The spread of innovation between local authorities: the London experience

Innovation is in fashion. It’s what we are supposed to do. Forget good services at a low Council Tax. We are supposed to innovate. Whitehall documents issuing challenges to local public services have changed their headlines from efficiency, through improvement, to innovation. Yet, simply because an idea is popular in CLG or a thinktank does not mean that local government should drop its local priorities to jump on the latest bandwagon.

So tonight I want to ask four questions about innovation and its spread

across local government:

1. Why do we need it?

2. What is it?

3. What drives it?

4. What are the implications of increasing the pace of both innovation and also its diffusion across local authorities?

Many aspects of the London experience will be familiar to people throughout English local government. I hope that some of my conclusions can apply just as much in Herefordshire as they do in Hillingdon. They are, after all about how we better meet the expectations of the people that we are elected to serve.

Why do we need innovation?

There are two reasons: cost and quality.


The drive to improve value for money has intensified as the growth in government spending has reached the ceiling of the public’s willingness to be taxed. Gershon efficiencies have been followed by 3% cashable annual efficiency demands on local government. Local government has led all other public services in its ability to deliver incremental increases in efficiency. Under the first Gershon regime public services were allowed to deliver half of their savings through notional cost reductions: statistically identifiable savings that did not create actual, spare cash.

While central government relied heavily on these notional gains, localgovernment did not. It was local government that delivered ahead of schedule £4.5 billion by the end of 2006. Today in London we generate £20m worth of savings – with no loss of service – every month. But this is not enough. Successful outcomes have not kept pace with increased spending. We need to achieve still more from the resources already available. But there comes a time when simply squeezing the old system starts to harm the quality of services. At that moment the incremental improvement that comes from the “efficiency” mind set must be replaced by more fundamental change. Process improvement asks more fundamental questions about how we deliver services and solve problems. It is like the difference between cutting costs on the Underground by replacing staff with ticket machines and replacing ticket machines with the Oyster card.

Solving existing problems in new ways has been part of the work of London Councils. For example the London Centre of Excellence, now incorporated in Capital Ambition the improvement arm of London Councils, re-designed the purchasing of IT hardware assets. We created an e-auction room sourcing equipment around the world and so saving each of the 10 member authorities an average of £400,000.

This month an improved London Jobs Portal aims to put 90% of London local authority – GLA and boroughs – jobs on line; so saving advertising spend and more effectively communicating with the next generation of potential recruits to public service. Process improvement, often supported by IT systems can unleash innovation that dramatically reduces costs while enhancing service quality.


However, it is the issue of quality that creates the greater need for innovation in local government. The hard challenges that we face in public service are not responding to old ways of working. Long term unemployment is no longer simply a problem of skills; solved by adding another teacher or another course at the nearest college. It is also about attitudes to work and the impact that other state policies have on those attitudes. That is why London Councils is arguing for changes to housing benefit policies for parents. Doing more of the same is no longer enough.

Innovation in public service – doing things in a smarter way – is needed to address social problems that come with being a successful global city. We can see this challenge being repeated across London and across all the issues that most worry Londoners.· Addressing child poverty demands new ways of helping parents to raise their aspirations· The Mayors’ target to build 50,000 affordable homes must not put a ceiling on the aspirations of the people who live in them. New ideas are needed to align tenure with opportunity.· Guns and gangs will not be solved simply through more youth centres as a way of providing diversion or containment. We need to harness commitment and new ideas to change behaviour and aspirations· Supporting older people to live independently will not happen simply because we provide more home helps or meals on wheels. Instead we need a huge diversification in the types of support on

offer so that different individuals can choose.

Each of these challenges demands that we stop offering old solutions with more efficiency and instead think afresh about the people we are trying to support. And one thing we know about quality or failure to deliver it is that, generally, a ‘wronged’ person tells 8-16 others. Innovation is the key to that change.

What is innovation?

It might seem that there is an obvious answer. Yet already Whitehall shows signs of distorting this simple concept. Innovation is ideas not checklists. Innovation cannot be another “key line of enquiry” in the Audit Commission’s Comprehensive Area Assessment. Innovation is thinking and listening to voices from outside the mainstream. Innovation involves asking questions without knowing if we can find the answers to them. This was in our minds when Capital Ambition created the London Collaborative. We commissioned three partners to work with 250 of the brightest and best service leaders – including some councillors – from all parts of London public service and private sector partners such as BT to ask and answer the hardest questions about London’s long term future. Following a 24 retreat of all London chief executives and a wider one day conference for key managers across London, we are looking in depth at:

· Issues of behaviour change

· Worklessness and social housing

· Climate change and carbon reduction

· Understanding population flows


Innovation is likely to take three broad forms. Where we need to improve existing services it is process improvement will be the most common route to deliver better results for citizens and at the same time increase the impact of every pound spent. Where old state bureaucracies are failing to solve the problem, creating new forms of partnership joining up local public services may be the way forward. LAAs are part of this process. They will also bring into focus Whitehall’s failure to join up across departments. But in some areas there are simply no organisations capable of addressing the issues that Londoners expect us to resolve. Here local government may need to develop new skills in helping social enterprises to grow so that they can meet the challenges of a global city.

What drives innovation?

But innovation is not a solitary task; it happens in organisations. How swiftly local government can innovate is affected by rules and systems inside the town hall. It is affected by the environment created by national government. It is also affected by the quality of relationships that individual councils have with others and individuals have with each other. London’s story tells us much about the challenges ahead.


Internal confidence is essential to take on the uncertainty of innovation. This has become still more true in a world dominated by top-down target cultures. Capital Ambition has been an essential part of helping each London borough to raise its game and so create the head room to innovate. Capital Ambition has worked to systematically analyse performance across London and across areas of activity. Secondments and peer based interventions between boroughs have created a high trust approach to raising the standards of every borough. And importantly it has been London boroughs saying that we will work together to improve – that we don’t need others to order us to do so that has been key. The political control of the borough getting support and those giving it has been irrelevant. The results have been dramatic.

Today, from having a number of basket cases, London boroughs perform better in CPA than any other type of borough. London has the best direction of travel scores and the best use of resources results. Uniquely, against national trends customer satisfaction with London local government is rising. In 2008 all but two London boroughs are either excellent or good. The effect has been to build confidence within authorities and by better protecting them from the threat of “failing” inspections to create room to innovate. Now our focus is shifting from ‘support’ to ‘challenge’.