The political party conference season has confirmed what we all knew already. The economy is not recovering as was hoped, private sector growth is the government’s route to future prosperity and the public sector will shrink further over the next few years. Whatever the rhetoric of the political parties, the message is strangely consistent – there are no easy answers and the current public spending plans will not get better.
It is little use to look at how we came to this position and even less use for us to focus on whose fault it was. We now need to identify and work on solutions to the position we face. While this is a national problem, it is equally one for each and every local authority as they have to deliver services to the public, knowing that they will have rising cost pressures and fewer resources. Stopping doing things altogether may be an option but where it is not, a systematic review of performance is required.
The process for cost reduction is simple:
1. Know how your services are performing – not just against last year but against others.
2. Re-engineer your services to match the “best of breed,” getting help if it is needed to boost short run skills gaps.
3. If you have done all you can, benchmark again.
And then if more is needed:
4. Look at other offers and other providers – balancing certainty, cost and speed.
Many will look at the option of increasing income too. Increases in fees and charges are part of but not the total answer and new forms of income are hard to find. Trading with others can offer those authorities that perform well a boost in income to mop up excess labour capacity with the added benefit of avoiding redundancy costs. But not everyone can be a supplier. Trading requires some to offer work and others to provide it. It requires a simple and cheap way to an internal market. It means inevitably that the sector’s overall costs and labour force will shrink.
The Audit Commission has gone and few lament its passing but as a former Chief Executive, it did provide me with information on performance and best practice. Benchmarking data with peer authorities was, and still is, a vital tool as efficiency is taken to new levels. CIPFA statistics are a substitute but are not truly trusted as a tool.
CapacityGRID has emerged as a self-help product in the sector for those that are facing these issues and are looking for a new solution with guaranteed results in a very short timescale. The concept is simple. Work is organised to improve productivity and enable trading. The resulting capacity release is banked or sold. Like-for-like operational data is available to everyone so authorities can truly compare their own performance with others. It can deliver information on where the big prizes lie for performance improvement or alternative provision. Internal transformation can be complemented by using the GRID as a risk mitigation tool. Too often performance problems arise in major change programmes, creating temporary peaks in workload. Those on the GRID can trade at defined costs and performance levels to alleviate those issues. It offers a simple spot purchase opportunity compared with a long and costly procurement exercise.
What is more is the fact that authorities are not restricted to a single supplier with locked in price rises but can operate in a real time dynamic environment, limited only by those that are active in trading on the GRID. As numbers increase, choice of provider and service will become even better. It can also be an answer on a longer term basis as a permanent way of doing business. Further efficiencies will inevitably accrue as contingency staffing capacity in each individual authority is replaced by a virtual contingency across the GRID, and further resilience is underpinned by a provider network from the private sector platform.
Local authorities can help themselves but they must now help each other. If not, then they should look to others. Outsourcing still has a place but it is no longer the only game in town and big deals are very thin on the ground. For too long we have talked of the sector being its own solution and now is the time to make it happen.
Sir Peter Rogers
Chair of CapacityGRID and former Advisor to Boris Johnson for Regeneration, Growth and Enterprise at the Greater London Authority.