Some recent headlines may cause public sector leaders to pause before rushing headlong into further outsourcing adventures.
The announcement of the reviews including a potential Serious Fraud Office enquiry into the contractual relations with and payments to the providers of the Ministry of Justice’s tagging service followed by the Institute for Government’s report on public service outsourcing were wake up calls.
They follow in turn over reports from the Public Accounts Committee and the National Audit Office which have questioned the efficiency and effectiveness of some public service contracts and public sector client capabilities.
In recent conversations with political and executive leaders in local government I have detected the emergence of a view that challenges the value of traditional outsourcing. The results have been mixed and have not always fulfilled the promises made at bids.
In a period of immense uncertainty and financial pressures long term contracts can reduce a public body’s budget flexibility and could lock them into inappropriate service provision. Procurement processes tend to be lengthy and expensive so immediate savings are unlikely and senior executive time can be diverted from other core issues.
At a time when the public is challenging and questioning some business behaviours and cultures public sector leaders may be less inclined to pursue traditional outsourcing. Others are attracted by the idea and practice of working with the social sector – social enterprises and charities. Others are seeing the opportunities to redesign services, stop some others and co-produce with service users as a means of improving productivity and/or saving money.
Increasingly there are examples of public sector organisations especially local authorities in sharing services, people and physical assets.
Service delivery models such as CapacityGRID are seen by some local authorities a good way to secure savings, enhance resilience and share expertise and capacity with others whilst retaining employment and accountable control. They can allow long term planning and flexibility too. Such models, whilst growing in their application and the numbers of bodies engaged, have much further range of participating bodies.
The current financial pressures and those forecast for the next five or more years together with demand pressures will require local authorities and the wider public sector to change or die. Whilst there is good argument for a different macro-economic policy and in particular for less deep cuts over a longer period, such a change seems unlikely for some time. Therefore, public sector leaders have to explore alternative service delivery options. They also have to consider what services they will continue to fund and on what basis. These are major challenges with no easy answers.
However, it is essential that local authorities and their local partners collaborate to plan strategic resource allocation and budgeting. The expansion of Community Budgets should trigger greater collaboration with a focus less on individual institutions and more on outcomes for communities and citizens.
A strategic approach to budget planning and collaboration take time and may not deliver immediate results. They are still worth adopting. It is important that when taking short term decisions the public sector does not close off longer more strategic options including those which may lead to longer term savings. And they should avoid unforeseen consequences such as simply passing budget pressures to another part of their organisation or to a local partner.
The challenges are greater than ever faced in modern public sector history. There is little value in feeling and continuously protesting ‘victim’ status however justified this would be. This is the time for serious public sector leaders – politicians and executives – to rise to the challenge.
My advice would be:
· remain true to your values
· focus on outcomes for communities and citizens
· respect and involve staff
· involve services users and communities
· strengthen links with the voluntary and community sector both as another complementary voice and potential service provider
· collaborate with others
· continuously challenge current practices
· be long term and strategic; and only take short term actions that do not compromise the long term
· be radical
· stick with because communities and millions of people depend on you to succeed
John Tizard is an independent strategic adviser, and a commentator on public policy and public services.
