Tuesday 17 November 2009
Speech from the Guardian's 'Capital Ambition' conference in London.
On to the question then, ‘if getting organisations working together is an obvious and simple solution, what has prevented it happening?’
Some of my experience in this area probably dates back to the period 2002 - 04 when I sat on the Office of the Deputy Prime Ministers Strategic Partnership Taskforce and I seen at first hand the difficulties of getting the cultural, political and structural ducks in a row. We oversaw the 24 pathfinder projects identified as having the best chance of success and which in the end either experienced huge delays or disappeared into oblivion. So my starting premise would be to say an obvious solution, yes, a simple solution, no as it can become too elaborate and be over complicated by consultants and experts who make a living by generating fees.
Implementation time can be significant and shouldn’t be underestimated, the longer it takes the more likelihood there is of political, organisational or environmental change in one or more of the organisations. Large projects are also resource intensive and must be planned for properly. Consultancy and legal costs must also be built into the equation or the project could end up costing more than it saves.
However, APSE has also seen successful approaches to shared services, in the East Midlands 17 authorities undertaking joint legal services work saving £2.5m over 5 years, in Essex 15 authorities procuring energy supply together and reducing the cost by £1.7m per annum on a £12.5m turnover, the Greater Manchester authorities procuring transport fleets jointly and in Worcestershire the County and its 6 Districts combining to deliver the revenue and benefits service producing savings of £1m per annum.
A number of authorities in South Yorkshire also got together to procure necessary supplies for their decent homes programmes and advertised in OJEU their intention to hold an e-auction for £100m of heating systems, bathroom suites and vinyl flooring.
In Scotland Highways and FM services are delivered by Tayside Contracts to 3 local authorities, Dundee, Angus and Perth and Kinross who have worked successfully together for 13 years despite the fact that political control between the authorities has never been aligned and has changed many times.
Again however, I have also seen numerous examples of protracted discussions taking place over a number of years with a lot of time, resources and energy being expended prior to reaching an impasse and the project being abandoned.
With any partnership arrangement trust is always key and this is particularly relevant when operating in the goldfish bowl of local government where everyone appears to know everyone else and the baggage they carry. Co-operation is also one of the attributes required and managing egos in terms of who gets the credit will involve the greatest of diplomacy tests. Grasping the opportunity, however difficult discussions become, could be the critical factor for success and surely the potential efficiency rewards make it worth the pain.
The best advice available on governance structures for shared services is not to over complicate them. The more complex they become the more they are likely to invoke the European procurement directives or run up huge consultancy fees, which then erode the potential savings. Joint working arrangements, joint committees or consortia are often adequate to do the job. Limited Liability Partnerships or Joint Venture Companies, however fashionable they may appear, are only necessary in specific circumstances or when third parties from the private sector are involved, which changes the procurement dynamics significantly.
Potentially the largest savings can be made in I.T. based services where new technology can improve delivery across authorities and where geographic distances between the lead authority becomes less relevant than with more front line based services. Clearly savings can also be achieved from specialist service units or assets which are currently underutilised that can provide good opportunities for both shared services and service co-locations. With regard to labour intensive services the savings will mainly come from a reduction in senior and middle management and although this is politically sexy it will produce limited results. The use of buying consortia can also contribute significantly to achieving efficiencies through economies of scale particularly where heavy capital investment is required for large projects such as incinerators.
So in summary, keep it simple! Ensure there are adequate arrangements for scrutiny, transparency and democratic accountability. Remember if you go down the company route any elected member appointed to the company board will be required to act in the best interests of the company under U.K. law rather than the Council they represent. It is important to have senior officer involvement in the arrangements and to ensure that any conflicts of interest are identified by those involved. Consideration must also be given to asset transfer and ownership as well as anything jointly created by the shared approach such as intellectual property rights. One final point on governance is that exit arrangements should be agreed at the outset with financial penalties in place for those who voluntarily leave.
In the current financial climate local authorities cannot ignore this agenda, they need to examine their portfolio of services and assess which ones are most suitable for sharing. The shared services approach creates an opportunity to reinvent public services; the key to achieving this sits within the issues of trust, co-operation and grasping the opportunity. Don’t over complicate it!
Wednesday 11 November 2009
Thanks for giving me the opportunity to come along today and speak to you about the highly topical research APSE has recently completed for UNISON - A new generation of council housing, an analysis of need, opportunity, vision and skills.
Looking firstly at need, the origins of social housing in this country can be traced to a desperate need for quality, affordable, secure housing at the end of the 19th century. Just over 100 years later social housing is back at the forefront of public policy debate for the same reasons.
In 1997 the incoming Government inherited a £22b backlog of repairs in council housing and set out with vigour to address what was the dominant need at that time, to bring the standard of council housing up to a decent level. With almost 2m names on council house waiting lists and many more living in overcrowded conditions the pressure on Government to deliver more affordable housing has been intense. With Government looking for 3m additional new homes by 2020, the recent failure of the private housing market has only cranked up the need for social housing further.
With registered social landlords and arms length management organizations failing to deliver new housing in any significant numbers Ministers have once again turned to local government to deliver a new generation of council housing in order to meet this need. John Healey as Housing Minister has made more progress in this area in a few months than his predecessors have in 12 years. Whilst some may argue that it’s only a few thousand houses it’s a significant start and a signal of intent.
It’s no secret that council housing has had its doubters over the years and many have questioned whether local government will have the ability to rise to the challenge created by this new agenda after such a long time. That’s what we attempted to assess in undertaking this research amongst 50 councils, main stakeholders and case study work. Can local government really deliver on this agenda?
What we identified was a variable state of readiness within local authorities. We categorized this in 3 broad groupings the ‘trailblazers’, the ‘interested’ and the ‘unaware’.
The ‘trailblazers’ are those who have been pushing for the opportunity to build for a number of years and indeed 49 authorities in England, along with 14 in Scotland, are already engaged in the first phase of building new homes.
The ‘interested’ are those where elected member and officers have seen demand grow significantly over the past few years and have recently become aware of new opportunities created to finance new build council housing but a lack of knowledge after decades of not building has hampered confidence.
The ‘unaware’ are those who are not interested in this agenda politically or who feel that as a result of transferring their housing stock they no longer have a direct role to play in housing provision.
So what are the critical factors in pursuing this agenda? The research identifies the importance of political and strategic vision, clear leadership and a positive culture towards council housing within the local authority; a growing mood for the importance of direct provision; the impact of new central Government policies around financing council new build; the scope of developments, many are looking to build small infill sites in the first instance, but aspire to larger scale later. It also identifies some difficulties with the HCA bidding process and factors such as land availability, maximizing community benefit in the local supply chain and employment. With regard to quality of build, this is not about recreating the sixties high rises.
The research also identifies environmental considerations around carbon reduction, sustainable construction and energy use as significant issues.
Of course any decent size new build programme can provide a huge boost to local economies in difficult times. APSE’s previous research in mapping the economic footprint of local authority spend, which showed that for every £1 Swindon Council spent on their services a further 64p circulates in the local economy through the multiplier effect of local expenditure backs this up. Some of you may also have seen our report for the TUC trailed in the press over the last few days which looks at the impact of the recession on public services. This also demonstrates the importance of continued investment in local services in the current climate.
An important point to emerge from APSEs research for UNISON was that those councils who have retained their ownership and management of housing appear more eager and well placed to pursue house building and therefore help government address what is becoming a huge social need.
However some barriers remain with regards to legislation, finance and technical matters although John is deliberating on the findings of his consultation exercise into some of these issues at present. However, skills and capacity do not appear to be an overwhelming blockage to local councils building housing directly again in significant numbers.
Skills required are split into four sets generic, professional, technical and trades. These are linked to the various stages of building; pre-development; pre and during and on-site.
Whilst not every authority maintains significant capacity in these skill sets at this stage the vast majority believed that this would grow and expand as house building programmes progressed.
Having considered all of the above, the huge need for new homes that has built up, the failure of the housing market to deliver generally, the falling numbers of homes available in the social housing sector over the past decade, the economic necessity and benefit and local governments capacity and capability to deliver in this area, the report calls for the government to place a clear duty on councils to provide homes in the areas they serve, either directly, or in partnerships with RSLs or other bodies.
The report identifies that we have begun the first steps to build a new generation of council housing one that must be constructed with the needs of tenants in mind, to the highest standards of energy efficiency, built in the right places and in communities that are mixed and sustainable.
In closing, John I applaud the progress you have made over the last few months in reintroducing house building amongst councils on a significant scale and I hope that as we progress towards a general election all of the political parties will be attempting to outdo each other on their manifesto commitments on the size and scale of their programme of new build council housing in the future.
Hopefully this will allow council housing to become once again, a quality affordable option for all not just a safety net for some.
Thanks for listening.
Tuesday 03 November 2009
In his recent book on the politics of climate change Lord Anthony Giddens called for the creation of an ‘ensuring state’ with the capacity to achieve political and economic convergence across policy sub-systems to tackle what is becoming a global phenomenon.
With Copenhagen only weeks away the need to work strategically at national government level has never been clearer. However, this notion of the ‘ensuring state’ may also have a place at a more local level in terms of the creation of an ‘ensuring council’ - and not just for the purposes of climate change. An ‘ensuring council’ is one that has to balance the macro imperatives against the micro dynamics which exist in local neighbourhoods.
Since the White Paper ‘Strong and Prosperous Communities’ was first published there has been a Government drive towards community engagement and empowerment, which manifested itself in initiatives such as devolvement to neighbourhood management, community kitties and asset transfers, however has the recession now resulted in the application of the brakes to this particular bandwagon? Has the need for financial constraint focused authorities’ minds on the need to act as strategic place shapers? Do councils now fear the breakdown of their capacity to influence the local economy in tackling difficult issues such as unemployment and climate change? Has the agenda moved on from local communities to local economies?
Local authorities need to find the right balance between devolving political systems to a neighbourhood level and the overarching economic and environmental necessity that exists at present and is also likely to worsen in the not too distant future. This tightrope walking act is one that falls nicely within the notion of the ‘ensuring council’.
Whilst devolution to neighbourhoods will remain a dominant policy theme there are challenges and limitations to the role they can fulfil. Firstly, you need to be clear about why you are establishing such governance arrangements in the first place, you also need to decide what levels of autonomy neighbourhood models have and how they will be supported. Can local councillors manage the tensions between strategic and local issues and what relationship should the neighbourhood have with the wider role of the council. APSE’s forthcoming research paper addresses these matters.
The costs of such models must be managed and the creation of political fiefdoms avoided. Capacity to deal with wider issues needs to be retained; this should not just be about perceived improvements in service delivery, neighbourhood working must also contribute to social, economic and environmental well-being of the whole area.
In these difficult times local communities need an ‘ensuring council’ that can balance the tensions between local engagement and strategic need.