More for less. Everyone delivering public services knows this slogan. The goal is better outcomes delivered with fewer resources. As fiscal conditions tighten, we can anticipate a new one: even more, for even less.
In local government the challenge will be sharp. Politicians now endorse "localism", promising to reduce central controls, giving councils a chance to deliver more for their communities. But councils will also have less money to play with. Some, particularly districts and small unitaries, will soon struggle to meet even statutory obligations.
Can we square this circle? Should there be fewer authorities and another local government reorganisation?
Perhaps like Michael J Fox in Back to the Future, we can find answers in 1950s California. In Los Angeles, small communities, later called the "Lakewood councils", campaigned to separate from the LA county authority. They faced scepticism. Could small councils really be efficient? Eventually, they seceded on condition they didn't produce services themselves. They had tax-raising powers and made decisions affecting their communities, but commissioned services from elsewhere. They were successful and more efficient than the city of Los Angeles, even though most used LA to provide services.
As they could buy services from any source, they drove tough bargains, encouraging LA's gigantic operations – far larger than any UK equivalent – to deliver scale economies. In effect they got better value for their residents than LA provided for its.
The 1950s Lakewood experience illuminates possible future innovations. With some exceptions, most in-house operations are exclusive to one authority. Similarly, most outsourced suppliers contract on a "binary" basis with individual councils. Yet serious cost reduction may require a scale beyond the scope of individual authorities.
This underpins the support for shared services. Councils A and B cannot cut costs further by themselves. But by pooling capacity, they can reduce overheads, reorganise work patterns, secure economies, while protecting – even enhancing - services. They can also commission services from third parties already providing in bulk to other councils, who can thus pass on greater economies still.
This is of course id starting to happen, and many organisations, including my own, are involved in innovative partnerships.
Recently, in the West Midlands, two district councils I advised, Redditch and Bromsgrove, decided to share service capacity. They recognise that as small councils they have limited prospects of achieving scale economies acting alone.
But these partnerships are exceptions, not the rule. And most are small initiatives, involving few players, inherently limited in the scale economies they generate.
Councils are wary of collaborations, even small initiatives, let alone big multi-lateral partnerships - with good reason.
Councillors value "sovereignty", their right to shape services to meet local conditions. Some inter-authority partnerships lack flexibility, as producers offer standard "vanilla-flavoured" services, not locally tailored ones. This may be fine for "invisible" functions like technology or communications, but won't work for many frontline activities.
Councils A and B need the same skills and systems to operate their planning functions, to process transactions and make decisions. But Council A wants outreach visits to planning applicants, while B doesn't. They can pool capacity, but to remain truly sovereign the councils must be able to "purchase" different outputs from the pool.
Paul Connolly
The Lakewood example offers a possible answer. It worked because of scale economies in service production, but also because of an efficiency that comes from being small. Inefficiency often stems from not getting things right first time.
Doing so means understanding what people want. In local government that understanding is strong when councils are close to their communities. Without service delivery responsibility, the small Lakewood councils focused exclusively on what their communities wanted and commissioned accordingly.
Perhaps a revolution in service production is needed. Service companies could emerge, publicly or privately run, serving large clusters of authorities, even entire regions. These would have sufficient size to secure economies.
But they could not exploit monopoly positions, since they would be commissioned by councils with the right to switch suppliers, potentially to innovative or niche local SMEs and voluntary organisations.
This contestability would push the service companies to deliver scale economies and use them to create adaptable service menus, supplying different authorities with different service formats. This might square the localism/efficiency circle and help councils get even more for even less.
Paul Connolly is director of policy and strategy at Serco Consulting
From Bubb's Blog
From Whitehall Watch
