At a time of austerity cuts, mounting demand and rising expectations, the challenge for communities and the organisations that serve them has never been greater. How do we ensure that key public services meet people’s needs?

The response by some government departments and local authorities to this challenge is clear – they feel that savings can be made by standardising community services and up-scaling local delivery, creating mega-contracts, delivered by multi-million pound organisations.

While this approach has had some major high profile set-backs, the underlying assumption – that the difficulties facing the funding of public services will be met through scale and standardisation – is not being challenged.

In our report Saving money by doing the right thing: why ‘local by default’ must replace ‘diseconomies of scale’ we argue that scale and standardisation are the problem, not the solution.

Locality and Vanguard have been working together to examine the issue and are able to demonstrate that big services and scale are incredibly wasteful and damaging to local communities and they restrict the ability of local authorities to respond to issues as they arise.

During our research we found examples of how the development of mega-contracts led to vastly increased bureaucracy and management cost (35-55% of the whole contract value). With such high administration costs, dramatic cuts were made to the actual delivery of services, with key community services being stopped or reduced.

We also found evidence of a shift away from joined-up locally flexible services to larger contracts, which created silos and disjointed provision.

Information from a number of local authorities who are trying to work differently enabled us to understand the true personal cost of not providing the services that people really need – staying in abusive relationships, neglect, additional mental health issues, prison sentences, loss of homes and a continuing downward spiral of lives out of control. The financial cost of getting it wrong is also staggering.

By tracking multiple demands from individuals over time and across public services, it is possible to quantify the actual costs of a service from start to finish for each individual.

If the experience we have studied is typical, initial calculations suggest potential cost savings for local authorities could equal £16bn annually across England, if they provide services people really need.

Designing effective services means turning current scale assumptions on their head. Today’s starting assumption is that as funding is being cut, services must be limited, rationed by threshold or screened out, leaving remaining demand to be met by industrialised provision of standardised packages of service.

However, we know that this doesn’t work; by reducing services and raising the threshold for help, not only do we impose heavy personal costs on the individuals we fail to help – but the same people simple reappear elsewhere in the ‘system’, often with more complicated problems.

The goal instead is to meet the need at the earliest point of contact, supporting people who need help, and reducing the overall demands made.

We know how to improve the lives of individuals and communities and the good news is that it doesn’t take any more resources to do it. But, it does take courageous public sector leaders who are willing to follow evidence and abandon the rhetoric of standardisation and scale.

Louise Winterburn is research and policy manager at Locality.