Why councils should want to keep it local

June 4, 2018   By Ed Wallis, Head of Policy and Public Affairs, Locality

As the dust settles on the local elections, newly elected councillors will be getting to work tackling what is, by now, an old problem. How do local authorities continue to deliver high quality services that meet residents’ expectations, in the face of continually rising demand and ever decreasing budgets?

It’s a challenge local areas have been grappling with since George Osborne’s 2010 spending review chose to place the burden of ‘fiscal consolidation’ squarely on local government’s shoulders. But it feels like the solutions being reached for are beginning to change.

In the early years of austerity, local authorities sought solace in scale. Services were bundled up into big contracts, the aim being to drive down short-term costs via the ‘economies of scale’ offered by big outsourcing companies and large national charities.

However, many places are now changing tack. This is partly due to the high-profile instances of ‘scale fail’ we’ve witnessed over recent years. This is where big outsourcing contracts either go spectacularly wrong and end in expensive legal proceedings; or simply fail to deliver the quality of service and cost savings expected. Indeed, following the fall of Carillion, there are increasing signs of a bad moon rising across the outsourcing sector.

Councils are recognising they simply can’t afford to become locked into rigid mega contracts, which aren’t flexible enough to respond to the rapid pace of change on the ground. Instead, they are looking to another solution: the power of community.

Most services are, and always will be, delivered by the public sector itself. However, community organisations play a unique role in the local service landscape. As the IPPR has put it, the VCS is particularly well suited to delivering “relational services: they are driven by intrinsic motivation, which helps to build trust; they are rooted in local communities with a deep knowledge and understanding of the area; they tend to have strong existing relationships that can help to make things happen; and they generally have more expertise when it comes to working with people with complex needs.”

So, from homelessness to employment support, children’s services to adult social care, community organisations are vital in providing the kind of ‘person-centred’ services that will drive down pressure on the public sector in the long-term. Indeed, Locality’s ground-breaking report Saving Money by Doing the Right Thing showed that the rising demand that is placing our public services under such strain is actually ‘failure demand’: problems which have mounted up over time, having not been properly addressed when they were first reported, with people re-presenting at multiple services for the same problem. For example, we report found that that eight people with drug or alcohol dependency presented to GPs a total of 124 times. Broader analysis from Vanguard suggests that failure demand accounts for 80 per cent of demand into health and social care services.

The trend towards scale has been crowding out community organisations, meaning local areas are losing this crucial source of experience, expertise and wide-ranging support. However, while local authorities have often valued the supposed simplicity of having one big contract, having seen the consequences of “scale fail”, the benefits of having a range of smaller, simpler contracts are now being recognised.

What’s more, by investing in small local providers, councils can ensure that precious public sector resources are used to build community capacity and create maximum benefit to the local economy. This is particularly crucial at a time when local authorities’ financial futures are increasingly dependent on the success of their local economies, with the shift to business rate retention.

We’ve been working with local authorities to better understand the additional economic benefits that commissioning community organisations to provide services can bring. For example, we found that every £1 generated by the children’s services contract delivered by Halifax Opportunities Trust created £2.43 of economic value for the Calderdale Council district. And analysis of 10 Locality members by NEF Consulting found that they collectively enabled approximately 1400 jobs and approximately £120m of gross value added to the local economy, through their tenants.

So it feels like the tide is turning and councils increasingly want to Keep It Local. This doesn’t mean adopting a simplistic view that sees all outsourcing as fundamentally bad and insourcing as inherently good. Instead, we need a new approach to local commissioning, which seeks to draw on the strengths of all sectors for the benefit of a place.

We need to seize this moment to forge a new direction. By unlocking the power of community, commissioning can create better, more responsive services that reduce long-term costs and invest in the local economy. Locality has joined forces with Lloyds Bank Foundation for England and Wales, to launch a Keep it Local campaign. A new Keep it Local Network will bring together councillors, commissioners, community organisations and policy experts, to support new approaches to the commissioning and funding of local services and organisations. It will support councils to move beyond large-scale, top-down procurement approaches, to instead harness the “power of community” through simpler, more proportionate funding arrangements.

We’d love to hear from anyone with an interest in finding innovative ways to reshape local services – so please do visit the Locality website for more information and to join the conversation.

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