Innovation from public service adversity
Ben Lucas, Director of the 2020 Public Service Commision, posts here on Labour’s shifting strategy on public spending. I agree with everything he says.
A point he implies, but to which I would give greater emphasis, is the need to make a case for public services based not just on what we can afford but on the longer term economic interests of the country. The debate about deficits and cuts has tended to revert to a simplistic economic model in which the private sector generates money, the Government taxes it, and the public sector spends it.
The Government’s economic case for public spending is more in terms of maintaining employment and activity rather than the role public spending can play in helping address the medium term challenges such as demographic change and competitiveness. If Labour is to try and show it has an approach to public services which is both realistic and different to that of the Conservatives it needs to develop a story about the economic value of public services along with policy approaches that give this edge. One way of squaring this with the undoubted spending squeeze ahead is to explore how adversity can foster innovation.
Studies of social innovation (such as that reported by the Young Foundation last year) show that being in a difficult situation can be the best spur for creativity (in better times it is harder to stir people from complacency). Another key factor is the freedom to innovate. As public service budgets get squeezed the temptation for central Government will be to tie everything down promising that budgets and service levels will be maintained in the areas the public seems to care about most. But such an approach would be disastrous leaving service managers and front line workers no room or incentive to do things differently.
Currently it is assumed that the areas that will be most badly hit by public service retrenchment are those – like the North East – which have the highest proportion of their local economy in the public sector. But if the squeeze leads to new ways of thinking and working it could be those areas that see the biggest advances in overall productivity. This is not just about more efficient spending. Education and health care are two of the fastest expanding areas of global economic activity. Innovation in the public services could help the UK compete more effectively in these markets.
Rather than simply splitting the difference between ‘steady as she goes’ and the ‘we’re doomed’ view of public spending, the Government needs to show how effective public services can contribute to economic dynamism as well as social inclusion and well being. But this case relies on them giving local service providers the freedom to work with service users and communities to develop ways of providing public services which achieve better outcomes with the same or fewer resources.
Public service savings – no pain, no gain
Filed under: Credit crunch, Politics, Public policy, The RSA
Fresh on the heels of Tessa Jowell’s welcome call for politicians to be more open and honest about hard choices (see yesterday’s post), we have the Government and Opposition implying that it is only if we elect the other lot next year that we will face public spending cuts. Perhaps Tessa should send a copy of her speech to Andrew Lansley and Liam Byrne.
We need significant public sector reform so that services are more effective and responsive, and particularly (as 2020 Public Services Trust Director, Ben Lucas, said at a Number Ten seminar this morning) to embed the idea that most public service outcomes result not from ‘delivery’ but from the combined efforts of the state, communities and individuals. But this kind of change will be gradual, and although it will ultimately create better services, it will not reap savings in the short term.
In as much as politicians, officials and advisors are facing up to the coming spending crunch it is possible to distinguish an important difference in emphasis between Labour and Conservative.
There are some specific cuts to which the Conservatives are pledged, for example scrapping Regional Development Agencies. But, as Philip Hammond, Shadow Chief Secretary to the Treasury, emphasised here at the RSA last month, the Conservatvies put great store by better management. They genuinely believe it is possible to find major savings (of the order of ten percent) through improvements to the way Government works. In essence, this involves an updating of the Thatcher strategy of Next Steps agencies and contracting out to create a leaner, meaner government machine.
The Conservatives are unapologetically technocratic saying that the ways to make a step change in productivity are clear but that Labour has failed to pursue them due to vested producer interests and the inability of ministers to control the growth of targets and initiatives. There may be much to this, but the kind of savings the Conservatives are aiming for still won’t be achieved without resistance from both workers and the public.
Labour also thinks it may be possible to save a lot of money without damaging public service entitlements (indeed the Government’s soon to be unveiled public service reform plan is likely to propose putting key entitlements on a statutory footing). But Brown’s advisors are also stressing the potential of decentralisation.
Following on from a report compiled by Sir Michael Bichard, a former Permanent Secretary and now Director of the Institute for Government, a series of pilot studies has been established looking comprehensively at the public money spent in specific local authority areas. I understand that early indications suggest a huge amount of waste, over-complication, duplication, and, more profoundly, a failure to get funding directly to the problems it is supposed to be addressing. The main cause of this lies in the overload of targets, funding streams, guidance and accountability mechanisms spewing forth from Whitehall. Labour’s plan is therefore to embed key public service improvements from the last ten years (and there have been many) while devolving to local government as much as possible beyond these core entitlements.
Labour’s plan is bold and makes sense as policy and politics. But – and this is a huge but – it will only be credible if Number Ten is willing to tackle the dysfunctionality of the political management of central Government. Problems like these need to be dealt with: there are far too many ministers, all of whom think it is their job to generate initiatives; ideas are allowed to be developed and launched without any reference to those at the front line; change management and the time it takes is not treated seriously; there is complete lack of realism about how far the centre’s intended messages actually reach; civil servants fail to see or warn (or be allowed to warn) their masters that every new target or piece of guidance had an adverse impact on all these existing targets and instructions (not to mention local morale).
However well intentioned Brown’s advisors are, they will not achieve real change unless they do something about this. The process of Whitehall capability reviews started when I was in Number Ten but, despite my best efforts, the political management of departments was largely excluded (even though everyone knew this was the biggest single problem).
Labour’s reform plan won’t be taken seriously, nor will it deserve to be, unless it involves a profound shift in the way policy is made at the centre. And if you want me to make this more concrete I will: I would find it impossible to believe in any plan to decentralise power from the centre that did not commit to a substantial reduction in the number of Government ministers
A wake up call for the public sector
Steve Bundred, chief executive of the Audit Commission, gives it to us straight this morning in The Times:
‘Tax increases and spending cuts are inevitable immediately after the election….’
‘any managers of a public service who are not planning now on the basis they will have substantially less money to spend in two years time are living in cloud cuckoo land’
This message chimes with the detailed picture drawn last week for the 2020 Public Services Trust Commission (here at the RSA) by IFS Director Robert Chote. Put simply, we are talking about a period of at least three years, starting next year, in which public spending budgets will be squeezed more tightly than in the living memory of most public servants.
Which means three issues should be getting focussed attention in the public sector – but I see little sign of any even being seriously discussed.
First, we need to be exploring the scope for major productivity gains, not just cutting back office staff, but re-engineering services to achieve substantial cuts in costs. The example I have given in the past involves schools moving to a four day taught week for key stage four pupils with the fifth day being used for self guided study. With the right use of space, on-line tuition and teaching support this could make a substantial saving on teaching time and also be good for pupils. Another example is that if local authorities moved more boldly on individual budgets, putting in place the technological and community support necessary to do so, they should be able radically to reduce case and middle management costs in adult service departments.
Second, we need to be encouraging an intensified process of innovation in public services, designed to find ways of doing the same, or more, for less. There are many organisations out there, from Participle to Think Public to the Design Council (indeed the RSA itself) with expertise in citizen-led public sector innovation, but their work still tends to be at the margins. They need to be given more support and be incentivised to collaborate better.
Third, we need a frank and creative discussion between policy makers, practitioners and the public about the hard choices to be made over the coming years. Local residents may complain about moving to fortnightly refuse collection but they might feel differently if they understood this was one of the measures that enabled the council to protect other services. The creative question here is how could the actions of citizens themselves reduce spending pressures and enhance service outcomes?
These kinds of debates should be taking in every Government department and local authority. If public services don’t adapt, innovate and engage the public in new ways we face a demoralising and divisive era of cuts which will not only damage people’s lives but could fatally undermine voters’ faith in universal public provision.
2020 Public Services Commission – and some nerve wracking memories
My busy Tuesday ended with the launch of the 2020 Public Services Trust, an independent, all-party inquiry which we are hosting here at the RSA and on which I sit as a Commissioner. Having Times columnist Camilla Cavendish in the chair helped compensate for the rather white, middle-aged, male feel of the panel (and, yes, that does include me).
Originally, the 18 month time scale for the Commission was designed with the idea in mind of reporting around the time of the next General Election. But now it fits neatly with the point at which public services will experience a massive deceleration in revenue and deep cuts in capital allocations. This is a vital turning point for public services and provides a good focal point for our deliberations. Anyway, I suspect that next spring is now the most likely election date.
Personally, I will be relieved if we are not publishing at election time. I will never forget being woken at 6.00 in the morning on 16 May 2001 with the news that the Guardian had splashed with Labour’s secret plan to privatise public services, a plan apparently based on the recommendation of the IPPR Commission on Public Private Partnerships. As the Director of IPPR, I was at least relieved of my worries about how we were going to generate interest in our learned but rather dull and worthy Commission report!
I still don’t know who gave the draft report to Patrick Wintour. I was told the leak was authorised by Labour strategists worried that the 2001 Manifesto was insufficiently New Labour. Unsurprisingly, elements in the Labour Party and trade unions were apoplectic with rage.
Later that day I got a call from a friend in Millbank with a warning:
‘I overheard one of Gordon’s people telling a journalist to try to do you and the Commission in. Be prepared’
Ten minutes later a call came from a journalist. ‘About this Commission, I see it was part funded by firms that sell private services to the public sector. How do you respond to the charge that you were paid to call for privatisation?’
I won’t reveal the name of the journalist as I don’t bear a grudge and we are now friendly acquaintances. Anyway, as he’s a Sunderland fan, I will be hoping to get more morsels of revenge when the Baggies go to the Stadium of Light on Saturday!
RSA Animate
RSA Mobile
RSA Comment- RSA Projects Blogs
- Twitter @RSAMatthew
RSA Bookshop
The RSA Bookshop, in partnership with Blackwell's the UK's leading academic bookseller, offers Fellows and friends an opportunity to purchase books and to explore our speakers’ ideas in greater detail. Visit the RSA Bookshop.