To describe Jon Thompson’s first weeks as finance director of Ofsted as a baptism of fire might be over egging it – but only just. Thompson joined the quango responsible for inspecting most of England’s educational bodies last September. He was well aware of many of the challenges he faced. His was a new post, created in no small part by the need to deliver 20% in budget savings, a 30% reduction in headcount and the closure of eight regional offices.
But in case he was in any doubt about the hurdles that lay ahead, an appearance in front of the House of Commons education and skills committee would have reminded him. Civil servants as a rule do not enjoy appearing in front of committees of MPs. Too many members of parliament use them as point-scoring exercises, designed to get themselves noticed by the whips.
Education committee chairman Barry Sheerman may be above that sort of shameless behaviour, but he certainly wasn’t going to let Thompson off lightly – even though he had been in post barely six weeks.
‘Jonathan Thompson,’ Sheerman began, sounding for all the world like a judge announcing sentence. ‘You are the new financial broom in Ofsted. I have never met a new director of finance who has not gone to the chief executive after being in post a month and saying: “My God, there are some pretty horrific things going on here”. Has anything hit you between the eyes since you came along and joined the team?’
Thompson responded with enviable calm. Acknowledging that he was relatively new to his role, he pointed to reviews of financial management and corporate governance already underway.
‘We hope to be able to report that internally some time before Christmas,’ he told Sheerman. ‘If there is something you are particularly interested in, I am sure it is something we could bring to you next time round.’
Thompson smiles as he looks back on his Commons debut. ‘Barry Sheerman, the chairman, was very kind to me,’ he insists.
If that makes you think that Thompson isn’t your traditional Whitehall financial manager – too long in the tooth to be a policy wonk – you’d be right.
Indeed, the rest of us should hope he represents the public drive by Gordon Brown – delivered on a practical level by former head of the Government Accounting Service Andrew Likierman – to professionalise financial management in government.
For a start, Thompson is under 40. He is a fan of Tom Peters, a management guru not normally regarded as required reading in the public sector. And not only is Thompson ambitious, he is also willing to talk about his ambitions to become FD of one of the big Whitehall spending departments.
More than that, in an age where politicisation of the executive seems irreversible, Thompson is a senior public sector figure willing to stand up to the politicians he serves.
Elected members at North Somerset Council, where Thompson spent several years as head of corporate finance then director of finance and resources, are swift to praise his independence of mind. Labour councillor Chanel Stevens describes Thompson as ‘a first-rate officer who always dealt with councillors by the book.’ Allan Hockridge, Liberal democrat councillor with the finance brief, says he was always helpful and always considerate, and willing to give ‘a balanced point of view’ – even at Budget time. And Thompson never held back in his dealings with the politicians when it came to finance. ‘If we talked crap he told us we talked crap,’ says Hockridge. ‘If I was talking rubbish he would have the confidence to tell me.’
Thompson may have enjoyed his time at North Somerset, but is relishing his role at Ofsted. It gives him access to the frontline (schools) and the seat of power (Westminster and Whitehall). ‘The main thing about Ofsted is that, as a brand, it has real currency on the street,’ he says in a very un-public sector way. ‘And it feels much more like you’re close to where the real decisions are made.’
As a parent, a school governor and a former local education authority officer, Thompson had some experience of Ofsted inspections before he arrived. And his view is hardly different now that he is in the hot seat.
‘I think Ofsted is firm but fair and that’s what it’s got to be,’ says Thompson. ‘They’re objective but rational.’
His in-tray these days, like his financial colleagues across government, is largely dominated by the Gershon and Lyons reviews which are driving the need to find efficiency savings in Whitehall and move non-policy jobs out of London.
The 20% budget savings that Thompson is under pressure to deliver will come from a variety of sources. HQ staff cuts will release several hundred thousand pounds of resources, while the home working that Ofsted has successfully pioneered will continue to be promoted.
However the lion’s share will be found elsewhere. Combining rationalisation of the regional office structure with investment in systems will, Thompson believes, generate savings of around £18m. Changes to the inspection regime should save around £15m (see box). Clearly those two figures combined show there is work needed to ensure the organisation reaches its target, but the back of the project has been broken.
‘I think we can reasonably say that we’ve got 17% of the 20% at this point,’ says Thompson. ‘I’m also trying to move the organisation to a three-year, medium-term budget. Traditionally the organisation has used an annual budget.’
Technology is crucial to those savings. Ofsted spends over £21m a year on its IT support. Although investment is bound to be heavy given the body’s network of inspector contractors, Thompson concedes: ‘IT costs are about 10% in total, which is pretty large. We have a long term on balance sheet PPP with LogicaCMG which provides the private sector innovation in terms of some of our business applications.’
Now Oftsed is looking at how it handles and records everything from forms to phone calls. Thompson admits it’s an issue that keeps him awake at night. ‘We are changing such an enormous amount all in one go,’ he says.
Thompson hopes investment in IT in the next three years will pay off beyond that. And to test those beliefs he wants to set up an investment review committee.
‘The organisation doesn’t have a process of saying: “If we invested this £3m here, what does it give us back?” That’s one of the essentials of broader resource management. I haven’t quite got round to advising the board of how it should do that, but that certainly needs to be there.’
In some ways, Thompson’s new role is narrower than his previous one at North Somerset. Although keenly involved in the investment decisions, he is not responsible for IT at Ofsted, for instance.
But he is enjoying focusing on financial management, which, he and others believe, Whitehall needs to improve. ‘It may have narrowed my focus but it’s given me a really clear view about what we need to do to be able to get from where we are,’ he says.
‘You can hold the budget for several billion pounds in central government but you don’t necessarily need to have had any particular background of financial management and training. It’s strange. But I think the chancellor, in my opinion, has got it right. He’s saying we need to bring that professionalism of finance management and finance directors to central government.’
Thompson’s career has taken him to Ernst & Young, where he worked on local government and NHS projects, Norfolk County Council and the Eagle Star Group. But none of those roles featured a selection process as rigorous as the one that he had to endure to secure the Ofsted job.
Mary Keegan, former chairman of the Accounting Standards Board and the new managing director of financial management, reporting and audit at the Treasury, may have been on the interview panel, but it was the whole setup that impressed him. ‘Ofsted uses this tremendous assessment setup which is a really interesting experience to go through and is really stretching,’ he says.
‘It basically puts you in the job for a day and you have to go through a range of exercises – a motivational speech and you have to do a presentation to the board and all that kind of thing. It’s really demanding. The feedback that you get, if you’re successful or quite successful, really helps you in terms of your own self-evaluation.’
And with surprising frankness, he says: ‘I’ve had my two hours’ feedback and I would have said it was about 95% accurate.’
It’s not just experience that you suspect will help Thompson cope with the demands of the job over the coming years – it’s self-awareness too.
A SHORTER, SHARPER SHOCK FOR THE EDUCATION SYSTEM
As if Thompson’s start was not challenging enough, the new year heralds a rash of further changes at Ofsted. Consultation closes next week on a new school inspection system, due to take effect from September 2005.
The formal consultation will determine the detail – but the spirit of the new regime already appears certain, subject to parliamentary approval, of course.
The next school year will see shorter, sharper school inspections that provide parents with a warts-and-all view of their children’s school.
The new regime is designed to do away with the pressure of inspection preparation for teachers, while the increased frequency means parents will benefit from more up-to-date information about the quality of education received by their child.
What does this mean for Ofsted’s new FD? Well, the new school inspections will save around £10m while the elimination of unnecessary preparation for inspection, on an annual basis, could free up time equivalent to at least 1,000 teachers nationwide.
That’s a lot of resources for Thompson and his colleagues in local education authorities to reallocate.
But it’s also just the beginning of Thompson’s challenges for the year ahead. In the run-up to Christmas, Ofsted unveiled detailed plans for the organisation’s three-year restructuring programme.
As a result of the need to find budget savings of 20% by 2008, the body is reorganising on the basis of three regions in Bristol, Nottingham and Manchester and cutting staff numbers by a fifth.
Eight office locations will close by March 2006, alongside a 30% reduction in the number of staff at its London HQ.
Thompson’s take? ‘It’s a really fascinating organisation,’ he says.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements