Tag Archives: efficiency

Inconsistency-spotting.

Apparently, we’re wasting vast amounts of money, pretty much on purpose. For example;

Whitehall officials said that the report showed widespread savings could be made  throughout local government without a “slash and burn approach” to  public  services. Mr Pickles’s aides said some councils were making  genuine efforts.  They praised Cornwall Council, which has cut £3million  from waste collection services by contracting out to one firm, not six.

Now, how might it have come to pass that Cornwall started using one waste collection firm, rather than six? Could it have something to do with Cornwall having become a unitary? It can’t possibly be that, though, because

THE formation of Cornwall’s new unitary council has been highlighted as one of the worst examples in the country by a senior Conservative party figure. On a visit to Cornwall, Eric Pickles, the newly-appointed chairman of the Tories, said the process of reorganisation had been a disaster – and a waste of taxpayers’ money.

And as we know, it’s not the sort of behaviour he wants to encourage. I presume a hunt is underway for the officials in question so they can be re-educated with the aid of Eric’s pearl-handled revolver.

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Then he went and spoiled it all…

Courtesy of the lovely folk at the New Local Government Network, I got to hear one of the new local government Ministers, Grant Shapps MP, speaking earlier this week. He said a number of welcome and interesting things about reducing the extent to which Whitehall gets in the way of Councils doing sensible things on the ground. He also said that the financial climate would be horrendous and local government would be in no way insulated from that, in fact quite the opposite. We’d kind of guessed that.

Then he said that what the private sector does, and he thinks we should learn from this, is to do more for less, and be more efficient. The man’s clearly some sort of organisational genius, I mean I personally had never thought of that. I don’t know about any of you. Less money, but the same broad outcomes? Apparently it’s what they do at Sainsbury’s. They don’t say “Good food costs more at Sainsbury’s”. I’m not sure what he thinks local government’s advertising slogan would be, something like “reassuringly expensive”?

Google knows the truth.

Win one for the kippers

I hope those UKIP Councillors elected earlier this month (Nelson ward in Norfolk seems as appropriate a place as any for them to top the poll) are settling in well to their new positions in elected local government, and finding good ways to make the link between the problems and challenges faced by their local authority in delivering for the people they represent, and the UK’s membership of the European Union. I worry that they are going to find a lot of Council business quite tedious if they aren’t especially interested in the rest of it, but they have their experience as residents to draw on, and Greens around the country have managed to engage with issues which aren’t really ‘environmental’ in any real sense, so who knows.

I thought this might be a good time to help them make one of those links – indeed I’m a little puzzled that it hasn’t already been made more widely – it might just be a really tedious story. Last week there was a rather unfortunate decision in a case before the Court of Appeal (Brent London Borough Council v Risk Management Partners Ltd) which in essence said that local authorities were not allowed to form partnerships with one another without going through the tendering process which they would employ if they were considering outsourcing a function to the private sector.

In brief, a group of London councils believed they could get better value for money from their insurance by clubbing together to self-insure than by buying insurance from the private sector. This is often likely to be true, since insurance is in pure mathematical terms irrational – the “expected value” for each individual is less than you get out, much like betting on horses. The advantage is being protected against large risks for a small guaranteed loss.

Understandably however, a private sector provider was unhappy that the tendering process had been halted and went to court seeking compensation. This recent ruling upheld one which awarded them such compensation, on the basis that halting the tendering process was a breach of the Public Contracts Regulations 2006. Now, I am open to the argument that if a Council is not going to deliver a service directly it should consider all possible providers. However I think there are a number of reasons this is not ‘the whole story’.

Firstly, the public sector (more broadly than local government) is hugely outgunned on procurement. While great strides have been made, big contracts still often see a local authority negotiator on a ‘politically acceptable’ salary of say £60k facing up against a far more experienced private sector ‘client relationship manager’ who is perhaps on the same wage but with the potential to more than double it through commission. The only time I’ve ever been confident in my own work that our lead negotiator on a large contract was really the top player on the field was when we had a very wealthy retired accountant who came in for a far lower wage than he could have commanded elsewhere, because he “thought it might be a fun experience”. Secondly, some private sector organisations overpromise and underdeliver to the public sector, knowing that it is politically and administratively difficult to break certain contracts.

Thirdly, and most importantly, partnership between public sector organisations is, in my view, a qualitatively different thing from outsourcing, for all sorts of reasons of staff morale, democratic accountability, and political acceptability. Whether we are talking about the Sustainable Communities Act, or the Total Place initiative, or David Cameron’s suggestions about pooling local funding for public services, there is progress to be made beyond simply an old model of ‘putting it out to tender’.

Consequently I am not terribly happy about this judgement – I think it puts at risk a number of important initiatives, and so do other people in the field. For example Michael Burton, Editor of the MJ (which used to stand for Municipal Journal but I think it now stand-alone, like BP or YMCA) says the following on his blog – quoted at length because I think it’s important;

Among the pile of correspondence in new communities and local government secretary John Denham’s red boxes this week, the Appeal Court ruling over London Authorities’ Mutual Limited should be stamped ‘urgent: action this day.’

This otherwise obscure ruling over the legality of a new insurance consortium of London boroughs threatens to undermine the entire direction of public sector partnership working by blocking the use of long-established wellbeing powers.

However, the Appeal Court maintains that councils do not have the powers to set up such an entity as LAML, even though it has the support of the CLG, and says that neither the 1972 nor the 2000 Local Government Acts give such legality.

Critics in turn argue that this is a narrow interpretation of this legislation and is a return to the 1980s when councils needed express powers to act and if they did not were ruled ultra vires. The whole point of wellbeing is to allow councils to do anything which is not expressly forbidden, precisely to allow them to be more pro-active and innovative.

John Healey, before he was moved to housing, made a point of telling councils they have these powers, and should just get on and use them, especially when grappling with the recession. Some lawyers said it was not quite as simple as that and the Appeal Court agrees with them. It has turned the clock back and done councils, and residents, no favours. Its ruling must be overturned.

Which is all well and good, and I entirely agree. However (and I’m sorry if this doesn’t quite live up to my billing), it’s not open to the Minister to reverse that ruling. Indeed it’s almost certainly not up to Parliament to reverse that ruling either, because the Public Contracts Regulations 2006 which are getting the blame here are not domestically inspired legislation. They exist to give effect to EC Directive 2004/18 and its predecessors, “on the co-ordination of procedures for the award of public works contracts, public supply contracts and public service contracts [in the EU]”.

Now, there may be UK gold-plating of that directive (though it looks pretty clear to me), or there may be a public policy decision that the benefit to UK private sector companies in being able to compete for public tenders elsewhere in the EU outweighs the inconvenience to the UK public sector in being unable to form public-sector-only partnerships. I don’t know. Nonetheless, I think it is important when we look at what impact legislation is having, to understand at what level that legislation is made, and who does and does not have the power to change it.

On hypocrisy

I wouldn’t for a moment suggest that any politicians are hypocrites. Mine are nothing of the sort, and even if they were I want to talk today about national politicians. It must be hard for them, briefing, counter-briefing, lobbyists, interest groups, constituents. It’s not surprising that they mis-think, sometimes, and fail to recognise inconsistencies between their arguments, other arguments they make on other issues, or arguments made by their colleagues with whom they are, in theory, entirely in accord.

I’m currently finding a number of things hard to reconcile. The Culture Secretary appears to think that Councils producing newspapers is bad news for the local newspaper industry. Fair enough – I think he’s wrong and that it has much bigger problems than that: at the moment I’d particularly cite the collapse in advertising from estate agents as a serious effect on the bottom line, but also in many areas the decline in reporting quality (widespread, but not universal) and the growth of the internet have made it less appealing to buy a paper. He seems to have some measure of support from the other parties for his criticism.

 The Local Government Minister, in contrast, continues to funnel substantial sums into bodies called Regional Improvement and Efficiency Parterships, designed to find ways of getting “more for less” out of local government. One way they have found and promoted (pdf)  is to make greater use of online recruitment portals, and spend less money on administration and postage for job applications, and less on job adverts in… local newspapers. I imagine one of the ‘quick wins’ when David Cameron is looking for savings will be to move a lot of public recruitment out of The Guardian and onto the internet. Will politicians leap to the defence of the national press too, when this happens?

More importantly, if you want to look for an example of the public sector using unnecessary competition to destroy a public service because they don’t understand how it works, you don’t need to go as far as local government and newspapers – the deliberate and planned withdrawal of services from Post Office based operation is substantially responsible for the required scale of the post office closure programme. Fine for those with lots of alternatives, whether because they are wealthy areas or because they are dense and urban, but for large suburban estates where the private sector premises are boarded up, or rural villages where the post office was the only shop in the first place, substantially less helpful.

Ironically, it is Councils stepping forward in some of these cases to save local post offices, but there’s a real risk this will fall victim to the Post Office beancounters, who are relying on the closure of Post Office X in order to force people to drive to Post Office Y, thereby rendering it viable. Never mind that at the post office nearest my office there is a queue out of the door for much of the day, and round the block between 12 and 2 – more people might go if the queue was shorter – it’s not a paradox!

You can’t always have everything you want, but the model whereby if a useful local service is in the public sector it must be cut, outsourced, privatised, competed out of existence or closed, but if it’s in the private sector it must be supported at all costs by taxpayers’ money and non-competition accords, without any real thought given to the value for money obtained, strikes me as – at best – sloppy thinking.

That could save something in the region of…

Media darling and economic blogger Duncan has been looking at the list of possible public spending cuts put forward by David Davis MP in today’s FT. He asked me what I thought of both the effectiveness and the likely saving from the proposal to “Abolish regional government and devolve remaining functions ‘back to the counties’ or back to the centre“. You can read my full answer in the comments, but I thought I’d raise the issue here in case any readers have any specific insights.

My general view is that at the moment the “regions” (RDAs, GORs, SHAs, and assorted other smaller regionalised Quangos) generally do the job they’re given adequately, but there’s no particular logic to them. Certainly there’s no reason it couldn’t mostly be accomplished either at a county level without spending any extra money (and sometimes by spending less) or centrally, since the limited devolution that the regions represent often doesn’t add anything in terms of real accountability.

The problems the proposal needs to address are, firstly, the variable geometry of the UK – not everywhere has Counties any more, so for example Doncaster and Brighton may not be large enough to undertake some tasks, but the Conservatives are generally opposed to structural reforms that might address that, and to the best of my knowledge not exactly enthused by the city-region (aka “metropolitan county”) agenda. London is the other anomaly – would the Mayor be the County and decide what can and cannot be pushed down further to the individual boroughs? Instinctively that seems sensible.

Secondly, where the savings from scrapping the regional tier come from the amount of work the Government Offices of the Regions do on liaison over regulation and inspection with individual Councils, there is a risk of double-counting, since the Conservatives are already proposing to save much of that money by reducing the amount of regulation and inspection. You can’t, sadly, save the same money twice. I suppose you can get rid of some of it, and have the part you keep done more consistently and with fewer layers.

In principle though, it’s much simpler to me. Democracy works better when there’s demos as well as cratos. Villages, towns, cities and counties tend to have a significant number of people who describe themselves as being “from x”. I meet very few people who say “I’m from the East of England”, and when someone says “I’m from the West Midlands”, they tend to mean the conurbation, I don’t think it’s a widely used self-description by people from Herefordshire.

Therefore I would want the argument to be overwhelming for governance at the regional level if it were to continue – which is not to say that some delivery can’t still be done at that level by agreement, but I wouldn’t use the current structures or, to be honest, regional boundaries. I am put in mind of a comment once made by Matthew Taylor, MP for Truro and St Austell – who when asked his views on regional government replied that he was entirely at ease with it but that there wasn’t really room for many regions in a country the size of Cornwall. I think he was joking…

While we’re on the subject, I have some changes I would like to make to the sections of the Local Democracy Economic Development and Construction Bill dealing with drawing up the Integrated Regional Strategy. Will supply own red ink if required.

Under the weather

Credit is being bestowed on Lincoln City Council at ConservativeHome for their success in reducing sickness absence from a peak of a fairly astonishing 18.2 days per member of staff in 2002-3, to a target-busting 8.7 days a year for the financial year just ended. The Editor has written to the Leader of the Council to ask how this was accomplished. Knowing a little about this I can offer some insights into what the response might be, although of course things may look entirely different from within the organisation as against how they appear from my perspective.

The first thing to say is that while sickness levels in the public sector are quoted as an ‘average’ per member of staff, and that’s a useful measure, it doesn’t give you a very good feel for the reality. 18.2 days looks like a prodigiously high number, and indeed I can’t imagine how it could be thought acceptable or how exactly it happened. It is very unlikely, however, that it was composed of some people taking 20, and some taking 16. More likely that among Lincoln Council’s staff there were a couple of dozen who were effectively absent because of some long-term illness for the best part of the year (sickness measures include those who are no longer being paid sick pay), and the remainder were off for something closer to the overall average of 9 days. Whatever the case, one would want to ask some fairly searching questions, but they are clearly different problems requiring different solutions.

Ordinarily, one would expect Lincoln to outperform on sickness – as a District Council it does not employ many of the staff members in whom the problem of long-term sickness tends to arise most frequently: firefighters with injured backs, teachers and social workers with nervous breakdowns, and so on. Similarly, short-term absence is often very high in social care for old people, simply because if I have what most of us would call “a bit of a cold”, it can still be too great a risk to go into a frail old person’s home and give them what might in their case be a much more serious infection. On the other hand, they do have a greater percentage of public-facing staff who might be expected to pick up more ‘bugs’ than an office worker. You can see a breakdown by department here (pdf). Interestingly sickness levels in the planning team are falling, and in the revenue team they’re rising – perhaps that’s not surprising given the economic climate! 

Without wishing to detract from Lincoln’s undoubted achievement, there is also the problem of mean reversion. While sickness was a staggering 18.2 in 2002-3, it was consistently around 11 days in 2000-1, 2001-2, and 2004-5, 2005-6, and 2006-7. I believe (I’m open to being corrected) that the Conservatives took control of the Council in 2007, so while sickness levels were still unacceptably high, they had already been brought down some way, whether by the law of averages, or by people taking action, from the bizarrely high numbers of 2002-3. Councillors have been actively involved at both Cabinet and Scrutiny level in leading and monitoring the ongoing work to bring these numbers down further.

A number of things were done in Lincoln with the aim of reducing sickness absence, and I’m not sure they all make comfortable reading for those who believe that the problem is skiving, or that the solution is a harder line from managers. I suspect some will, and some will not. 

  • HR policies around equalities were strengthened, to ensure that if people developed a disability it did not prevent them working for an extended period of time if there was a way of helping them continue in their role, as well as monitoring the casues of accidents and stress more closely.
  • Managers were encouraged to become more active in helping or disciplining, as appropriate, those employees whose absence was the result of misusing alcohol or drugs.
  • The Council also acted to speed up the resolution of disciplinary and grievance proceedings where “off sick” was being used as a euphemism for the real situation.
  • Absenteeism in previous employment was given greater prominence in the recruitment process in an attempt to reduce the number of people being brought into the organisation who were likely to prove ‘bad risks’ in terms of absence.
  • Managers were trained in ’emotional intelligence’ so that they could offer more tailored support to staff where sickness absence appeared to be becoming a problem, and a ‘third eye’ approach adopted so that managers could have a colleague to call on to look again objectively at a problem situation.
  • The function of occupational health workers was promoted more actively, ensuring that staff who were off sick for an extended period of time attended interviews focused on getting them back to work.
  • More was done to encourage recognition of those staff with an exemplary attendance record.

Now, think what you like about some of it – I can hear the cries of “occupational health? non-job” in my ears now, and as for rewarding people just for turning up and doing the job they’re employed to do in the first place, shocking! But there we are, one way or another it appears to be working. Contrast this with some truly bizarre decisions around sickness – I know one (Conservative as it happens, but I doubt this has come from the Members!) council which has decided that if office staff are too ill to make it to work they are now to be banned from working from home, on the premise that “you are either ill or you aren’t”. That might, just about, be fine if people have flu (though I’d have to be iller than that before I stopped at least picking up my office e-mail), but what if you have a broken ankle?

For the record, my maths says I have had 6.5 sick days in the last three years, although I’ve had some other persistent issues which have meant taking occasional scheduled time off during the day for medical appointments, for which I have happily (from my perspective) not been required to use holiday allowance.

Spot the Customer

The financial climate for public services has not been as good over recent years as many pundits suggest, but there is no doubt it is set to worsen dramatically over the next few and quite probably beyond. As this happens, the attraction of “more for less” theories and the temptation to embrace easy answers will grow across local government. Of course it is always important to look for ways to deliver the best possible balance between good services and low costs. It is also important not to waste scarce resources.

One way local government is sometimes very good at wasting scarce resources is in the ineffective or inefficient employment of consultants. Let me be clear, I am not opposed on principle to the employment of consultants, though if spending on them were to exceed about 1% of total turnover, alarm bells would ring, and I would ideally hope it would be a great deal lower. Consultants can be useful in delivering specific projects on which they have expertise when it would not make financial sense to employ someone in-house for a short time period, or to develop those skills internally. They also, rightly or wrongly, can be a better way of delivering hard messages to the Council – to staff or Councillors, which they would find easier to resist or ignore if they were raised internally in a similar way.

However, consultants have a number of drawbacks. Firstly, they are often very expensive in terms of cost of time, compared to internal staff. Secondly, they often turn out not to have the expertise claimed for them, and finally – worst of all in my view – they are sometimes misdirected by a Council which is unclear about what they have been employed to deliver in the first place. One example of when this can happen, perhaps ironically, is when consultants are employed in order to identify ways of saving money.

A fashionable cost-cutting theory at the moment is one arising from manufacturing, suggesting that organisations should become “lean“, following a theory which “considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination”. So far, so difficult to argue with (unless you work in the advertising or sales department, I guess). Now Lean is making the leap into the public sector, and certainly advice on saving money is welcome. However, there is a big problem. Wikipedia again;

“Working from the perspective of the customer who consumes a product or service, “value” is defined as any action or process that a customer would be willing to pay for.”

Now tell me who my customer is. For now, let’s imagine that I am working in a department providing services to children with serious disabilities. There are a string of people who might be my customer – sufficient that this is not a theoretical debate, but one any Council using this sort of method needs to be absolutely clear about before proceeding. I am not arguing against setting about the process of saving money, this is increasingly urgent, but to do so in a counter-productive way which either doesn’t save money, or later needs to be undone, may be worse than failing to do it at all.

1. The Child: I am employed to improve the quality of life of a disabled child. My success should, in principle, stand or fail on how well I achieve that, within the resources available. Of course depending on the extent of the disability and the age of the child it might be difficult for them to tell me how effective I have been. So, customer number two:

2. The Parents: They will have the strongest interest going in the wellbeing of the child, as well as hopes and fears of their own, and a potential need for ‘respite care’ if the disability is such that they are acting as full-time carers. Arguably my services are being provided as much to them as they are to the child, and therefore they should be included as ‘customers’ just as much, in any Lean analysis. However, parents will always want the best for their child, and it may not be possible to provide “the best” in every case, because the best is expensive, and there’s customer number three to consider.

3. The Taxpayer: In theory the taxpayer will have no problem with us going ‘Lean’, since while they are a customer in the sense of being the one who pays for the service delivered, there is no direct link at an individual level between the tax they pay and the service received. The parents of the disabled child might be happy to see taxes rise in order to fund better services for disabled children, but many people don’t have children, and most children are, happily, not disabled. Do I spend money on a newsletter about Council services, so that they can see what great work is being done with their money, or do I save that money so that they can pay slightly less tax, but have no idea what is being done with it? Hopefully there’s a way to cut that Gordian knot, but it lies in understanding different aspects of the customer relationship from those which will be explained by Lean. One person who might help me is customer number four.

4. The Councillor: Cabinet member, Scrutiny Chair, Ward Councillor, it doesn’t matter. These are the people who vote through my wages and the plans that set out what my service should be delivering. I am accountable to them, and clearly they will place a high priority on the outcomes for the specific customer of each service, but they need to know what those are – which means a string of activities which are unlikely to be Lean – collecting data when I could be working with children, attending scrutiny meetings when I could be attending parental meetings, and so on. Of course Councillors are not masters of their own house either, because of customer number five. 

5. The Government: Local government is, famously, a creature of statute. The services it provides are, to a very great extent, those dictated to it by central government. Furthermore, the success or failure of those services is often also judged by central measures, rather than local feedback.

While there has been some welcome progress by Government over recent years in moving to indicators of success, rather than indicators of process, there are still major problems. Collecting reams of data is not Lean. Employing people specifically to liaise with inspectors is not Lean. Directing activity to meet arbitrary targets which do not really benefit the service user is not Lean. Yet I can give examples of Councils who have commissioned consultants to save money who have wholly disregarded this, and found themselves slammed in their Comprehensive Area / Perfomance Assessment, despite their services not having worsened in any appreciable way. Unfortunately, this has a significant impact on customer number six, to whom both customers four and five should in theory be accountable:

6. The Voter: The average voter will, of course, be both a service user and a taxpayer. It is statistically likely, however, that they will pay for more services than they receive – simply because a large proportion of spending is concentrated on a small number of people – disabled young people, the very elderly, troubled families, and so on. Should we treat the voter as a customer, directing resources to engaging them more in planning services, delivering local forums, and informing them of the work of the Council, or should we treat that as non-Lean activity, and focus on pure service efficiency?

As usual I’m not trying to suggest answers to these questions – I’ll make it very clear when I think I have answers! – but I think it is important for the Council to be clear about the relative needs of these possible “customers” – as well as others with whom it engages – local businesses, other partners in the public sector, local Members of Parliament, newspapers and, heaven forbid, bloggers – in order to get value for money out of an analysis of spending and potential efficiency savings – whether delivered through Lean or any other way. 

Oh well, at least it’s not six-sigma!