Delivering Innovation and Efficiency!

Progressive austerity appears to be the message on public finances for the foreseeable future. In local government this translates to reducing costs or cutting services in order to pay for the sins of the bankers.

For those who have been in local government over the last few decades this is not exactly a new phenomenon. From the mid-1970s onwards every few years another government financial crisis appears, often originating from another source; from the International Monetary Fund intervention to CCT and from Black Wednesday to Gershon.

And as much as we can blame others for all of this, the reality is that the public sector has rapidly become the media whipping boy once again.

There is much talk of incremental improvement being exhausted with innovation and step change being the only solution. But is this really true? Or is it a convenient truth for those who stand to prosper from alternative forms of service delivery?

My view is that creating an environment in which efficiency and continuous improvement flourish will allow a culture of innovation to develop. It will also place local authorities in pole position to lead other public sector agencies in the total place agenda. So what might this environment look like?

Firstly, there needs to be a focus on good local performance management data. Not centrally driven targets, but meaningful useful information that identifies a baseline of performance which can be scrutinised for competitiveness and challenged by both elected members and local people.

Phase two is about process benchmarking with others to identify who has outstanding performance at present then examining how to get to that standard or level of efficiency.

This can be done in a variety of ways, but the management tools and techniques associated with systems thinking approaches could prove a useful start rather than simply attempting to replicate others.

Involving staff from all levels of the organisation from the outset in this process will help spread the message and build ownership of the solutions.

Having untangled staff from the organisational straitjacket of the past, you are now into level three where innovation can flourish. Transformational service redesign can take place by eradicating waste and bureaucracy and enabling such innovations as the co-production in service delivery we have seen in recycling and waste minimisation over the past few years.

This has encouraged residents to take more responsibility for their actions while having greater input into service design and allowed more to be done for less.Of course it may prove easier to achieve the benefits created by such an environment if you have retained control of your own destiny.

For councils locked into long-term contracts, it is likely to be someone else who reaps the rewards.

Value added services

Claire Fox succeeded in fulfilling the brief to do her usual thing and ‘stir it up’ when she spoke at our annual conference in Cardiff. She also took the opportunity to make her usual rallying cry for less state nannying.

The underlying tenet that what once constituted the public sphere is being eroded while the state delves further into the private lives of citizens warrants consideration. But is perhaps lost amid her evocation of some sort of municipal Dystopia; complete with spying helicopters and a moratorium on anything remotely resembling fun (Stop monitoring the public, The MJ, 1st October 2009).

We welcome debate on how scarce resources can be best targeted to achieve public value, which was, indeed, the theme of our conference. I think Claire is being slightly mischievous in her interpretation of this point. For us ¬– and for service users – front-line means collecting the waste, cleaning the streets, providing affordable housing, caring for elderly and vulnerable people, feeding school kids, repairing the roads, cutting the grass in parks and a whole host of highly tangible services upon which people rely day in day out.

These local services have a huge bearing on the health and well-being of local communities. They are also important economically; with our research showing every local authority pound spent can generate £1.64 in the local economy. Promoting behavioural change that will reduce the longer-term economic and social costs of ill health and create a better environment actually means more effective use of public resources.

‘Co-production’ was a term used by speakers at our conference with first hand experience of making service improvements and multi-million pound savings by finding effective local service solutions from within their own in-house teams and communities. And doing things ‘with’ residents, rather ‘to’ or even ‘for’ them is surely the intention of all of us in local government. The reality is that the majority of people are happy to recycle and don’t want their taxes used to clean up after the few who drop cigarette butts or beer bottles. Is Claire suggesting that, instead of encouraging healthier lifestyles, school meals and high quality public spaces, councils should instead be promoting deprivation, misery and a return to the dark days of public squalor?

Since way, way before the recession began, APSE has been supporting the delivery of excellent front-line services and fighting against bureaucracy and waste. But focusing on the front-line does not mean councils should stop taking a wider approach to the health and well-being of residents; it goes hand in hand.

And yes, service users will defend against cuts that affect not only their lives, but also their life-chances.

Mixing with the London set!

Spend a couple of days in London at a variety of events and meetings.

Attend a Fabian event on the future of local government at parliament where local government Minister John Healey speaks along with Simon Jenkins from the Guardian. It quickly turns into a debate about localism and whilst it's all interesting I started to think that I have been hearing the same arguments over and over again for the last 15 years. And I think some progress has been made with devolution to Scotland, England, Wales, Northern Ireland and London. However my mind starts to drift to the fact that there may be some more urgent priorities facing local government at present.

I go over to the MJ and meet the Editor and Deputy Editor, Michael and Heather for a catch up. This weeks edition has already gone so we exit to the pub for a chat, where I wax lyrical about how local authorities can deliver business process reengineering themselves without bringing in external help. I should have known better the next day I receive an email from Heather asking for 700 words on the subject for the next edition.

The following day I attend a rountable discussion with the Centre for Public Service Partnerships and Unison on 'Public Service Partnerships and the Workforce'. It was Chatam house rules so I can't really say to much but I put forward points about a lack of uniformity of approach to the workforce by contractors, how we need joint monitoring on agreements that are in place, that we need research in this area and that we need to understand local economic value rather than just looking at cost.

The event was chaired by John Tizzard and Dave Prentis of Unison made an opening contribution. It was good to have such heavy hitting representatives of the private and public sector together and it brought an interesting dynamic to the discussion.

It was a lively discussion and I think it is one which will run for a bit.

Budget response - is that it?

Being one of those who had hoped to see a second fiscal stimulus that invested heavily in local government in particular and public services in general in an attempt to spend our way out of the current recession I have got to admit to being slightly underwhelmed by the Chancellors offering today.

However, having examined the detail it is fairly obvious that with public borrowing reaching £175b this year and then slowly falling over the next four years to £97b his room for manoeuvrability was extremely limited. And indeed additional expenditure today may have resulted in much harsher cuts to public finances in coming years.

So what does it mean for local government overall. Well the overall increase in public sector efficiency savings next year to £15b equates to an increase of £600m for local government, this is a 12% rise from the target of £4.9b to £5.5. Whilst this will present challenges I suspect that local government may have been bracing itself for something worse. And with the final year of the 3 year grant settlement remaining unchanged and not up for renegotiation then financial Armageddon may have been avoided in the short term. However with economic circumstances creating a higher demand for public services during these tough times then perhaps the real strain could be somewhere just over the horizon.

Looking then to specific measures for local government, the £100m of funding for local authorities to invest in new environmentally friendly council housing is welcome, however the impact is likely to result in authorities building a couple of thousand units a year rather than the couple of hundred at present.

For the 1.8m people on council house waiting lists and hundreds of thousands more living in overcrowded conditions with friends and families this is hardly going to change the world for them. With the maximum mortgages available being 90% most are looking at a £15,000 deposit on an average house price and this is therefore way beyond their means. Perhaps Ministers will now fast track the review of the national housing revenue account system, which could really make a difference to local authority’s ability to supply new housing units at meaningful levels.

The Chancellor made some interesting noises about investing in green technology and perhaps this along with the energy saving schemes mentioned will encourage local authorities to really push the boat out on carbon reduction and give a lead to not only the public sector but the rest of the economy. For those authorities who have been plagued by abandoned cars and the problems of having to dispose of them, I am sure the £2,000 trade-in scrappage scheme announced will also be welcome.

Exciting times also for the North of England with the announcement that Leeds will join Manchester as the second city region pilot scheme.

Overall, for one of the most anticipated budgets in decades it all felt a bit subdued to me.

Insourcing!

Think APSE has started a pretty hot debate with the publishing of our latest research project which is a guide to Insourcing local authority services previously outsourced.

We did articles for the Guardian, Public Finance, MJ and Public Servant, as well as some other sector journals and a number of journals and websites also gave the report coverage and their own particular slants on it. Of course there were the usual attacks from the vested interest brigade in both the third and private sectors but it was quite obvious that they hadn't read the report and it was therefore fairly easy to rebut their whining.

The research actually examined over 50 case studies where local authorities had Insourced services mainly because of market failure and poor performance of private contractors. It didn't call for a wholesale Insourcing of every previously outsourced contract or the cut off of funds for the Third Sector - however there is that much of an industry built up around these sectors that I suppose they have to hysterically attempt to misrepresent any challenge that comes along to the status quo or the orthodoxy that they have carefully crafted around public services being monolithic, bureaucratic and inefficient - despite the tangible evidence available painting a very different picture.

I guess they ain't going to take to kindly to anyone pointing out the failings in the market based approach and the flaws in the performance of the private and third sectors when they have spent so much on lobbying and marketing an image of a perfect alternative.

They may be in for a bigger shock as local authorities up and down the country have purchased our publication in record numbers. Maybe the aim of the research - to establish Insourcing as a credible option - has been achieved.

Market failure - a dawning reality!

There has been a lot of trade journal speculation recently about the state of the outsourcing market in public services and I have been asked to give several press comments on this, therefore hopefully it's worthwhile posting these views here.

Firstly, it's hardly surprising that given the current economic circumstances and the high profile market failures that have occurred, that procurers are backing off, at a fast rate of knots, from what are high risk deals. On the other side of this suppliers in the market are trying to minimise their own risk amongst their portfolio's and are reducing their exposure to any new risk in order to consolidate in many cases their already overstretched position.

Having sat on the Office of the Deputy Prime Ministers, Strategic Partnership Taskforce from 2002, it was even then widely recognised that the market had limited capacity to deliver, barriers to entry were high and some who were filling their boots were stretching themselves to the limit.

I guess what has happened in the last few months has exposed the myth about plurality of provision - the supposed move away from 'monolithic' state provision has just really seen a whole variety of public sector providers transfer services to a handful of companies with a vice like grip on their own preferred segments of the public services market.

One of the biggest ironies of this situation is that in a time when local authorities are evermore required to find efficiency savings they are locked into contracts for 10, 15 or even 25 years duration and it is now extremely difficult to renegotiate with contractors who were probably brought in on the myth of achieving value for money in the first place. The pain will then fall once again on the in-house providers within the Council to create savings.

I have already mentioned in previous posts about the APSE research work in Swindon that demonstrated that for every £1 spent on direct services £1.64 is guaranteed to circulate in the local economy, surely it is time for this work to be closely examined and future procurement decisions taken on the basis of what is best for the local economy in the long term.

Already many in the public sector are seriously reevaluating the faith that has been placed in the market and starting to come to the conclusion that if you deliver services directly at least you have a degree of control over your own destiny!

Putting DeDracula in charge of Da Bloodbank!

DeAnne Julius published her review into the Public Services Industry today and its hardly earth shattering conclusions that she draws.

Having poured over 'evidence' for a number of months she thinks that the £79b of public sector contracts awarded have brought great benefit to the UK economy and that the Government should accelerate the speed of outsourcing to gain even further!

As an ex Non Executive Director and Senior Independant Director of SERCO, which she stood down from 9 months ago I didn't really expect her to say things had gone too far. I am sure she is professional enough to be objective about her findings and wouldn't allow producer interests to get in the way of the facts.