Strategic Commissioning Is The Future

Author: Alex Thomson, on eGov monitor   |  

A vast majority of councils in England and Wales are looking at the strategic commissioning approach – its not just outsourcing – but an opportunity to support the third sector and cooperatives.

Whilst the recent constraints on government finance have attracted much attention, there is broad consensus that, debates about the nature of the cuts apart, councils will need to deliver more for less in the coming years.
With that in mind Localis has recently launched a major report, with cross party backing, at the Labour party conference in Liverpool which describes how councils can deliver better public services by shifting towards a more ‘strategic commissioning’ approach.

‘Commission Impossible? Shaping places through strategic commissioning’ – produced in partnership with Essex County Council and Mears – draws upon the findings of a recent survey of over 100 council leaders and chief executives carried out by Localis showing that 4 in 5 councils across England are considering taking a greater strategic commissioning role in the delivery of local public services in the near future.

Traditionally councils have provided many of their services themselves, and although there has been a gradual move towards commissioning services from other organisations, recent figures show that total non-external local government expenditure is approximately œ65bn, or around 40% of all their expenditure.

But with rising demands on council services and increased pressure on budgets following cuts to central government grant, the trend towards new providers looks set to accelerate significantly. As ‘Commission Impossible?’ shows, for every council that believes more services will be delivered in-house in the near future, there are 16 more that anticipate less in-house delivery. A shift in provision to voluntary organisations (82%), public sector shared initiatives (81%), SMEs (75%) and larger companies (68%) are all deemed likely.

Strategic commissioning, then, is not about outsourcing to the private sector wholesale, but instead is likely to lean heavily on third sector and co-operative vehicles going forward. Given the public prioritises effective public services above and beyond the means in which they are delivered, this seems logical enough.

The report argues that a strategic commissioning approach offers substantial benefits for both councils and local residents. These include delivering services in more efficient ways, ensuring the provision of services which deliver the most important outcomes for residents, stimulating local enterprise by creating new markets (and new jobs) in the provision of local services, and an increased emphasis on the scrutiny of services.

One example highlighted in the report is that of Essex Cares ? the first social care local authority trading company in the country, set up in 2009. After transferring 850 staff to the wholly owned company, Essex County Council has endeavoured to make the most of both private and public expertise. In its first year of operation, the company achieved a 99% satisfaction rate amongst users, and has recently announced a pre-tax annual profit of over œ3.5m. This money has enabled the service to be further improved, and a œ1m dividend paid back to the council.
Former DCLG Secretary of State Hazel Blears, who contributed the publication’s foreword and spoke at the report launch, commented that ‘by commissioning more effectively councils can benefit from greater efficiencies that will allow savings to be made in a difficult financial climate.’ It could also, she added, foster a culture of ‘continual improvement’ by engendering a ‘partnership between service providers and service users.’ And as Lord Shipley (the former Liberal Democrat leader of Newcastle City Council) also commented, strategic commissioning can help ’empower people’ whilst providing an important opportunity for cooperative trading councils, mutuals and social enterprises to gain a foothold into service provision.

The report offers a series of recommendations for central and local government, including:

? Focus on outcomes not processes ? Central Government should promote national availability of data to compare provider performance to enable commissioners to make informed decisions. Councils should also be open-minded about who provides the services, and neither the market nor the state should enjoy an automatic monopoly.
? Support a thriving market for all sectors ? Central Government should support councils to open up services to all organisations including small and voluntary organisations, by helping evidence social return on investment and reducing procurement barriers.
? Redefine risk ? Councils should redefine risk to ensure that money is spent on services which deliver long term benefits.
? Create smarter, more flexible contracts ? Councils should ‘value test’ and re-negotiate their contracts more extensively. As PFI has shown, where councils do not act as intelligent and demanding consumers, both balance sheets and outcomes for residents can be adversely affected.

Strategic commissioning rests heavily on entrenching a culture shift amongst members. This, as the report shows, will also require that they gain new skill sets. Members will need to become more used to a guiding rather than directive role, yet this does not augur a return to Nicholas Ridley’s idea that councillors would merely meet four times a year to award contracts. They will have a dynamic role to play, constantly seeking the best provider for their residents, be it from the public, private or third sectors.

If local government is having to radically recalibrate service provision in the coming years, there may be as much to gain from rethinking the entire decision making process as merely salami-slicing existing budgets. Efficiency is needed going forward, but, even given legitimate concern over the financial climate, the term is not just about wielding the spending axe. Strategically commissioning services in a provider neutral fashion can help deliver better outcomes for residents – and that, ultimately, is what local government should be about.

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