5 Focus on service quality - not only cost

Bids for public service delivery must provide taxpayers with value for money, but this does not necessarily mean opting for the cheapest tender. It is all about the best option for the long term. The focus must remain on quality. Services must be strategically commissioned from providers that meet peokppple's needs. Through a focus on outcomes, commissioners can generate innovative solutions. It is innovation that gives nurses more scope for treating people at home; teachers more time to run school clubs; and job centre staff more time to focus on diffcult cases.

Too much of the political debate over public services has focused on the amount of money going into services, rather than the results it achieves. But there is an equivalent de bate to be had on what we have got for that money. Central government spending departments and local government all face tighter budgetary constraints set by the Comprehensive Spending Review. The danger is that authorities will focus on cost and ignore the importance of maintaining value for money and quality of service. To achieve quality outcomes:

Competitive supply markets must be managed by skilled professional staff. They will need expertise in project management, contract management, market management and model design.16 Procurement and commercial skills are essential and lead to positive partnership relations with providers. Commissioners need the skills to be able to work with providers so they can base services on what is suitable for the people who will be using them. In Rhondda Cynon Taff for instance, the local authority worked with an independent fostering agency to replace the council's children's home provision with intensively supported foster care. By engaging early with providers the council made an informed choice on what is best for children and young people. This saved the local authority £1.2m over a three-year period.

Know what you want to achieve before you procure. Clarity in what public authorities want to achieve is essential to en sure effective commissioning and avoid procurement delays. The average cost of delay on a health PFI scheme is 1% of capital cost, amounting to £2.45m over each deal and total losses of £98m over the health PFI programme.¹⁷ Delays must be addressed: they are an inexcusable waste of taxpayer resources. This can be done through mechanisms such as payment by results and penalties for delays or over-running on cost.

In all central government departments and large public bodies, commercial directorates should ensure that procurement and delivery are joined up. The Department for Education and Skills, the Department of Health, the Department of Work and Pensions, Transport for London and the National Offender Management Service at the Home Office have all taken this step. There is no reason why it should not be replicated. Costs will be recovered through performance improvements. At a local level, the model for development is Leeds City Council's PFI team, which ensures the experience from each procurement informs future deals.¹⁸

Project specifcations should be closely aligned with outcomes. In Cheshire, one private security frm worked with the local police authority to deliver three custody centres and introduce an innovative approach to the transportation of of fenders. Using a system deployed by a major UK supermarket chain, it developed software to map the location of arrests and then maximise how transport was used in response. The provider was able to reduce the pick-up time on arrests from 30 to ten minutes in key areas through equipping vans with a satellite navigation system. This approach enables arrest ing officers to return to the beat sooner. At one point, the provider invested some of the efficiency gain from the project, so the client absorbed no extra cost.