I spent today at a seminar looking at how to improve public services. There are many of these events in Scotland at present and most are just a platform for the outsourcing providers and management consultants to pitch to the public sector. Whilst there was an element of that at this seminar, the speakers and the debate was much more balanced than others I have been at.
My presentation aimed to give a reality check to some of the main proposals for improving public services. First and foremost there is the financial position. This will restrict the ability to innovate as many schemes require spending to make eventual savings. The 40% cut in capital is also being used as an excuse to privatise, with the contractor providing the capital investment. What is often forgotten is that this has to be paid for from the revenue budget, at far greater cost than local authority borrowing. There is a real risk that we end up wasting similar amounts of taxpayer pounds as happened with PFI.
Outsourcing is back on the agenda with a range of doubtful claims being made for potential savings. A new breed of officials who weren't around during the 1980's CCT and market testing period will need to relearn the lessons of that period. Contractors will almost always cost to the margin and make their profits through variation orders and corner cutting. The Edinburgh trams are all over the media this morning and that is a classic example of this contractor strategy. I used Liverpool Direct as my case study. A recent audit report of this flagship Joint Venture reported that the council could save £23m p.a. by taking the work back in-house.
Shared services in principle is a good idea. However, in practice the promised savings rarely materialise and costs are often shunted to operational functions. Contact centres can work for simple transactions but are not always suitable for the complexity of public service provision.
Service redesign is always best done in partnership with the staff who actually deliver the service. If job security is guaranteed under an organisational change agreement, then staff are more willing to innovate and there are many examples of real service improvement using this model. It's also a lot cheaper than the £2.8bn wasted each year by the public sector on management consultants!