So what’s a mission statement? They are always a bit wordy, I do apologise, a bit of jargon. But, I think every word does count. Every word means something and I hope you’ll agree with that when I’ve finished speaking.

Our mission statement says that we “promote improvement so that the people of Wales benefit from accountable, well managed public services that deliver the best possible value for money.” I’ll tell you what that means.

Promote improvement:
The word promote is very, very important. We’re not just in favour of improvement, we want to promote it. But that has some consequences. It means we have to act it. It means that we have to recognise improvement when we see it which, and there are some auditors in the audience I know, which means ‘oh dear!’ that we actually have to have an opinion about whether the audited bodies are doing well, or not, and in which direction they should improve.
Now, the system that I’ve inherited here in Wales, with regard to local government, does formally recognise that concept. The Wales Programme for Improvement has a feature called the ‘Improvement Journey’ - I’m not sure I would have chosen that term myself  - but the concept is the auditor and the audited body agree on the direction of travel and I think that’s very positive, a very good idea. And I am keen to expand that concept, but probably not those words, into other areas of my responsibility.

The people of Wales:
What does that mean? Well, it’s very fashionable to talk about customer focus and I talk about customer focus, not because it’s fashionable but because it’s the area of customer focus that traditionally presents the greatest risks to value for money in public services. And the reason for that - and customer focus is important in the private sector too - but the reason for that in the public service is that predominantly public services are monopoly activities and the monopolist, however well intentioned, generally ends up organising the world to suit himself rather than to suit the people he theoretically serves. And therefore, the concept of focussing our work on the customer and - it doesn’t matter what you call them, you know what I mean - the recipients of public services, whether they are paying for them or not, is a very good way into delivering improvement. That is the area where improvement is most likely to be found, because customer focus is most likely NOT to be found in public services traditionally. One could give lots of examples of the quite dramatic improvements that can take place simply by switching the viewpoint from organising the service to suit the people who deliver it, to organising the service to those who receive it.
Most public servants are very well intentioned and they can see immediately that they have to change the way things work.

Accountable public services:
Now, no doubt, this is where the enmity my former colleague saw arose. Traditionally, for 700 years, auditors have had the role of holding public servants to account and in former centuries that could be literally a painful process. But it’s certainly psychologically painful; it involves exposing public servants to public gaze, in the case of central government at the Audit Committee, and that is never going to be comfortable for them.
It’s certainly very greatly helped to be a constructive process if the Audit Committee conducts its hearings in a way that is clearly directed towards the promotion of improvement. Not just because a former Chair of the Audit Committee and a member of the Audit Committee are present, I would say to you the Audit Committee here in Wales does conduct its procedures in that way and that’s very, very helpful.

There is, of course, no doubt that part of my role is to examine things that have gone wrong and to explain why they have gone wrong in an authoritative way, in a conclusive way, so far as I possibly can. And in an open way, so that things are not hushed up or covered up, everyone can see what has happened and understand them and, where things that are wrong have been done, people can be held responsible for their sins. That is part of the job. It is not the main part of the job. I will tell you that there are two expressions that I have absolutely forbidden my staff ever to use on pain of instant dismissal and those two expressions are ‘bang to rights’ and ‘gotcha’.
I cannot disguise the fact of course, people are human and I am human as you can see, that there is sometimes satisfaction in really pinning down that “it really was that guy over there, he’s the one, he’s the guy responsible.” That is part of the job, but it really is not the biggest part of the job.

When I first joined the NAO a bit over 12 years ago, they were going through a bit of change. Previously, staff had been rewarded for raising what were known as ‘audit points.’ An audit point, by definition, is negative.‘You want points, you reward the production of points, you get points.’ People would be vying with each other to generate numbers of points saying, “oh, the form is on green paper, it should have been on pink paper, a contravention of  regulation so and so.” Does it matter? Should people be encouraged to raise these points? No. And the NAO and, definitely at the Wales Audit Office, that is not the incentive that I have established or wish to establish.

Going on through the mission statement:

They must be well managed:
What does that mean? That actually is quite difficult. In the very kind introduction, the Chairman referred to my work on Private Finance Initiatives, and that began more or less in parallel with the development of PFI. What is an auditor going to do in relation to a thirty year deal that might have been signed yesterday? What’s the question? Well, the question, it seemed, to us was ‘is this a good deal?’ It’s a bit like saying, are these public services well managed? What does that mean exactly? Well, you have to go through an analytical process, which we did in the case of PFI, to develop very detailed questions, the answers to which, would together, reveal whether the deal was good or not, or likely to be good. Now similarly, well-managed public services is not  a simple matter. It’s a broad question, but there are certain features that you look for: certain structures, certain forms of governance, an element of ticking boxes: are these features present, or are they not? But that is not the whole story. It’s a story that auditors are very happy with obviously - a checklist where you can tick boxes. But the crucial question is always, does it actually work? And, if there are any south Americans present, I apologise for what I am now going to say. But, if you look at the arrangements for public audit in any south American country you will find that, on paper, everything is there. If you consider the general reputation of many south American countries for proper and regular management of public services, you will see that there is obviously a gap there. And the fact that the feature is present is not enough, they must actually work.
Now, getting to the bottom of what good management actually means is a high grade analytical task which my staff are capable of, but it is really, really hard. You will often hear people say, maybe some people in this room have said it, “it would be very nice for that auditor to draw out what constitutes good practice.” I won’t say best practice – that is a defensive term. I hope to do a lot of work in that area. So if I say to you ‘that is difficult’, I am managing your expectations about how much will be done. But the crucial point here is it requires a really thorough understanding of what it is about allegedly good practice that makes it good. And it isn’t enough simply to say “oh Blaenau Gwent, they do very well at such and such, just copy what they do.” That is probably not a good idea because, however good it might be in Blaenau Gwent, it fits their local circumstances but might not fit your local circumstances. And, it probably has some things wrong with it as well, as most things are imperfect.  

Now finally in the mission statement it calls upon us to promote…

Best possible value for money in public services:
Now, what do I mean by value for money? Fortunately, that is defined for me as ‘economy, efficiency and effectiveness.’ And, just to say what that means in practice: Economy is basically buying well and there is clearly scope for public services in general, not just in Wales, for improvements in the quality of procurement. And that is linked to the question of the capabilities and capacity of public servants to enter into commercial negotiations. The commercial competence of public servants is directly relevant to the ability of public services to buy well, and related to other things to.
We have some work in hand. I hope to produce a report on commercial competence of public servants, probably next year. I personally think it is a very important subject, perhaps on account of my own career in that I have been in the public sector and private sector. What that told me, as someone who began his career in the civil service, is that the normal progression of the public services, which tends to be  wholly within the public services, is not conducive to the development of commercial nous. What is commercial nous? Well, you know it when you see it. It’s very difficult to define. You can’t run training courses in it, probably, and you will find very senior public servants who essentially deny that there is a problem. I personally think there is a BIG problem. It’s not a problem that is easy to solve.  I hope I can contribute to that.

Secondly, is efficiency. Efficiency is to do with internal processes - getting as much out for the given inputs as you possibly can. Well, there is huge, huge scope here for improvement in public services in Wales. Business processes in public services tend to be very stable. They tend to survive for a long time, sometimes long after their original design concept has faded from view.
I can give you an example of this. In my last but one post at the National Audit Office, I was responsible for auditing the Ministry of Defence and there is a form, a standard procurement form which is a nine part form, multi-coloured carbon paper. There’s only one problem with this form, which is that nobody can now remember what was supposed to happen to part 9. Religiously filled in, and torn off, but what do with it nobody knows. Now, that is just an example of the stability of processes when the requirement has almost certainly changed.

Finally is effectiveness. Now you can get into terrible complaints about ‘what’s the difference between an outcome and an output’ and ‘shouldn’t we be interested in outcomes and not measuring intermediate products such as outputs?’
From my view, it depends how far back you stand. If you stand back far enough all you can see is final outcomes and if you get in close you see things that are outputs and there isn’t really a hard and fast distinction between them.

In my role, looking at public services in Wales, I am interested in the whole lot - the zoom into detail but also to stand back. And that is one of the particular advantages of the structure of  public audit that we now have in Wales. There is a single audit body which is capable, we hope that you will soon be able to say on evidence more than capable, certainly legally capable of, looking at public services in Wales as a whole, without regard for organisational boundaries. We are in the particularly capable position to look at system-wide issues. I don’t say our position is unique, other people may well be capable of doing that. All my experience of public service, nearly 34 years now, has been that individual public service bodies find it very difficult to stand back far enough even when they try to do so, and quite often they don’t try to do so.
We can look at the whole system and that will be a big feature of my future work programme. Now there is a slight technical awkwardness in that the National Assembly does not, and cannot, properly hold to account individual local authorities. Of course, that’s a matter for electors locally. I have powers to inspect local authorities. I appoint auditors to local authorities. Yet I am paid by the National Assembly, so isn’t there a conflict there?
I think I could run that in a way that would generate conflicts every day of the week  You’ll not be surprised to hear that I don’t intend to proceed in that way, but actually my experience so far - seven months in - that this is a theoretical problem, not a real problem. This can be handled very easily, provided everybody understands what is being done when, and by whom.
I quite frequently find myself internally in the office saying, ‘now am I doing this as me?’ or ‘are you doing it’ pointing to a member of my staff as the appointed auditor of a local authority, or ‘are you doing it on my behalf…?’ We have to be clear but it isn’t difficult to be clear. Provided we are clear about this, it works very well.
So, I have taken you through the traditional view of auditors. I have explained, almost word -by word, how our mission statement explains our role as I see it here in Wales. We are seven months into our post merger. The only problem is that mergers are traditionally always seen as a takeover by one of the other and each half of my staff accused the other half of running a takeover. Now they can’t both be right and actually, since my involvement here in Wales was very limited before I arrived, if it is a takeover, it’s a takeover by me.
And we are proceeding actually on quite significantly different lines from the predecessor bodies. This month, I am progressively announcing, internally, major restructuring of the organisation. I have inherited no fewer than 27 different grades of staff for  250 staff. That’s rather too many grades I think. We’ll be coming down to 4 or 5 grades, a non hierarchical structure, a matrix organisation – huge change internally.
As far as the external world is concerned, I will be issuing a draft strategy document on which I will be consulting, with the aim of producing a definitive document at around the end of the year. And I am hugely excited to have this role in Wales. It is without any question the best thing that has happened to me in my professional career, although I don’t suppose you could care about that. But I can tell you that I have plans for the Wales Audit Office, which I am quite confident will deliver our mission statement and will lead to, definitely, better public services in Wales.

Thank you for listening.
   
 
For more information please contact Rachel Harries (Communications and Media Officer) on 02920 262 675 or email rachel.harries@wao.gov.uk