Why the localism agenda in public services is failing to get off the ground

Worrying projections about our “unsustainable” public finances mean the rhetoric around decentralisation must now become a reality

By Alexander Hitchcock

19 Jan 2017

If the Monday just gone was the gloomiest day of the year, Tuesday must have been the second. Hot on the heels of so-called “Blue Monday”, the Office for Budget Responsibility labelled public finances “unsustainable” in the long term. 

By 2067, debt will be 224% of GDP. No single public service is going to bankrupt the country; together they all might. With ever-changing demand, the government must realise there are systemic issues with the way services are designed. 

OBR: Public finances are “on an unsustainable path”
Prospective Parliamentary and Health Service Ombudsman moots “frontline investment” 

Government’s commitment to give “local areas control over the delivery of public services” to improve services recognises that central design and funding of services may not be delivering value for money. 

Greater Manchester believes it can save £2bn from its health and social care bill by 2020-21 through integrating care and targeting issues, such as cancer, that are unusually high in the region. Benefits have already been realised elsewhere. Healthcare commissioners in Cornwall have combined to reduce non-elective emergency admissions for people with long-term conditions by 40% between 2013 and 2014. 

Yet this localism agenda is failing to get off the ground for public services, new research by Reform shows. The UK is second only to France in terms of the proportion of spending controlled by central government, including a 2% increase between 2010 and 2014. 

Clinical Commissioning Groups, GP-led healthcare commissioning bodies, pass two-thirds of their budgets through to NHS hospitals. One expert interviewed for our paper argued this meant they are “not commissioners”, because hospital finance targets are set in Whitehall. This leaves little space for commissioners to design the innovative out-of-hospital services so many agree the NHS needs. 

If Whitehall is serious about following this approach, it must work with local areas to accelerate the transfer of powers over public service commissioning. Jeremy Hunt must allow Sustainability and Transformation Plans to focus on the “transformation” side of the equation by allowing CCGs and local authorities a greater say in how care is designed in their regions. 

The Department for Work and Pensions, characterised as reticent to cede any control of commissioning, should engage with local bodies to share labour-market knowledge and understand where local commissioners can help design services. 

Local bodies need to be bolstered to deliver this agenda. Police and Crime Commissioners highlighted the temptation to replicate central models at a local level when some introduced targets (including call-handling quotas) abolished by the Home Office in a drive to free forces to meet the needs of local communities. Interviewees pointed to the actuarial complexity of designing many payment-by-results contracts, which render them beyond the current skills of many local authorities and CCGs. 

These changes might not be for the fainthearted, but the OBR’s projections require a major shift in the way public services act. Acting now presents an opportunity to deliver public services that deliver the best outcomes today, without bankrupting the country tomorrow.

Alexander Hitchcock is senior researcher at the independent think tank, Reform

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