Member Blog: Commissioning partnerships to deliver VFM outcomes

  • Neil Euesden, Managing Director, Pinnacle PSG
  • 27 Mar 2015

Blog by Neil Euesden, Managing Director, Pinnacle PSG and Chairman of BSA Housing Committee

Commissioning partnerships to deliver VFM outcomes

The public sector and local government in particular are under sustained pressure to reduce costs. Whoever wins the election in May will introduce another 5 years of austerity and funding reductions for local authorities. The questions going forward are where will these savings come from, how will services be delivered, are the skills there and is there a real chance of a failing council?

Savings from where?

Many local authorities have responded well and year on year reductions since 2010 have been absorbed by creative and increasingly more innovative use of resources, supplemented by raising their income via charges where possible. The initial reaction of some local authorities to close libraries and front line services has long passed. For many, the search for real reform and solutions has now started in earnest.

Some authorities have chosen the route of ‘shared services’ or shared chief officers. The long term benefits of these kinds of reform have yet to be fully realised or evaluated. Due to the different politics and policies in partner authorities some have unravelled quickly.

There is undoubted merit in gaining cross-council efficiencies but, without competitive commissioning, it is difficult to be confident of savings, efficiency or transparency. It will be interesting to compare the performance and cost outcomes of the “Tri-Borough” arrangements in London. Here three London Boroughs, Westminster, Kensington & Chelsea and Hammersmith & Fulham have created two “Tri Borough” business models. One is a traditional shared services, Council to Council without competitive commissioning/procurement and the other is a full market test OJEU to secure a private sector partner. Both models are ground-breaking in their scope and innovation.

How will they be delivered?

All Authorities need to consider becoming an enabling authority with commissioning outcome based services. This is a starting point but there is no silver bullet, no exact model. Each authority must examine its own needs, circumstances and outcomes and determine the best business model to achieve its aims.

One way is to expand and form new Public Private Partnerships (PPPs) which will enhance the choices for Local Authorities. If this is via competitive commissioning, whether it is “shared services”, “grouped services”‘, “front office”, “back office” or any other variations, real Value for Money can be achieved. However, the additional benefits with competition are about transparency, income sharing, cultural change, innovation, empowerment of staff, smarter working and new business models, which put the customer experience first. Newly commissioned innovative business models with a pipeline of opportunity can help to create a new Public Private marketplace where mutuals and social enterprises can flourish alongside private and public sectors.

Are the skills there?

It has to be recognised that it is a major change for some local authorities to become an enabling authority commissioning outcome based services. This requires Members and Chief Executives to adopt a mature strategic approach, to set outcomes against policy and allow for competitive commissioning of their services to achieve their aims. This needs to have transparency, accountability and trust and a real recognition of strategy versus operations and enabler not deliverer.

There is a question for both the public and private sectors “Are the skills there to commission and deliver large scale public private partnerships?”

Will a Council fail?

Impossible you might say? Wolverhampton City Council recently said that it feared becoming “bankrupt”. The Local Government Association (LGA) have also raised this question. Initial conversations have started with the LGA and the Department for Communities and Local Government (DCLG) to potentially create a watch list of Councils financially at risk.

There are many ways to mitigate and reduce these risks. As discussed, this could include innovative PPPs where the skills of the Public and Private sectors come together to create solutions.

Post Election there will be great challenges but also great opportunities to create new business models for the future.

Neil Euesden

Neil Euesden Managing Director, Pinnacle PSG

Neil has over 30 years’ experience in the UK’s housing sector. Before joining Pinnacle PSG in 1998, he spent 18 years in local government and eight years running his own facilities management business. After working in housing for the London Borough of Hackney, he left to set up his own business to provide facilities management services for both the public and private sectors. He was recruited by Pinnacle PSG to build the facilities management business alongside its social housing contracts.

Neil is a member of the Public Services Strategy Board of the CBI and of the Business Services Association.

  Related topics: Procurement, Public service reform, Local Government, Economy and growth