Delivering UK public services costs some £475bn a year - £240bn if one excludes procurement of goods, services and works. However, duplication in the public sector is rampant. There are thousands of independent and different finance and payroll systems in the public sector, even for organisations that have identical functions. Most organisations have their own IT, legal, estates and buildings management and procurement teams (back office services). Most have independent approaches to frontline activities as diverse as waste collection, social care and passenger transport.
In a time of budget cuts, can such independence be justified? Independence loses economies of scale; duplication creates huge costs. This takes money from frontline services. Also, expertise varies hugely between different organisations. Not everyone can employ the best. Career development opportunities may be limited and organisations may be over-dependent on certain people. This can lead to wage escalation, for example through over-promoting people. Independence reinvents specifications; unwise IT specifications can boost costs by two or three times.
Some would argue that joint services risk losing the local touch and could cost more through bureaucracy. However, service level agreements and cost transparency can counter that. Where do we spend most of our money – at Tesco or in corner shops?
My experience is that 10-20% of the cost of back office services should be saved through joining together on a large scale. The New Local Government Network recently identified that this could save local government some 3% of its total costs. There is less evidence for the size of potential savings through joint frontline services, but 10% would seem a safe bet. Such savings are probably typical of the public sector as a whole and could save many services.
The benefit of joint services is recognised widely, but progress is slow. While many examples can be quoted, most are collaborations rather than genuine joint initiatives. Collaborations rarely deliver what is promised and there can be high hidden costs that negate any benefits. Joint service delivery represents only a tiny proportion of public sector running costs and most examples are small scale.
The government is facing two ways on joint services. It is attempting to create them in central government, focusing mainly on back office services and taking us back towards pre-Thatcher days when all such services were centralised. However, it is planning the opposite for the NHS – many GP commissioning units replacing the relatively few NHS trusts – a possible field day for prospective IT, estates and procurement directors and consultants. It is singing the praises of joint services to local government, but has not changed the VAT rules that discriminate against joint services in higher education.
Not all services are suitable for joint delivery – some are genuinely unique, though that argument applies principally to central government. However, there could be a huge rationalisation of service delivery activities throughout much of the public sector, the ideal model being a balance between centralism and regionalism – along functional, not sectorial, lines. A much stronger and consistent lead from the government is overdue.
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Autor(en)/Author(s): Colin Cram
Quelle/Source: The Guardian, 16.05.2011
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