Public: Policy-making + Features | Public

Fresh move to drive more civil servants out of London

Tue, 16 Mar 2010 09:34:00 GMT

Six years ago Lyons first mooted the idea of moving civil servants out of the south-east and to the regions, another report is now targeting departments that remained unscathed, only this time it's a different proposition

Tired of London, tired of life, goes the saying: "for there is in London all that life can afford".

The Lyons Review in 2004 emphatically disagreed with Dr Johnson on the subject of affordability, however, calculating that £2.3bn could be saved by moving 20,000 civil servants out of the capital and expensive south-east England.

Ian Smith, former boss of publisher Reed Elsevier, is about to become the latest to tackle this issue.

Forming part of next week's budget, Smith's report is expected to recommend a further 15,000 public sector jobs be moved to the regions, targeting departments, such as Communities and Local Government, which escaped relatively lightly last time.

The department still has 2,000 posts in the south-east, albeit a fraction of the 135,000 civil servants in the region as a whole.

How do senior managers feel about relocating? For some, particularly those whose children are at the right age, it presents an opportunity. Dave Sharp, who was manager of the Office for National Statistics (ONS) core table unit in London, and moved to Newport with the ONS in December 2005, is positive.

A different office culture

"It was a case of adapting to a different office culture and a new environment – I hadn't been familiar with Newport at all – but I actively embraced it," he says. "It was a good time with my children, and nice to get away from the commuting and congestion to somewhere new with good career prospects. I've since been promoted, so the whole thing worked out very nicely for me."

When the Gambling Commission was created to replace the former Gaming Board, the new organisation was set up in Birmingham, where a spokesperson cites "access to first-rate employees" and much lower sickness rates as two of the positive features of being based in the city.

New departments may find it easier to relocate than those that are more entrenched, but geography is also a factor.

Top Whitehall officials are privately concerned that proximity to London increases the chances of losing staff to city-based jobs. Successful relocations depend on opportunities for career progression, they say, which means having a "critical mass" of civil servants in a particular region.

The implication is that if more and bigger departments don't engage with relocation London and the south-east will continue to be places senior civil servants are unwilling to leave.

That has certainly been Sharp's experience: given the choice of moving west or moving on, the rest of his 10-strong unit decided against Newport. "In the long run, everyone knew it was either relocate or find another job," he comments. "I ended up coming down on my own, and recruiting and training fewer people to do the same volume of work."

Philip Whiteman of the Institute of Local Government Studies in Birmingham, says the economy makes Smith 2010 a different proposition to Lyons 2004. "The prospect of redundancies will be greater for civil servants at risk of relocation, and the opportunity for remaining in London will be less," he says. "Relocation can construct a redundancy situation."

In effect, the options for doing the same job in a different town are narrowing just as the recession and budget cuts conspire to make people more receptive to the idea.

Information technology and communications

Advances in information technology and communications since Lyons has undercut the claims of policy-making departments that they need to stay close to the power centre – Whiteman singles out the Treasury, the Culture, Media and Sport Department, the Foreign Office and international development. Lyons said "national policy can be and is done perfectly well out of London", citing the department of health and the then-department of Education and Skills.

More important to senior managers, especially those who are less established, are the informal networking opportunities that Whitehall provides.

"Lyons found a particular problem with what is classified as 'policy-making' and which civil servants should covered by this terminology," says Whiteman.

"Clearly it is not in the spirit of the relocation policy if bureaucrats that are defensive of any proposed move out of London can class themselves as policy-makers. Exceptions may include those officials from the FCO or DFID who have to be in London to meet with international delegations, but one could question whether this is the case with all policy-makers."

The co-operative approach to reform

Mon, 15 Feb 2010 09:30:00 GMT

As the general election approaches, political and policymaking interest in developing mutual forms of public service provision is growing. Andy Cowper reports on developments in the health sector

Public policy may not usually be perceived as 'hip', but it can be as prone to fashions and trends as the fastest-moving consumer goods. As pre-electoral tension mounts, politicians and policymakers are increasingly looking towards the mutual, co-operative and co-owned sectors for solutions to some of the problems regarding public sector reform.

There is much speculation that Labour's manifesto will look to present co-operative and co-owned forms of provision on public services and today's announcement by shadow chancellor George Osborne demonstrates Conservative interest in this area.

The John Lewis halo effect?

Why has the mutual, co-operative movement come back into policy vogue now? Various factors are at play here. The impact of the economic recession cannot be under-estimated. Despite these conditions, there have been consistently impressive trading figures from the John Lewis Partnership (perhaps the UK's highest-profile employee partnership). All of its full-time staff become members of the partnership, and receive a share of the business's annual profits.

John Lewis's managers can be held to account by staff through democratic mechanisms at every level of the organisation (although its chair Charlie Mayfield recently told a conference that, in practice, this right is used proportionately and sparingly).

A limit to market mechanisms

The use of market mechanisms in public sector reform during most of Labour's time in office was facilitated by booming UK economic growth. Providing more staff, new buildings or technology and the capacity to offer choice were viable options in the context of a growing economy.

The medium-term likelihood for UK economic growth currently looks weak-to- anemic. One key result of this is to try to get any extra capacity out of existing providers through efficiency and productivity gains. Research suggests that one of the methods of achieving this is to examine successful examples of the mutual sector, where studies cite increased staff morale and commitment to frontline delivery as critical success factors.

Another factor is the Labour Party's shortage of cash. Private donors have been distancing themselves from the party ever since it began to look electorally mortal. The trades unions will therefore be Labour's major source of funding for the election campaign ahead.

They do not welcome private for-profit providers, but are not against mutuals and social enterprises.

In health, the NHS has already seen a significant policy U-turn away from market contestability in provision of services, with Health Minister Andy Burnham's policy announcement last autumn that the NHS is to be regarded as the "preferred provider" where existing service provision is reviewed.

Nothing new in mutual and third sector providers

Many not-for-profit and mutual providers already provide various public services. The 'third sector' of charity and social enterprises (also known in some organisational forms as community interest companies) already successfully provide mental health and drug rehabilitation services and social care through such bodies as Turning Point.

Charities in particular often deliver excellent, responsive and patient-centred services to specific groups (such as Macmillan Nurses and the Maggie's Centres in cancer care). The hospice movement for the terminally ill is almost entirely provided by this sector, and receives less than one-third of its funding from the government and the NHS.

Prior to the new GP contract in 2004, much of the out-of-hours provision of general practice was done by not-for-profit co-operatives of willing GPs.

Nor is some element of mutuality exclusive to commercial investment. Circle Healthcare is an organisation established in 2004, which mixes 49.9 ownership by its partners (mainly consultant surgeons and anesthetists to date, though some GPs are now joining) and 50.1% ownership by private equity investors and venture capitalists. Circle provides both private and NHS care, and is currently expanding and building and acquiring provider facilities. It is Europe's largest professional partnership healthcare organisation.

The impact of Circle's top-down, devolved decision-making approach to management of its facilities can be seen in its acquisition of three independent sector treatment centres – units which do high volumes of low-complexity surgery such as cataracts or joint replacement on relatively healthy patients - from a private provider. Within one year, these facilities (in Bradford, Burton and Nottingham) saw revenue day case volume increase by 22%; cost reduced by 19%; and overall revenue increased 26%.

The semi-independent NHS foundation trust sector of provider hospitals and mental health trusts was also described as a 'modern return for mutualism' by its legislative proponents to win the support of unwilling Labour MPs back in 2003, when the legislation was becoming law. Foundation trusts (FTs) win autonomy through proving high performance on financial stability and clinical quality to sector regulator Monitor.

On achieving their authorisation, FTs become accountable only to Monitor, rather than to the health secretary. They also elect their board of governors.

However, the mutuality aspect of FTs is overstated and unclear: their facilities remain owned by the NHS (or the Private Finance Initiative consortia, if relevant). Monitor's outgoing executive chair Dr Bill Moyes confessed in valedictory interviews that the FT sector had not shown the degree of innovation he had hoped.

Over the past five years, turnouts at FT governor elections have almost halved, while, the proportion of governors' posts that have gone uncontested has risen by 81%. And although FTs have a theoretical right to vary their terms and conditions to improve on those offered in NHS national contract negotiations, in practice none yet do so.

A more authentic example of mutual-type provision is the community services provider company Central Surrey Health: a not-for-profit, limited liability company, in which each staff member has a 1p share. Its creation followed the policy decision to re-emphasise NHS commissioning (purchasing and shaping health services), with the associated implication that the primary care trusts who also provided community services should have no conflict of interest as providers - becoming commissioning-only organisations.

Availability of the generous NHS pension remains a major sticking point for staff interested in working in differently-owned organisations. The Department of Health has since announced that staff transferring to new social enterprises could remain in the NHS pension scheme. However, if a social enterprise's staff also provide non-NHS services, to diversify their business, they become ineligible for NHS pension arrangements

Last summer, health thinktank the Nuffield Trust published NHS Mutual, a detailed report into the potential for mutual-type provision in health by Jo Ellins and Professor Chris Ham. Ellins and Ham suggest five broad options: greater voice and participation; employee-owned community health services; multi-professional partnerships in general practice (addressed in another 2009 Nuffield Trust report, Beyond practice-based commissioning: the local clinical partnership); a social enterprise model for primary care and community health services; or multi-professional chambers within NHS foundation trusts.

The wicked issues

Government-backed pensions are a predictable stumbling block to persuading public sector employees to consider other organisational forms of employment. Governments don't go bust (they just raise taxes), so safety-wise, their pensions are pretty gold-plated.

Others report that the position of VAT, which is charged on the income of social enterprise, makes the economics of moving to that form of provision marginally attractive. Clearly, an indebted government needs all the tax revenue it can get, so expecting movement on the VAT issue may be Micawberish optimism.

Likewise, contracts would need to be offered for sufficiently long periods for the creation of new organisations to be an attractive option. Given the government's row-back on a mixed economy of provision in health, the signals here may be too mixed for many.

There are also real issues about capital: newly-formed provider social enterprises would probably be too small to raise capital effectively. Extant facilities are, by their very nature, designed for current or past patterns of healthcare provision. Given the government's desire to see more care provided outside hospital in community settings, the future for big, old-fashioned hospital buildings may not look bright.

Yet the biggest element may be the fit of mutual-type approaches with the professed 'public sector values'. Just as important to staff in the public sector might be the ability to be more in control of their own destiny, following a decade or more of 'command-and-control' centralised approaches to reform (memorably characterised by Bevan and Hood as "targets and terror").

Paradoxically, the bossiness of central government could be one of the most persuasive arguments for moving provision into mutual forms – if they can really offer some meaningful independence on a basis that looks secure enough to tempt staff out of their 'Stockholm Syndrome'-type relationship with the state as a direct employer.

Andy Cowper is the editor of Health Policy Insight

Total Place: Can't share, won't share?

Fri, 12 Feb 2010 10:27:00 GMT

If councils are reluctant to follow the Total Place agenda of working together to deliver services more cheaply, will ministers force them to, asks Max Rashbrooke

After Total Place, what then? Though it might seem premature, attention is already beginning to focus on how, if at all, its recommendations will be forced on local bodies.

Though ostensibly about improving local services, Total Place has been caught up in the relentless search for public spending cuts. That creates a dilemma for parties wanting to save money without wrecking their localist credentials: enforce collaboration, or not?

The assumption is that if local bodies work together, they will find savings. Claire Kober, the Labour leader of Haringey council in north London, says the last decade was all about seeking efficiencies within individual organisations.

"The next decade," she says, "is about taking the thinking from Total Place and looking at [how to get] efficiencies across organisations."

But some local bodies, for whatever reason, won't want to play nicely with their neighbours and peers. So what would the government do, if it believes it can't achieve savings it has promised the public without precisely that collaboration?

The present government is still considering its response to the Total Place pilots, and won't respond officially until the budget expected in March.

The Conservatives, for their part, insist that local collaboration will come about as a matter of course. One of their shadow Treasury ministers, Philip Hammond, said recent: "The pressure to do more with less, and transparency, will drive decision-making at the local level.

"Of course it is possible that local authorities will have no part in that - [that] they are going to cut services rather than hunt efficiency gains. Our job then is simply to make sure democracy holds them to account."

Susan Williams, the former Conservative leader of Trafford council and a parliamentary candidate for Bolton West, agrees. Collaboration is "not something that you would force upon people ... it's going to be up to local councils on how they wish to work together."

Enforcement process

Others are more sceptical of such relaxed noises. Chris Leslie, the director of the New Local Government Network thinktank, says ministers "will be bound to have some sort of [enforcement] process. If they [councils] don't budge in the way they want them to budge, it will be too difficult for them to achieve the savings they want."

The "danger" of the Total Place process, he says, is that the government will start giving "very crude instructions" to enforce collaboration.

To do so would be to miss all kinds of local sensitivities: for example, that councils might want to work with other councils of a similar size and nature, not just their nearest neighbours.

Better, then, to provide incentives for collaboration - but perhaps not in the current way. At the moment, the reward for councils delivering services more cheaply one year is often a reduced budget next time around, Leslie says.

Different incentives could involve giving out local grants only in exchange for performance above the average - effectively saying, "if you are overly expensive in your services, you are not going to keep that money", as he puts it.

Or ministers could require local bodies to give up a percentage of their grant to an overarching body such as a local strategic partnership, forcing them to take budget-pooling seriously.

It would still be trampling on local autonomy, Leslie admits. But, he says: "If that's where the money comes from, it's the lever they [government] will have to use."

Williams acknowledges that the implication of not working together is that councils "would have to find different ways of cost saving".

Central government may not crudely push local councils together, in other words - but falling grants will do the job anyway.

Public Services Summit 2010: Anticipating the challenges ahead

Jane Dudman — Wed, 10 Feb 2010 11:18:21 GMT

Delegates and speakers at this year's Guardian Public Services Summit agreed on the need for change, as long as any transformation is carried out skillfully, without confrontation was the underlying message, writes Jane Dudman

One thing is for sure: none of the public managers who attended this year's Guardian Public Services Summit could be in any doubt that change is on the way for the sector.

The two-day conference, which took place in Hertfordshire at the end of last week, was notable for looking both backwards and to the future.

Leaders and thinkers summed up many of the of the key aspects of the past 12 and a bit years of running public services under the Labour government, and attempted to anticipate some of the challenges that will face them in the coming years.

Sir Michael Bichard, director of the Institute for Government and a former permanent secretary with considerable influence inside Whitehall, summed up the mood of many when he said, introducing a session looking at resistance to change in the public sector, that there has already been "fantastic change" in the public sector.

Following Bichard to the speakers' podium, Professor Christopher Hood, director of the Economic and Social Research Council's research programme, agreed that what we need now is a grown-up debate, focusing on which kinds of change and innovation different organisations are best at doing.

So far, then, the conference agreed on the need for change, as long as the debate was framed in the right way - and as long as change, particularly cultural change in organisations, was handled skillfully and not in what one speaker described as "an unnecessarily confrontational way".

A strong reminder of why change is still needed in the way public services are delivered came from Craig Dearden-Phillips, chief executive of the charity Speaking Up, who told delegates that despite discussion of more joined up services, from the point of view of the disabled people with whom he works, very little has changed and it is still a struggle to deal with the many different arms of the state, a point reinforced by another speaker at the conference, Charles Leadbeater, founder of the public service design agency Participle.

Describing the work of his organisation with families in need, Leadbeater, too, put forward a view of public services that was far from joined up: "It wasn't that these people weren't getting services," he said, "but that the services came in and out and added to the chaos."

The international and local focus was on budget cuts

Add to this the view from the politicians at the conference, who from both an international and a local focus emphasised the need for budget cuts, and a truly gloomy picture might be thought to have emerged.

In fact, the converse was true. It is clear that public sector leaders and those in the voluntary sector, as well as social entrepreneurs, may not be relishing the crisis, but certainly see the need for real leadership in difficult times and are ready to rise to the challenge. The idea of not wasting a good crisis was heard around the conference floor more than once.

Above all, the summit is a place to exchange and hone ideas. As Stephen Bubb, the chief executive of the Association of Chief Executives of Voluntary Organisations, says on his blog, this is a place to gain good ideas.

Bubb writes: "The range of top speakers and thinkers on public service is astonishing. The debates are superb and I rarely leave without new ideas for action (my staff just love that!)".

For more coverage see today's Guardian Society

Jane Dudman

Policing in need of a radical overhaul

Jane Dudman — Mon, 30 Nov 2009 09:07:23 GMT

Despite years of investment, police performance in tackling crime could still be better. Is it time to look at how the police are organised and governed to improve the service - for everyone?

Calls for wholesale reform of British policing are gathering steam. Following last week's recommendations from Denis O'Connor, Her Majesty's Chief Inspector of Constabulary, about the nature of policing, thinktank Institute for Public Policy Research (IPPR) has published a call for radical reform of the way the police work, including strengthening local involvement in setting policing priorities.

Rick Muir, senior research fellow at the IPPR and author of the report, says that years of investment in the police by successive governments has failed to improve police performance significantly.

"Given that spending looks set to be cut, if the police are to effectively tackle crime in the years ahead, they will need to change the way they work," he comments.

"Unless the way the police are organised and governed is transformed, any substantive programme of reform will suffer the same fate as those that preceded it: opposition within different parts of the service followed by a government 'U-turn' for fear of a politically costly conflict with the police."

Muir says the first priority for reform must be improving police governance. He wants to see a system that provides value for money, is "more coherent and less fragmented and that empowers local and national leaders to deliver change in the public interest".

Last week's inquiry into the policing of the G20 protests in London by O'Connor resulted in what has been described as "a blueprint for wholesale reform of British policing".

The IPPR report says all local crime priorities should be set locally, by strengthening the role of local elected authorities, with councils directly commissioning police services.

It also calls for the National Policing Improvement Agency to be merged with parts of the Association of Chief Police Officers (Acpo), to form a new National Policing Agency. Acpo came under severe fire in O'Connor's report for its role in "unaccountable" operational matters.

The publication of two influential reports so close together will help fuel continuing debate about the role of elected officials in policing, something that has been controversial in this country.

Whether the next government, whichever party is elected, will want to tackle a fundamental rethink of policing, remains to be seen – it's previously been shied away from, as the IPPR report makes clear.

Jane Dudman

Deal or no deal?

Fri, 27 Nov 2009 10:48:22 GMT

Community groups and councils are being promised more control over public services and budgets. But how would local decision-makers cope in negotiations with the private sector, and what is the Treasury's role in any new arrangements?

Sometimes two policies, each worthy in its own right, can collide head-on. The policies of localism – greater power for community bodies – and partnership working, which of course entails more deals with the private sector, may be one such case.

All three main parties are signed up to the idea, if not necessarily the reality, of giving local bodies a greater say over public services. Among the Opposition, the Liberal Democrats have long argued that Britain's over-centralised state "has done much to harm and dampen the energies of local communities" as their Treasury spokesman, Vince Cable, recently said.

For the Conservatives, David Cameron has pledged to "strengthen" local civic institutions such as community groups and local councils, while their schools spokesman, Michael Gove, has promised headteachers more control over education budgets.

However, what none has yet addressed in detail is the question of how local bodies are supposed to manage if they are also expected, as is the trend under Labour, to engage in increasingly complicated and wide-ranging partnerships with the private sector.

A recent National Audit Office report argued that many central government departments lack the commercial skills needed to drive a good bargain. How, then, will community groups cope? How, equally, will any kind of efficiency and economy of scale be preserved if deals are done as a series of single, isolated examples?

Greg Stone is a Liberal Democrat councillor in Newcastle who has worked on several local regeneration schemes. There is already, he says, "a tension there between trying to steer regeneration benefits to the community and trying to keep the private partners around the table".

True localism, he adds, means devolving power not just to local councillors like himself but further down to community groups and parish councils. "If the people who can turn the key on this were the local authority rather than the community, it would lead to a discrepancy of resources and power."

But, asked how it would work if those local bodies were left to work directly with the private sector, he says: "I don't think there is an easy answer. I don't think there's anything in place yet."

Even among local councils, the skills needed are "a little bit lacking", he adds. "It's going to have to be addressed. Otherwise the conversations and the development of various [projects] will be conducted in a way that's very unequal, and the risk is in the interests of developers will overpower the interests of local decision-makers."

The obvious solution to this conundrum is central guidance – some way of allowing local communities to draw on a body of expertise and experience of major projects.

John Tizard, a public-private partnerships expert from Birmingham University, says there is no contradiction in such an arrangement. "In some areas, particularly areas of complex procurement, access to central resources seems to me absolutely essential for local bodies.

"It would be unfortunate if the policy were to dismantle those support services that local agencies can call on or if local agencies felt they were being discouraged from drawing on them."

Central guidance

The need for such central guidance could lead to a new role for some of the agencies – notably the public-private quango Local Partnerships - that might otherwise have feared for their future. However, their functions could equally be carried out by regional bodies, or from within central government departments.

Steve Beet, of consultants PricewaterhouseCoopers, says one solution to the local procurement dilemma could be a "twin track" approach that splits decision-making from procurement. While local groups could assess – and decide on – what needs to be done in their area, their building or services projects could be brought together with others at regional or even national level to be procured in a big bunch.

If a community decided a new school should be built, "you can quite understand that being identified locally", he says. "But no one would argue that a parish [council] leader should go through the [centralised] Building Schools for the Future programme."

However, the danger is that leaving procurement decisions with a regional or national agency will negate any real devolution of power.

The temptation for a strong, centralised agency to interfere could be overwhelming; giving advice could easily tip over into taking control.

"The big tension is going to be between local needs assessment and consolidated procurement," Beet admits. "It's going to be an interesting challenge for the Treasury."

But how will that tension be resolved?

"This is the unknown," he says. "This is the bit all the parties are struggling with – what is the glue that sits between localism and community engagement and the central functions that can support and deliver what they require?"

Falling productivity mars Labour's record

Tue, 17 Nov 2009 11:18:21 GMT

A new report from the Office for National Statistics shows that the government's huge increase in spending on services was not met by a rise in productivity - will the recession help cut the slack?

The November winds battering Britain have ushered in more bad news for a beleaguered Labour government: figures released last week by the Office for National Statistics (ONS) indicate that public sector productivity fell overall during the Blair-Brown years, despite increasing investment.

The report, Changing costs of public services, shows that during 1997-2007 the unit costs of public service output grew by 13.7% more than those for the whole economy, an annual average relative rise of 1.3%; productivity fell by 3.4%. The only sectors quality-adjusted were health and education, which account for 50% of all public services spending; outputs in other sectors were assumed to rise in line with inputs.

An expanding public sector is one reason for the fall, according to professor Michael Ben-Gad of London City University. If output is measured by how much a company produces divided by its number of workers, then an increase in staff without a concomitant rise in capital will inevitably result in a drop in productivity.

"The UK has been increasing public sector employment quite substantially over the past 10 years," says Ben-Gad. "During the boom times Labour expanded the state faster than the economy was growing, and assumptions were made that there would not be another recession. We'll probably see productivity improve in the UK, as recently in the US, for the simple reason that there is high unemployment. Cut staff and there are fewer working with the same amount of capital. The denominator is getting smaller, so productivity shoots up."

Given the injection of new resources during New Labour's first decade in power, Siân Thomas, director of NHS Employers, says productivity hasn't improved to the extent it could have: "With economic growth and politicians giving manifesto commitments for more staff, it was entirely predictable that's what we would get. That was the goal and how we've improved access for patients." But while investment was necessary, it came quickly and in large amounts, without the "fantastically different mindsets" required to manage productivity at that level. "It is hard to deliver increased effectiveness and efficiency with 5%-7% growth year on year," she says. "Any company would struggle with that."

Professor John Van Reenen of the LSE's Centre for Economic Performance, says the ONS findings were entirely expected. "While the fall in productivity is partly attributable to the way public sector productivity is measured – it's hard to pick up the quality improvement of, say, a fall in waiting times for operations – these figures do reflect some reality," he comments. "Typically, increasing spending without changing the way a firm is organised and does business will contribute little to productivity."

Defenders of the government point to signs of growth – NHS output improved in 2006-2007, for example – as evidence that Labour's investment is paying off in the longer term. The latest Audit Commission figures agree that NHS productivity, driven by acute and specialist trusts, has been increasing in recent years. Unit costs in 2007-08 were down 3.7% on those of two years earlier. All of which begs the question: will the recession and tighter public sector budgets see an improvement in productivity?

"People innovate more in periods of austerity," says Thomas. "Tighter budgets will focus us to reduce duplication, streamline services and provide more cost-effective solutions. There will inevitably be a debate about a reduction in hospital beds and acute services, as well as moving from hospital care to community and GP services. We need to have a different mindset of doing the same or more work in the right place, such as community-based work, with far less money."

Wage freezes may be one way to drive productivity, but there will be a limit to what belt-tightening can achieve. According to Thomas, a report by the Institute for Fiscal Studies and the King's Fund on the bleak financial future facing the NHS shows things have to radically change: "if they don't we will literally run out of money, because we won't have the revenue and the allocations from government".

Politicians seem unwilling to grasp the nettle of systemic change, however. Ben-Gad says pre-election debates will centre on who can manage the public sector better, rather than fundamental shake-ups. "The Tories will no doubt promise skyrocketing public sector productivity, but there is little discussion or difference in ideology among the two main parties in terms of re-evaluating the size of the public sector," he says.

"Productivity" is a useful concept on the factory floor, but is perhaps less meaningful as an objective measure of public services. Still, even with so many intangibles and variables involved, it is important in terms of getting as much out of fixed and decreasing budgets as possible, says Dr Deborah Wilson of the Economic and Social Research Council.

Public sector productivity will be coming under increasing scrutiny through 2010: "We'll be looking at a period of trying to get more for less, which is essentially exactly what productivity is trying to measure, and this is increasingly going to be the case as frontline resources come under more pressure."

Thomas concurs and says the important thing is to have agreed goals from defined inputs: "By assessing the level of productivity required to achieve a specific outcome we are better able to judge if the results are aligned. In this way we ensure that measuring output isn't simply about whether a number has increased or not."

Talent for tough times

Wed, 11 Nov 2009 10:55:54 GMT

When a report was leaked in September forecasting at least 137,000 job cuts in the health service, NHS Employers and the NHS Confederation responded by focusing on leadership and aligning talent management to a clear business strategy

Last week, Sian Thomas, director of NHS Employers, warned NHS managers to avoid the temptation of making quick savings by cutting back on jobs and said chief executives are concerned that the NHS may lack "enough staff with the right talent and skills to lead it through recovery".

The need for talent management at all levels of the organisation is highlighted in a briefing paper from NHS Employers, Talent for tough times: how to identify, attract and retain the talent you need .

The paper, and Thomas's comments, are a response to the leaked McKinsey report in September, which forecast huge job cuts – up to 137,000 jobs – in the NHS and are part of a strategy to maintain morale in the face of hard times.

"NHS Employers and the NHS Confederation are clear that slash and burn cuts are not the answer," says the paper. Instead, "a focus on developing talent at all levels will send the right message to staff".

One of the challenges will be retaining senior managers in the NHS during these exceptionally difficult times: not only will senior managers be steering health organisations through deep spending cuts, but they will be doing so when it is expected that the rest of the economy is likely to be coming out of the recession. Over the past year, the public sector has seemed a good option for many in the private sector, but the tables may well turn in the coming months.

The NHS needs to identify and develop its future leaders and this paper sets out many of the principles it will use to do so, including aligning talent management to a clear business strategy and valuing leaders "who can achieve results through others".

One of the case studies in the paper is South Downs Health NHS Trust, which provides community services in Brighton and Hove and which is about to integrate with the West Sussex Trust.

"Leadership will be key to the integration process," comments Andy Painton, chief executive at South Downs. "But the wider agenda is to increase quality and reduce costs. Leadership development is in some ways a proxy for the organisation we need to be. We need to create a culture where those leadership qualities are part of the way we behave every day. In tough economic times, you have to invest in developing talent, because it is your leaders who will create the environment in which people will innovate."

First talent management programme

The trust began its first talent management programme last November, after a number of changes in the organisation had highlighted the need for more effective leadership development. Fourteen leaders from across the trust were selected for the first bespoke development programme (see below).

With the appointment of Painton as chief executive, almost six months ago, the programme has now been widened and 80 staff will be selected for leadership training, with the first of the next session of training beginning in December.

Sarah Thomas, organisational learning manager at the trust, says the programme is already producing direct results in improved patient care. "We have one member of staff who now encourages staff to talk to patients about their experience and what would have made it better," she says. "It may not sound radical, but it is."

Case Study
Sylvia Russell
lead nurse manager
South Down Health NHS Trust

"I've been in the NHS for 28 years and I've seen a lot of changes. I was on the leading champions course and found it provided really practical tools. At a personal level, it's about building up mental toughness and resilience for making tough decisions and having tough conversations.

"The course was intensive. It was one day a month for six months of taught sessions, as well as meeting as a peer group to apply the learning, individual coaching, which I found really useful and 360 degree feedback, which was a bit scary. I also did a project, which was on reducing assessment and making it easier for patients to know who was doing what.

"The only downside has been sustaining that level of motivation, now the course has finished and the coaching has stopped."

The buying squad

Tue, 10 Nov 2009 10:33:00 GMT

Yet another report claims government departments don't have the commercial skills to deal with complicated projects. Could a flying squad of procurement experts be the answer? By Max Rashbrooke

It is a decade now since Sir Peter Gershon's seminal report raised the alarm over the way government departments run complex, public-private partnership projects.

But just last week, a report by the National Audit Office (NAO) found many government departments still lack vital commercial skills.

Two-thirds of major projects team had significant skills shortfalls, according to research cited in the report. And only half of all government departments have "effective commercial leadership".

Despite making massive strides over the last decade, the public sector often still fails to properly understand the risks involved, experts say. The potential for things to go wrong is not recognised, nor is the financial impact of those failures well understood.

So why is it so difficult for departments to attract, and hold onto, people with the commercial nous to run major projects? One obvious problem is the relatively low wages such people can command in government service. It doesn't help that commercial roles – contract management, procurement, etc – are less prestigious than those that involve policy-making.

"If you're focusing on procurement and commercial management and all that sort of thing, the career paths are less clear and not always as attractive as if you were involved in policy," says Adrian Kamellard, head of major projects for the Partnerships UK agency, which specialises in complex, privately financed projects.

In addition, most departments carry out complex projects only occasionally. So, rather than leaving commercially skilled staff idle for long periods, government departments instead draw on an army of interim staff and advisers – who now account for over a third of departmental staff spending.

Higher staffing costs

But that often leads to higher staffing costs, a loss of commercial knowledge when interim staff and advisers move on, as they inevitably do, and an imbalance between public and private skill levels. Departments "don't necessarily have many experiences of such practices," says John Tizard, a public-private partnerships expert at Birmingham University.

"Whereas for their private sector partners, negotiating contracts is something they do continually. They build up much more expertise and are able to learn from contracts."

What, then, is the answer? The NAO report says departments should be "flexible" when it comes to paying commercially skilled staff – code for paying them more, which may not be practical in a climate calling for greater public sector discipline. Tizard, meanwhile, advocates making part of public officials' pay dependent on long-term management of projects and user satisfaction.

The report also says departments should tackle the issue of prestige by doing more to retain highly skilled staff, for example by allowing them to be promoted within their current role. But a more fundamental issue, it hints, is making sure successes are copied. Some departments manage complex projects extremely well, but their knowledge is often not shared widely.

One option is simply to make it easier for commercial staff to be seconded quickly between departments. A further, more radical, step would be the creation of a squad of experts who could be sent into government departments when projects run into difficulty.

Edward Leigh, the chairman of the public accounts committee, has long called for a "cadre" of senior civil servants, a kind of public procurement flying squad. Such a scheme would address the problem of retaining staff, by giving them a constant, cross-departmental stream of projects to tackle; it would also, by its high-level nature, increase their status.

Kamellard says the key to improving procurement is not having swathes of commercially minded people at all levels of government but employing a number of "very experienced, high-calibre individuals". He warns, however, that the flying squad idea "has been tried from time to time, [but] has not quite happened yet".

One potential obstacle is the tension at the heart of the civil service. The NAO identifies what it politely calls "a lack of departmental engagement" with current efforts – run by the Office of Government Commerce (OGC) – to improve procurement skills. Two OGC programmes have had to be been abandoned because departments shunned them. Some departments make their own efforts to improve matters, duplicating OGC initiatives, while others simply fail to improve.

This state of affairs cannot persist, warns James Close, a partner with accountants Ernst & Young's government team. Projects are getting ever more complex, he says. And though contract management "is streets ahead of where it was 10 years ago, equally, the level of complexity in terms of commercial arrangements has also increased quite significantly. We have made some progress, but we can't stand still."

Some believe there may never be enough people able to manage the most complex projects and willing to work in government. "It's a very small number of people who can do that," says one senior government official.

Is the answer, then, to abandon the drive towards ever-more complicated deals with the private sector, and do more within the civil service? Kamellard, unsusrprisingly, doesn't think so. That would not reduce the complexity of projects but simply shift it back onto public officials, he argues. "You would be bringing the risk [of failure] back into the public sector, which requires skills which are not there."

Public v private: let battle commence

Tue, 01 Sep 2009 12:55:48 GMT

While James Murdoch attacks the BBC and Americans dismiss the NHS, the debate between the relationship between public and private is bound to intensify especially when 'pension envy' comes into play

The battlelines are drawn. As the Guardian has noted, James Murdoch, the chairman and chief executive of News International in Europe and Asia, yesterday fired the first shot in the general election campaign, with his fierce attack on the BBC.

One of the defining issues in the months leading up to the next general election will be the relationship between public and private: "Our public spaces, our public services, the very idea of the public, have all been appropriated by the languages and practices of profit and the private sector," says the Guardian.

The debate will be intense and will be both ideological and financial. We have already seen an attack from the other side of the Atlantic on the fundamental principles of the NHS. We can expect more attacks, not just from Americans, but from those within this country that have a vested interest in the state divesting itself of what have, until now, been regarded as public services.

The attacks will, there is no doubt, be brutal. Expect an intensification of "pension-envy", as private suppliers face a steep rise in the cost of providing final salary pensions. A recent report from actuaries Aon Consulting says the final bill for private employers could be more than £1tn.

Adrian Ringrose, the new chair of the CBI's public services strategy board and chief executive of services company Interserve, which receives three quarters of its turnover from running outsourced UK public services, says the cost of pension benefits is "right at the front of our minds".

The CBI has a long standing issue about the way public sector pensions are calculated and want "reform" of the system of transferring pension costs from public to private sector, when employees move over as part of outsourcing deals. It says the present way of calculating costs prevents "fair competition". Ringrose says private companies are happy to compete with voluntary and public sector bodies - but only if everyone competes on the same basis.

There will be much more of this kind of debate as companies jostle for influence and stake their claims for business with whichever party leads the next government. The practical need to cut the cost of public services is all too clear.

But the background of the economic downturn makes for some interesting arguments and positions. Who would have expected, for instance, the Financial Times, that bastion of private enterprise, to support greater regulation? Yet today, the FT unequivocally agrees with Lord Turner, chairman of the Financial Services Authority, that it would be unacceptable for the City to return to the status quo ante. "The sector must realise, as Lord Turner has, that real reform is essential," says the FT.

So on the one hand, we can expect a major onslaught on the divide between public and private; but on the other there may also be some unexpected allies arguing for the cause of social good.

The third way, the hard way

Wed, 22 Apr 2009 14:28:00 GMT

Obstacles preventing not for profit organisations from playing a greater role in the provision of public services are, it seems, the same the world over

The UK is not alone in reassessing the relationship between the public and third sectors. Many countries are increasingly relying on not-for-profit organisations to provide a range of public services, particularly in welfare. This has led to problems of scale, funding and how services are commissioned - both for state and provider.

A recent report by the Association of Chief Executives of Voluntary Organisations assesses the state of play in Australia, Canada, France, Hungary, Italy, Japan, Portugal, Sweden and the US. It finds a "remarkable" degree of commonality in the challenges and opportunities for the sector.

How the state engages with not-for-profit organisations determines the extent to which those bodies can deliver public services. Funding is critical. In many countries, recovering the full cost of services on behalf of the state is problematic and there is low certainty of revenue due to short-term funding cycles in the public sector.

In the US, the move to fee-based funding (akin to individual budgets in the UK) has caused big headaches for the third sector, which had been used to more certainty of revenue.

Legitimacy remains a problem in a number of countries. In Portugal, while confidence in the public sector to provide social services is low and many citizens are involved in social organisations, the idea of the voluntary sector delivering services is not widely supported. France, Hungary and to an extent Italy have also resisted using not-for-profit organisations in this way. When they have let contracts, they have tended to be awarded to companies rather than charities.

As in other central European countries, the dominant role for Hungarian charities is in sports, leisure and culture; welfare makes up only a small part of their operations.

In Italy, many of the 235,000 not-for-profit organisations provide public services. The third sector employs about four million people, of whom 500,000 are paid. Since the 1980s, it has been prominent in health, education and social services systems, but even so, the private sector still provides 80% of services not covered by the public sector. Cooperation between not-for-profit organisations is weak and public servants' contracting skills low.

This resistance seems to be a result of the way services are commissioned. In Italy, contracts usually go to the cheapest bid, while in Hungary, the trend among local authorities to create state-owned not-for-profit organisations means savings for councils but hinders third-sector involvement in public services.

In Australia, Canada and the US, voluntary organisations play a more active role. They are becoming more active in Japan, and in Sweden, a coalition between the government and 90 large not-for-profits has formally agreed the role of the third sector, which may increase its contribution to public services as the country moves from a traditional welfare model to a more diverse mix of providers. For now, 85% of services are provided by the state.

As in the UK, whenever voluntary organisations become more involved in delivering public services, it raises issues of autonomy and independence and whether third-sector values are being replaced by commercialism. Funding structures can put pressure on not-for-profits to provide certain services to certain clients. For example, a charity helping disadvantaged groups to claim benefits may be paid for the number of people they get. This could incentivise the charity to focus efforts on those entitled to benefits, regardless of whether they were the people who needed most help. acevo.org.uk

Are we on track for a smaller state and more outsourced provision of services?

David Walker — Wed, 22 Apr 2009 14:27:59 GMT

Are we on track for a smaller state and more outsourced provision of services? The debate still lacks reliable evidence on performance

Does the review of the public services industry by American economist DeAnne Julius represent government policy or is it a freelance effort by a secretary of state with a personal and ideological agenda?

The politician concerned, John Hutton, the business secretary, has argued a strong line in cabinet and public speeches in favour of outsourcing; he has even advocated tax cuts and downsizing government. Other ministers take a more obviously Labour line, including, it seems, the prime minister.

A couple of weeks before the Julius review was published in July, the prime minister presented a visionary paper, Excellence and fairness: achieving world class public services. How big, how good, where next? It contained not a single mention of the public services industry extolled by Hutton and Julius and scarcely a word about outsourcing.

Unless there is an autumn reshuffle of ministers, Hutton may get to lead a commercial delegation overseas on behalf of what he calls the UK's world-leading dynamic sector. But most of the other recommendations of the Julius report depend on other ministers along with No 10. And they are far less enthusiastic. The government looks unlikely to "reinforce and demonstrate their long-term commitment to open up public service markets and maintain effective competition" in the way Julius demands.

Plan of action

The chances are high that, while Labour remains in power at least, the Julius report will not be adopted. Its recommendation for more clarity - visible pipelines of tendering opportunities and clear and consistent objectives in commissioning services - will be widely supported, but few others. Its recommendation that government "needs a coordinated plan of action" depends, among other critical factors, on the outcome of the autumn's political machinations. Julius wants less prescription in contracts. "Multiple objectives for wider social and environmental goals should be used sparingly." This flies in the face of what the Labour party agreed with the unions at its July policy forum and subverts the government's green agenda. The Tories, too, have moved in favour of "contract compliance".

The report asks for competitive neutrality. "Commissioning processes and bid evaluation should strive for a level playing field between public, private and third sector bidders." But that rules out promoting the interests of the third sector, on which the government (and the opposition) are keen. Unless you give the third sector a start, how is it ever going to grow into competitiveness? Julius, closely following the CBI's wish list, wants suppliers to have cosy relations with commissioners. But some of her recommendations fly in the face of competition policy and suggest these markets are so competitive after all.

Tough guy

Her recommendation for tough-guy directors of service delivery anticipates the political commitment to outsource everything. The report implies the new director would outrank even chief executives and permanent secretaries. She doesn't have much truck with the new localism, saying that contract procedures and bidding by local authorities should be closely monitored by Whitehall and more league tables published.

The report is oddly ambiguous about competitiveness. It seems to suggest the government should pick winners among supply industry companies and promote their interests overseas, yet the very case for competitive tendering of services is that it is competitive and commissioners take a neutral, uncommitted view of suppliers.

David Walker

No north-south divide

Tue, 24 Mar 2009 16:50:00 GMT

Regions in Italy are told to become self-financing through taxation, while Spain and France try to deal with the economic slowdown

Italy's latest attempt to reform local and regional government finances was unveiled last month by the simplification minister, Roberto Calderoli. As a member of the Northern League, which advocates more financial autonomy for the north, his proposals would introduce revenue-raising powers for the various tiers of the state, local, provincial and regional.

Respective authorities would have to be self-financing on the basis of their tax take. Communes and local councils would be financed through taxes on households, provincial authorities through imposts on transport and cars; Italy's regions would levy on other public services.

Authorities would be free to set charges as they wished and citizens would be able to see what services are provided and how much they are charged for them. The requirement to be self financing would, the Berlusconi government hopes, force local and regional authorities to be more energetic in tackling tax evasion.

Calderoli denied fiscal federalism meant he was favouring the rich north to the detriment of the poorer south. Equalisation would still be pursued, he said, with the richest regions and councils forced to help less developed ones. The difference is that resources will no longer be distributed from Rome.

Calderoli's proposals are meant to be part of the government's bid to ameliorate public finances. In order to meet the EU's requirement that Italy balances its budget by 2011, the finance minister Giulio Tremonti announced £24bn in spending cuts; they would be partly offset by selling off property confiscated from organised crime.

The Italian public administration minister Renato Brunetta predicted sickness absence in the public sector was going to fall 30-40% as this month measures to tackle absenteeism come into force this month. The new rules would allow medical "inspectors" to be sent to employees' homes after just one day's absence and would introduce the requirement to obtain medical certificates from doctors approved by the ministry.

Bonuses paid to sick workers would also be reduced. Brunetta says his tough stance has already seen absenteeism in central government go down by 10% in May and 20% in June.

The reforms are part of a wider attempt to cut Italy's 3.5m public workers and improve productivity by 20%, in a bid to save £30bn over the next five years.

Spain

Ministers were forced to cut short their holidays to attend an emergency cabinet meeting to discuss the country's economic crisis as inflation exceeded 5%, the highest for 15 years. The left-of-centre government led by Jose Luis Rodrigo Zapatero opted for fiscal incentives, abolishing inheritance tax, introducing VAT rebates and extending loans for state housing and smaller businesses. Together the plans are expected to inject around some £35bn into the economy.

France

The government wants to reduce the cost of social insurance and unemployment benefit but with employees already bemoaning the demise of the 35-hour week, the proposals will be controversial, particularly at a time when unemployment is on the rise again. The Sarkozy administration has ordered that anyone refusing two "reasonable" job offers should lose their entitlement to benefits. It has also introduced more flexibility into job contracts.

But unless the funding gap between social insurance contributions and benefits is reduced, France's efforts to reduce the public sector deficit to 2% by 2009 and to balance its books by 2012 look increasingly unlikely. The European Commission calculates that lower tax receipts and higher interest rates on the public debt mean France's deficit is likely to remain around 3% this year - not the 2.5% predicted.

Investment and the economy

Jane Dudman — Thu, 05 Feb 2009 16:30:00 GMT

A lack of data about their implications makes regeneration projects controversial

No one quite yet knows how the recession will play itself out across the public sector. As David Brindle points out, there are few senior public sector managers who have experience of managing through hard times - and almost no one with the experience of times as hard as these are shaping up to be. Similarly existing public investment schemes, including Building Schools for the Future and the NHS Lift programme, may have the potential to provide valuable knowledge about how large infrastructure schemes can work, as well as what can go wrong, but there's still a great deal of uncertainty about where such investment will be made and how it will benefit the economy.

The government's decision last month to go ahead with building a third runway at Heathrow is a good example. It's been widely condemned, not just by environmentalists but also by MPs of all parties, who were furious that the decision to allow BAA to apply for a third runway and a sixth terminal was made without a parliamentary vote.

Regeneration investment is equally controversial and complex. The big challenge facing managers in both central and local government is the lack of real data about the long-term implications of regeneration and sustainability projects. As Guardian columnist Polly Toynbee pointed out last month, that leaves a false dichotomy between two untrue propositions - green versus growth.

Later this month, public leaders will get a chance to rehearse the case for government investment in regeneration. The Chartered Institute of Housing and the British Urban Regeneration Association, with support from the Homes and Communities Academy, are again running a masterclass for regeneration professionals, with the aim of ensuring that "future regeneration projects don't stall".

They may have a fight on their hands, if the London 2012 Olympics are anything to go by. The government has already been forced to raid its Olympic contingency fund to the tune of £461m, to pay for the £1bn project to build an athletes' village and international media centre, after private sector investment evaporated. The media centre - an important part of the regeneration proposals for east London, once the Olympics have happened - will now be entirely funded from the public purse.

Plans by a private developer to build flats that will be sold after the games have been hit by the collapse of the property market. The government bailout of the two most significant parts of the 2012 plans in legacy terms demonstrate the huge difficulties facing any kind of attempted state stimulation of private sector regeneration projects.

A recent report from the Centre for Cities highlights the areas most likely to find it hard to recover from the recession. These are likely to be the ones looking for the most in government infrastructure funding.

It's not only government money that's in demand. Professionals skills, particularly the ability to negotiate and argue the case for spending in this and other areas, are going to be more in demand than ever as we move further into recession and as public sector organisations begin to anticipate the next comprehensive spending review by cutting back on budgets. That's already happening. Steve Freer, the chief executive of the Chartered Institute of Public Finance and Accountancy, has not been slow to point out that many councils are facing their most difficult budgets for years, following the announcement of the local authority grant settlement.

The aim, says Freer, will be to drive efficiency savings "as hard as possible to bridge the budget gap and minimise the far less palatable option of cuts in services". But, in some places, that less palatable option will be taken: there will be cuts in services.

Essential services

What management theories can help here? There is, of course, no shortage of expertise about managing services in a downturn, but most of it is aimed at those in the private sector. Not that many managers in that sector are going to spend much time over some of the advice, which borders on the inane: "Make your products and services so indispens able to customers that they wouldn't dream of cancelling" is one priceless bit of advice to private firms. Isn't a mortgage a more or less indispensable service in 21st century Britain? Yet that doesn't seem to have saved the banks. Those in the public sector, of course, really do provide services so indispensable that they cannot be cancelled.

Finding a way to marry up the essential characteristics of the state provision of services with the assumed market ability to do so efficiently was the hallmark of new public management theory, but that's unlikely to help us in present times.

David Spencer, a senior lecturer in economics at Leeds University Business School, argues that while global governments are focusing on the demand-management policies of economist John Maynard Keynes and looking to investment to stimulate projects and lower unemployment, there are other aspects of Keynes's proposals that also merit attention, particularly a reduction in working time. Reducing work time, says Spencer, not only extends the time during which workers could spend - itself a goal of economic stimulus - but would also allow jobs to be spread out more evenly across the workforce as a whole. This is something that has not yet been applied to public bodies, but could have interesting implications for other aspects of workforce development.

Sign of the times

Short working time, with its connotations of the three-day week, is unlikely to become a useful management tool. What's going to be interesting over the next months is seeing which management practices are going to prove most useful. Will behavioural psychology, as put forward last summer in reams of discussion about the "nudge" theory of changing citizens' behaviour, continue to hold sway among the leaders of thought in public services?

One sign of the times, perhaps ominously, is that the "lean" organisational approach, originally promulgated by Toyota for improving its manufacturing processes, has become rather more prevalent - or at least, discussed - in public organisations. Anecdotally at least, there is an impression that this theory, which is based on giving frontline workers greater power to organise themselves into the most efficient ways to work, and to feed back examples of inefficiency up the management chain, is becoming popular in a number of public bodies.

Jane Dudman

The needs of a place must come first

Thu, 05 Feb 2009 16:25:00 GMT

Much broader in its scope than procurement, strategic commissioning has to factor in service delivery but can it deliver desired outcomes

Local strategic commissioning is critical to leadership of place, ensuring public services meet the needs and aspirations of their users and the wider community. It must also address the financial and service consequences of a recession and much tighter public expenditure settlements. What defines strategic commissioning, rather than simply buying services, is aligning the use of markets (in the broadest sense of that term) to a systematic approach to delivering services and improving outcomes for local people.

Strategic commissioning is a much broader process than procurement, with decisions on service delivery being just one aspect of meeting the needs of a place and its population. Procurement is just one way of implementing commissioning decisions. Even then, procurement includes different options to provide services through "make, buy, share or partner", with services delivered through many public, private and third sector bodies and organised via a mix of contracts, partnerships and in-house or inter-agency agreements.

The test is what will best help deliver the desired outcomes.
Strategic commissioning does not, therefore, represent a reversion to the ideology of the 1980s, when government used compulsory competitive tendering to force open the supply of public services to the private sector; nor to the 1990s when prior options, market testing and internal markets were used to "reform" delivery of government functions. The arrival of New Labour in 1997 saw most of this superstructure swept away and replaced by "best value", with its greater emphasis on securing quality and value for money. The approach was less ideological and more pragmatic. Partnership between public, private and voluntary sectors and wider forms of contestability were encouraged alongside competition.

Best value helped to change the adversarial culture between public sector procurers and business sector suppliers but the process often became highly bureaucratic.

So although elements of the best value regime remain, the policy emphasis has switched to strategic commissioning. Is strategic commissioning likely to be any more long-lasting than its predecessors? Potentially, we think strategic commissioning has great benefits and could be around for some time to come and could well survive a possible change of government.

But - and it is a whacking great "but" - not as it is now being practised by central government. The needs of a place Although all the big Whitehall spending departments are promoting strategic commissioning, there is no consistent concept of what it is or how it should be applied. So while the NHS has introduced world class commissioning, the Work and Pensions Department is developing a prime contractor commissioning model.

At the same time, crime and disorder partnerships have been reformed to follow an intelligence-led model, the Learning and Skills Council is adopting its own mix of open and closed competition, and the Department for Children, Families and Schools is rolling out another strategy for children's trusts and the commissioning of children's services. The Department for Communities and Local Government, meanwhile, puts the emphasis on organising commissioning based round the needs of a place. It is clear that each department is doing its own commissioning thing. A lack of uniformity is not necessarily a fault.

There may be good reasons why strategic commissioning looks different for different sectors. For example, one would expect the commissioning model for adult social care, where individual budgets are set to become the norm in this and other service areas, to look very different from the model for community safety, where there are legal and political constraints on contracting out the role of warranted officers and where the emphasis is as much on engagement with communities as with individuals.

However, even making allowances for this, the government's approach is causing problems. Multiple versions of strategic commissioning not only overly complicate the concept but make it difficult for partners and services in local areas to adopt an integrated approach. This is reinforced by different performance management regimes across local service and agencies. For example, we have the understandable but crazy situation where different Whitehall departments have introduced separate legal duties to carry out needs assessments (which underpin the early stages of all strategic commissioning models) in different sectors. Councils and partners are under separate duties to assess the need and demand for health and social care, housing, childcare, children's services and community safety.

And the Queen's Speech provides for a new duty on local authorities to carry out an economic assessment. This problem is compounded by the prescription inherent in some strategic commissioning models. It is not at this stage clear, for example, whether the competency-based approach of world class commissioning in the health service will be sufficiently flexible to enable localities to fully reflect local circumstances and factors in their commissioning plans; or to enable the NHS to partner effectively with local government and other bodies.

Underlying the different models is a more fundamental issue: who determines the outcomes to be commissioned? What assumptions are being made on central/local relations and the ability to decide between relative priorities? The local area agreements signed off in late spring 2008 have brought a greater emphasis on local rather than national priorities and have generally been welcomed, but the top local priority in terms of further improvement still remains "increased freedom on choosing and designing targets". This tension is reflected in the overlapping performance management regimes.

Accountability is still strongly rooted in targets for individual sectors. The new comprehensive area assessment regime, which is intended to incentivise partnerships to commission and deliver agreed local objectives, shows signs of drifting back towards focusing on the performance of individual institutions. Dilemmas The answer to these dilemmas lies in empowering and encouraging strategic commissioning models built around the needs and aspirations of local people in each area.

This will not only help to deliver more integrated solutions to challenging local problems, but will also have the merit of reinforcing the efficiency agenda by encouraging public agencies to align and pool their budgets and commission services jointly across the professional and service barriers that so often frustrate people. But if this is to happen, the government and Whitehall departments must become much more joined up in their discussions and negotiations with local areas and with commissioning and delivery bodies.

The journey towards local strategic partnerships having greater autonomy to determine their own priorities must also continue.

Robert Hill is a former adviser to Tony Blair and now works as a public policy analyst. He is an associate of the Centre for Public Service Partnerships.

John Tizard is the director of the Centre for Public Service Partnerships at the University of Birmingham