“I am expecting local councils to provide more for less”: The third sector and public

services – opportunity or exploitation?

Prof. Tony BovairdTSRC/INLOGOV

June 2011

Context

• Getting ‘more for less’: expectation and reality

• ‘More for less’ strategies and tactics

• Commissioning, procurement, contracting and delivery

Getting more for less: the expectation• We have been here before

• The expectations are often high – Gershon Review, 2004

… and why not?• Is it really possible to believe that we CAN’T save

X% p.a. through:– Service redesign, leaner processes, new ICTs, smarter

procurement, training, customer orientation, restructuring, relocation, engaging younger/smarter/cheaper staff, dealing with ineffective staff, bringing in volunteer-based organisations, better project/supply chain management, etc.?

• X% was 1% and then 1.5% in utilities and SOIs in 1980s, then became 2% in 1990s, 2.5% after 2000, 4%+ after Gershon

Well, here’s why not …

• We do all of the previous ‘improvements’ badly much of the time – innovation is not a smooth upwards process

• Some innovations can undermine each other

• Many innovations cost more and improve less than expected

• Disruption effects can outweigh positive improvements for a considerable time after introduction

• [But still the dream goes on …]

CPA scores: number of upper tier authorities in each category

1 1

2118

15 9 5

4040

3331

25

5456

60 70

71

22 2641 39

47

13 10

2002 2003 2004 2005* 2006**

4 stars

3 stars

2 stars

1 star

0 stars

* 2005 - scores include the quarterly updates** 2006 – 1 council’s star category is subject to review

We can choose numbers that sustain the dream

95

100

105

110

115

120

125

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

All LAs

21.9% increase in

service performance

Performance improvement - indexed on performance in 2000/01 (CLG, 2006)

Based on a representative basket of BVPIs indexed back to 2000/01

Measuring what we’d like to see(CLG, 2006)

Table 2.1 Indexed measures of local government performance – by service

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06

Primary Education 100.00 100.91 102.45 102.98 102.81 111.18

Secondary Education 100.00 103.49 107.03 109.67 108.83 108.47

Children's Social Services 100.00 107.90 113.87 122.00 127.36 128.88

Adults' Social Services 100.00 105.24 110.25 116.87 118.09 122.99

Housing 100.00 102.07 106.68 111.25 116.67 124.74

Benefits 100.00 103.22 112.83 120.95 123.68 129.62

Waste 100.00 105.62 123.07 153.22 191.67 230.90

Transport 100.00 100.00 100.00 108.85 108.85 118.75

Planning 100.00 100.65 101.16 105.91 109.94 114.38

Culture 100.00 110.87 142.84 141.61 169.55 182.19

Community Safety 100.00 96.22 95.86 104.76 131.23 140.08

Of course, there is usually an antidote to selective figuring - overall citizen satisfaction declined 2000-06

(MORI, 2007, for CLG)

… but we have ways of rescuing some good news from the ashes

… until reality again intrudes!

And bluntly, we did not see this coming: results from council officers survey (‘Cardiff 100’)

2.6

2.7

2.8

2.9

3.0

3.1

3.2

2001 2002 2003 2004 2006

Figure 4.5 Reported performance 2001- 2006 (Cardiff 100)

Staff satisfaction

User satisfaction

Effectiveness

Efficiency

Value for money

Quality

Mean score on scale from 1 to 4

2.8

2.9

3.0

3.1

3.2

3.3

3.4

2001 2002 2003 2004 2006

Figure 4.6 Reported performance 2001- 2006: Service Quality (Cardiff 100)

Education

Environment

Planning

Culture & leisure

Social services

Benefits

Housing

And why did we not see it coming?

• We didn’t spot the trend which WAS in the data until too late – forecasting the peaks in cycles is notoriously fraught

• But we also were looking at and measuring the wrong things …

The NPM version of public sector reform – a service perspective

• Service improvement– but just for public services

• Accountability of public services– to service users, taxpayers and to central

bodies (e.g. National Audit)• Strategic management of public organisations

– not community leadership• User involvement and choice in services

– Not engagement and co-production by general public, citizens or other stakeholders

• Public confidence in service provision– Not in the public sector or its institutions

The public governance approach to public sector reform focuses on:

• Quality of life improvement– not just service improvement, and including ALL services which

contribute to citizens’ quality of life• Accountability

– of ALL services and ALL sectors• Community leadership

– by all organisations, not just public sector• Public/stakeholder and citizen engagement and co-

production– within frameworks of democratic renewal and social inclusion (in

both decision-taking and quality of life outcomes)• Public confidence in the workings of government, society

and the economy

LESSON FOR 2011: EFFICIENCY GAINS CAN SUPPORT ALL OF THESE BUT THEY ARE INDEPENDENTLY IMPORTANT

Strategies for getting ‘more for less’

• Services shift – transferring or sharing the responsibility for service provision

• Service prioritisation – getting more outcomes from existing resources by focusing on what key stakeholders actually want

• Productivity shift – getting more outputs from existing resources

• Resource generation – mobilising more resources from outside the tax base

Services shift• Shift (some) responsibilities to other

governmental units• Shift (some) responsibilities outside of

government – e.g. to third sector• Partnership working – sharing responsibilities• User co-production• Community co-production

‘SHARING’? OR JUST ‘COST DUMPING’?

Partnership working• Sharing the burdens as well as the pay-offs • Joint decision-making (shared budgets)• Commitment to innovation, not tied to hard-

and-fast specifications• Relationship contracting – doing the

specification cheaper, faster and better• Influencing the network, not controlling the

hierarchy or the ‘agents’• Sharing and trading capabilities and resources,

not insisting on the ‘right’ to get one’s way

Co-production – ‘beyond consultation’

• User co-production– Expert patients– Tenant’s repairs and improvements– ‘Group living’ for people with high social

needs

• Community co-production– Classroom assistants– Social care– Neighbourhood watch– Environmental improvement

Public sector outputs

Private and third sector

market outputs

Informal economy outputs

Formal volunteering and informal social value-adding

outputs

Value-adding outputs in market, public and third sectors and in civil society

Economic, Social, Political &Environmental Value Added

Modelling Birmingham

Issues around self-organising• Government is going have to learn a lot more about how it is

currently working

• … and about how it could be helped to work better

• … and how about how to lean on it when it’s NOT working well but is needed

• … and about when NOT to use it and how to explain this to the people involved

• Local councils are much better placed to help here

Why ‘co-production’ of public services?

• SERVICE USERS know things that many professionals don’t know ...

• ... and can make a service more effective by the extent to which they go along with its requirements

• ... and have time and energy that they are willing to put into helping others

• In all these ways, service users are an important part of the ‘co-production’ process of the service

• And other citizens contribute, too, in the process of COMMUNITY CO-PRODUCTION

Different types of co-production• Co-planning of policy – e.g. deliberative participation, Planning

for Real, Open Space• Co-design of services – e.g. user consultation, Innovation Labs• Co-commissioning services – e.g. devolved grant systems,

Community Chest• Co-financing services – fundraising, charges, agreement to tax

increases • Co-managing services – leisure centre trusts, community

management of public assets, school governors• Co-delivery of services – expert patients (peer support groups),

meals-on-wheels, Neighbourhood Watch• Co-monitoring and co-evaluation of services – tenant

inspectors, user on-line ratings

Distinctive principles of co-production

Co-production conceives of service users as active asset-holders rather than passive consumers.

Co-production promotes collaborative rather than paternalistic relationships between staff and service users.

Co-production puts the focus on delivery of outcomes rather than just services. Co-production may be …

substitutive (replacing government inputs by inputs from users/communities)

OR additive (adding more user/community inputs to professional inputs or

introducing professional support to previous individual self-help or community self-organising).

... And if you don‘t like that odd word 'co-production' ...

Service prioritisation

• Cut low priority services?• Cut least efficient services?• Limit demand or raise eligibility

criteria?

• NOT ACROSS-THE-BOARD CUTS• STRATEGY AS THE ART OF SAYING ‘NO’

Outcome-based public management: rhetoric or reality?

• Outcome-based accountability– Generally believed to be happening by strategic commissioners, at least at

partnership level, also through inspectorates

• Outcome-based commissioning and procurement– Patchy – some services already have a 7-8 year history of this, otherwise it’s often

marginal or new services

• Outcome-based contracting and delivery– Much more controversial – few providers want to take risk of only being funded on

outcomes achieved– But ‘payment by outcomes’ already in employment services, mental health and

learning difficulties support, offenders– Rather than payment for outcomes, providers tend to be driven by accountability for

outcomes at contract renewal stage– Argument in UK to admit that in many services there is still great uncertainty about

pathways to outcomes – SO, pay 3 year grants on ‘outcome promises’ to convincing providers, minimal specification, renewal if outcomes demonstrated

Productivity shift• ICT and e-government• Other capital substitution for labour• Business process redesign• Smart (joint) procurement• Training• Employee motivation• Customer service• CRM • Quality assurance• Performance management

Resource generation• Pursuing grants (EU/government) (‘accepting sweets

from strangers’)• Fundraising from community• Increase volunteering from community (and from private

and voluntary sector staff)• Raising capital from private or voluntary sector partners• Raising revenue contributions from private or voluntary

sector partners• Increasing prices to (low priority) users• Increase long-term borrowing (against growing asset

base)• Selling low priority assets

More for less: Managing the risks

• All change involves taking risk …– especially radical and superfast change

• But actually we are taking huge risks already – just not owning up to them

• Time for owning up to risk – and to our (often relatively minor) reductions to it?

• So when we report ‘new risks’ from mutuals, the public co-producing or self-organising, let’s surface how big the risks are when public agencies do the work

• And time to accept different risk-cost pay-off in the future?

Conclusions

• Efficiency and quality are different sides of the same coin – ‘improvement’

• Quality improvement depends on our definition – not agreed• Most public agencies need to use more than one strategy to get ‘more

for less’ … • … but few are exploiting all available tactics or keeping them

refreshed• ‘Joined-up government’ has so far meant joint spending rather than

joint budgets, joint saving and joint resource mobilisation• Co-production with users and communities is still limited – it can be

hugely expanded …• … but it will entail a new compact between service users,

communities, politicians and professionals• ‘Invest to save’ – requires time and money but should be more used• All of this will cost resources – ‘society’ and ‘community’ are not ‘free’

Contact

• T.Bovaird@bham.ac.uk