The Open Public Services White Paper, the Budget Deficit and Thirteen Key Reasons for the Government to Deploy Professional Interims for Risk Reduction?

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This week marked the publication of the Coalition Government’s much awaited White Paper on Open Public Services. In the House of Commons, Oliver Letwin MP, underlined the five principles that underpin the White Paper and the Coalition’s vision for public services:

 
  1. Choice – wherever possible we will increase choice
  2. Decentralisation – power will be decentralised to the lowest appropriate level
  3. Diversity – public services will be open to a range of providers
  4. Fair access –we will ensure that there is fair access and fair funding for all
  5. Accountability –services will be accountable to users and taxpayers.

As a Transformation Specialist, I was rather disappointed when I saw the following headline in the Economist:

 New thinking on public services offers reform but not transformation
 
 The White Paper had been promised since January but differences of opinion within the Coalition Government were probably responsible for the delay. The White Paper makes very good reading and is strong on Localism which is seen as an alternative to Big Government. On the other hand, many economists (especially neoliberals), would argue that enduring cost reduction would come more effectively from a globalist approach that was strong on outsourcing (privatizations in Lady Thatcher’s day). Many observers, like Lord Adebowale of Turning Point, support the direction of the White Paper but caution against the additional risks of Big Society, for example,  not having access to professional expertise, concluding:
 
To stand any chance of long-term success the Big Society has to draw on voluntary bodies that are professional in all but name. Without that the concept will be like a house built on sand
 
 The biggest criticism of the White Paper seems in relation to economics and value for money. Andrew Haldenby of think tank Reform argued:
 
One criticism might be the complete absence of the concept of value for money in the paper. The coalition government could argue that it would have embarked on its reform programme regardless of the fiscal situation but the practical task of reform for public service managers (which in the end is what matters) is all about value for money – whether to amend the services, reduce costs, invest this year to save in years to come, and so on.
 
Another view, from Nick Pearce of think tank IPPR who concluded:
 
The  government is right that public services need reform, but it has no analysis of the mix of public services that the country needs in the decades ahead. Its white paper is too narrowly focused on the role of market forces, neglecting other proven means of raising standards. 
 
Meanwhile, Chris Nicholson of CentreForum summed it up as follows:
 
Employee ownership offers great potential for professionals to transform frontline services. However, in many cases the most appropriate provider will be a large corporation with a good brand, strong balance sheets to enable it to finance new investment, and working capital for PbR. The skills to provide strong quality-control and staff development are also vital.
 
I shall leave the political journalists to argue over the political merits of the White Paper. My personal expertise is Strategic Cost Reduction and Delivery of Transformation in some very challenging, complex and multi-cultural organisations, like for example, UNESCO, and I seriously struggle to understand how the reforms outlined in this White Paper will contribute directly to reduction of the Budget Deficit.  
 
Shrewd political commentators will also argue that the White Paper is a staging post and downstream, outsourcing is the real agenda  (possibly in the next government) but meanwhile Coalition politics dictates a softly softly approach. Some observers argue that this White Paper is closer to a Green Paper – there is an now an extensive consultation period until the end of the year, at least. Different stakeholders are likely to take strong positions and one can only suppose that the government is ready for more U-turns?
 
In my judgement, Big Society and Localism is very high risk, with limited opportunity for demonstrable cost reduction and service improvement (over the traditional Public Sector service delivery model). Given the risks, I would expect early failures and for these to pave the way for Phase 2, namely outsourcing.
 
My concern since the beginning of the year has been delivery of real transformation to support the reform agenda. The House of Commons Committee of Public Accounts report on “Central government’s use of consultants and interims”, in December 2010, recognized that the Public Sector does not have the resources to deliver effective transformation, with government policy often weak on the “strategy formulation” and “implementation phase” of transformation. Given that the Government policy experts are likely to be still drafting early in 2012, when will the Goverment face up to the strategy formulation & delivery challenges? It’s really hard to see how that will support Budget Deficit reduction in this parliament. The Economist cautioned:
 
Wholesale alteration in the delivery of public services might take three terms of government, according to a minister 
 
 As I have been waiting for this White Paper since January, I have had ample time to reflect and write blogs on the strategy and delivery challenges facing the Government. Here is a selection of thirteen of my blogs (ranked by number of hits):
 
  1. UK Local Authorities & Shared Services: Cost-Cutting – Myth or Reality?
  2. What are the Three Types of Interim Management Assignment?
  3. What’s the Difference between an Interim Manager and a Management Consultant?
  4. Public Sector Performance: Catch 22 Type Dilemmas
  5. Public Sector Catch 22: the Role of “IT” in Business Transformation
  6. Utilizing Professional Interims to Help Reduce the Budget Deficit – Removing Catch 22?
  7. Public Sector Catch 22: Structural Reform, How to Avoid an Omnishambles Recovery Programme?
  8. Public Sector Reform: U-Turns, Banana Skins, the March of the Neoliberal & the Demise of the Professional Interim?
  9. Public Sector Catch 22: Business Transformation
  10. Executive Interim Management
  11. Executive Interim Management: Seven Key Trends
  12. Four reasons why a Professional Interim is a Smarter Choice than a Management Consultant?
  13. Reforming the Professional Interim & Independent Consultant Supply Chain Model?

History too provides good reason to be cautious with these proposed policy changes. When in the 1980s, Prime Minister Thatcher reversed the post-war Labour government’s nationalizations, she was dealing with very large, quasi monopolies, with pricing post privatization controlled by regulatory organizations.  The stock market soon applied pressure on privatized businesses for acceptable financial return on investment, with downsizing, lean and offshoring becoming common but it probably took the best part of a generation for customer service to rise to the top of performance challenges in organizations like British Gas and British Telephone etc. Fundamentally, these privatized businesses were very large organizations that could potentially benefit from the economic advantage of scale. On the other hand, specialist micro-businesses that might emerge out of the Public Services Reform will probably seriously struggle for competitive advantage. Neoliberals would argue that these micro businesses would benefit from being non-unionized attracting the best resources available in the wider market.

 For sure, the Coalition Goverment will need help with: (a) policy evaluation and drafting, (b) strategy formulation, and most importantly, (c) delivery of the transformation. Already hard-pressed, down-sized and demoralized,  public servants will struggle in this new language. In all probability, the Government will turn to consultants for strategy formulation and possibly policy analysis. However, I would strongly encourage the Government to turn first to Professional Interims for delivery of transformation for the four reasons cited earlier under (12).  

By deploying Professional Interims early, I would argue that the Government will:

  • Reduce the composite  risk of Public Services Transformation
  • Validate proposed reforms with independent, non-aligned, business hardened challenge on the important practical decisions, like governance, organization, strategy, pricing regulation, products/services & business mix, quality assurance, customer service, financial control, professionalism etc.

To remind the reader, a Professional Interim Executive is a high impact external resource, usually operating at or near board level on a short-term basis, who utilises extensive proven experience to solve complex problems or deliver solutions to business critical issues fast. Professional Interims diagnose, design, deliver, embed the learning, and then disengage.

9 responses

  1. Pingback: Reflections on my top 20 blogs in nearly three years of blogging « Dr Alf's Blog

  2. Pingback: Dr Alf Best Twelve Blogs 2011 « Dr Alf's Blog

  3. Pingback: UK Government’s Strategic Vision for Shared Services and Twelve Open Questions? | Dr Alf's Weekly Blog

    • Barry,

      Many thanks for taking the time to post a comment on this blog. I am particularly grateful that you are widening the theme and showing an alternative perspective to John’s.

      Given that you seem to be something of a professional pioneer in this area, what advice would you give the Government and policy drafters in minimizing the overall transformation risk? Also do you have any views on post implementation “localized operations” to minimize transactions costs and maximize “customer” service?

      Thanks again

      Alf

      • Hi Alf,

        Sorry for a late reply, but I’ve had quite a bit of work on recently!

        Obviously there have been some high profile calamities in government policy making, where the worng data has been used (Building Schools for the Future) or the speed and lack of consultation has caused delay and u-turns (NHS reform, wider public sector reform).

        However, it’s not all been badly managed. If we take Adult Social Care (ASC), the new vision and partnership agreement (Think Local Act Personal) builds on the previous government’s Putting People First policy. The baby was not thrown out with the bath water, and it could be considered incremental, although the government would no doubt insist it is transformational. Compare how the sector has bought into TLAP versus the staunch resistance to NHS reform. It may be that as the previous government displayed during its early years, transformational change just takes more time to work through from policy to implementation.

        In terms of minimising risk, I think that there has always been an invidious relationship between the Civil Service and Local Government regarding risk transfer. The Civil Service is always aware that by passing funding to Councils, they can pass the risk – if it goes wrong, its the Councils fault, if it goes right, its the minister’s story. This is why I think that LA’s are (in the main – I’m not claiming perfection!) better at managing project and programme risk that Central Government. Like yourself, I also believe that professional interims with practical knowledge of a given area can be utilised to minimise such risk at the conception stage, rather than big consultancies.

        If we look at transaction costs and customer service in the ‘localised’ area we are working in, our web site*** has a market shaping has a report called “The Cost of Capital” that shows that a typical higher tier Council could expect to deliver £3m savings in ACS if it implemented the packages around TLAP. It also makes an important point that previously optimised processes may well not be optimal after some elements of transformation have been implemented, espcially with a process like personalisation that has tendencies to dis-economies if not handled right. There are also a few examples of the Customer aspect of the policy, especially the ‘information and advice’ aspect which is a crucial starting point for many people’s first entry into ASC, but unfortunately, also an area that so many organisations get so wrong.
        Enough for now – it’s Friday, I’ve been travelling all week, and relaxation calls.

        *** http://www.marketshaping.co.uk

      • Barry,

        Many thanks for your comprehensive and insightful response.

        I accept the point that there are “shades of grey”.

        In my analysis, the Government still has a way to go in defining its detailed Reform agenda and translating this into fully costed & risk assessed policies. Perhaps at that stage, the penny will drop and it will become more apparent that the Public Sector will struggle to find internal specialised resources for the strategy formulation and delivery stages of transformation?

        Without specialized resources inhouse, with a reluctance to use consultantants and interims, I fear that the only alternative available will be outsourcing! (Otherwise the Government will struggle to demonstrate results ahead of the next election (all governments seem to have a problem with delivery, irrespective of political colour).

        For me, it would seem to be prudent to deploy professional interims, operating client-side, to reduce the composite Transformation Risk to deliver effective reform.

  4. The Government’s approach is meaningless nonsense!

    Giving people more choice is only an option when people have the money to exercise those choices and at the moment people are about £500 gbp worse off than they were before the recession which is about to go into a double dip and worsen.

    Sir Philip Green during his review for David Cameron identified enormous potential savings in his review of procurement, but these were predicated on centralised purchasing not purchasing on a fragmented basis as happens now.

    The structure of local government in the UK is excessively layered and far too costly in several respects.
    Compared with the French system of Departments(they have 95) for a country 3 times the size of ours, we have around 65 county councils for the UK and Northern Ireland. Even allowing for our more concentrated population this means we have twice as many county councils as we need each with it’s own CEO and directorate structure.This in turn creates more waste in the form of Districts and Boroughs which need to be abolished and whose functions can be subsumed into those of enlarged county unitary authorities using G-BIZ a software tool developed by BT Global Services for their joint venture with Suffolk County Council.

    The number of police forces corresponds to the number of shire counties and the same sort of thing happens with NHS Trusts.

    Successive Governments have tried to reduce the number of constabularies in England to 12 from the present figure of 43 yet masonic Chief Constables conspiring with their friends in the judiciary have blocked reform even to the point of David Blunkett being taken to court and his actions being ruled “ultra vires”.

    Michael Howard in his time had no more success and now Theresa May is being blindsided by the Chief Constables fearmongering about rising crime rates and creating trouble via the Liberal Democrats.
    My own local NHS Trust is a good example, since it only covers North and East Herts, i.e., half a county.
    The NHS is Europe’s largest employer and we are not the most populous country so there is clearly massive scope for creating larger units and clearing out wasteful management.

    The Fire Brigade is another area of bloated expenditure corresponding to it’s organisation being based on excessive numbers of councils.

    The Government has tried to create regional command structures to develop economies of scale but many of these Star Wars style command centres remain empty. Why?

    Basically because the fire chiefs and the Fire Brigades Union have sabotaged the change programme and have scuppered all meaningful reform, this despite the “Fire Futures ” programme.

    The costs of old people in local authority care homes is also out of control, partially because there are too many local authorities (lack of scale economy again) and because of the fact that as people live longer (especially woman aged 65 and over), morbidity is compressed into later years and the number of people needed to look after these people, 1 million of whom have dementia, rises from 22 to nearer 30.
    The idea of treating/looking after these Adult Social Care recipients close to home is one that sounds wonderful but is unaffordable. Already Adult Social Care represents 50% of county council, unitary authority and city council expenditure and is rising. The humane solution is to conclude a deal with the Indian Government and have these people,unless they have long term care insurance in place or private wealth, moved to Goa where they can be looked after at affordable cost.

    Even then the bill here needs to be reduced as it is in Japan by the use of robots in those care homes that remain.

    As I said at the beginning localism and choice are wonderful things but at the moment they are unaffordable in the same way that the “choice” of an on the bench interim or C1,C2,D,E social classes to dine at Claridges every day is not a realistic prospect.

    The Government’s approach should change and the politicians should stop trying to sell the population a “pup”.

    • John,

      Many thanks for your detailed reply. Clearly, you have strong views on this subject!

      Whilst my own views are not as strong as your own, I have some sympathy for the direction of your argument, especially concerning Localism reducing the Budget Deficit. That is why I have zoomed in on the “Transformation Risk” and the high probability of failure of this pivotal policy without input of external professional change agents, viz. Professional Interims (as a risk mitigation strategy). It also seems proper to share that Phase 2 is likely to be more naked outsourcing.

      Given that there will be at least six months debate by the Government before policy drafting starts in earnest, I have tried to open up a broader debate.

      In order to stimulate broader debate, I have posted the blog as a discussion thread in the following ten LinkedIn professional forums (some of which are open groups):

      1. UK Interim Management Providers
      2. AMBA – Association of MBAs
      3. Odgers Interim Management
      4. Russam GMS Interim Management
      5. Henley Alumni
      6. Bradford University School of Management Alumni and Students
      7. Public Sector Executives
      8. Association of Professional Interims
      9. Public Sector (UK) Interim Managers and Consultants
      10. Public Sector Interim Management Jobs Board

      I shall try to keep an eye on the emerging comments and bring emerging themes back to this blog.

      Thank you again for sharing your views

      Alf

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