Public services are facing the most severe budget crisis in post-war history. Some £6.2 billion of public spending cuts a year – including the reduction of local government grants by £1.165 billion – loom ahead. Grants to councils face an average cut of 25% in real terms over the next four years. And of course, this builds on a long-standing efficiency agenda prompted by Gershon in 2003. As a provider of services to over 100 Local Authorities, including our joint venture partnership with Glasgow City Council, environmental services to Hammersmith and Fulham Borough Council, leisure services in Manchester and education services in Walsall, we are acutely aware of the challenges that lie ahead.
At the same time as tackling the fiscal crisis, public services are having to adapt to significant changes in society – from supporting an aging population to equipping the next generation to compete in an increasingly global marketplace. Add to this the challenges presented by the new government’s plan to increase public involvement in service delivery, and the need for substantial, proactive reform becomes clear. As local authorities find themselves increasingly torn between managing demographic trends and responding to the public deficit, we at Serco believe that only a fundamental shift in thinking will enable an effective response.
This response demands a broad view and a holistic approach that requires the knowledge and expertise gained in one field to be applied for the benefit of another. Such pooling of expertise should not just take place within individual organisations. Indeed, current debate around the creation of place-based networks encompassing local authorities, other public service providers and delivery partners has identified the potential for major cost and time efficiencies by avoiding overlap, creating productive working relationships and bringing together up-to-date information.
Linked to this is the need for greater citizen engagement, creating a dialogue with citizens about how they would like services to be delivered and where the priorities should lie. Clearly defining citizens’ needs in this way also enables local authorities to design for end results. An important step in the evolution of contract models will be changing the way rewards are made to ensure outcomes become the top priority – both within public sector organisations and external providers. A fundamental shift from payment on promise to payment on delivery, to become embedded in contractual structures and budgetary decisions, could be revolutionary. Competition between public, private and third sectors to meet new payment on delivery criteria will help drive up standards even further.
Underpinning all these factors is the need to spark true cultural change. This should ensure senior managers have greater autonomy to develop solutions based on their deep understanding of the needs of the service user – and to attribute accountability accordingly. Clearly, Serco is not a disinterested party, but we genuinely believe that more often than not, private sector engagement and increased competition will encourage managers, politicians and staff to seek out innovative and imaginative ways of operating to tighter budgets and tougher targets. The challenges are numerous, but by encouraging a new ethos – with citizen engagement and experience at its heart – we can strive for leaner, fitter and more cost-effective services.
Serco has published a new discussion paper that looks into the above topics in more detail, including practical examples of how knowledge management, citizen engagement, designing for outcomes and cultural change are already achieving results in practice. Click here to read the document in full, or for more information please email This e-mail address is being protected from spambots. You need JavaScript enabled to view it
