With the parties furiously competing to see who can make the greatest ‘efficiency savings', a veritable tsunami of scale-based change is about to hit the public services. Sir Peter Gershon has advised the Conservatives that if they come to power they should outsource the entire public-sector back office within 18 months.
But this nightmarish vision – centralism on steroids – would kill stone dead the ferment of service innovation that is currently offering not just the hope but the reality of improvement at local councils up and down the land. Managers and workers at these bodies have reached the liberating and counterintuitive realisation that big is not better; making services truly local is both morally and economically attractive.
They have learned that in services, economies of scale – separating services into front and back offices so that processes can be standardised and automated – are a myth. The secret of service improvement (both financial and qualitative) lies in streamlining the flow. The more services are fragmented and batch-processed, the worse and more expensive they get. Saving isn't in sharing services or building giant back-office factories like HMRC and DWP. It is getting clear about purpose and redesigning the service to meet real local demand. Gershon has it the wrong way round. Cost reduction is a by-product of the focus on purpose and improvement, not vice versa.
Councils that have quietly rejected central specification of method – reminiscent of Soviet-style central planning – are making service improvements that make a mockery of official targets, while driving out costs in the process. They do it through small-scale iteration and adaptation rather than adoption of an all-embracing central plan – this is how innovation works; this is why bubbling capitalist economies outperform centrally planned ones.
For example, by studying what claimants needed and redesigning the work to match, East Devon and Stroud Councils have dramatically beaten the official target time to pay housing benefit, and spend less doing so. Stockport council's IT help desk now does just that – help – making customers happy and saving taxpayers' money at the same time. Or take potholes. Local authorities in the UK and New Zealand have doubled productivity in road repairs by studying demand and redesigning the work so that local teams have both the equipment and the responsibility to maintain the highways in their area in tip-top condition.
Where work is designed like this, people can use local knowledge to solve local problems. As a direct result the morale of those doing the work rises, fuelling further improvement, and the symptoms of poor morale – sickness and absence – fall away. But even better, when citizens experience good (local) service, their behaviour changes. Indifference turns into awareness, engagement and responsibility. Visitors to Portsmouth's estates, which have been transformed by the new service localism, are struck by their spick-and-span appearance and the positive attitude of residents. None of this could be achieved by Gershon-style industrialisation of services, and the value extends far beyond cost-cutting. Better services create better communities; the moral economics of localism outweigh even the financial benefits, considerable as they are.
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Many of the case studies referred to in this blog are published in: “Systems Thinking in the Public Sector; delivering public services that work,”
Triarchy Press.