With major savings required as a result of the Government’s public expenditure policy, local authorities and others have to find new solutions and new service models. Traditional outsourcing is not always seen as the right solution.
Over the last couple of years, I and some others have been arguing that the traditional model of public sector outsourcing has reached the end of its natural life – or if not, is very close to it.
There is some outsourcing but, in spite, of continued political, consultant and media pronouncements on the potential for savings through traditional outsourcing, the surge has not occurred.
There has certainly not been a ‘tsunami’ because increasingly, the evidence is growing that a view that ‘the traditional model of public sector outsourcing has reached the end of its natural life’ is shared by some, if not most, public sector senior managers and local government political leaders do not see outsourcing as meeting their needs.
There would appear to be several rational explanations for this:
- traditional outsourcing does not produce immediate savings (if any at all) and the immediate need has been to find in-year savings for the Spending Review period 2010 – 2013
- the primary need has been for major service re-design rather than delivering the same more cheaply, plus the desire for flexibility to allow for further change
- the procurement process tends to take a long time, costs a great deal of money and has a significant opportunity cost at the very time when the public sector is trying to find quick savings
- in a period of long term uncertainty, there is a natural and understandable reluctance to constrain budget flexibility by locking elements of expenditure into long term inflexible contracts
- there has been a public and political ‘mood switch’ in respect of the ethos and capability of the private sector after the high profile banking and other scandals – even if these did not directly involve the majority of outsourcing companies
- the view that with outsourcing, ultimately risks remain with the public sector Also, there is an urgency to identify, develop and try innovative approaches including: new forms of service commissioning and delivery; new collaborative models involving the public, social and business sectors; and new relationships between the state and the public – the public both as service user and citizen. These new models will include:
- collaboration between the public and social sectors; and between the business and social sectors
- in-sourcing business and third sector expertise and experience to the public sector without the transfer of control and staff, and with some of the business sector’s reward being at risk from performance
- social enterprise and co-operative ‘spin outs’
- in some areas, more co-design and coproduction of services involving
- individuals, collective groups and communities
- local authority exchange and sharing of capacity and expertise
- shared services – sharing between local authorities or between them and the wider social and public sectors There are many successful examples of shared services but many may be sub-optimal and others may not be realising significant savings and/or service improvements or even service resilience.
There are major barriers to achieving effective collaboration and sharing.
These can be structural or relate to governance but most are behavioural. Often, when attempting to collaborate or share people do not take the time or effort to invest in building relationships.
The necessary leadership willing to cede and share resources and power is absent. There is often a lack of shared vision and objectives.
Collaboration and indeed sharing are the same as merger, or even convergence between the sectors, or the takeover of one by another. Nor can they be based on a traditional contracting model.
We need to understand what is required to make collaboration and sharing effective. This is why we have established Collaborate to act as a hub of new ideas, ground breaking policies and leading-edge practice, a centre of leadership and skills development and a forum for conversation, debate and problem-solving between the business, social and public sectors.
Collaborate will design and undertake all its programmes on a cross-sector basis. Collaborate is a community interest company based at London South Bank University with whom it partners.
It also collaborates with practitioners, academics and policymakers in the UK and internationally, pursuing a strategy overseen by a council comprising leaders from all sectors.
It will undertake research, enquiry, share of good practice, provide a ‘space’ for discussion and solution solving; and provide development programmes for practitioner It hopes to work with our colleagues at Shared Service Architecture to support practitioners to make a difference for their communities.