Efficiency and Reform in Public Services

A FASCINATING INSIGHT into efficiency and reform activities under way as part of the coalition government’s review of public service provision. Rt Hon Francis Maude MP, Minister for the Cabinet Office and Paymaster General, speaks to the 2020/RSA Public Services Summit.

Francis Maude, Public Services Reform
Francis Maude (Photo credit: paul_clarke)

Delivery of Reform in Public Service Provision

Maude opens by commending the RSA and the 2020 Public Services Trust’s work in assisting to forward the debate on the new consensus on the delivery of reform in Public Services.

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Provision and associated reform will be driven by two fundamental approaches, addressing the balance of centralised control, and driving forward localisation and decentralisation and empowering providers and citizens to shape front line provision.

User Centric Services

Emergent services will be user centric, not supplier centric, aligned to new policies for commercial supply and will require process redesign (particularly in relation to channel shift). Outcome based payments will replace traditional commercial models, mutualisation will be supported as a mechanism for increased ‘local ownership and empowerment’ and channel shift for online service provision will be adopted as a key enabler of cost reduction and service simplification (a very familiar message coming out of Cabinet Office and the work championed by Martha Lane Fox).

There are two key facets, the first gaining the appropriate levels of control and centralisation to harness a) true economy of scale within HMG (Her Majesty’s Government) as a single procuring entity and b) localisation and decentralisation of front line service provision.

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Redressing the Balance of Centralised Control

Maude notes that centralised micromanagement with associated target measurement, regulatory bloat and front line management from centre is doomed to failure due to the connectivity requirement (from centre to service) and need for constant oversight.

This clearly leads to inefficiency, scalability issues and disconnect from provision to consumption. Localisation and personalisation at the front line is also ‘impossible’ (at least highly impractical) to understand from the centre, and so the disconnect between provision and user choice is perpetuated.

In service provision there are requirements for some degree of centralisation and systems used to deliver them with appropriate velocity, quality and scale. In this respect, part of the early work in public service reform looked at the economies of scale in government procurement and the potential for additional leverage of cross-government services (predominately purchasing and IT supply). Unsurprising findings highlighted that economies of scale were not being (fully) leveraged and interoperability issues across HMG IT Systems and limited systems reuse persisted.

Exercising serious control where ‘scale of government’ can have a significant impact is a key focus of the centralisation question. Renegotiation of contracts with large providers to ensure HMG had a single customer relationship (not as a loose collective of independent departments) was an initiative that Maude describes as “unglamorous work”, but has lead to predicted savings of £3bn in (2010 to 2011 financial year).

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Localism and Decentralisation

Big Society is the demand side when it comes to power, decentralisation is the supply side. Decentralisation is push, Big Society is pull.

Pushing responsibility away, letting go of power is a fundamental strand of localisation and decentralisation of front line service provision. Maude describes this as something of a paradox highlighting that in big organisations power is centripetal rather than centrifugal (i.e. power and decision making tends to be drawn to the centre). 13 years of New Labour will no doubt have reinforced this operational culture across local government and indeed front line service provision and hence decentralisation will not be an ‘effortless aim’.

Citizen centric empowerment and choice will therefore be the underpinning tenet of localisation and, choice, control, localisation, de-monopolisation, removal of monolithic supply, democratic accountability (e.g. directly elected police commissioners) all come into play. Community action, social action, capacity to do things differently is the Demand Side of Big Society. Personal choice in education, health care, personalised budgets for social care will deliver new opportunities in end-user choice. This means end-user accountability, not Whitehall accountability.

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Three key changes for Reform in Public Service Provision

  1. Channel shift – relates to the shift of offline service provision online. The DVLA tax renewal is cited as a prime example of benefits in channel shit (10% of service provision cost, and significantly more efficient process for both the consumer and service provider). Channel shift implies a need to decommission much of the offline channels (to realise savings). Assisted digital transactions through Post Office and library services is certainly an appealing approach to mitigating some of the inherent complexity in maintaining user engagement, particularly where IT literacy skills (or even basic access to resources) is a challenge. There is a recognised need to redesign processes from ‘the outside in’, i.e. simplification, intuitive design, accounting for user feedback and good HCI design methods. Channel shift is therefore not simply a lift and drop of offline to online provision. Services must be derived which are intuitive and this will require substantial process reengineering and consultation.
  2. Mutualisation – Giving groups of public sector workers the right to form mutuals autonomous of, but providing services to the Public Sector. Non-tradable shares in the social enterprise are one pattern that might be successfully employed (i.e. the share in the mutualised entity is only held for the period of employment and is non-transferable). This has led to innovation and motivation boosts and as co-owners there has been a removal of bureaucracy and increase in job satisfaction. Naturally this needs to have a downstream benefit in terms of service provision, although streamlining and the ability to introduce greater innovation is again appealing. My view is that while this is an interesting concept, we need to ensure that fragmentation caused by mutualisation does not lead to inefficiency and reduced service provision.
  3. Payment by results – this is very similar to ‘outcome based’ contracting. Maude cites the Work Programme as a key example, and indeed the commercial model around Work Programme will be outcome driven and incentivised by private sector innovation and delivery excellence. Moving away from cumbersome risk averse procurement and requirements specification is also a noble goal. The burdensome pre-qualification mechanisms price out smaller providers, daunted by procedural complexity. Enlarging the scope for participation and development of competitive market to empower smaller organisations and 3rd sector providers will yield benefits. There does however need to be a social investment market, and reference is made to the development of the Big Society Bank in terms of providing the necessary level of financial assistance to organisations which cannot afford wholly outcome based commercial models.

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Conclusion

Public Service Reform is entering an exciting phase. Efficient delivery of centralised services, with HMG focusing increasingly on systems reuse and the purchasing and negotiation power of a ‘single customer’ makes perfect sense.

To create space for the innovation needed to bolster private and 3rd sector service provision within a wider Big Society context, we await the Localisation Bill and further details of the Big Society Bank.

Government must continue to strive to simplify procurement and pre-qualification, challenging risk aversion and stimulating more outcome focused agile delivery. Channel shift is a key enabler, but solutions must be in place through assisted digital transactions and process re-engineering to ensure full citizen engagement across the ‘capability spectrum’.

RSA Public Services Summit

VIDEO: Rt Hon Francis Maude MP, Minister for the Cabinet Office and Paymaster General, speaks at the 2020/RSA Public Services Summit. Lord Geoffrey Filkin from the 2020 Public Services Trust chaired the session.

Further Reading on the Public Sector and Public Services