Forget the 1980s, this public sector recession will be far worse, and public sector leaders will need to lead from the front, says John Tizard
This is no time for timid leadership. Public sector leaders are about to be tested. The country’s public services are going to face their greatest challenge since 1945 as public expenditure is cut in real terms. Few if any services are expected to be exempt.Whatever the national politicians say before the general election, at best, their pledges of protection – in most cases – will be little more than a commitment to sustain current cash levels. And this would fail to take into account inflation and increased demand.
Public expectations will not diminish and, indeed, in many service areas, people are looking to see the full benefits of a decade of expenditure growth.
There is a strong macro-economic case for debating both the extent of the action required to reduce the public deficit, and whether deficit financing may continue to make a positive economic contribution, as it has over the last two years. There will also be a debate about the speed of the implementation of any reductions.
However, for local authority leaders and most public sector managers, these are decisions beyond their control. The more important and immediate debate should be about where the absolute reductions and deceleration of expenditure growth will take place.
In my experience, those local authorities which have begun to consider the financial pressures strategically are planning on reducing their expenditure by between 15% and 25% over a three-year period. This takes them well outside the usual local authority efficiency territory of 2.5% to 5%.
The current situation will take most leaders and chief executives where they have never been before. This is not a repeat of the 1980s. Efficiency savings will not be enough. The challenge for political leaders and their senior officers will be to remain strategic. It could be all too easy to be deflected or to panic into making random cuts.
What might a strategic approach look like? Of course, it will vary between authorities and across the wider public sector. However, I would suggest the key elements will be dependent on effective leadership and a shared understanding within cabinets, and between council leaders and their chief executives and finance directors. This leadership will exemplify itself in a number of ways, but the most important will be the promotion of a very clear, long-term vision for the locality and the authority’s contribution to this.
But long-term has to mean well beyond the immediate period of budget pressures. Short-term decisions and actions should not prejudice but instead re-enforce the vision. The vision must be shared by the other major public sector agencies in the locality so that all of them are rowing together.
Other essential approaches will include adopting Total Place behaviours and culture. That is, seeking to find how resources – money, property and people – can be best deployed across agencies in order to secure the required outcomes.
Strategic commissioning should lie at the heart of resource allocation and will need to include an approach to de-commissioning – deciding what not to do as much as deciding what to pursue.
Making cuts is never easy but hard times demand hard choices. Partnership and collaboration must be very much at the forefront of any strategic approach to addressing the public expenditure storms. The effective strategic leader – political and managerial – will need to listen to others and understand the requirements and concerns of partners, and the opportunities they may be able to offer. They must share information and plan budgets jointly to avoid unintended cost shunting and disproportionate accumulative adverse impacts on particular communities.
Leaders will also have to be effective networkers, negotiators, diplomats, influencers, and procurers. Public services and communities will be ill served over this period by leaders who think they can protect their communities by remaining in their town hall bunkers and trying to protect their own institution.
This should play to the strength of local government as ‘place shaper’ and ‘community leader’. Leaders will have to carry their staff with them as they make difficult decisions. Tough times demand a greater empowerment of staff. In many situations, staff know how services could be improved and costs saved. They need to be encouraged, facilitated and incentivised to innovate.
However, no leader will not be able to afford to be possessive about his or her institution, or allow vested interests to get in the way of the right solutions. This sometimes means letting go, or being prepared to redesign services across service and agency boundaries.
The next few years more than ever will require meaningful engagement with local citizens and communities. Strategic commissioning and service design will need to be focused on outcomes for citizens – sometimes individually, and sometimes collectively. It will also require public support and understanding for unpopular de-commissioning decisions.
Many outcomes will not be dependent on service delivery or procurement by the public sector, but will rely on people changing their own behaviours as individuals, households and neighbourhoods.
And this will require greater devolution from town hall to neighbourhoods – micro-Total Place – and a new settlement between councillors and the wider public sector and citizens.
John Tizard is director of CPSP@LGiU
