Delivering the anticipated level of savings means greater involvement by the private sector in delivering public services, says Richard Marchant

In today’s economic climate, every organisation, whether public or private, needs to deliver ‘more for less’, and how this is achieved is the subject of much debate. Local authorities are viewed as the early adopters of one of the service delivery methods currently in the spotlight – outsourcing.

So, what are the current views from the public sector on this approach? And since local authorities have worked with organisations such as ours over the last 20 years, what can each sector learn from the other with respect to challenges faced and tactics used in the pursuit of high-quality, cost-efficient services?

In recent research, civil servants were questioned on the perceived strengths and weaknesses of private sector organisations compared with those of local authorities. The research highlights the perception that the Government can only reduce departmental budgets by an average of 11% without affecting services. Civil servants also feel that to bridge the gap between the identified 11% and the desired 40% savings, more innovative, collaborative and radical service changes need to be considered.

Collaboration with the private sector by way of outsourcing is one of the levers which could be considered, as the private sector is able to deliver the technology and support services to enable agile working at a cost-effective price.

It is also essential that we address the issue of improved productivity and utilising our resources more effectively.

While 41% of civil servants surveyed believe innovation to be one of the strengths of the private sector, and an essential ingredient to deliver transformation, 38% feel a lack of trust towards the private sector, and 25% perceive the private sector to be poor managers of staff.

This demonstrates that there is still work to be done in terms of building greater awareness and understanding of the private sector’s relationship with the public sector.

In contrast, the respondents feel that local authorities have a good understanding of the end-user, and are culturally diverse and collaborative. However, there is also a perception of the public sector as being inefficient, bureaucratic and weak on financial management.

The attributes of both sectors are key to cost-effective public service delivery, and some of the strengths perceived by the respondents could be inherent to each sector. This does not mean that we do not have scope to learn from one another and develop our capabilities, and that many of these perceptions are not necessarily a reflection of reality.

There is innovation happening throughout local government, and there is also evidence that the private sector is developing a greater understanding of the public sector ethos.

Around 70% of Capita’s employees have come into the company through TUPE – the Transfer of Undertakings (Protection of Employment) Regulations – or through contracts and acquisitions, and employees with public sector experience now play a key role in the public services we help deliver.

There are also many good examples of successful partnership working, one of which is Capita and Birmingham City Council’s joint venture company, Service Birmingham. In 2009/10, the joint venture company will deliver £68.4m in savings, bringing the overall total to £151.8m since the start of the link in 2006. The partnership also sets aside surpluses for local charities, has created local jobs, and continues to engage with local suppliers.

This demonstrates that it is possible to deliver on all fronts, if one has a strong and collaborative partnership.

For local authorities, job creation within the local community and working with local suppliers is just as important today as it always has been. Local service delivery offers the opportunity to connect services to citizens more effectively, while adding to local economies and enriching communities. A key consideration for central government goes back to the widely-used saying, ‘Think global, act local’.

The collaboration of knowledge and skills between these sectors, as well as other parties across the public, private and voluntary sectors, is a logical approach, if handled correctly.

If we are to deliver more for less in the future, and embrace local service delivery, the public sector generally needs to bolster its skills across market management, commissioning, procurement and contract management. The need for this can be demonstrated by civil servants’ perceptions of the public sector as inefficient. The private sector needs to adapt to the changing requirements of citizens and continue to deliver innovative solutions and cost-effective support services.

We do not believe that the public sector should exit from all of its current service delivery responsibilities. There are areas of public service which should remain the preserve of the state, and be delivered under public sector management – for example, ensuring that the vulnerable are protected and that there is frontline policing. It is also clear, however, that there are many non-core areas which remain comparatively untouched, in terms of outsourcing, where the private sector could really contribute, including business administration and customer services. The key to success in delivering more for less is for partners to agree shared objectives to ensure that all parties are clear regarding their accountability, performance criteria in working together, and transparency.

The challenge for the public and private sectors is how to deliver additional savings while protecting frontline services?

This will not be easy to achieve and will require collaboration, flexibility and innovation in new models of service delivery supported by latest technology.  

Richard Marchant is local government strategic partnerships director, Capita