These serious service failures reduce the public's trust in public organisations. But well-governed public bodies can deliver and sustain high quality and improving services that meet users' needs and improve trust.
Corporate governance is about the framework of accountability to users, stakeholders and the wider community, within which organisations take decisions, and lead and control their functions to achieve their objectives, including how to improve services.
The negative consequences of poor corporate governance are illustrated by the case of babies undergoing heart surgery at Bristol Royal Infirmary, the riots in Oldham during 2002 and the tragic Victoria Climbie case.
The inquiries that followed these cases and some others revealed common themes that influenced corporate governance. These included:
- the poor quality or absence of leadership
- poor decision making and decision making processes
- inadequate systems and processes
- lack of clarity in roles, responsibilities and activities creating poor accountability
- poor working relationships and dysfunctional behaviours
- an insular culture, with a poor focus on community and user needs
- poor risk management strategies
It is crucial for these areas to be effectively managed in order to prevent the build-up of problems, maintain the trust of the public and ultimately deliver excellent services for people.
Each of the sectors covered by the report has weak points:
- Performance management is weak across the local public sector.
- Risk management and internal controls are weakest in local government, police authorities and probation boards.
- Financial risk is highest in the NHS, as trusts work to meet the targets in the NHS Plan.
- The quality of information for decision making needs to improve in all areas, but particularly in the NHS and the police.
- Scrutiny and challenge needs to improve across the public sector and the role of non-executive directors and councillors should be enhanced to achieve this.
The report makes numerous recommendations for public bodies, central government, regulators, auditors and inspectors. Key recommendations are that public organisations should regularly and pro-actively review their corporate governance arrangements and that regulators, auditors and inspectors should encourage public bodies to check that the information that they need for management and decision-making purposes is accurate.
Audit Commission chairman James Strachan, said:
'It's crucial that public services give priority to good corporate governance. Weak corporate governance can lead directly to service failure, which in turn reduces trust in the public sector. Well-governed public services will both generate trust and provide services that meet users' needs.'