be more proportionate. In this regard we already have the Best Value process and we will support its roll out across the public sector to act as an effective means of assessing the fitness of any organisation – its leadership, its financial management and the link to performance. Our intention is to use Best Value audits as a way of identifying the need for further scrutiny, and would test these findings with a sample of inspections of frontline service delivery to ensure that scrutiny is more proportionate in future. Best Value should also be much better aligned and co-ordinated with other corporate audit and performance processes. We will work with the Accounts Commission and the Auditor General for Scotland to ensure Best Value can be used as a more effective tool to determine the level of scrutiny attention which should follow. As part of this Government's transition to an outcomes-based approach, we will also look at how an organisation contributes to achieving our 5 strategic objectives. We will also further investigate how a corporate level assessment of organisations providing services of a public nature could act as a basis for more proportionate scrutiny of their frontline services.
Thirdly, we will support robust self-assessment within delivery organisations using outcome based approaches, tied into our five strategic objectives and the key national indicators, to set challenging benchmarks on which to assess progress against. The involvement of service users will be a critical component of self assessment. We will work to support delivery bodies to develop these approaches which in time should be an integral part of a more proportionate external scrutiny system and crucially an integral part of a continuous improvement approach within the organisation.
The Crerar review had a broad remit and, as highlighted in the report - in the time available - could not cover all the important issues related to scrutiny of particular sectors. For example, the use of scrutiny to regulate markets and market-entry was not covered in detail. In housing, for example, the regulator plays a significant role in maintaining the confidence of private investors, and in tackling cost growth and poor asset management. In the water industry the Water Industry Commission works on behalf of consumers to determines Scottish Water's charges independently of Ministers. We must ensure that changes to scrutiny do not inadvertently undermine confidence which scrutiny can provide and that future structures reflect this.
The report also does not reflect on any implications of the statutory public equality duties. We will ensure that we give consideration to equality issues in taking forward our work.
Finally, in taking the work forward we will need to consider the valuable role the third sector and the private sector play in providing services such as social housing and social care. Many of the concerns raised by public service providers concerning excessive and uncoordinated scrutiny also impact on providers from the private and third sectors. The Government will want to ensure that the needs of these providers are fully taken into account.
Independence and accountability
Turning to the specific recommendations in the report, we support the following general recommendations made by Professor Crerar:
- (recommendation 1) the principles of all external scrutiny will be public focus, independence, proportionality, transparency and accountability. These principles are widely accepted and closely aligned with current best practice in scrutiny, and in complaints handling. The Government accepts these and will use them to build core risk criteria from
- (recommendation 7) the primary responsibility for demonstrating compliance with regulations and performance should rest with service providers, and not with external scrutiny. This is closely aligned with our drive for local delivery and accountability and we are supportive of this as a principle. However, implementing this in practice in some services will depend on the existence of robust self-assessment performance reporting and a continuous improvement culture which we will help to develop. In some cases this may take time to establish. We would support the recommendation (Recommendation 37) that the local government sector should be a priority sector in which self-assessment will become the core tool of accountability, with less reliance on external scrutiny required. This is also linked to a more proportionate means of scrutiny where corporate audit through the Best Value process can better act as a gauge of how embedded continuous improvement and self assessment and challenge actually are
- (recommendation 21) we support the recommendation to introduce a duty on scrutiny bodies to give an account for their activities and use of resources to the Parliament, which will require adapting the exisiting governance and reporting arrangements for some scrutiny bodies. In addition we accept the recommendation (Recommendation 28) that scrutiny bodies should report to Ministers and the Parliament against agreed cost and impact measures. We will implement this once Audit Scotland completes its work on these measures (Recommendation 26 – see paragraph 14, below)
- (recommendation 23) The outputs of external scrutiny should be reported simultaneously to the Parliament, Ministers, and to other stakeholders. Presently some reports are sent to Parliament and some to Ministers. We will work with scrutiny bodies to ensure that the outcome of scrutiny is in future sent simultaneously to all 3 bodies. This refers to public reporting, but this will not affect internal mechanisms for identifying problems, to be brought in the first instance to the attention of Ministers or the Parliament in the usual way
Reducing the burden
The burden, overlap and duplication of scrutiny in local government sector has been a key driver in identifying the need for a reduction of scrutiny. Outcome agreements are already in development for local government, and this will add impetus to improved self-assessment performance reporting across local government so, in line with the Crerar recommendations we will now:
- (recommendation 36) ask the Accounts Commission to work with other scrutiny organisations to develop a corporate performance audit which absorbs other corporate level inspections to reduce the burden on local government. This should reduce significantly the present potential for duplication in the information gathered from local government, and through that reduce the overall burden. As a first step we will look to the Best Value audit and discuss with Audit Scotland how it can be better co-ordinated with other corporate audits
- (recommendation 38) invite the Accounts Commission to coordinate scrutiny of local government functions immediately until the longer term changes are implemented fully. The Accounts Commission is best placed to act in a 'gatekeeper' role for scrutiny directed at local government. This can be done with immediate effect. This will mean that all scrutiny relating to the corporate and strategic role of local government will have to be cleared by the Accounts Commission. Other service related scrutiny of local government functions should be communicated to the Accounts Commission in advance who will coordinate with a view to minimising compliance burdens. We will ask the Chair of the Accounts Commission to put in place a process to allow this until longer term changes are introduced
The Crerar report also proposed ways of reducing burdens across all of scrutiny and we accept the following recommendations:
- (recommendation 29) the Scottish Government should review joint and multi agency inspection programmes. We agree with this. There will always be a need for cross agency working and elsewhere in this paper we set out our agreement to the Crerar report's recommendations on future arrangements for joint inspections. It is clear that the existing format of multi-agency assessments must change. The simplification of the scrutiny landscape will help to reduce the need for multi-agency inspections. Any that are required in future will have a one body taking the lead and will share data and findings to reduce a far as possible the burden on the body being inspected
- (recommendations 32, 33 and 35) existing external scrutiny organisations should review the data they gather, with a view to reducing overall requests and to eliminate any duplicate requests. Ministers should place a high priority on this matter and ensure that priorities and leadership are assigned to taking such work forward. The Scottish Government should ensure that parallel work to improve data gathering across public services more generally links with work in the scrutiny sector. We agree that data gathering should be reviewed alongside information sharing and timetabling regulation and inspection and will work with scrutiny bodies to take this forward
- (recommendation 34) the Scottish Government and scrutiny organisations should develop an external scrutiny website, or portal where all planned scrutiny activity will be logged. Establishing a portal where all stakeholders could view forthcoming inspection programmes would help service providers plan and help scrutiny bodies co-ordinate activity more effectively. We will work with scrutiny bodies to put in place a portal for all planned inspection
The public voice in scrutiny
The report also sets out a cluster of recommendations on improving how the public voice is taken into account in scrutiny and in complaints. The Government recognises the need for effective engagement by service providers and by scrutiny bodies with the public when developing improved practice in response to the Crerar Review. Indeed this is also true for Government in developing the wider reform agenda. This engagement will be essential to provide the most effective delivery systems. The Government recognises there are good examples of scrutiny bodies involving the public and service users in their work, but acknowledges that more could be done, and in a more consistent way across all scrutiny. We support the following recommendations:
- (recommendation 2) the Scottish Government will work with external scrutiny organisations and providers, and consumer representatives to ensure that scrutiny priorities reflect the interests of the public and of service users
- (recommendation 3) there should be greater public involvement in external scrutiny processes. Scrutiny bodies should take further steps to ensure that they involve the public in all aspects of their work, including determining priorities, gathering information, reporting, and governance. The Crerar report recognises that there are already some good examples of this such as Communities Scotland's use of tenant assessors or the statutory requirement that Ministers appoint to the Care Commission Board at least two Board members who are users of care services or carers. We will work with scrutiny bodies and consumer representatives to see how user involvement in scrutiny can become more widespread
- (recommendation 4) scrutiny organisations should work in conjunction with providers, the Scottish Government and consumer representatives to develop outcome measures and to strengthen the user voice at all levels of public reporting
- (recommendation 5) scrutiny reports should be written in language that people can relate to, and contain information that is relevant to what they want to know and is trusted. Scrutiny bodies must make information more accessible, develop common performance reporting language and explore ways of explaining the complexity of what they have found as straightforwardly as possible
The Government accepts that there are costs associated with increasing the ability of service users and carers to play an active role in scrutiny. This would include, for example, providing support and training for service users undertaking new and unfamiliar roles such as acting as Board members. We will further examine how these can best be met in response to (Recommendation 6): The Scottish Government should assess the cost implications of developing effective public focused system and allocate sufficient resources.
New and existing external scrutiny
The report made a number of recommendations about streamlining existing scrutiny and putting in place checks against its future proliferation:
- (recommendation 14) where a decision has been taken in the future that scrutiny is needed, if there is more than one existing organisation, only one will be asked to do the work and to be responsible and fully accountable. We accept this recommendation and, in relation to scrutiny of local authorities, will ask the Accounts Commission to identify and instruct the lead organisation until the longer-term changes in place. For scrutiny of non-local authority bodies, we will require that a lead agency is chosen and failing agreement we will identify the lead organisation. All scrutiny bodies will be responsible for maintaining productive working relations between each other in cases where they are working together;
- (recommendation 15) creating a new external scrutiny organisation to deal with an issue should not be an option. The Government accepts this recommendation in principle, as a commitment to simplifying the service delivery landscape. There are already too many separate bodies in the scrutiny sector, and we will introduce a working assumption that no further bodies are introduced unless there are clear and compelling reasons and where every other avenue has been explored;
- (recommendation 16) each external scrutiny initiative or programme should have a timeframe with a preset 'sunset' clause. The Government accepts this recommendation in principle. Scrutiny programmes and functions should have a clear and transparent timeframe in which to carry out assessments, and where practical should have a 'sunset' clause which suggests a rigorous review specifically to assess whether the scrutiny function is still needed (as distinct from the performance of the function). We recognise the need to set out the length of life each scrutiny function might have, although in some priority areas scrutiny will be required indefinitely. We will establish a timeframe for any new scrutiny function. We will also review existing scrutiny and, where appropriate, introduce 'sunset clauses' based on risk against the core criteria;
- (recommendation 17) cyclical scrutiny should happen only where all other options have been considered and ruled out. The Government accepts this recommendation which aims to limit the impact of scrutiny but reducing the level of cyclical inspection. We support the move to self-assessment by providers and this, combined with a more proportionate approach based on strategic risk, should reduce the level of cyclical inspection. We have already made a start on this by announcing our intention to end the cyclical programme of inspections of local authority housing landlords once the current round of baseline inspections in complete. We will look to do this for other cycles. However, we recognise that there will be some key priority areas, particularly around vulnerable sections of society, where cyclical inspection will always be required albeit that we would expect the level and nature of that inspection to be proportionate based on a risk assessment. There are also some bodies, including the Care Commission, which currently have a legislative requirement to carry out cyclical inspections. But we agree that there should be a presumption against cyclical inspection except for those services were such inspections are essential for public confidence in high risk services;
- (recommendation 18) existing scrutiny should be removed or scaled back when new scrutiny is introduced. The Government accepts this recommendation. Adopting this approach will help cap the cost of scrutiny as well as ensuring that additional burdens are not imposed on providers. Identifying the need for new function and then identifying areas where existing scrutiny can be reduced will require a more strategic overview of the whole landscape, so we are committed to taking a more strategic overview of all scrutiny activity;
- (recommendation 22) we accept that the Parliament should be involved in all strategic decisions about new external scrutiny programmes and will agree a process for how this should work in future;
- (recommendation 27) costs/benefit analysis should become a routine element of any decisions about the use of external scrutiny. The Government accepts this recommendation. This is a vital prerequisite for introducing new scrutiny and reviewing all existing functions. There is no standard way of measuring the impact of scrutiny, and not enough is known about the costs providers are faced with in complying with its demands. We need to have a better understanding of the impact of scrutiny – what the costs and benefits actually are. We will ask the Auditor General for Scotland to identify ways of measuring cost and benefit, against which all new and existing scrutiny will be assessed;
- (recommendation 26) the work set out above will require information on cost and impact measurement, and we will ask Audit Scotland to develop cost and impact measures to enable comparisons between scrutiny regimes.
Priorities and risk
The Government believes that the recommendations above will form the basis of a strategic framework for scrutiny and complaints handling in the future. To underpin this framework, we need to set out our priorities and detailed core risk criteria against which external scrutiny should be assessed. In doing so, the Government agrees with the following recommendations on establishing a strategic framework:
- (recommendation 9) the Scottish Government and the Parliament will agree strategic priorities for external scrutiny which focus on areas where assurance about public services is most important;
- (recommendation 10) financial audit should be one of the strategic priorities;
- (recommendation 30) future performance audits should be aligned with the strategic priorities for external scrutiny as agreed by Ministers and the Parliament;
- (recommendation 11) core risk criteria being agreed by Ministers, and considered by the Parliament, to assess the need for current and future external scrutiny;
The Government acknowledges that we have to agree strategic priorities to find where the need for scrutiny is greatest. We also agree with the need to retain financial audit, which enables Government to ensure and demonstrate that services are continuously delivered against clear value for money criteria. We also see a need to explore how financial and performance audit may be more closely aligned in future. We also agree that core risk criteria should be agreed between Government, Parliament and the Auditor General against which all new and existing scrutiny should be tested. The Government is working closely with the Parliament and the Auditor General to set out key priorities for scrutiny and agree core risk criteria against which scrutiny shall be assessed. This would allow us to identify where cyclical, joint, multi-agency and thematic inspections should continue as well as where they should cease. The results of this work will be made public early in 2008.
These priorities and risk criteria should be agreed to allow Government to take forward the following recommendation: (Recommendation 29) Ministers should immediately assess existing scrutiny activity against the recommendations in this report, with the aim of reducing activity in:
- cyclical inspection
- joint and multi-agency inspection programmes
- thematic inspections
- regulatory functions.
This recommendation will be taken forward in the first instance by one of the fixed-term action groups identified in paragraph 29 below.
We also agree with the consequent recommendation (Recommendation 31) that all reviews of specific inspection and regulatory functions should also assess the scope for amalgamating bodies with common interests, reallocating responsibilities to one organisation where there are unnecessary direct overlaps and opportunities to share resources (including staff) to deal with overlaps. As referred to at paragraph 3, above, we will shortly bring forward proposals separately for a structural scrutiny framework which is more "understandable" and proportionate than the present arrangements. Implementing recommendation 31 for all proposed reviews of specific scrutiny, now and in the future, will ensure that rationalisation will be a continuous process from now on.
Recommendations supported in principle
There are a number of recommendations that we support in principle but need to consider the practicalities in more detail before accepting in full.
(Recommendation 1) The role of external scrutiny is to provide independent assurance that services are well-managed, safe and fit-for-purpose, and that public money is being used properly. We agree that this is the main purpose for external scrutiny but another important outcome is sustaining improvements and enhancements. Scrutiny plays an important role in influencing a culture of continuous improvement including on equality. Government has an overall responsibility to use scrutiny and complaints outcomes to drive improvement. We believe there will always be a need for a challenge function which is independent of the body providing the service and the body setting the standard, but some scrutiny bodies have been charged with ensuring improvements are made from their assessments. We will consider carefully the important links between scrutiny and improvement.
(Recommendations 12 and 13) There will now be two stages in considering the application of new scrutiny. First, there must be an assessment of risk against the core criteria agreed by Ministers, and second there should be an assessment of the appropriate type of external scrutiny required. The Government accepts the need for change in how scrutiny is introduced, to make the process more transparent and strategic and to halt the growth in the number of scrutiny bodies and in the associated costs. We would want to give further thought to the two-stage approach suggested to ensure it is workable and can keep "process" to a minimum. We will now discuss the merits of setting up independent expert panels to consider proposals for scrutiny with the Parliament and the Auditor General (Recommendation 20).
We support (Recommendation 8) the proposed move towards self-assessment of service providers so that external scrutiny can be scaled back where appropriate. This is entirely consistent with this Government's transition to an outcomes-based approach which will leave the detailed management of services to those who have closest knowledge and can best tailor their resources and activities in line with local priorities. However, this will require robust self-assessment and performance reporting set against benchmarks to be developed and introduced before scrutiny can be scaled back. We will work with service providers and scrutiny bodies to ensure a smooth introduction of these systems.
Recommendations where we need further work before reaching a view
(Recommendation 40) Professor Crerar sees his report as leading to the creation of single national scrutiny body in the longer term. We support a simplification of the scrutiny landscape and we will work to develop a structural framework which will act as a basis to achieve a simplified and more coherent approach to delivering scrutiny. However, it is important that we have a proportionate approach to scrutiny (one of the key elements set out in paragraph 5 above) which compliments any simplified structural framework, where functions and activities are grouped together based on an identifiable relationship.
This work on the future "architecture" of scrutiny will also include specific tasks on health sector scrutiny – most notably the recommendation on confirming independence in health scrutiny: (Recommendation 39) Ministers should redistribute resources and functions from within NHS QIS, the Scottish Government's health directorates, and the Care Commission (in relation to private hospitals and related treatment) to an independent external scrutiny organisation. We will consider if this is appropriate as a means of confirming "independence".
(Recommendation 25) All external scrutiny organisations should have one "status", with a clearly defined line of accountability to the Parliament and to Ministers. We agree that all scrutiny bodies need clearly defined lines of accountability, and it is vital that a transparent governance structure is put in place to maximise any potential for sharing resources and services. This should be achieved without jeopardising the independence of scrutiny organisations. However, we are not convinced that a single status for all scrutiny bodies is the most critical factor at this stage. We need to weigh up several factors including the cost of changing status.
(Recommendation 19) Responsibility for decisions to create scrutiny should rest with Ministers, the Parliament or the Auditor General. At Ministerial level a Cabinet-level committee or group should take leadership on this matter. The Parliament should identify a suitable committee or group to take responsibility within the Parliamentary system. Professor Crerar argues that there should be a more strategic approach taken to ensure consistency of approach in future. This recommendation is consistent with our support for Government taking a more strategic role on scrutiny and showing leadership on the purpose of scrutiny. We will discuss the most effective way to take this forward with the Parliament and the Auditor General.
Similarly, for the recommendation (Recommendation 24) that enhanced reporting by scrutiny bodies could be used to reduce Parliament's reliance on legislative provisions in holding organisations to account, we will discuss this in detail with the Parliament before making any specific commitment.
Professor Crerar identified particular issues with regard to complaints handling and recommended the adoption of a standardised complaints process for all public services (Recommendation 41), overseen by the Scottish Public Services Ombudsman (Recommendation 42). Improving complaints handling and the role of the SPSO was one of the main issues raised in the Parliamentary debate in October. We will commit to introducing an effective complaints system which can give assurance to the public and provide a link back to service improvement. The work strands set out at paragraph 31, below, show that careful consideration will be taken before these recommendations could be adopted. The commitment to a streamlined and standardised complaints system across public services remains a priority objective.
There is a considerable amount of work to follow through on the recommendations. We intend to draw on the expertise of other partners, and to work with them to achieve improvements in scrutiny and complaints handling. We believe it is the Government's role to provide the leadership and set the direction in tasks such as this, and where partners show they can deliver, Government will stand back from micro-managing - thus reducing bureaucracy and freeing up partners to get on with the job. We have identified a number of distinct strands of work which will need brought to a conclusion. This will be done by a series of fixed-term action groups with clear delivery deadlines. These will be co-ordinated by Government, working alongside colleagues in CoSLA, in Audit Scotland and with the Scottish Parliament but relying on the input of others including user interests and with scrutiny bodies where required.
The groups will cover five broad themes:
- policy and approach to scrutiny
- accountability and governance of scrutiny bodies
- complaints handling
- user focus
- reducing the burdens of scrutiny
The groups will draw on the analysis of Professor Crerar and his team, but will be expected to supplement this, where necessary, to reach workable solutions. These implementation strands will be led by a small team of officials within Government who will work to a Programme Board comprising representation from the key strategic partners – Government, Scottish Parliament, CoSLA and Audit Scotland. The Board will co-ordinate activity across the action groups and work streams and monitor progress against key milestones and deliverables. The team will work very closely with senior staff across Scottish Government, scrutiny bodies and the public sector more generally to progress key issues.
Many of the proposals made by Professor Crerar which we accept or support in principle can be implemented without legislation, but there are some which may require statutory provision, particularly around the simplification of the scrutiny landscape where bodies are merged. The Government will consider a range of options for bringing about improvement through legislation, recognising the wide support the principles received in parliamentary debate, but mindful of the need for Parliament to be consulted appropriately at every stage.
The Scottish Government 17 January 2008
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Better Regulation Team
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