5.13 Effective solutions to the real challenges of local places, citizens and clients can often only be developed by joining up at the local level, with local public service organisations such as primary care trusts, Job Centre Plus, local authorities and the police moving away from a traditional view of individual service areas limited by institutional boundaries. For this to happen, central government departments will also need to behave in different ways. If public services are able to identify new ways of commissioning and delivering services centred around local needs, this will enable them not only to improve results but also to increase efficiency by better targeting services, reducing areas of overlap and minimising overheads and transaction costs.
5.14 The two primary factors that enable effective local collaboration are: firstly, a strong commitment from local leaders to working jointly to meet agreed local priorities; and secondly, flexibility from central government in the application of national delivery structures so that they facilitate efficient local delivery.
5.15 National delivery structures are essential for setting the overall strategic direction of public services, ensuring that consistent service standards are available in every place and for holding delivery systems to account for results. However, if local public services are solely focused on meeting national objectives, they will fail to respond flexibly to the particular challenges and needs of local places and people in a coordinated and efficient way. Box 5.A sets out the characteristics of national delivery structures and how they should be adapted to support delivery of customer centred services.
| Box 5.A: Integration of delivery channels to deliver customer-centred services Public resources have traditionally been administered according to broad categories of spending by service type, which allow for a high degree of national level transparency, accountability and prioritisation of public resource allocation. Each sector of public spending (e.g. policing, health) has its own vertical mechanisms, which translate national policies and priorities into local delivery. However, the people who benefit from these services, either through direct use of services or through wider public benefit, use a mix of public services in their daily lives. For example, in seeking employment an individual's experience may be influenced by employment advice, skills training, transport and health services. An excessive reliance on vertical delivery channels will fail to take account of the interconnected nature of the challenges facing local citizens. To collectively meet the needs of citizens, local services therefore also need to be horizontally integrated, with an understanding of customer needs. A balance between vertical service delivery channels and their ability to be horizontally joined together at the local level will provide the flexibility for public services to form more efficient delivery models, meet the needs of citizens and adapt to the changing nature of local places. |
5.16 Alongside delivering improved outcomes for the customers of public services, there is the potential to make significant efficiency savings in the following ways through collaboration:
• removing duplication where there is overlap in the activities of local agencies;
• identifying new ways of delivering services at lower cost through joint innovation;
• investing in those public services that will reduce the costs of other local services, even if the costs and benefits fall to different organisations, by looking at the benefit to the public sector as a whole in a place;
• better targeting of spending towards the needs and priorities of each place through strategic commissioning; and
• joining together the functions and management structures of different services to reduce overheads and transaction costs.
5.17 The examples in Box 5.B demonstrate the potential for gains in efficiency and effectiveness that can be achieved by local organisations working together and focusing on the role of the public sector as a whole across a place.
| Box 5.B: Improving efficiency and effectiveness by working together across a place Calling and Counting Cumbria5 Calling and Counting Cumbria was a two-phase initiative that set out to: • bring together leaders from all public sector bodies in Cumbria to gain a shared understanding of the needs of the area, the services provided, and the total levels of public spending; and • identify how cultural and organisational barriers could be overcome, how resources could be better matched to needs and how organisations achieve more for the area by working together more closely. The 2008 projects combined the mapping of the £7.1 billion of public money spent in the area with challenging local organisations on what could be done differently to make savings. A saving of just one per cent across the county would result in a £70 million saving a year. Birmingham: Public Expenditure and Investment Study Birmingham's Local Strategic Partnership undertook a similar funding stream mapping exercise to that in Cumbria, with the aim of understanding spending and as a consequence, knowing where and how expenditure can be better aligned to achieve collective goals. This identified that total public sector spend in the city will be £7.5 billion in 2008-09, or around £7,425 per head. The expenditure is being mapped onto delivering outcomes in order to move to greater alignment between funding streams and outcomes in future. Birmingham City Council and partners are developing pilots to model how public spending in a particular theme or geographic area can be re-engineered to provide better priority outcomes. |
5.18 These case studies show that mapping of total public spending in a place is effective in identifying how spending relates to the priorities of the area and demonstrate the real potential for efficiency savings and quality improvements to be made from collaboration in a place. The scale of total potential savings cannot be accurately identified, but with around two thirds of the Government's annual expenditure at the local level and with initiatives to redesign processes from an end user perspective delivering 20 to 30 per cent savings in many areas, the total potential savings are significant. The cost of not joining up, for example between health services and social services, is just not sustainable.
5.19 With such opportunities from local collaboration, government must ensure that it better applies its vertical national frameworks in ways that support local flexibility and collaboration rather than hindering it. Progress has already been made in this area over the past decade, with local public service organisations working together more closely, identifying common aims and delivering together. Recent changes made to performance and funding frameworks have further helped enable and increase the incentives for more effective local partnerships, for example:
• across-cutting and more streamlined set of Public Service Agreements set out at the 2007 Comprehensive Spending Review (CSR07);
• a reduction in the number of performance indicators through which local government is held to account from over 600 to a single National Indicator Set (NIS) of 198 at CSR07, which has since been reduced to 188;
• pooling over £5 billion of specific grants to local government into the non ring- fenced area-based grant, which allows spending to be matched flexibly to local needs and priorities;
• in June 2008, the Government signed 150 Local Area Agreements (LAAs), with the local authority and its partners in each upper tier local authority area in England, each of which set out up to 35 priority targets for local outcomes; and
• from April 2009, local authorities and their partners will be assessed by the Comprehensive Area Assessment (CAA), providing a single framework for inspection and assessment in a place that is joined up, risk based and outcome focused.
5.20 Early evidence from the first reviews of the new LAAs suggests that many local partnerships are beginning to deliver an increased range of joint initiatives and services targeted at local challenges, and are reaping the benefits of new approaches.
5.21 However, despite this progress, the pace of change needs to quicken. It is therefore recommended that the principles of the Cumbria approach and similar initiatives be taken forward urgently in several areas, asking questions about the ways in which public money is spent in places to drive greater efficiency and improved delivery of outcomes in a local area.
| Recommendation 5.1: Roll out Total Place, a programme mapping total public spending in a local area and identifying efficiencies through local public sector collaboration, to at least 12 sites across England: • the Calling and Counting Cumbria approach asks fundamental questions about how public money comes together and is spent in places and how the distribution and configuration of services can be improved to drive improved outcomes and greater efficiency. This approach should be extended to and built upon in at least 12 areas (including at least 10 new pilot sites alongside at least two existing projects) under the Total Place initiative. These should have a dual focus on leadership of place and efficiency. This work should be led on behalf of central government by Communities and Local Government (CLG) and for local government through the Regional Improvement and Efficiency Partnerships (RIEPs) in each region. Initial findings should be reported at the 2009 Pre-Budget Report with final results reporting at Budget 2010; • a high level reference group comprising senior Cabinet Office, HM Treasury, CLG, DCSF, Home Office and Department of Health officials and leaders of local public bodies should capture the learning of these 12 sites in order to identify how to increase the incentives and eliminate the barriers for joint working; and • this programme of work should be sponsored by a ministerial group including the Chief Secretary to the Treasury, the Minister for the Cabinet Office and the Secretary of State for Communities and Local Government to ensure that the barriers and incentives for joint working are addressed swiftly and effectively across government. |
5.22 This programme, as described in Recommendation 5.1, should inform both central and local government of the specific actions that will enhance the kinds of local collaboration that lead to efficiency savings and improved outcomes, by reducing or eliminating factors that pull against horizontal integration.
5.23 Alongside this initiative, the vertical frameworks, structures and mechanisms coming from government need to be adapted to support local delivery, building on the work already in train through the local government performance framework. These include:
• performance frameworks for public agencies, which provide strong incentives, rewards and drivers for service delivery but which are often designed and delivered in silos;
• financial regulations and ring-fences which, when they prescribe the specific activities to be funded by central grants, can prevent the sharing of spending on joint aims in a local partnership or increase the complexity of doing so;
• inspection, assessment and regulation regimes, which are vital for ensuring that national standards are being met and to challenging the quality of services, but if seen as an end in themselves can restrict local flexibility and responsiveness;
• commissioning frameworks in different sectors, each with their own reporting and monitoring requirements, which create complexity in organisations jointly commissioning services to meet local needs; and
• accountability and reporting to the centre, which can often take priority over local accountability to the public and to partner agencies.
5.24 While these tools can play a vital part in the overall management of the business of government, they must not prevent the public sector locally from meeting the needs of individual places and local people. Strong motivation and commitment to joint working from local leaders has been and will continue to be the most effective means by which to overcome these barriers but the following recommendations set out a strategy to help local partnerships overcome the barriers to collaboration.
5.25 Performance frameworks for local public services should be better joined up across sectors to encourage greater local collaboration and give greater importance to the joint priorities of each place. This should build on progress made through LAAs and should allow for greater prioritisation and flexibility across the whole public sector at a local level, leading to greater efficiency savings and joint delivery.
5.26 As part of these frameworks, inspection and oversight have been streamlined through the CAA, but there is scope to extend the CAA to all public services in an area. The inspection landscape is now simpler due to a reduction in the number of public sector inspectorates, and new inspection coordination arrangements are being introduced from 2009 as part of the CAA framework, but there is significant room for further improvement to deal with multiple uncoordinated inspections and audits by numerous agencies outside the scope of the CAA. Lessons from developing the new CAA framework should help to develop an inspection process that is joined up, outcome focused, risk based and proportionate. Commissioning frameworks across the public sector should provide greater flexibility for local variation and should be simplified in order to reduce the complexity of the joint commissioning of services to meet local priorities.
5.27 LAAs and the CAA are key vehicles for achieving these changes. In particular, full weight should be given both to the LAA negotiation in a local area and the first round of findings from the CAA.
| Recommendation 5.2: Performance frameworks should be aligned across sectors and services to encourage greater local collaboration and give greater weight to the to the joint priorities of each place: • CLG should lead on reforming, and where possible reducing, the National Indicator Set (NIS) ahead of the next round of LAAs to support effective local prioritisation. This should include making the indicators more relevant, outcome focused, cross-cutting and measurable; where possible reducing the number of LAA targets to focus on a smaller number of priorities at the local level; and examining the approach to mandatory indicators to ensure that they accurately reflect those outcomes that are an absolute priority for government in every place; • performance frameworks, resource allocations and delivery mechanisms should be better aligned between different parts of the public sector, with the LAA becoming the primary performance agreement for all public sector partners in a place, including health and police. As a first step, HM Treasury should undertake an analysis of the alignment of performance frameworks across government and their impact on collaboration at a local level to inform future development of the government's performance framework. Government departments should work with HM Treasury and the Audit Commission to develop, negotiate and agree a method of measurement and a target for value for money savings across the whole of the public sector in an LAA area; • in the longer term, the CAA framework should be extended to become the main assessment for the public sector in a place. The public accountability for the performance of local services should be enhanced through online reporting that is focused on local priorities and presented in an accessible way. CLG and the Audit Commission should work to ensure that critical reviews are followed uprigorously; and • CLG should rapidly extend the involvement of senior Whitehall 'negotiating champions' in the LAA negotiation process, using the Top 2006 as facilitators of a meaningful dialogue and as an ongoing point of contact with Whitehall. |
5.28 Where financial regulations and ring-fences restrict investment in joint local services, these should be removed to help promote the pooling of local budgets in order to encourage greater local collaboration and to strengthen the LSP. Any legal requirements that prevent or inhibit the pooling of funds and joint investment in LSPs should be investigated and, where possible, removed.
| Recommendation 5.3: Strengthen Local Strategic Partnerships and encourage local flexibility and coordination by avoiding ring-fencing of new funding allocations except in exceptional circumstances, which need to be agreed with the Chief Secretary to the Treasury. Existing ring-fences should be reduced where possible. |
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5 See www.localleadership.gov.uk for more information on Calling and Counting Cumbria
6 The corporate leadership group for the Civil Service made up of the most senior civil service leaders.