There’s never been a more productive time to talk about productivity
Originally published in the Local Government Chronicle – 21/03/24
Towards the end of a political cycle, the spins run even faster. Last June I wrote an LGC Briefing on the start of the latest government’s latest ‘productivity drive’ – complete with obligatory reference to the Yes Minister episode ‘The Economy Drive’ for comic relief and giving advance warning of the government’s probable desire do double down on attacking local government for an obsession with EDI policy – regardless of proportionality.
This may seem then and now a gratuitous attack on a sector which has had by necessity to drive productivity or fail to balance annual budgets with all that entails. But you can’t say you weren’t warned when the Government gave a sting in the tail in exchange for the £600m it found for the sector through gritted teeth to assuage a potential backbench mutiny. But a redundant exercise for a few million extra isn’t the worst we have to fear from man or beast, let alone an end of term government.
Looking at how the Public Sector Productivity Plan was framed in the recent budget documents, if we’re to believe the Office for Budget Responsibility’s long-term forecasts, public spending at 2.2 per cent is set to outstrip economic growth at 1.7%. Hence the need to get a grip on productivity and boost it by 5 per cent to stop the rot. On the wider public sector, the NHS got most of the attention with yet another campaign to make it paperless (cue inner groans from those who’ve lived through such initiatives as the £12bn busting failed Electronic Patient Records programme – still a world leading example of health IT failure).
Is there really nothing else for it than for local government to roll up its sleeves with its public sector partners across the NHS, the police and get its plans across by this July, detailing how it will improve service performance and use data and technology to cut all that wasteful spend that is bringing the sector to its knees? Well, a promise is a promise so one can only assume the sector will play ball for the cash. And once this is banked, the sector hopefully gets to enjoy its participation with the scintillating DLUHC productivity panel to purposefully discus key themes and take on board the freely proffered advice. This might upend the general rule in life, which is that if you want money, you should ask for advice, and if you want advice you should ask for money.
So far, so easily cynical. There is the genuine question to raise of how any of this supposed to work and how seriously this should be taken into the next parliament. This programme is intended to be developed in the coming months and, as chancellor Jeremy Hunt divulged to the House of Lords this week ahead of the next Spending Review that must come after the next General Election – which on this timeline would be held in October.
Unlike Thatcher’s call for the Rayner efficiency review from the ‘Yes minister years’’ or Gordon Brown’s appointment of Lord Gershon to overhaul public sector commercial practices, there is no time or space for a totemic industry figurehead to deliver a transformation in how the public sector goes about its business. Instead, we follow the lead set by Gareth Davies, head of spending watchdog the National Audit Office in his recent call to deliver cash-release savings will be the off the shelf bible from which a blueprint for public sector productivity will be delivered.
For this we can read savings from spend in major infrastructure projects; asset management; procurement; digital transformation and reducing fraud and error.
Certainly there is scope for savings in local strategic procurement by making use of the recent legislation. This is something Localis will be investigating given the urgency in the run up to the election to revaluate public procurement and its relation to national priorities and how they might shift. Despite a consensus on the strategic importance of procurement, there is a significant gap between this understanding and actual implementation and the capacity to do so throughout local government.
Similarly, AI and data-analytics are pressed as a panacea for many local government ills – including a route to solving the gnarly issues of financial governance we are led to believe. On the face of it, place-based innovation through AI and govtech offers many pathways for local authorities to enhance service delivery, economic resilience and operational efficiency in a good and sustainable way. This is something Localis is looking at in our study on whole place transformation.
As ever, local authorities face the dilemma of balancing immediate financial pressures against the need to invest in long-term technological advancements that could ultimately lead to cost-savings and improved service delivery. The challenge is further compounded by the division between capital and revenue funding, which restricts the flexibility of councils to allocate resources towards AI and data science talent development, research, and innovation.
And this will need to be given time and nuanced understanding, the development of suitable local governance frameworks and in a collaborative manner that engenders public trust – a topic we will be debating shortly. There’s seemingly never been a more productive time to talk productivity.