The recession will create new pressures to deliver services through public-public and public-private partnerships, and gain from their economies of scale. John Tizard offers some advice for local authorities and agencies on how partnerships can help them withstand the downturn
There can be no doubt that one consequence of the economic recession which the UK is about to enter will be an increase in demand for many local public services currently funded by local authorities and their local public agency partners.
These same agencies cannot expect to continue benefiting from the growth in public expenditure of the last 10-plus years, and the forthcoming spending review could well lead to falls in real levels of funding available.
The public’s expectations for high-quality, responsive services is unlikely to diminish and, indeed, in many areas of service the need for increased outputs and more public collective action will be significant.
This will be challenging. Managers and politicians will have to adjust to the new financial environment, and many will only have experience of budget growth or having to find relatively-modest annual efficiency improvements.
A new mindset will be required which looks to partnership working as the norm, not the exception. They will need to be ready to de-commission as well as to commission, and to do so, where possible with partner engagement and support.
Progressive local authorities will want to demonstrate their community leadership role to ensure that they protect their communities from the worse excesses of the recession, plan for the recovery, and ensure that quality public services continue to be available.
Political leaders will see the opportunity to exercise leadership of place, to demonstrate the value to communities of effective democratically-accountable political leadership. They will see the opportunity to galvanise their local strategic partnership and its constituent members to focus on the immediate needs and choice of local people and the wider community.
Local strategic partnerships can provide leadership and voice for the locality, secure cross agency co-ordination, ensure cost-effective use of resources across and between agencies, maximise public value – from investment, assets and revenue expenditure – achieve more effective commissioning, and harness and share resources and capacity to address the presenting issues.
Over the next few years, this will be more important than ever.
LSPs can help areas withstand the destructive power of recession and financial restraint. They can be used to ensure that public agencies and, indeed, the local third and business sectors align strategy and action, share resources, and co-operate to focus on the immediate task, while retaining a strategic view for the future.
There are many examples of where a partnership culture will be essential. Tackling worklessness is not a responsibility solely of Job Centre Plus. It requires a range of agencies to work in partnership. Decisions relating to the Flexible New Deal could be enhanced, if they are shared and agreed within the overall local strategic community plan by key local agencies, including local employers and the local authority.
Similarly, decisions relating to education and training require the actions and input of several agencies. These have to be co-ordinated and, again, this is an opportunity for the local strategic partnership.
Regeneration and infrastructure programmes will require sub-regional and regional solutions. The partnership approach must be extended to include agencies such as the new Homes and Communities Agency and the Highways Agency.
A positive response to the current prospect of reduced budgets in real terms is the pursuit of service transformation, focused on outcomes with greater alignment of individual agencies’ strategies, budgets, operations, management, and leadership of these agencies within local authority areas and, indeed, sometimes across those boundaries.
It may also require new forms of partnership and collaboration including, if necessary, the transfer of functions from one agency to another.
For many local strategic partnerships this will require a paradigm shift in behaviour and trust within and between these agencies.
Pooling and/or aligning budgets can be challenging, but the total public expenditure in an area will be significantly greater than that of any one agency. Historically, when budgets have been under pressure, agencies have used joint finance and similar ‘partnership’ arrangements to ‘cost shunt’ costs and responsibilities to other agencies.
It is essential that this is avoided, but there will always be a risk that under pressure agencies and their leaders will feel under siege and consequently adopt behaviours based on retrenchment and short term protectionism rather than strategic partnership.
Organisations should recognise that there is value in avoiding duplication and having the flexibility to shift expenditure between agencies and budgets. This will require central government to introduce much greater discretion and flexibility for agencies and their managers – from Job Centre Plus to the NHS to the police to probation to every agency which impacts on a local community.
This may require a new localist settlement with a consensus on those activities and outcomes which have to be controlled in Whitehall, and those which can be delegated to local people.
Some local agencies will choose public service boards, others will adopt shared strategic commissioning models, and even more will share resources directly.
There is a range of models which could be adopted to address the immediate and future challenges facing the public sector across the country. There can be no rational reason for a central prescription. Local partners working with their communities should be able to select the approach which has the best fit for their local needs, cultures and sought outcomes.
If there is a risk of a protectionism and retrenchment response from some agencies to the impending problems, there is also the risk that some will use procurement simply to drive down price and return to the culture and practice of CCT.
Effective commissioning which achieves quality outcomes should always govern procurement. The requirement will be for smarter procurement based on securing value for money, and not just the cheapest option. Joint inter-agency procurement could enable agencies to use their market power more effectively, and this has to be one of the partnership tools which will be deployed when the conditions are right.
Service-providers should be expected to contribute to the wider community goals which place-shaping and leadership of place have identified.
Local authorities and their partners may wish to consider how they can best work in the right circumstances with the business sector to leverage investment and deliver services, but the standard PPP/PFI route may be less attractive if the cost of capital is highly expensive.
In the short term, private capital may not be available. The appetite for private investment could remain low for some time, so it would be prudent to consider more imaginative uses of public investment and shared assets.
There is an opportunity to consider more publicly-financed capital schemes. There may also be some opportunities to consider business sector expertise being contracted to manage and/or advise on service delivery, but with some risk transfer and incentives, similar to those which apply in standard PPP arrangements.
New options may become available to the public sector. Where private sector investment is sought, there may be some advantage in an inter-agency approach whereby the projects may bundle several service and uses together, which could better balance the risk for investors and make schemes more attractive to them.
Public bodies might wish to seek government changes to the more complex elements of capital and PPP regulations which could deter partnership approaches between different public agencies.
Adversity is the real test for leadership. It will also be the real test for partnerships.
John Tizard is director of the Centre for Public Service Partnerships, University of Birmingham
These same agencies cannot expect to continue benefiting from the growth in public expenditure of the last 10-plus years, and the forthcoming spending review could well lead to falls in real levels of funding available.
The public’s expectations for high-quality, responsive services is unlikely to diminish and, indeed, in many areas of service the need for increased outputs and more public collective action will be significant.
This will be challenging. Managers and politicians will have to adjust to the new financial environment, and many will only have experience of budget growth or having to find relatively-modest annual efficiency improvements.
A new mindset will be required which looks to partnership working as the norm, not the exception. They will need to be ready to de-commission as well as to commission, and to do so, where possible with partner engagement and support.
Progressive local authorities will want to demonstrate their community leadership role to ensure that they protect their communities from the worse excesses of the recession, plan for the recovery, and ensure that quality public services continue to be available.
Political leaders will see the opportunity to exercise leadership of place, to demonstrate the value to communities of effective democratically-accountable political leadership. They will see the opportunity to galvanise their local strategic partnership and its constituent members to focus on the immediate needs and choice of local people and the wider community.
Local strategic partnerships can provide leadership and voice for the locality, secure cross agency co-ordination, ensure cost-effective use of resources across and between agencies, maximise public value – from investment, assets and revenue expenditure – achieve more effective commissioning, and harness and share resources and capacity to address the presenting issues.
Over the next few years, this will be more important than ever.
LSPs can help areas withstand the destructive power of recession and financial restraint. They can be used to ensure that public agencies and, indeed, the local third and business sectors align strategy and action, share resources, and co-operate to focus on the immediate task, while retaining a strategic view for the future.
There are many examples of where a partnership culture will be essential. Tackling worklessness is not a responsibility solely of Job Centre Plus. It requires a range of agencies to work in partnership. Decisions relating to the Flexible New Deal could be enhanced, if they are shared and agreed within the overall local strategic community plan by key local agencies, including local employers and the local authority.
Similarly, decisions relating to education and training require the actions and input of several agencies. These have to be co-ordinated and, again, this is an opportunity for the local strategic partnership.
Regeneration and infrastructure programmes will require sub-regional and regional solutions. The partnership approach must be extended to include agencies such as the new Homes and Communities Agency and the Highways Agency.
A positive response to the current prospect of reduced budgets in real terms is the pursuit of service transformation, focused on outcomes with greater alignment of individual agencies’ strategies, budgets, operations, management, and leadership of these agencies within local authority areas and, indeed, sometimes across those boundaries.
It may also require new forms of partnership and collaboration including, if necessary, the transfer of functions from one agency to another.
For many local strategic partnerships this will require a paradigm shift in behaviour and trust within and between these agencies.
Pooling and/or aligning budgets can be challenging, but the total public expenditure in an area will be significantly greater than that of any one agency. Historically, when budgets have been under pressure, agencies have used joint finance and similar ‘partnership’ arrangements to ‘cost shunt’ costs and responsibilities to other agencies.
It is essential that this is avoided, but there will always be a risk that under pressure agencies and their leaders will feel under siege and consequently adopt behaviours based on retrenchment and short term protectionism rather than strategic partnership.
Organisations should recognise that there is value in avoiding duplication and having the flexibility to shift expenditure between agencies and budgets. This will require central government to introduce much greater discretion and flexibility for agencies and their managers – from Job Centre Plus to the NHS to the police to probation to every agency which impacts on a local community.
This may require a new localist settlement with a consensus on those activities and outcomes which have to be controlled in Whitehall, and those which can be delegated to local people.
Some local agencies will choose public service boards, others will adopt shared strategic commissioning models, and even more will share resources directly.
There is a range of models which could be adopted to address the immediate and future challenges facing the public sector across the country. There can be no rational reason for a central prescription. Local partners working with their communities should be able to select the approach which has the best fit for their local needs, cultures and sought outcomes.
If there is a risk of a protectionism and retrenchment response from some agencies to the impending problems, there is also the risk that some will use procurement simply to drive down price and return to the culture and practice of CCT.
Effective commissioning which achieves quality outcomes should always govern procurement. The requirement will be for smarter procurement based on securing value for money, and not just the cheapest option. Joint inter-agency procurement could enable agencies to use their market power more effectively, and this has to be one of the partnership tools which will be deployed when the conditions are right.
Service-providers should be expected to contribute to the wider community goals which place-shaping and leadership of place have identified.
Local authorities and their partners may wish to consider how they can best work in the right circumstances with the business sector to leverage investment and deliver services, but the standard PPP/PFI route may be less attractive if the cost of capital is highly expensive.
In the short term, private capital may not be available. The appetite for private investment could remain low for some time, so it would be prudent to consider more imaginative uses of public investment and shared assets.
There is an opportunity to consider more publicly-financed capital schemes. There may also be some opportunities to consider business sector expertise being contracted to manage and/or advise on service delivery, but with some risk transfer and incentives, similar to those which apply in standard PPP arrangements.
New options may become available to the public sector. Where private sector investment is sought, there may be some advantage in an inter-agency approach whereby the projects may bundle several service and uses together, which could better balance the risk for investors and make schemes more attractive to them.
Public bodies might wish to seek government changes to the more complex elements of capital and PPP regulations which could deter partnership approaches between different public agencies.
Adversity is the real test for leadership. It will also be the real test for partnerships.
John Tizard is director of the Centre for Public Service Partnerships, University of Birmingham
