Turning a crisis into an opportunity

Friday, October 23, 2009

The demand is for better public services at lower cost. Sir Michael Bichard explains how innovative local thinking can influence government ahead of the cuts

Both of the main political parties now agree that action has to be taken to address the huge increase in the national debt consequent upon the banking failures and the recession.

It is less clear what the balance will be between public expenditure reductions and tax increases or, indeed, when action should be taken if we are to avoid derailing the nascent recovery. Few, however, would dispute that there will be significantly less money in the foreseeable future for public service investment.

Some of us have argued from the outset that this particular crisis will not be resolved by traditional means. In the past, downturns have been tackled by increasing public service efficiency and productivity; by deferring less essential projects; by rigorous prioritisation of budget allocations and by the robust control of budgets.

All this will be necessary, but given the size of the deficit we shall also need to reconsider the role of the state and think innovatively about how we shape, fund and deliver public services. The fiscal impact of this more radical approach may not be evident for two or three years, but it is inevitable and in fact provides an opportunity to look afresh at public services which have fallen short of expectations even with the massive increase in resources delivered by government in the past decade.

The Operational Efficiency Programme Report, included in this year's Budget, in fact mirrors this two-tier approach. Its early strands highlight that there are still significant savings to be had from the better management of property, the more effective stewardship of public assets, better use of IT and a greater willingness to share back-office services.

Savings in excess of £15bn are predicated and it is difficult to argue that these cannot be achieved – and achieved relatively quickly if there is the will. The final strand of the report, which looked at local incentives and empowerment, acknowledged, however, that these traditional efficiency strategies would not suffice and we had to enable greater innovation at a local level. The new mantra has to be "better services at less cost".

In leading this strand of work, I was struck by the way in which one geographical area – Cumbria – had already begun to address these issues. They had, with the help of the Local Government Leadership Centre, brought together all the local service agencies to look at how they could make better use of the public resources invested in the county area. A relatively quick assessment of this showed that the annual public investment in the area totalled £7. 1bn, but of course, too often this was not regarded as "public" money but central government, local government, health, police and benefit money. Too little effort had been invested in jointly looking at how it could be made to work effectively.

This initiative seemed worthy of wider support and thus Total Place, as it became known, was launched. In the September edition of Public Servant, John Seddon argued that Total Place was not new and at its heart lay the government's obsession with costs. As I explained when I met John, it is not new, but it is not obsessed with costs in the way he argues.

We do not want the Total Place pilots – and there are now 13 of them – to spend disproportionate time calculating in great detail the public money expended in their area. We do think, however, that having some idea of those totals does bring home – as it did in Cumbria – the scope for local action and the impact of even a 1 per cent improvement in cost effective delivery.

The first priority of the Total Place is to find new ways of designing and delivering services together which are better and cost less. The hope is that the shared commitment of local agencies to "their" place and "their" clients will provide the impetus to find new solutions to some long-standing public policy challenges. So the work that Croydon and Manchester are doing in revisiting early years' provision will hopefully provide some new insights on provision for the under-fives and also explore where the last decade of investment has been successful and why it has not always delivered the expected results.

The second priority of Total Place is to provide feedback to government via the Top Level Officials Group –which I am chairing – and the Ministerial Group chaired by John Denham. In particular, we want to hear what should be done differently at the centre, to help frontline agencies deliver success.

No one suggests that Total Place is the total answer and I am especially concerned at the moment to manage expectations. It is, however, an opportunity for localities to take the initiative and to influence government before a major programme of reduction is introduced. Many of our services do need to be reshaped around clients and plentiful resources can sometimes mean that we continue to deliver in the same way but with more people. Crises can sometimes provide opportunities. The question is, are we collectively prepared to seize this one?