Public: Policy + Features | Public

Local enterprise partnerships: government to decide

Jane Dudman — Wed, 08 Sep 2010 10:00:18 GMT

All bids are now in for the new bodies that will replace regional development agencies, but the process is already causing tension in some areas

As the government sifts through the 56 bids from groups of local authorities and businesses in England hoping to become local enterprise partnerships (LEPs), it has been warned that their bids will be complex to assess.

LEPs are the public-private partnerships with which the present government intends to replace regional development agencies (RDAs). The deadline for submitting LEP proposals was midnight on Monday 6 September, following the announcement of the scheme in June by business secretary Vince Cable and communities secretary Eric Pickles.

The bidding process itself has already created tensions in some areas. North Lincolnshire council's bid, which calls for an LEP between four councils in the Humber area, for instance, has led to some councillors claimingthey were not properly consulted over the plans, while council leaders in Hull and the East Riding have opted instead to link up with councils in Scarborough.

Other bids include the East of England, which claims to be one of only three regions in the country to make a positive contribution to the nation's coffers. Its proposed LEP will, in effect, be a low-cost version of the East of England Development Agency. The largest proposal comes from the two county councils of Kent and greater Essex.

The government has not yet said how many LEPs will replace the existing nine RDAs, although a limit of 30 has been discussed, and the 56 proposals, published on the website of the Department for Business, Innovation and Skills (BIS), vary considerably.

A reportby the Institute for Public Policy thinktank says the assessment process will not be straightforward. It points out that there will be contradictory bids, with overlapping geographical areas for proposals. "Some areas could find that they fall in within an LEP that they do not want to be part of," it says. Similarly, the broad guidelines for LEPs will create uncertainty as to what will meet the criteria and what will not.

The report says that LEPs are now in the vanguard of sub-national economic development and it is vital that they are strong and powerful bodies able to make a real contribution not just to economic development, but to localism and social justice. The government's white paper on sub-national economic development is due out soon.

Monday was also the closing date for the consultation on the Regional Growth Fund. Announced in the budget, the £1bn fund will provide support for projects that offer significant potential for sustainable economic growth and can create new private sector jobs.

The two-year fund is designed help areas that have been traditionally reliant on the public sector "make the transition to private sector growth and prosperity", according to the department for BIS.

Jane Dudman

'Deliverology' is the way forward, says Barber

Jo Adetunji — Tue, 07 Sep 2010 13:44:23 GMT

Former head of the Prime Minister's Delivery Unit Sir Michael Barber tells PAC conference proper leadership is crucial in delivering results, as is a long-term strategy

Setting out the challenges to delivering results in the public sector, Sir Michael Barber says involved leadership and better productivity are key to delivering enhanced public services.

Speaking as the keynote speaker at the Public Administration Committee (PAC) conference last night, Barber, the former head of the Prime Minister's Delivery Unit (PMDU), said productivity was imperative. He said that as global pressure on public services steadily rises – through pressure on enhanced outcomes, customer services and efficiencies – so too is the need for the right approach, "or deliverology".

He said the PDMU's approach to success included good systems for measuring outcomes, setting targets, conducting priority reviews – "check the reality of delivery at the frontline" – and quickly identifying corrective action. Getting the key relationships right, down from the prime minister to civil servants and the wider sector was also important, as well as having an involved leadership.

On the dilema of leadership he said: "You have to have a long-term strategy if you want to have a significant and lasting impact; but the long-term strategy has to deliver short-term results otherwise you won't be believed," he told the conference at Nottingham Trent University.

As chief adviser on delivery for the former prime minister Tony Blair, Barber was responsible for implementing a wide range of priority programmes including health, education and policing.

Barber said that former prime minister's involvement was "a decisive factor" in successful delivery.

One of the PMDU's successes, Barber said, was hitting the four-hour target for patients waiting in accident and emergency units. This was achieved with clear accountability and incentives and engaging with the delivery chain, as well as tailoring support for specific problems and performance management "to the very end".

He added that transformation depended on the combination of three elements: "the right mindset, efficient performance management and bold reform."

The performance management regime he developed for the PMDU was really starting to have an effect, but there still remained room for more development, said Barber, who is now a partner in McKinsey's global public sector practice, working on issues related to performance, organisation and reform in government and public services in the US and elsewhere.

Since leaving the unit, he said, other countries have been influenced by the methodology, or deliverology, used by the unit.

The conference has brought together academics and practitioners from across the global public sector to explore themes relating to public administration in an age of austerity.

Joyce Liddle, academic leader for the conference and professor of public sector management at Nottingham Business School, said: "We're bringing together academics and practitioners from a broad range of disciplines to explore a huge variety of questions about the changing nature of public services.

"Coming almost immediately after the UK general election and during a time of acute financial constraints in the public sector, the key sub-themes this year include the new political landscape, efficiency, innovation and service improvement."

Other speeches delivered at the conference included "systems thinking in the public sector" by professor Brian Collins, chief scientific adviser to the Department for Transport and Department for Business, Innovation and Skills, and the methological challenges of comparing private and public sector management by professor Jari Vuori from the University of Eastern Finland.

The National School of Government and the PMPA Practitioners Forum are also running a forum on "developing effective policy in an era of austerity", designed for practitioners who are adapting to new financial, economic, social and demographic realities.

The conference ends tomorrow.

Jo Adetunji

Crowdsourcing campaign closes on a high

Jo Adetunji — Thu, 02 Sep 2010 13:49:36 GMT

The Treasury's exercise to crowdsource for ideas attracts over 45,000 ideas from public sector workers and wider population

The government's latest crowdsourcing exercise came to a close yesterday with thousands of ideas submitted by the public on ways the government could make savings and deliver more efficient services.

The Treasury's spending challenge, which was set up to give the public the opportunity to "help shape the way government works" and to submit ideas that could be used in the October spending review, elicited more than 45,000 ideas in just over three months in areas such as civil service, central government, health and education.

The first two weeks of the scheme were open only to public sector workers. The public was also invited to rate ideas on their potential to save money while impacting least on public services and those that reach the top of the pile will be reviewed and investigated by government officials.

The government's last foray into crowdsourcing – essentially outsourcing through an open call to a group or "crowd" – was denounced as a "sham" by critics after it transpired that none of the public's suggestions had been taken on board.

The exercise, which was hoped to widen participation, instead brought forward suggestions including cutting the foreign aid budget and banning immigration. In turn, government departments were forced to restate current policy or sidestep the issue.

Although the episode highlighted some of the limitations of crowdsourcing, experts believe that the method, when done correctly and with a clear purpose, can benefit the public sector.

Promotes public participation

"Crowdsourcing is good when you have information that is distributed among the population as a whole or a specific group that you want to access," says Simon Burall, director of Involve, an organisation which promotes public participation in government.

"The problem the government has run into is that it hasn't taken the time to be clear about why it is using this method. It can be used to get information not held centrally, for example knowledge about where money is being wasted which is only known to specific officials doing particular jobs. The danger is that if government isn't clear about why it is asking the public to contribute, it ends up creating the suspicion that all it is trying to do is to build legitimacy for cuts."

Burall says that proper design and clarity of the process and targeting a large but specific group are key to successfully using crowdsourcing to engage with the public, which the government is only just beginning to learn. By opening the exercise to public sector workers and looking at all of the submitted ideas individually, the Treasury's spending challenge has the opportunity to dig out ideas from those who hold more knowledge.

"There are very clear examples where crowdsourcing would be useful, whether for central or local government – for example where the spending challenge was open to public sector workers. You need to use crowdsourcing where people have specific knowledge. I'd say they are a more relevant for public sector workers as they have very detailed knowledge," says Burall.

"You need to use crowdsourcing where people have specific knowledge, for example doctors or nurses or probation officers. Or even the offenders themselves," says Burall. "You could and ask them very specific questions on outcomes for patients or how to reduce offending rates. Or it could be a specific population or area. For example, asking people about hotspots of anti-social behaviour."

While the Treasury would not be drawn into commenting on whether its crowdsourcing exercise could lead to yet more embarrassment, it hopes that the ratings system will allow the public to wheedle out the more significant submissions. "We have a commitment to look at the top rated ideas," says a Treasury spokeswoman.

"On the 20th October the chancellor will reveal where those public ideas have been taken on board. It's part of the spending review process. The first two weeks were open only to public sector workers and every single one of those ideas will be looked at by government officials. The public have rated ones that they think have value and have risen to the top – the ones with most potential. We'll invite departments to look that those."

Perry Walker, head of participation at the New Economics Foundation, says that crowdsourcing works well for ideas, less well for how you develop them.

"Crowd sourcing is one form of many ways of public engagement but you have to be clear about what it is you're doing," says Burall. It's perfectly legitimate to say at the beginning that we'll look at the ideas and will apply this set of criteria and if none of them fit that criteria we won't use them. If you don't make it clear the public feel they aren't actually involved. The government has not been clear enough about how it is framing them. One of problems is, which happens with quite a lot of new methodology is that they don't think about why they're doing it. You start with what you want to do first and then choose the method," says Burall.

But properly designing the process from the beginning can open up new ways of using ideas, for example to further deliberate and create conversation around an issue. Burall suggests that bringing in a group of the public to design the underlying principles of an exercise, opening it to the public, allowing it to be judged by experts and then giving it back to the public, will introduce more accountability and discussion.

Other ideas for the future of crowdsourcing include using groups to take on some of the functions of a workforce.

Jo Adetunji

Top marks for school's transformation

Tue, 31 Aug 2010 12:35:14 GMT

Cressex Community School in Buckinghamshire was the county's second lowest performing school, but a new partnership with the council and various local organisations has resulted in a more positive reputation, Eifion Rees discovers

The motto of the Cressex Community School in High Wycombe is an African proverb: "It takes a whole village to bring up a child."

Sandwiched between a business park and the M40, it's hard to imagine a less village-like setting, and yet the application of the principle is paying dividends for this once-failing school.

Last year Cressex was Buckinghamshire's second-lowest performing school, with only 25% of its 655 pupils achieving five A* to C GCSEs, including English and maths – 5% less than its commitment as part of the National Challenge, set up in 2008 by the previous government to raise standards in schools.

In April this year Cressex became the county's first state-maintained Trust school, and one of the first Cooperative Trust schools in England, and its GCSE results were its best yet: 36% of students gained five A* to C GCSEs, including English and maths, and more than 50% gained five or more passes in any subject.

The school's change in fortune is being put down to the formation of the Cressex Cooperative Learning Partnership, a collaborative effort on the part of various local organisations to raise attainment at the school and broaden opportunities for its students, with each bringing its particular expertise to the table.

The cooperative members include high-performing selective state school Dr Challoner's Grammar, in Amersham, Wycombe Abbey girls' independent, Buckinghamshire New University, the Cooperative College and Buckinghamshire County Council.

In essence, the educational bodies are sharing their expertise and pedagogy to help improve standards at Cressex, with the county council facilitating this new educational practice. Council representative sit on Cressex's governing body to make sure the arrangements that have been put in place work.

Sue Imbriano, Buckinghamshire county council's strategic director for children and young people, says partnership trusts are the way of the future.

"Schools are sharing much more in terms of their expertise across the piece and supporting youngsters in the wider community.

Self-esteem, confidence and resilience

As well as the content knowledge provided by the school, partnership trusts mean working with pupils in the context of family and community to build up their self-esteem, confidence and resilience. Our trust was set up to develop better opportunities for Cressex's students, their families and the community in general – we were very conscious that we wanted to be working within the school walls and in the community beyond."

Wycombe Abbey's summer school is one example of the new partnership in practice, attended by some of Cressex's talented students. Wycombe Abbey's sixth-formers work with Cressex students on literacy schemes and work alongside teachers to help those pupils develop.

Dr Challoner's has programmes set up around student leadership that Cressex students will also benefit from, teaching them about how prefects discharge their responsibilities, as well as providing them with a sense of community and responsibility, equipping them to lead their peers both within and without the school gates.

In return, Cressex, a specialist business and enterprise school, has been able to offer the other schools its expertise in those areas, as well as in special needs and English as an additional language.

Cressex headteacher David Hood says better exam results are only part of the overall picture. He says the partnership's aim is also to build closer links with and so improve the community.

"We'd like parents and community representatives to have more influence on what we do, joining the school's stakeholder forum and having their say about the development of Cressex." He says more applying to become governors "would be a great development".

A brand new £27m school building – funded by the now defunct Building Schools for the Future programme – has been "psychologically great", according to Cressex's head. "We feel as though we're standing proud, and it's good for the Trust to be clustering around a school that's feeling good about itself."

Steep learning curve

Jane Dudman — Thu, 26 Aug 2010 10:50:51 GMT

As the new academic year approaches there will be thousands of young people not in education, employment or training. The Learning and Skills Network is one organisation who can offer them a lifeline. Jane Dudman reports

Next week, it will be back to school for students across the country and with record numbers not gaining a place at university, pressure is mounting to improve at GCSE and A-level.

But where does this leave those who are less academic? The Learning and Skills Network (LSN) recently reported on how schools and local authorities can provide better opportunities for the thousands of 18-24-year olds not in education, employment or training.

LSN supports training and staff development programmes, but also supplies services directly to schools, colleges, training organisations and the private sector.

John Stone has been chief executive of LSN since 2006. Before that, he was principal of a further education (FE) college, where, he explains he had taken the institution through a major merger, which gave him a taste for the more entrepreneurial and commercial aspects of educational life.

"I was looking for a new challenge, so when LSN phoned me, I let them put my hat in the ring, because this post is more overtly commercial, even though LSN is a charity, and that commercial side is something I'd greatly enjoyed."

Stone says there is still little comprehension that charities have to be commercial. "They have to earn money in an efficient manner and provide services that people want and are prepared to pay for," he points out. The difference between a charity and a fully-commercial organisation lies not so much in the execution of daily business, he believes, as in the ultimate aim. "Everything we do is focused on our core objective, which is to support education and training."

Commercial skills

Stone brings not just a knowledge of education but also a level of comfort with commercial skills that is still unusual in the sector. "I enjoy running a business," he says. "The central challenge of the job is understanding what the people who are to benefit really want – and that includes anyone involved in the design and delivery of education and training."

LSN employs 300 full time staff and one of its recent innovative moves has been becoming a partner in running an FE college in Reading. This is a unique development, says Stone, but may not remain so for long. "We increasingly see ourselves as developing a new form of consultancy support," he explains. "Consultants are often criticised for diving in and then disappearing. But we are interested in long term relationship and sharing the risk. When we talk about processes and models, we want to talk about things we've done ourselves, where we have learned the pros and cons. This is really about being a consultancy that also does things."

Prior to this appointment Stone was principal of Ealing, Hammersmith and West London. He was also vice-chairman of JISC, chair of the Association of Colleges London Region, a board observer at the London Development Agency and a board member of West London Business, Regenesis and the Southall Regeneration Partnership.

Jane Dudman

Dorset's triple billing under one roof

Mark Say — Wed, 25 Aug 2010 08:17:00 GMT

A revenues and benefits arrangement has evolved into an ambitious shared service initiative between three councils, writes Mark Say

Advocates of an incremental approach to shared services are likely to pay close attention to events in Dorset over the coming months.

An initiative founded on a handful of processes and a common software is set to expand to a more ambitious scale, as West Dorset district council and Weymouth and Portland borough council prepare to share all their back and front office services under a common management team.

The process kicked off in 2006, when the two councils formed a partnership to provide a shared service to manage revenues and benefits. Partnership manager Stuart Dawson, who worked for Weymouth originally, but is now based in West Dorset, says the move was made to obtain efficiency savings and to help the two councils deal with capacity problems, "making it large and robust enough to deal with staff absences".

It helped that both councils used Capita's Academy software for their revenues and benefits operations, and Dawson says the arrangement offered benefits to both sides: the company has found it easier to deal with one body rather than two in negotiations and maintenance, while the councils have gained from joint procurement.

Oversight of the partnership is in the hands of a board of councillors, members of which are on the executive committee of each authority, while the councils are able to decide on the levels of service they require – such as how many days should be spent processing benefit claims.

Better use of office space

When the service began, most of Weymouth's revenue and benefits staff, with the exception of a few in customer facing roles, were moved to West Dorset's offices in Dorchester. It required compensation for the extra travelling time and cost, and a few people chose not to make the move, but it has enabled the councils to make better use of their office space.

Over three years the results were sufficiently successful to attract a third partner, with Purbeck council joining in October 2009. While the relevant staff have remained in the council's offices, it has members on the partnership's board, and has migrated to using the Capita software.

Ambitious plan

Dawson says that over the past four years the service has saved more than £1m for the three councils combined, and that this has led to the arrangement being reinforced by transferring Weymouth staff into West Dorset. But it has also encouraged a more ambitious plan for the two original partners, with members of both having recently agreed to merge the full range of services to operate under a similar arrangement.

At time of writing it has not been decided if the new chief executive will be one of the incumbents or an outside candidate, and the decision on this is likely to affect plans for the shape and personnel of the management team. There are also questions to be resolved about the structure, with the possibilities of separate management boards for different services, or one that will handle everything.

But Dawson says the most important feature is that the individual councils will still have plenty of flexibility in how they use the service.

The timetable is not yet decided, but Dawson says that it may be possible to bring some services together by the beginning of the next financial year. He also hints that the experience of the past four years may lead to a measured approach to the implementation.

"If the two councils decided on a 'big bang' the fall out would be more than it if it is done by an incremental approach," he says. "I expect some services to be up and running by April, but in some areas evolution is better than revolution, and I expect the two councils will take that approach."

Purbeck is standing back, having a shorter experience of the original service and wanting to see how things progress, and Dawson says this could help to make the inevitable problems with the change more manageable. But he is not discounting that in time the third council will want to take more from the partnership, and says other authorities have been taking an interest.

Mark Say

PFIs: is the price worth paying?

Tue, 24 Aug 2010 10:27:04 GMT

PFIs have come under a lot of flack lately, but there is a strong argument for maintaining the arrangement - especially when the costs of maintaining buildings such as schools or hospitals comes into the equation

The BBC's claims that PFI hospitals worth just £11bn will end up costing the taxpayer £65bn have led to a public outcry.

But the criticism is far too simplistic. The actual cost of building the hospitals is likely to be nearer the £11bn figure.

For this, the private contractors have produced the new buildings, plus borne the financial brunt of any cost overruns or delays. The example provided by the publicly funded Scottish Parliament building – which was almost 10 times over budget – demonstrates the benefits of allowing private contractors to take on these risks.

Furthermore, the bare figures do not take into account the annual repayments to contractors, which include the buildings' maintenance and in some cases services such as catering.

Rather than simply funding a new building, the public sector client is also paying to ensure the asset is maintained, so its value at the end of the 25 or 30-year contract is almost the same as when it was newly built. Far from being a lead weight during the age of austerity, PFIs may offer some refuge.

Maintenance budgets are almost always the first – and easiest – to cut in times of trouble. But PFI spending is ring-fenced by the contract.

In a decade, PFI hospitals, schools and other buildings will almost certainly be in better shape than any other public building of the same age. This is almost always overlooked when new headlines are published about the apparently exorbitant cost of PFI.

Worryingly, though, the new government seems happy to jump on the bandwagon. Responding to the PFI hospitals furore, a spokesperson for health secretary Andrew Lansley suggested his predecessors should have considered other funding methods.

In reality, it's doubtful the health service could have created over 100 new hospitals without cutting frontline services had it not relied on private finance.

Alongside this failure to grasp the economic realities, there appears to be a distinct lack of understanding around how PFI contracts work. In response to the attacks on hospital PFI costs, Conservative MP Jesse Norman claimed in a Financial Times article that the public sector should be able to reduce its PFI repayments now it has less money.

But why should a company, which has entered into a contract in good faith, be willing to reduce its remuneration for no reduction in the quality or amount of work required? It would be tricky to justify under contract law, and certainly make private companies think twice before entering into another government contract.

Absorb reduced payments

Norman's claim also supposes contractors are able to absorb reduced payments – which is far from true. Some of the biggest PFI players, including Interserve and Morgan Sindall, have revealed large falls in pre-tax profits, while advisories Tribal and Gleeds are both planning redundancies due to less work.

Even where contractors have been flexible in the past, such as revising contracts so that service levels are reduced, practitioners agree this has only a small impact in the overall cost.

With little new work coming from government, companies are unlikely to make such changes lightly.

There seems to be a growing perception that private funding equates to profiteering. But the experience of Hartlepool hospital suggests otherwise. Plans for a new publicly funded hospital were scrapped by the coalition government as unaffordable.

Private finance now looks set to come to its rescue, and bosses are confident it will be considered better value by the Department of Health.

PFI is not perfect, but it does offer some real benefits to the public sector and will ensure maintenance, catering and some other service levels remain a top priority despite the financial squeeze.

Those in government need to recognise this before joining the chorus of disapproval, which rarely explores behind the large figures that make good headlines.

Paul Jarvis is editor of Partnerships Bulletin

TUC challenge to Osborne's 'collective effort' on cuts

Jane Dudman — Wed, 18 Aug 2010 11:09:28 GMT

As the coalition approaches 100 days in office, the chancellor claims that any hardship will be evenly spread throughout society - analysis by the union body paints a somewhat different picture

The TUC has challenged the view that public spending cuts are being made "fairly", as claimed yesterday by the chancellor, George Osborne.

The organisation claims today that some of the UK's poorest families have been hit by what it describes as unfair spending cuts during the first 100 days of the coalition government.

Its analysis of departmental spending highlights a number of areas where cuts have affected the UK's poorest citizens. They include:

• Free school meals - The cancelled measure would have extended entitlement to free school meals to about 500,000 families in work on low pay from September this year. Cost £125m.

• Every child a reader - This programme to provide early support to children with literacy difficulties (focussed on inner-city schools) will be cut by at least £5m and its future is not guaranteed.

• City Challenge Fund - This programme aimed to provide extra support to under-performing children in the most deprived areas, but has been cut by £8m this year.

• Building Schools for the Future - This scrapped programme was the biggest-ever school buildings investment plan. The aim was to rebuild or renew nearly every secondary school in England. Cost £7.5bn.

• Housing benefit - Nearly a million (936,960) households will lose around £624 a year as a result of changes to housing benefit.

Londoners will be worst hit.
• Homes and Communities Agency - Cuts to programmes including Kickstart (for restarting stalled house building programmes), affordable housing, gypsy and traveller support and Housing Market Renewal (improvements to housing in deprived areas). Cost £450m.

• Young Person's Guarantee - £450m has been cut from the Guarantee, which will be abolished in April 2011. This Guarantee promised unemployed young people access to a job, training or work after six months of unemployment.

• Working Neighbourhood Fund - This fund, which aimed to help unemployed people in deprived areas to move into work, has been cut by £49.9m.

The TUC is calling on the government to reconsider its plan of swingeing spending cuts to public services, and focus instead on other ways to reduce the deficit.

Yesterday, on the 99th day of the coalition government, the chancellor George Osborne declared that the cuts made by his government would be a "genuinely collective effort" and said that the government would be "laying the future foundations for economic growth and for a fairer society".

Osborne said the government is running a "wide and inclusive" public engagement programme to inform the spending review, which will be announced on 20 October and said the government had received more than 100,00 ideas "from people keen to help us find ways to make savings and transform the public sector".

In parallel with this consultation process, Treasury chief secretary Danny Alexander has been meeting ministers to discuss their departmental savings and the public expenditure sub-committee starts its weekly meetings at the end of August.

The spending review is a "genuinely collective effort," said Osborne - "collective around the Cabinet table and collective with the British public".

The government plans to cut public spending by a total of £113bn by 2014-15, of which £61bn will come from cuts to departmental spending.

Jane Dudman

Better economies of scale for councils

Tue, 27 Jul 2010 12:31:03 GMT

Companies that deal with hundreds of different local councils may find those bodies demanding a better deal, as the public spending squeeze tightens

Most local council contracts are dominated by a handful of suppliers, especially in big-spending areas such as construction and waste disposal, with just 17% of suppliers holding contracts worth nearly half of all local council business.

New research carried out for Guardian Public by procurement company Spikes Cavell, also shows that the top 10 businesses serving local government are dominated by waste and construction firms (see graph [2a] below).

These figures will be important, procurement experts say, as local councils look to get a better deal from their suppliers. They show that in three areas - waste disposal, construction and financial services - a handful of firms have over 90% of the business between them.

The dominance is almost as pronounced in several other fields, including IT, energy and building management.

Public services advisory firm Kable believes that while IT is important to local authorities as they reshape services, the supplier roster won't change dramatically.

"The two obvious options available to local authorities are transformational outsourcing and shared procurement. Both of these tend to benefit larger, established suppliers, which can deliver economies of scale", says research director Stephen Roberts.

Predictably, the list of biggest suppliers is dominated by waste firms, including Veolia and the Waste Recycling Group, and construction companies, among them Wilmott Dixon and May Gurney.

The most dominant companies will have dozens, possibly hundreds, of contracts with England's 463 local councils.

Spikes Cavell estimates £50m is lost each year by "price variance" - companies charging different amounts to different councils .

The firm suggests that up to £290m could be saved if councils collaborated more, bringing forward wide-ranging joint contracts to get a better deal from big suppliers.

In total, councils could save almost £2.2bn by being a more canny client: getting better terms from existing suppliers, re-tendering contracts in areas with a sole supplier or, conversely, reducing the number of contractors in some areas to get economies of scale.

Suppliers will have to learn to deal with stronger, better informed councils, procurement experts say. "The supply side may well need to wake up [and realise] that the dynamic of power has shifted from the supplier to the buyer," says Spikes Cavell founder Luke Spikes. He says councils are missing out on the best deal from suppliers and says some adjustment will be needed, particularly for longer-established suppliers.

'Suppliers like a challenge'

Councils agree more could be done to get a better deal. "There's some strategic pricing which goes on," says Portsmouth city council procurement head David Pointon, diplomatically. "There's bound to be. But in my experience, suppliers like a challenge."

Jonathan Jones, who helps run a procurement hub in the West Midlands, says councils often have a huge amount of fragmented spend, which is going to the same suppliers but tendered on an individual basis and not always co-ordinated.

"Collectively, that costs quite a lot of money," he comments. "A lot of the spend is going to be in the hands of a few suppliers, and it seems logical that we could all be dealing with suppliers in an aggregated and coordinated way."

But it's not just about councils cooperating, Pointon adds. When letting, say, a new bus contract, he asks why local authorities don't talk to universities or primary care trusts. "It's an area which is ripe for review," he says.

Pointon also favours buying online - e-procurement, in the jargon - which cuts the cost of competing for smaller local firms. Those suppliers are not doing as badly as might have been thought, however. Although the Spikes Cavell data shows that large companies (those with over 250 employees) get 49.6% of all local council contracts, the remaining half does go to small (26%) and medium-sized firms (24%).

How councils could save billions

Mon, 26 Jul 2010 15:35:51 GMT

New research shows councils could save billions on procurement. The hard part is turning those potential savings into reality

Local councils could save themselves £2.2bn a year by driving a better deal on the goods and services they buy from private companies, according to new research.

The data, compiled by procurement company Spikes Cavell for Guardian Public, shows that if all England's councils matched their top-performing peers, they could cut 6.6% from their £33bn annual spending with the private sector.

If fully realised, that would be more than the £1.165bn in local council cuts demanded by the Treasury in May, though some of the savings are for one-off capital projects.

Procurement expert Jonathan Jones, of the West Midlands Innovation and Efficiency Programme, said the figures were "feasible".

The data also shows where councils spend the most money (see graph 1). By far the two biggest categories are construction, which accounts for £7.4bn a year or 22.3% of total spending, and social care, which accounts for £7.2bn or 21.7% of spending.

Spikes Cavell works with two-thirds of the UK's 463 councils. Its figures are extrapolated from those councils but based on actual invoices and, the company says, are accurate to within 1%-2%.

Some £150m could be saved just by consolidating invoices (see graph 2). That means getting mobile phone companies, say, to send only one monthly bill rather than 20 each month, slashing processing costs.

Some £430m could be saved where different arms of a council have myriad contracts with different suppliers, and consolidating contracts would create a better deal.

Another £310m could be saved by getting better terms from companies that have started doing so much work for councils that they should be delivering economies of scale. In areas where councils deal with just one supplier, £100m could be saved by renegotiating deals or tendering them more widely.

At the most complex end, £530m is up for grabs - but only if councils completely rethink the way they buy goods and services in areas such as adult social care and construction.

Luke Spikes, the company's founder, says these are the most challenging areas: "You don't buy adult domiciliary care from a catalogue." Instead, councils should, he says, follow a three-step process: draw up a new, comprehensive plan for the services they need; buy those services using a pre-selected framework; then create the tools - generally online - that will allow staff to quickly work out which supplier is offering the best deal.

Spikes says his company was able to help Peterborough primary care trust cut £1.8m from its £9m spending on caring for people in their homes - a 20% saving - simply by putting all the providers' price and quality details into an online ordering system.

However, councils say achieving such savings is not easy. "There's still huge scope [for savings]," admits David Pointon, Portsmouth city council's head of procurement. "But it is not just procurement alone. You are not going to make those savings simply by bullying down prices. You are going to do it by fundamentally reviewing ... the goods and services we are buying."

Jones, meanwhile, warns that knowing where savings lie is not the same as realising them. "Sometimes where councils fall down is, they have the spending analysis done, they have good data ... but they don't do much with it."

Quality government must come first

Jane Dudman — Thu, 22 Jul 2010 14:07:29 GMT

At the annual Audit Commission lecture Professor Anthony King urged the new government to think before implementing policies and not fall into the trap that has blighted previous regimes

The present government is in danger of rushing through poor legislation in its haste to avoid the lessons of the Tony Blair government, according to a major political commentator.

Giving last night's Audit Commission annual lecture, Professor Anthony King, of the University of Essex, said the present government had drawn "the wrong inference" from Blair's comments that his government failed to make the most of its first term in government.

Rather than rush policies through, said King, the government should pay attention to obtaining good quality governance.

King, together with Sir Ivor Crewe, Master of University College Oxford, is carrying out research into government policies that failed to achieve their aims, or that in doing so created massive unintended consequences, in order to draw some conclusions about how to avoid future blunders.

He listed several such policies, including most prominently the introduction of the poll tax and the child support agency, which fall into such categories, and highlighted some of the institutional and behavioural factors that influence poor policy-making.

These include what King describes as a "cultural disconnect" – the failure of those making policy in both Westminster and Whitehall to understand that people beyond Whitehall "live very different lives" and may react in very different ways than policy-makers expect.

"It was clear that those who introduced the poll tax, for example, assumed that because they paid their taxes, others also would," noted King.

"The degree of non-compliance was simply not anticipated by almost every one of the people involved."

This led King on to two further points about the tendencies of policy makers.

One was the scourge of group think, where everyone agrees and no one can see any drawbacks – "any bill team should include at least one member who harbours grave doubts about the policy", he said – and the other was the need to consult outside experts at an early stage of policy-making.

He also highlighted the small role that UK parliamentarians play in formulating policy. "We should think less about the quality of our democracy and more about the quality of our government," said King.

Jane Dudman

Can the big society concept save your local swimming pool?

Patrick Butler — Wed, 21 Jul 2010 15:20:36 GMT

Volunteers run the local rugby club, so why not the local swimming pool, asks one resident who is campaigning to keep it open

• This report is taken from Guardian Society Daily, follow the link for more of today's top stories on Guardian Society

Shane McCracken has written a powerful blog post about what it might take to resurrect the local swimming pool in Bradford on Avon, earmarked for closure by Wiltshire county council on the grounds that it will soon no longer afford be able to afford to run it.

Some local politicians seem to think keeping open the pool depends on
persuading the council to meet its "obligations" through campaigning
and petitions. McCracken, however, suggests that a more fundamental
re-assessment of its future is needed: "The swimming pool as we know
it will close. We need to choose if we, as a town, want to keep it. It
needs to become our swimming pool, not the council's. Big society
isn't about closing council-run facilities. They are going to close
anyway. We can't afford them. Big society is a way of keeping them
open."

If the energy and commitment of volunteers can sustain his daughter's
rugby club, argues McCracken, why can't it sustain the local swimming
pool? A bigger business, much more risk, but essentially the same
principle.

McCracken is right in believing this kind of idea didn't start with big society. A colleague pointed me in the direction of Jesmond swimming pool in Newcastle-upon-Tyne, which was succesfully taken over by a community group in similar circumstances nearly 20 years ago. How did it succeed?

I spoke to Glenn Armstrong, chief executive of Jesmond swimming
project, a social enterprise which runs the pool on behalf of the
community. Surprisingly easily, he says. Lots of hard work, but a lot
of common sense too.

It took a year to get the business plan together and persuade a
sceptical local authority to hand it over. Just under £90,000 was
raised in grants and pledges, £40,000 of it from local people. But
within months it was turning a profit and attracting more visitors.
Explains Armstrong: "We designed the programme around the customers.
It was now open for swimming when they wanted to swim."

Before, he says, it had been designed around the needs of the council
and the staff. After the takeover, opening hours went from 42 hours a
week to 80. It started to open on bank holidays.

When the pool decided it need a refurb and a gym, it financed half the
£1.5m cost through its own reserves built up over the years (the other
half came in the form of a Lottery grant). It turns over £570,000 a
year, and handles over 140,000 swims. The staff are full time, backed
up with volunteers.

I suggested it succeeded partly because Jesmond was in a fairly
well-off part of the city, with an articulate and expert activist
base. Armstrong accepts that local residents were passionate about the
pool, but points out that a nearby pool, Fenham, in the deprived west
end of Newcastle, has also saved itself by going down the community
ownership route.

So what lessons did he have for people who want to rescue their local
pool? First, decide how badly local people want their pool. Some
community takeovers fail to get off the ground because, ultimately,
residents actually don't use it.

Second, and perhaps surprisingly, get support from the local authority
– they can give crucial business and professional advice. It's an
intersting point. The state and its agencies still matter: big society
swimming pools don't survive in an infrastructure support-free zone.

It will be interesting to see if McCracken's tentative idea gains any
traction. Bradford on Avon is a middle-class market town, with
passionate and articulate residents. It will be interesting to see how
far, when push comes to shove, they really, really want their swimming
pool to survive.

In the meantime McCracken has succeeded in articulating big society
much better, it should be added, than any minister. "Big society
really is a crap name, but I can't think what to call it either. I've
long railed against the idea of encouraging people to volunteer.
People don't volunteer per se. They offer to run schools, clubs,
charities for free."

Patrick Butler is head of Society, Health and Education at the Guardian

Patrick Butler

Checkmate: how bad decisions can cost an organisation

Mon, 19 Jul 2010 10:54:26 GMT

Why do public sector managers invariably fail at effective decision-making? It's through no fault of their own and until the system changes costly mistakes will continue to be made

A government department has a large programme of work ready to move from its feasibility stage to implementation. The programme will save the department £10m as well as massively improve customer service. However, it needs £300,000 spent upfront to kick things off.

Decision? Cancel the programme – there is a freeze on any external support.

Another government department needs to send staff on an overseas training course so they can learn key skills for their job. The overseas trip means spending £10,000 now, the alternative is to pay for external support over the life of the project at a cost of £100,000.

Decision? Spend £100,000 – we can't be seen to be sending people overseas in this period of austerity.

The above examples have highlighted a real problem in the public sector. That too often decision-making is lacking in any common sense when considering the overall net impact and bigger picture, even if the individual drivers at the time are valid. Decision-making is also often poor, slow, and too political.

Where has it all gone wrong?

"The problem", says Mark Warren of consulting firm Moorhouse, "Is that today's public sector has become so complex and political that leaders become almost 'paralysed' when asked to make a decision. They try and take into account too many influencing factors – the political agenda, the position of senior bosses, what the media might say - and are terrified of making a mistake. They then either procrastinate and do nothing, or go for the 'correct' thing to do depending on who has the highest influence – even if that decision seems like craziness to everyone else."

A challenge, or in some cases direct interference, from leaders at the top has made decision making particularly difficult in the NHS. Decisions at a primary care trust (PCT) level are being modified because of a strategic health authority's position on a local issue – even if it doesn't make sense for the customer.

Richard Marsden, a partner with The Berkeley Partnership says: "We've seen good decisions watered down or completely upturned at the insistence of senior bodies – only to be reversed back to the original, locally led proposal later on. It's a huge waste of time and money."

Bad decision-making isn't just the fault of politics or interfering seniors though. There are many psychological traps in decision-making that leaders should be aware of, as outlined in the classic Harvard Business Review article 'The Hidden Traps in Decision-Making'.

There is the 'sunk cost trap'– where a deep-seated bias sees us make a choice to justify a past decision, the 'confirming evidence trap' – which has decision-makers ignore evidence which contradicts their instinct on a decision, and the 'status-quo trap' – in which leaders make decisions that perpetuate the status quo - to name but a few.

With all this to contend with, it is little wonder that good decision-making is so rare and a radical change in approach is required.

"People need to think about decision-making as a specific skill set," says Warren. "Strategic decisions that have a high impact need to be treated like a major project, and given all the resource, data, time, and discipline that you would normally dedicate to an important initiative."

This approach, plus the addition of some strong analytical players and others who are independent and specifically tasked with playing 'devil's advocate', can help leaders who are otherwise apt to procrastinate.

Basic rules of decision-making

The basic rules of decision-making are worth bearing in mind. Allan Wood, chairman of Harmoni, one of the leaders in providing primary care services, has this piece of advice: "Understand the psychological traps you can fall into with decision-making so you can do your best to avoid them. Then put some time aside to build an understanding of the context, using the data and facts that outline the issue, and involving the right people to discuss the critical factors.

He suggests using a balanced scorecard to decide on choices. "Finally, factor in some common sense. For example, a decision may be 'politically correct' and please a boss far away, but if it damages an entire department's motivation, your second choice may be better."

Quangos: 'read before burning'

Nick Huber — Thu, 15 Jul 2010 08:10:00 GMT

Seen as a potentially quick way to save money, closing down quangos may have the opposite effect says a report by the Institute for Government, unless there are major reforms to arms-length bodies

A plan by the government to cut the number of quangos is unlikely to deliver substantial savings and could even increase costs unless there are major reforms to how arms-length bodies are run, a new report has warned.

Quasi-autonomous non-governmental organisations, which deliver services ranging from nuclear commissioning and teacher training to arts grants and national savings, are a prime target for public spending cuts, as the coalition government tries to slash the UK's £154.7bn budget deficit.

Critics claim that quangos, which account for about 13% of total government spending, create unnecessary bureaucracy and are unaccountable.

The coalition government has already announced plans to close the Qualifications and Curriculum Development Agency and also Becta, which advises schools on technology.

The government is holding a review to decide the future of remaining quangos, also known as arms length bodies (ALBs).

One of the arguments for closing quangos is the potential to save public money, but according to a report by the Institute for Government (IfG) – Read Before Burning – a cull might not create savings unless the government tackles "deep-seated problems" about how quangos are structured, run and regulated.

Any big savings will come from reforming the big quangos. According to the IfG, three quarters of expenditure by "non department public bodies" is tied-up with 15 large organisations, including the Learning and Skills Council, Nuclear Decommissioning Authority and Higher Education Funding Council for England.

"It will be here that the greatest savings could be found, rather than in the long tail of smaller bodies," says the IfG report, which is based on a year of interviews with quangos and analysis of their spending.

However, restructuring public bodies can be expensive. Scrapping quangos and incorporating their functions into government departments, may not create savings and could even add to government costs, the IfG says.

The IfG estimates that 51 reorganisations of central government departments and their quangos carried out between 2005 and 2009 cost a total of about £780m.

Some 85% of this cost was attributed to establishing and reorganising quangos.

"There is a cost attached to creating a new department and then disbanding it again," says Ian Magee, a co-author of the IfG report and a former chief executive officer of three executive agencies.

"It's fine to reduce duplication and get some economies from that but it isn't a numbers game. You don't necessarily achieve the savings that you want by saying, for example let's cut 100 of these [public] bodies."

The IfG report says that although many quangos perform a useful function, the complexity and differing structures of the organisations (there are at least 11 types of quango) is causing "duplication and policy coordination problems".

Perhaps more alarmingly, the report says that it found examples of "both micro-management and institutional neglect" of quangos, resulting in "low trust" and sometimes in "downward spirals of institutional conflict."

Reforms to quangos in order to make them more efficient and transparent

The IfG report calls for a series of reforms to quangos in order to make them more efficient and transparent. Recommendations include: performance reviews every three to five years for quangos spending more than £50m; ministerial "sponsors" of quangos should be briefed thoroughly on their quangos; and the government should publish a list of all quangos, details of their expenditure and lead officials sponsoring them.

Most quangos contacted by Guardian Public declined to comment on the IfG report.

But Christopher Banks, chair of the Public Chairs' Forum, which aims to improve the efficiency and of public services in the UK, and represents quango leaders, says he welcomes the IfG report.

"The report sheds light on some of the key challenges faced by ALBs and their sponsoring departments and makes helpful recommendations on how this complicated landscape can be improved," he says.

Alan Langlands, chief executive, of the Higher Education Funding Council for England (HEFCE) adds: 'We agree that there is a need for the government to scrutinise arms-length bodies." He adds that a recent external review of HEFCE by Dame Sandra Burslem judged it to be a "high-performing" organisation.

The Local Government Association (LGA) which has raised concerns over the number of quangos and their perceived lack of accountability to the public, declined to comment on the IfG report.

Last week, the LGA claimed that devolving power and budgets from public bodies including quangos and Regional Development Agencies to local councils and groups of councils could save up to £100bn over five years.

Nick Huber

'There's no end of trouble'

Mon, 12 Jul 2010 09:34:39 GMT

From January local councils will be forced to declare spending over £500, while improving transparency has been broadly welcomed - some think a more targeted release of data is more desirable

"While I was still experimenting, I saw only the advantages of the thing. But there are disadvantages, I can tell you." The words of Griffin, the hero of HG Wells's The Invisible Man, and something of an authority on the equivocal benefits of transparency.

Local government will soon understand what he means, following the announcement in June by communities secretary Eric Pickles that from 1 January councils will be expected to publish details of all expenditure above £500.

As an exercise in improving openness and accountability, the move has been broadly welcomed. In terms of the sheer amount of information that must be disclosed next year – not only new items of local government spending, contracts and tenders over £500, but also frontline service data including allowances, expenses and senior salaries – councils may find themselves agreeing with Griffin's neat summation of what it means to be seen through: "There is no end of trouble."

John Simmonds, cabinet member for finance at Kent county council, agrees with the move but would prefer a more targeted release of data.

He raises the "huge number of spurious" Freedom of Information requests the council receives, "which require a huge amount of work for no purpose".

It's easy to toss it all on to a website but more difficult to do so in a meaningful form

"I understand people wanting to know where their council tax is being spent, but would have hoped to consult with the public about the best framework to disseminate this information in terms of its intelligibility – it's easy to toss it all on to a website but more difficult to do so in a meaningful form.

I'm not sure publishing 3,000 separate pieces of expenditure information each week will tell anybody anything. We'll have no problem meeting the deadline, but may need simply to put it up on our website and refine it as we go along."

The Conservative-led Royal Borough of Windsor and Maidenhead, from whom the Tory government drew inspiration for the scheme while in opposition, has been declaring all spend above £500 since March 2009.

It takes a matter of minutes to publish the information in simple CSB format, says chief executive Ian Trenholm; it's for third parties to mine the data and come up with conclusions.

He adds that this "lever for change" has seen residents' satisfaction with the council rocket by 25%.

"Being prepared to expose our data to the public gives people confidence that we're making sensible spending decisions," he says.

"It's like doing business on a trestle table outside the town hall, which alters the way you operate and how people perceive you. Knowing purchasing decisions will be online forces us to think clearly about them – if we're happy to defend them, we'll go ahead. It will stop people making debatable decisions, but not stop them spending money on important things."

Trenholm concedes the biggest problem may be managing queries prompted by the data, rather than the release of data itself, but says initial concerns the council would be inundated have proved unfounded. One of the main risks for councils new to the process, he says, is accidentally publishing personal data – compliance with data protection legislation and general data publishing standards is of paramount importance.

Dr Steve McCabe of Birmingham City University considers it "an interesting exercise [but] another distraction".

"No one can have a problem with openness and transparency, but I wonder how much money the government thinks it will save through this initiative, especially given the scale of the financial crisis?

"There is an argument for reducing waste and expenditure, but despite the image in the press of profligate local government bureaucrats who have no idea where the money goes, in the vast majority of cases there are perfectly valid reasons for spending. Are we going to get to the stage where we get to vote on every aspect of public expenditure?"