Geoff Ettridge: how councils should deal with hostile market conditions

Geoff Ettridge suggests ways councils can make savings without  damaging frontline services, as town hall leaders ponder cutbacks

With difficult financial times ahead, local authorities need to look at transforming the way they commission services and the relationship they have with their staff.

Over the past decade or so, councils have introduced increasingly costly monitoring and reporting systems. If frontline services are to be protected – to some extent – more savings will need to be made by the “back office”. In the past this has tended to shift work onto frontline services. However, the extent of the savings that need to be made will require a fundamental review of how services are commissioned and staff involvement in shaping the services they deliver.

During periods of austerity there is a tendency for senior management to exercise tighter controls over services and expenditure. This is an effective “within year” tactic but it is not sustainable. Indeed, it may be counterproductive, as the experience in the private sector is that the businesses that strike the right balance between tight and loose controls are the ones mostly likely to survive difficult times.

Each local authority has its own unique set of circumstances but all could, I believe, benefit from looking at the following issues that have been found to influence a business’s ability to survive hostile market conditions.

Striking the right balance between administration and management:

Managers need to be empowered to manage – and that involves taking a long-term as well as a short-term perspective for their services. If they are required to overly concentrate on within-year issues – such as managing an unrealistic budget – it could be at the expense of their performance and health. They need to be enabled to concentrate on bringing forward innovations that would improve the cost-effectiveness of their service.

Are staff engaged in designing new services?

It is important to recognise that frontline care staff can be better placed than their managers to develop interventions that could be more therapeutically effective. “Knowledge workers” are also more likely to be motivated by pursuing service improvements than service targets. Managers need to work with this, because service improvements and cost savings are not mutually exclusive.

Does the commissioning processes encourage provider innovation?

Tight service specifications can restrict innovation, discourage non-traditional providers from entering the care market and prevent commissioners from benefiting from a provider’s expertise. Contracts based on tight, non-negotiable specifications and penalty defaults also discourage risk-taking – but risks will need to be taken. Commissioners need to be able to distinguish between requirements that need to be tightly controlled and those on which they are prepared to negotiate or work with their provider-market.

How is philanthropy to be encouraged?

A quick way to achieving more with less is through increasing gifts – be that in the form of money, assets or time. It is not for local authorities to “require” philanthropy but they could do more to help organisations that have replaced their philanthropic ways with business disciplines as a consequence of the approach local authorities have taken to commissioning and contracting for services.

The above is not a definitive list of issues that should be examined but hopefully gives some pointers to the additional ways that savings could be delivered. Although there are significant differences between the private and public sectors, I believe the public sector, whose level of funding has largely been assured, could learn from looking at how successful businesses respond to hostile market conditions.

Geoff Ettridge is an independent adviser on care services

More articles by Geoff Ettridge on councils, funding, personalisation, commissioning, adult care services

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