Public performance and delivery

A reply to Fraser Nelson: the only thing astonishing is how little power local authorities have

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Catherine Staite

Fraser Nelson’s article on Birmingham City Council last Friday was a very disappointing offering from an experienced journalist and a reputable paper – more Daily Mail then Daily Telegraph. 

It was riddled with inaccuracies.

Birmingham City Council does not have ‘astonishing power’. What is astonishing is how little power local authorities have, even in big cities.  Central government has as iron grip on local government. Money – how it is raised and spent – and policy – the thinking which underpins those choices – are the two key levers of government and central government controls them both.

The average amount of local authority income derived from Council Tax is 16%.  Council Tax is a regressive tax based on 1991 property valuations and bears no relation to the real costs of providing local public services.  LAs cannot increase CT by more than 2% without a referendum, for which they must pay.

The remainder of their income is made up of rents, fees and charges (local authorities can’t make a profit) and business rates (which central government gathers and re-distributes to a national format).  The remainder comes from grants from central government. BCC’s take from Council Tax is only 7.5% because of poverty and property values, which means it is disproportionately dependent on central funding, which has been cut by 35% since 2010.

The gap between rising demand and falling resources is getting wider by the minute in Birmingham, just like it is in Chicago.  The difference is that Chicago can run a deficit of billions – and has done so for the last ten years.  BCC has to balance its books.  It is still obliged to deliver over 1700 statutory duties – from trading standards to disposal of the dead to the protection of children. Year by year it has less and less room to manouvre.

What is really astonishing is that Birmingham and other local authorities still manage to deliver very good services. A recent Ipsos Mori poll showed satisfaction remains high.  That is because authorities have protected frontline services in spite of losing 15% of their jobs since 2010.

Splitting up Birmingham City Council would make no sense at all. The comparison with Manchester is entirely spurious.  The geography and demography of the ten unitary authorities in the Greater Manchester area is very different to Birmingham but the success of that area is built on collaborative upscaling not on separatism. They have banded together to create a Combined Authority. It’s the only way to get the economies of scale and critical mass to compete, bring growth and deliver infrastructure.

The West Midlands is not made up of unitary councils – it is a mixture of unitaries and two tier areas – encompassing counties and districts.  This makes it harder for Birmingham and the wider West Midlands to emulate Greater Manchester’s collaborative progress.  In Birmingham, some services are run at a neighbourhood level, and a district structure helps support better engagement and differentiation but there is nothing to be gained by splitting the city.

Birmingham is a global city, competing with Chicago, Melbourne and Guangzhou and dividing it up would be a nonsense.  Last week senior people from Birmingham City Council were in China, drumming up business for the city.  Would Beijing be interested in talking to Kings Heath District Council? I think not.

Blaming Birmingham City Council for the architectural failings of the 1950s is like blaming David Cameron for Suez.  It’s entirely pointless. Most cities have some 1950s and 1960s monstrosities but Birmingham is being very successful in transforming the city centre. The Bull Ring works, New Street Station is being transformed and whatever Prince Charles thinks about the new library, I think it is truly amazing.  It is beautiful and original.  What is more important is that it works.  Hundreds of thousands of people have flooded through its doors and librarians have had to work hard to keep up with the huge rise in demand for books.  That is the real measure of its success.

People hark back to the happy days of Joseph Chamberlain who as Mayor in the 1870s and thereafter transformed the city and created the legacy of civic splendor, including the University of Birmingham.  The difference between then and now is that he did have ‘astonishing power’ because he had control of both the money and the policy.  In spite of the herculean efforts of Lord Heseltine, central government controls the big money for skills, growth and infrastructure.  It is to the credit of Birmingham that they have done so much with so little.

Poverty is indeed a problem in Birmingham but not one which the city council can solve. National policies drive national poverty which is then concentrated in big cities. Birmingham is super-diverse and has a high proportion of young people.  Ethnic minorities and the young have been disproportionately effected by the recession.  Central government’s cuts to benefits to vulnerable people are shunting the costs of poverty onto local government at a time when they have few resources with which to respond.

Child protection is a stark example of this phenomenon.  Most child abuse has its roots in poverty, drug and alcohol addiction, domestic violence and mental illness.  Local government cannot solve all those ills alone.  Every serious case review and every inquest highlights a very simple lesson.  Children can only be protected when all the key agencies work together – schools, GPs, mental health services, the police, the hospitals – as well as children’s social care.  Cuts in public sector funding have a knock on effect on child protection.  West Midlands police cannot attend all the case conferences they should.  It is in those circumstances that children fall through the net.

Somehow it is always the Council that gets the blame.  They do hold the ring in a complex network of agencies, professionals and responsibilities – but they cannot always be expected to hold the blame.

Catherine Staite

Catherine Staite is the Director of INLOGOV. She provides consultancy and facilitation to local authorities and their partners, on a wide range of issues including on improving outcomes, efficiency, partnership working, strategic planning and organisational development, including integration of services and functions.

The paradoxical nature of being successful

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Ian Briggs

The world of social science can be an odd place at times. Much is quite rightly being made of the impact of severe reductions in public spending, but when social scientists look at the levels of satisfaction with public services, many see the general quality of services remaining high.

This seeming anomaly can seem even more confusing when we start to look at the tactical moves made by public institutions and bodies to place themselves within a market-based approach to service provision. For those in the private sector demand stimulation is a core activity. Seeking growth, market penetration and improving competitiveness are very much at the heart of sound management and leadership. But for the public sector the issue of demand brings with it issues of access criteria, rationing and strategies o deflect demand away from the most pressurised services.

The rise of strategic commissioning has been for many the key mechanism to deal with market-based approaches to service provision – this brings with it tactics that seek to make public services more attractive to market-based provision, stimulating provision rather than stimulating demand. Indeed, there are growing numbers of examples where through taking a market-based approach to provision, citizens are readily accepting that services are commissioned by public bodies but actually provided by private and third sector organisations.

Consequently, if satisfaction and contentment remain high (though it has to be accepted that is not in any way universal), why should we worry?

Having happy and content consumers for a commercial organisation is indeed something to be very highly valued and the same should be true for our public services. However, there is a sting in the tail. There are an increasing number of examples of what we can refer to as ‘needs acceleration’ – if you satisfy a demand for a good or a service then over time it brings with it an appetite for yet more. This is a phenomena that is well understood in many consumer markets; once you have provided a good product the time will come when it needs replacing and the consumer expectation is that it will bring with it an advancement in quality and increased utility.

For local councillors, the expenditure of monies on local improvements can bring with it both satisfaction and a feeling that if an improvement is made in one area then another must be close behind. This is ‘needs acceleration’ – if you can make one thing better then why can you not deal with another perceived problem? For many in local communities the history of planning gain through section 106 agreements often leads to a paradox – this is now being keenly felt with severe budget reductions.

An example of this is where developers have brought improved local facilities such as play areas with housing developments, over time the asset investment cost is overtaken by revenue costs to keep the facilities in good order. Over ten years a play area that cost £60k to build and install can bring with it equal levels of cost to ensure that it is maintained and operated to an acceptable standard. This impact of ongoing revenue costs over capital costs is an issue that is at times challenging to get across to communities who seek improvements in civic amenities but remain unaware of the longer term implications of meeting revenue expenditure obligations.

The same can be said for where we have schools that are judged to be of high calibre. This brings with it the perceived advantage of higher property values and greater pressure for development. A local school with strong OFSTEAD reports is attractive for a developer seeking to build new properties on adjacent land. For the developer the housing mix is determined by national regulation though it is clearly in the interests of the developer to build houses that are saleable and attractive to potential customers who seek to have a place in a good school for their children. Given that any new development brings with it obligations under section 106 or the CIL, the local community has the right to expect that local facilities and infrastructure improvements will follow – though, again, the actual benefit may be relatively short term. Although the open spaces and free public access facilities that come with new housing development are to be welcome and indeed seen as a necessity, over time the costs of maintaining such improvements will have to be met from somewhere. This cost can and does often fall on the local community, increasing pressure on expenditure in future years, at a level that can be difficult to calculate.

This, however, cannot be an argument for mediocrity. We need development; any community that does not seek to improve is failing in its civic duty – though we may be facing too many problems in years to come by taking a short term view of civic performance. For many councillors, the pressure to create physical improvements to a place is huge; though if we concentrate too much on the immediate future at the expense of the longer term we can see that some of our public services will fall into neglect, especially as the cost of maintaining those services and facilities increases over time.

A question that often arises in our teaching and research on the issue of strategic commissioning is what it is exactly that make strategic commissioning strategic. The answer may lie in the balancing of meeting immediate need with longer term vision – too often commissioners are faced with commissioning for the here and now and fail to see that we have to make all provision sustainable; poor short term commissioning may meet immediate needs but fail to take into account where service need will be in years to come. Most councils are willing to admit that they struggle with the very idea of having a commissioning strategic – they can see the need for it but commissioning for future needs is something that can be driven out as today’s agenda is about meeting known needs today.

Commercial organisations have at their fingertips different strategies that are perhaps unavailable to us – they can offer differentiated products and services where premium products and services can be delivered alongside standard ones. The premium charges cover the cost of research and development and the cost of the premium in the first place.

What remains is that whilst there may be growing evidence that some people are generally satisfied with what is provided in a period of austerity and service diminution, the actual demand for services does not actually decrease. We offer an increasing number of potential substitutes and alternatives, but where we make improvements or update facilities and services within the mind of the public it can and does bring an expectation of more.

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Ian Briggs is a Senior Fellow at the Institute of Local Government Studies. He has research interests in the development and assessment of leadership, performance coaching, organisational development and change, and the establishment of shared service provision.

Delivery of public services and economies of scale: Cooperation as an alternative for small municipalities

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Germà Bel

The economic crisis has strongly affected many developed countries, and has caused serious tensions in government finances. These constraints are particularly important at the local level, because local governments have limited taxing bases, and fiscal competition is stronger. Policy discussion on local government reform and local cost reductions, as well as increasing efficiency in local service delivery, is widespread.

Besides the measures of suppression or reduction of intermediate local government in some countries, the most relevant feature of local government organizational reform is the search for a better scale, to be able to provide local services in a more efficient manner. A policy frequently proposed to reduce costs is merger of municipalities. In practice, most experiences worldwide have had compulsory character, given the usual reluctance of municipalities to merge. However, it is by no means clear that municipal amalgamation results in cost reduction.

An alternative reform of local service delivery increasingly which is increasingly used has been intermunicipal cooperation, which focuses on functional consolidation of services instead of focusing on amalgamation or consolidation of governments. Little is yet known about why municipalities engage in cooperation to deliver local public services.

Shedding further light on this question is the aim of our recent article ‘Why do municipalities cooperate to provide local public services? An empirical analysis’. We use a database of the Spanish region of Aragon, characterized as having many small municipalities. Our empirical analysis confirms that small municipalities need to cooperate with other municipalities so as to reduce the costs of providing services. The need to exploit scale economies, which is not possible for small municipalities individually, may be one of the main factors driving the decision to cooperate.

Of course, municipalities could also contract to a private vendor to benefit from scale economies. However, higher transaction costs with privatization seem to be particularly influential in the decision of local governments to privatise or cooperate in the delivery of solid waste collection. Our analysis shows that small municipalities prefer to cooperate so as to reduce costs, while larger municipalities prefer to privatise the delivery of the service.

The clear policy implication of our work is that intermunicipal cooperation, as opposed to privatisation, may well be an optimal solution for the delivery of services by local governments in small municipalities. Municipalities of this type have to face the problems of a lack of competition and high transaction costs, while facing the need to exploit scale economies. By cooperating, scale economies can be achieved with lower transaction costs and fewer concerns for competition than is the case for private production.

A full account of this research is available in my recent article with Xavier Fageda and Melania

Full details of this research are available in my article with Xavier Fageda and Melania Mur: Why do municipalities cooperate to provide local public services? An empirical analysis.  Local Government Studies, 39(3), 435-454.

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Germà Bel is professor of Economics at Universitat de Barcelona and Visiting Professor at Princeton University (Woodrow Wilson School). His research focuses on public sector reform, with a special emphasis on privatization and regulation, and he is particularly active in the study of transportation infrastructure and local public services.

Innovation in social care: it’s the how as much as the what

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Catherine Needham

People with personal budgets need to have something to buy. For some people the money will be spent on a personal assistant. But there will be lots of people who don’t have a big enough budget to employ someone, or don’t want to take on employer responsibilities. For them a more attractive option may be to buy some support from within the community. What budget-holders probably don’t have in mind is buying care slots from a big domiciliary care agency employing a high turnover workforce on zero hour contracts, replicating the local authority offer. The transformational stories that have spread about personal budgets have been based on people thinking much more creatively about the kinds of choices that budget-holders might want to make. Of course some people might want short visits from agency carers; plenty of self-funders already opt for that. But local commissioners of care services, particularly as they become market-shapers, need to ensure that 15 minute services aren’t simply chosen because there is nothing else to buy or nothing else that can be afforded.

One way to get more cost-effective and innovative services could be for commissioners to stimulate the growth of micro-providers: very small local care providers who keep costs low through minimal bureaucracy but who can find innovative ways to offer support. The Putting People First consortium has endorsed these micro-enterprises (employing 5 people or fewer) as a key element of the move to personalisation: ‘Micro social care and support enterprises established and managed by local people are in a good position to deliver individualised services and are vital elements of a diverse market’.

But is it true that very small organisations are more innovative and cost-effective than larger ones? The University of Birmingham is leading a project to evaluate the contribution that these micro enterprises make, testing if they outperform larger care providers in delivering services to users that are valued; innovative; personalised and cost-effective. We will be speaking to people who use services, and to carers, in micro, small, medium and large care providers, as well as to the providers themselves and the local authorities in which they are based.

The existing literature on scale and innovation is ambiguous: small organisations can be more versatile and lean, intimately knowing their customer-base and innovating quickly. On the other hand, large organisations have the inhouse expertise and the financial security to be experimental, utilising economies of scale. However existing studies have rarely looked at micro-providers (with 5 or fewer staff), as opposed to small organisations (classed as having 6-25 staff). Micro organisations may magnify the benefits of smallness, providing very personalised support to just a few people, and drawing on the ‘natural networks’ of the community to keep costs low. However micros may be more fragile than small providers, heavily dependent on one or two staff, and unable to participate in local tendering processes that are more accessible for small organisations.

A central issue for the research team is the extent to which micro-enterprises can become a new core offering for social care, or whether they offer creativity at the margins, for people who have the resources or imagination to step outside the domiciliary or residential mainstream. This links to the question of what kind of innovation is on offer from micro-providers: is it a what innovation, i.e. a new kind of support. Or is a how innovation: delivering ostensibly traditional services such as residential and domiciliary care in more personalised ways, being better attuned to what kind of support is being asked for, and developing more relational forms of support which utilise the assets of those being supported.

Some of the micro-enterprises supported by the national body Community Catalysts are very much offering what innovations. There is no obvious ‘old world’ equivalent of an animal-human therapy service or a bike-powered smoothie business, just two of the diverse services which Community Catalysts helped to get started. What innovations hit the headlines and help to generate excitement about how personalisation can break the mould of social care service-land. However it is the scope for process-based how innovations that constitute the most radical challenge to the mainstream of social care. People will continue to need help getting out of bed, getting washed and dressed; for some people residential care will continue to be the best place to get this support. If micro-enterprises are an affordable way to get the personalised, responsive, dignified,  domiciliary and residential support that we would all wish for our families, that will be a radical finding from the project.

For more details about the project please see the website or contact Catherine directly.

Catherine Needham is Reader in Public Policy and Public Management at the Health Services Management Centre, University of Birmingham, and is developing research around public service reform and policy innovation. Her recent work has focused on co-production and personalization, examining how those approaches are interpreted and applied in frontline practice. Her most recent book, published by the Policy Press in 2011, is entitled, Personalising Public Services: Understanding the Personalisation Narrative. Follow Catherine on Twitter: @DrCNeedham.

Could a lack of trust between professionals undermine health and social care integration?

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Catherine Mangan

The latest guidance on the health and social care integration transformation fund emphasises the need for ‘genuine commitment to partnership and recognition of the challenges’ to ensure success. We all know that successful integration will rely on genuine, positive relationships between health and social care professionals in the system. But are we taking these positive relationships for granted?

The early findings from iMPOWER’s Home Truths programme suggests that we are, and that we face some fundamental challenges around levels of understanding, and, ultimately, levels of trust between professionals in the health and social care sectors.

The original Home Truths report was published in September 2012 and suggested that GPs were inflating demand for residential care because they didn’t understand the alternatives and that by failing to address this issue, local authorities were failing to manage demand for residential care. Since then, six geographical areas have been working with iMPOWER to explore these issues further, with the University of Birmingham acting as a critical friend.  The sites have conducted surveys of GPs and older people, interviews and data analysis; culminating in an action plan. This week sees the launch of the interim evaluation report on the work of the six sites. The initial findings make for interesting, albeit uncomfortable reading:

  • Over half of GPs rated their relationship with adult social care as poor or unsatisfactory. 41% of GPs felt they could make a better assessment than social workers about a patient’s need for residential care.
  • On a more positive note, 92% of GPs wanted closer links with Adult Social Care staff to better understand local service offers and 76% of GPs said they could be helped to do more to intervene earlier to delay or avoid the need for residential care admissions.  A third of GPs felt that at least some of their patients who had gone into residential care had been admitted before they needed to be.
  • GPs lack knowledge and understanding about social care and prevention type services. Half of GPs who took part in the surveys knew nothing about telecare services (even though they were available in their area), whilst a third knew nothing about the available exercise classes or social support networks. Even where GPs do know about social care services there is a strong perception that these services are not good quality.

Sites also discovered that GPs have a significant influence on older people’s decision-making about care options, with the survey of older people showing that after family, most older people would turn to their GP for advice.  This is perhaps made even more significant by the finding that older people don’t pre- plan their entry into residential care, so may be turning to GPs in a moment of crisis.

For the sites these findings made difficult reading, but most of those involved admitted they had a ‘gut feeling’ about the problems. They have started to address the issues by developing a variety of approaches which aim to:

  • Improve communication about social care referrals
  • Improve access to information about social care services
  • Train GPs and consultants about social care services and processes
  • Embed joint working between social workers and GPs
  • Influence the influencers of older people’s decisions about care

For the sites involved, the Home Truths programme has acted a useful catalyst and provided a focus around which health and social care professionals can begin to converge. The work has acted as a first step in understanding and addressing the relational challenges of integration that lie ahead.

We suggest that all Health and Well Being Boards would benefit from thinking about how these issues might apply within their health and social care systems and ensure that alongside structural plans for integration, fundamental issues around trust and understanding are recognised and addressed.

The Home Truths evaluation report will be launched today at the NCAS conference #ncas and will be available at www.impower.co.uk.

Portrait of OPM staff member

Catherine Mangan is a Senior Fellow at INLOGOV.  Her interests include public sector re-design, outcomes based commissioning and behaviour change.  Prior to joining INLOGOV she managed the organisational development and change work for a not-for-profit consultancy, specialising in supporting local government; and has also worked for the Local Government Association, and as Deputy Director of the County Councils Network.  She specialises in adult social care, children’s services and partnerships.

Caught in the crossfire: local authority outsourcing and the murky world of employment law

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Ian Briggs

Given the extent of legislation affecting officers and members in local government, it can be rather misleading to see the influence of Westminster solely through the lens of direct local government legislation. Wider legislation on employment has arguably had as big an impact on the way that local government and local government services are delivered.

For councils the reshaping of delivery means, in the majority of cases, seeking partnerships with external providers. Where services are outsourced or delivered through contract, the costs associated with redundancy and passing over employment duties to others is an issue that perpetually causes debate and discussion.

The application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) to transfers from the public sector, commonly known as ‘TUPE plus’, has been regarded as being more onerous on public sector employers than others. The Coalition Government has since 2010 gradually watered down these legal obligations but they are still regarded as problematic.

It is generally accepted that employment legislation is a problem area for local government and for many there is a desire to see a more flexible approach to employment. By implication, employment law is a matter that perhaps needs some review.

So, is this an issue that is shared in other places? The approach to employment practices that is enshrined in law across Europe raises some interesting issues. The media has made much of the economic problems in Greece, citing the high levels of protection afforded to civil servants and public employees there. The European Working Time directive is taken very seriously there; when the hours are worked the person stops and goes home! A similar situation exists in France and Italy, where anecdotal evidence suggests that even police officers, when they are part way through an arrest, have clocked off and gone home as their hours are worked.

The obligations of local authorities in a TUPE transfer are not entirely clear; TUPE plus has been significantly eroded but not removed altogether. In any future outsourcing situation, a local authority risks being caught in the crossfire between prospective contractors and trade unions. On the one hand, prospective contractors are likely to be reluctant to incur costs, offering generous employment benefits which go beyond the normal requirements of TUPE. On the other hand, the trade unions are likely to push for full-scale TUPE plus protection, or as close to this as they can realistically achieve. Any such situation is likely to need careful handling to minimise any potential exposure and legal advice should be taken wherever necessary.

briggs

Ian Briggs is a Senior Fellow at the Institute of Local Government Studies. He has research interests in the development and assessment of leadership, performance coaching, organisational development and change, and the establishment of shared service provision.