By Winnie.Agbonlahor

17 Apr 2013

For years, governments have run pilots exploring ways to improve local autonomy and coordination between services at the sharp end. Winnie Agbonlahor reports on the latest results – and the prospects for radical change

Look in the dictionary, and you’ll see the word ‘silo’ defined as a hollow structure used in agriculture for storing bulk materials such as grain or fermented silage. But in Whitehall (with the possible exception of the Department for the Environment, Food and Rural Affairs), the term is usually used to describe the vertical organisational structures that characterise our centralised, departmental system of public services.

Seen by many Whitehall managers and service delivery professionals as better suited to fermenting silage than serving the complex needs of a developed-world population in the early 21st century, silos have been a bogeyman for public servants for some time, while successive governments have talked about breaking down the barriers between service providers at the local level. Little substantive progress has been made, however – perhaps because major reforms would threaten departments’ powers over their own service delivery operations, whilst creating formidable challenges for the frontline professionals tasked with putting service users, not providers, at the heart of delivery structures.

David Cameron’s government has nonetheless kept the initiatives flowing, and in a report published by the Local Government Association (LGA) last month said again that he wants to decentralise power and give it “back to the people”. The current government’s ‘Whole Place Community Budgets’ (WPCB) initiative builds on a long list of predecessors – including local and multi-area agreements, Total Place, city-regions and local strategic partnerships – designed to catalyse greater collaboration between local service providers; and it recently reached a significant milestone.

The Whole Place back story
The Department for Communities and Local Government (DCLG), which has pledged to “fully support the need for services to be re-wired around citizens and families, not organisations and structures”, launched the WPCB programme in October 2011. Four areas’ councils were asked to work with central government officials to produce detailed operational plans, explaining how their local services could be reformed over the next five years. The result was a set of business plans – so the scheme as briefed by DCLG really falls under the category of research, though government has repeatedly used the term ‘pilots’.

The four areas – West Cheshire, Essex, Greater Manchester and the West London tri-borough area – submitted their business cases to the government last October, setting out the problems being tackled, the proposed new delivery models, and the returns that public bodies might expect on their investments. The priorities identified included improving services for families with complex needs, health and social care for adults and older people, economic growth, skills levels, and the rates of reoffending and domestic abuse.

Angela Hands, the National Audit Office’s (NAO’s) value for money director, was involved in writing a report on the programme: ‘Case study on integration: measuring the costs and benefits of Whole Place Community Budgets’. Hands told CSW that, interestingly, none of the partnerships ended up advocating pooling all the public money spent in their areas in a single, shared budget. Instead, they decided on various goals they wanted to achieve – for example, reducing re-offending – and determined exactly which changes would most boost progress. “These pilot areas decided very early on they were not going to try fully pooled budgets because of practical problems,” she says. “Trying to pool money like that would immediately raise issues around organisation and allocation. Instead, they chose a very pragmatic approach.”

Based on these newly-identified ways of delivering services, the LGA’s report – ‘Local public service transformation: a guide to Whole Place Community Budgets’ – invited other local authorities to “adopt this approach to public service transformation”. The time has arrived, it said, “to have a radical re-examination of whether services could be better configured locally”. The report has been backed by Cameron, who called on local authorities to “go for it and get involved”, and to “seize the chance to take control of their areas, after years of top-down targets and centralised plans”.

A collaborative approach
This WPCB report has provoked some scepticism. “It never comes to anything,” says Iain McLean, a politics professor at Oxford University. “Giving more power to local authorities is a good idea, if it works. But I’m not aware any government has ever made it work.” McLean can be forgiven for his cynicism: over the years, despite numerous statements and reports, we have not seen much structural, tangible change in the way central and local government deliver services.

Nonetheless, the potential savings identified in the business plans may help change minds in Whitehall. Consultants commissioned by the LGA have estimated that if the four areas’ plans were rolled out across England, the net annual benefit would be £4.2-7.9bn. Savings, as well as improved service outcomes, would be achieved by a collaborative approach – aligning different agencies’ objectives, activities and resources.

In the case of the tri-borough area – Hammersmith & Fulham, Kensington & Chelsea, and the City of Westminster – the annual savings within five years are estimated at £80m per year, including £66m in health and social care alone. However, such savings would require a major culture shift among public sector professionals. Westminster City Council, which has been leading the initiative, wrote in the joint report: “In order to successfully deliver smarter services we need a different type of public sector worker.” Specifically, the council’s proposals require “workers that are creative and flexible” and “no longer inhibited by traditional organisational or professional barriers or silos”.

Instead, the report said, public sector employees must relentlessly put the multiple needs of citizens at the heart of their work. “At the moment,” says Westminster’s head of strategy Giles Roca, “there is a divide between [different groups of] public service workers in terms of what they do and how they see themselves. We’re arguing that it doesn’t matter whether you’re a government officer or someone working for an agency: we are trying to improve people’s lives. So we need to change people’s mindsets.”

Barriers of this type aren’t unique to Westminster. “We’ve seen tensions between government departments; between partners, professions and areas,” says Dan Gascoyne, Essex County Council’s assistant director of corporate policy, strategy and partnership, who’s been leading the ‘Whole Essex’ project.

As well as setting out the obstacles and challenges in the path of reform, the business cases included financial evaluations and made a set of recommendations. Essex, for example, told the Department for Business, Innovation and Skills (BIS) and the Education Funding Agency (EFA) that they should “agree to devolved decision-making of funding incrementally to 100 per cent by 2016”. Gascoyne describes this demand as a “key ask, which will really test how serious the government is and how far it is prepared to go to reflect its aspirations around achieving growth”.

He wants education and training to be more employer-led, so that young people pursue qualifications likely to win them jobs; education providers should focus on the vacancies available when deciding which courses to offer, he says. Control of the funding would enable local public servants to achieve this goal, Gascoyne says; and he’s optimistic that his demands will be met. BIS officials have, after all, been working directly with local officials to produce these proposals. But then again, he adds: “These departments are big places. Whilst the [Whitehall] secondees have been really helpful, they’re not the whole department.”

Sharing the proceeds
Gascoyne’s optimism might be justified if departments are convinced by the estimates of predicted savings: given the pressures on budgets, they may be more willing to embrace localism these days. But Westminster City Council’s Roca argues that local authorities also need incentives to participate: there should be a mechanism by which councils share in the proceeds. If, for example, a local authority intervenes in ways that reduce offending and unemployment, the Ministry of Justice and Department of Work and Pensions will make big savings: Roca says that handing some of the cash back to councils would create a virtuous circle and encourage further such work. DCLG says it has taken note of the proposals and is considering them.

The NAO’s Angela Hands agrees, saying: “Part of the problem with any change in how we provide services is that quite often the person who makes that change is not the person who will benefit. A local body makes a change but the benefit does not accrue to that body. But a local authority needs to know it is going to get back some of the benefits.”

The NAO has welcomed the WPCB findings, and its report describes the “co-production approach” – under which local and central government officials collaborate to develop policies – as “a promising model for future policy design and delivery”. It has called on the DCLG and Cabinet Office to consider whether the approach would benefit other parts of government.

Looking to the future, Hands adds that continued monitoring and evidence gathering has to be guaranteed. “We need to know that the changes are working where we are making them,” she says.

So what happens now? At the end of last month, local government minister Brandon Lewis announced a new multi-agency network, which will help spread the lessons learned from WPCB to other local authorities – taking Cameron’s passionate appeal for power “back to the people” a step further. A Treasury spokesperson says HMT will be supportive of community budgets in this summer’s comprehensive spending review, and DCLG has said the government “will announce plans to extend the benefits of [the WPCB] approach across the country at the 2015-16 spending round”.

Heeding Heseltine
It seems, then, that we may finally be coming towards the end of the long series of community budget pilots, and approaching some form of nationwide implementation. Indeed, the project may even be being overtaken by a new policy agenda – one based around Lord Heseltine’s recent review of the government’s growth policies.

Asked by the PM to set out “how we might more effectively create wealth in the UK”, Heseltine last October submitted 89 proposals in his report ‘No Stone unturned – in pursuit of growth’. And last month, the Treasury and BIS published the government’s response.

In the foreword, chancellor George Osborne and business secretary Vince Cable wrote that Heseltine’s report is built around “a powerful case for decentralising economic powers from central government to local areas and leaders, as those best placed to understand and to address the opportunities and obstacles to growth in their own communities. The government agrees”. The pair said the government now needs to “turn the tide on the excessive centralisation that shackles local ambition and creativity.”

Heseltine’s report welcomed initiatives such as WPCB, but said they don’t go far enough. “This approach is piecemeal and creates complexity,” he wrote. “It is as though the government is prepared to dip its toe, or even several toes, in the water but is not yet prepared to accept the logic of its position with the confidence it should... Local places will never be sufficiently empowered to drive the growth we need unless we share the Government’s most important lever – funding.”

Heseltine called for government to pool the Whitehall funds spent on supporting growth – currently administered by a range of departments – into a single pot for use by local areas. The government says it accepts this recommendation, as it does the idea that local enterprise partnerships (LEPs) should be able to bid for this money in five-year tranches from 2015-16.

Among other recommendations accepted by the government was a call to allocate LEPs up to £250,000 of new public funding each, “resourced through departmental efficiency savings and underspends, in each of the years 2013-14 and 2014-15, specifically to devise their local economic strategies”; and a call for civil servants to be brigaded into ‘local growth teams’, structured around clusters of LEPs, whose main aim would be to join up government and local partners in their areas of responsibility to identify and realise economic opportunities. Heseltine’s emphasis on LEPs is also apparent in his call for ministers and permanent secretaries to be associated with individual LEPs – a recommendation accepted “in part” by the government.

To create wealth, Heseltine says, we need “local communities to be empowered and incentivised to collaborate”, as well as “a rejuvenated partnership between the public and private sectors involving both local and central government”. And in response, Osborne and Cable wrote: “Lord Heseltine has laid down the challenge. The government is ready to rise to it.”

It does look like the tectonic plates may be shifting in government. Sceptics will comment that we’ve seen a succession of schemes designed to shift spending power down to the local level, without much in the way of results. But in answer to their question: ‘Why should this time be any different?’, there is at least now an answer: ‘Budgetary pressures’. With further weighty cuts being imposed on both local and national government funding, the need to overhaul existing, costly models of service delivery has become urgent.

The truth is that, as Heseltine remarks, the English system of local government is “not suited to the demands of the 21st century, and in particular our need to pursue economic growth”. In the UK, less than a third of public expenditure passes through local government, compared to half in Sweden and about 70 per cent in Denmark.

The LGA report concluded by announcing that from this month, the four pilot areas will “move to implementation” of their WPCB business plans. Meanwhile, the focus is shifting to the chancellor, and the opportunity in the spending review to turn words into actions and slogans into policies – breaking down the barriers so the grains of power can finally trickle down and across our service delivery silos, producing the best possible outcome for the British public.

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