Returning to integration and territory in public service reform

March 15, 2013

…the scope for absorbing cost pressures through reducing other lower-cost services is diminishing, because authorities have already reduced spending on these services. Local authorities and their partners recognise that to achieve their desired outcomes with fewer resources, they will have to consider longer-term and more fundamental reforms to providing public services alongside continuing to find further short-term efficiency measures….

A message, not from an Irish Government Policy Statement but in fact one which is at the heart of major proposed reforms to the public sector in the United Kingdom. As in Ireland the public services throughout the United Kingdom are seeing wholesale expenditure reductions which is underpinned by a demand for greater effectiveness in public spending and the need to protect front-line services. Clearly maintaining existing structures and working processes cannot be sustained if these particular challenges are to be met. So the on-going challenge in the UK, no more than that of the rest of the public sectors of the OECD, is to think its way through severe re-configuration, reduced scope for budgetary flexibility and the continuing allocation of spending which is thematic and set within isolated policy silos.

So back to the future?

In a return to the thinking around whole of government responses which finds it origins in the late 1990’s the UK Government is pushing ahead with truly revolutionary thinking around the concept of territory and not theme in the design of public services. Operating the 19th century construction of public service in the unstable economic environment of the 21st century truly demands reforms which cannot and will not go away in the manner that might have occurred following the first moves to integrated service design in the 1990,s. The problem, unsurprisingly has not gone away and the lessons of stymied reforms since then suggests that continued organisation of public services on a thematic basis does not work.

So what does this mean?

Well in the British case there is now a move towards what has long been a feature of reform in other parts of the OECD. No surprise there given the capacity to deliver quality public services at lower cost in countries such as Sweden and the Netherlands. The focus in these countries is on the territorial nature of society and therefore it does not take rocket science to think that public services might also require organisation on this basis.

This lesson is a central feature to public service reform in the UK. Recent evaluations suggest that the thematic approach to service re-configuration which took place over the past decade provided tenuous evidence of cost savings, indeed there is increasing evidence that efforts towards unified thematic services such as HR, back office coordination etc come at a greater cost than even that associated with the pre-reformed public service of the early 1990’s.

So in what is likely to be the most significant policy shift in the UK under the Cameron Government, years of centralising services is to be rowed back if recent pronouncements are to be followed through with substantive policy implementation.
Public services, the thinking suggests, should be delivered on the basis of territory and not theme, overcoming centuries of public service configuration in the UK. To quote in full from HM Treasury:

Integration in government refers to the coordination of working arrangements where multiple departments or public sector organisations are involved in providing a public service or programme.
Integration includes:
•‘horizontal’ integration of activities between bodies involved or interested in a service or programme, or with a shared interest in a particular client group;
•‘vertical’ integration through increased coordination of the delivery chain for a service or programme;
•‘back-office’ integration of functions or management processes which support frontline services or programmes; and
•‘strategic’ integration measures which encourage integration or seek to apply a coordinated approach across government.

Public service delivery therefore is not about the simple organisation of thematic structured government departments but rather the need to confront citizen centred needs that require integrated responses which ideally should be close to the citizen. Developing back office services only makes sense if they underpin improvement to front-line engagement with the citizen and this means moving from top down public management to territorial management.

Those writers of the National Spatial Strategy in Ireland should take a bow as this thinking and that of the Task Force for the Integration of Local Government and Local Development might feel some vindication for their unsuccessful efforts to introduce such thinking in Ireland at the start of the millennium.

Of course this is of immediate relevance to current public service re-configuration efforts in Ireland. The challenge of delivering improved service at a time of restricted budgets remains…in fact will not change for a long time, if ever. So is it creditable to think about reform without thinking in terms of a re-configuration framework which is based on citizen and territory rather than moving towards service models which even the great promoter of same, HM Treasury, not to mention the House Of Commons Select Committee suggests has cost the taxpayer more for a disproved service?

No surprise then to Irish eyes the declaration that: the Student Loans Company’s first year of administering centralised student finance saw unacceptably low performance, with only 46 per cent of applications processed by the start of term, which reflected weaknesses in risk management and oversight.

So the UK Cabinet Office and the Treasury now agree: National Audit Office reports have highlighted significant potential for integration to generate new opportunities for financial savings and service improvements, as well as ensuring the effectiveness of existing services and programme delivery. While these potential benefits are most clearly articulated for back-office functions, the principle also applies to frontline services. Given the imperative for further cost reduction in government and the need for innovative ways of increasing efficiency, integration has an important role to play in reducing costs while limiting effects on service levels.

Usefully there are several models currently underway in the UK to demonstrate what pretty much most of the OECD realised years ago. The City Challenge model already referred to in an earlier Newsletter is complimented by on-going findings from the Community Budgets Initiative. Increasingly, there seems to be evidence that genuine savings can be derived by moving towards territorial based models of public management which are appropriate to the different locational characteristics of differing parts of a country, even one as centralised as Ireland?

Reports such as the Local Government Efficiency Group can only go so far. Substantive change, highlighted in such reports as those from the UK continue to point to the need for an overhaul of the public service which requires a focus, as is increasingly the case in the UK, on changing how the centre operates.

Dusting down the NSS and the aforementioned Task Force Reports might not be relevant anymore in Ireland of the 21st century but what is clearly relevant after all these years of non-action and limited reform is that territory and not silo is the only proven basis for service reform and even the UK has come to this conclusion.