Localis chief executive on catalyst councils

Alex Thomson previously worked in the civil service, latterly at the Department of Communities and Local Government and has been the chief executive of Localis for two years. The think tank has just released its report Catalyst councils: A new future for local public service delivery.

Room 151: How can government encourage local public sector partners to “participate in the pooling of resources and funding”?

Alex Thompson: The big answer to that is Community Budgets and a more holistic approach. Early intervention would make better use of scarce resources and is a gateway to getting people involved. The noises I am hearing about Community Budgets are pretty positive. I’m not sure it’s that people haven’t got their heads around them, it’s more that there needs to be the will to make the change.

Room 151: You cite Essex and Shropshire as councils with pioneering trading companies. Is there a feeling that other councils are willing to undertake this sort of entrepreneurialism?

AT: Some of the examples, I think Surrey is one, go back years so the concept has been around a while now. It’s a good thing to do and people seem to be saying ‘if they can do it why can’t I?’. People are pushing on down this road and local authorities will have to be more entrepreneurial. There is a feeling that we are moving in the right direction.

Room 151: Can you put any time scale on how long it might take to get to the position where councils are using the full range of innovation you talk about?

AT: No one does the same thing nor should they because every area is different in terms of their needs and the requirements they face but also in terms of their leaders. They’re elected to make decisions and they stand accountable for the decisions they make with the ballot box. But I wouldn’t be surprised if in five years we weren’t a long way down that road and in ten years time the landscape could look completely different to where we are now. I think that’s reasonable.

Room 151: 65% of councils responded that nudge theory could be the “single greatest opportunity” to reduce costs. Can you give us a couple of examples of this?

AT: The 65% finding is from an Impower report. The concept of nudge is about changing behaviour so that you drive down demand for service. Making what you do more efficient is tremendously useful and helpful, but if you can prevent the demand for a service or lower a demand for a service in the first place that is the biggest win of all. Nudge is using social norms to change the way people behave: so instead of telling people what to do you inform them that lots of other people do ‘the right thing’. That’s a crude characterisation. So people feel ‘if that’s what everyone else is doing then I should be doing it as well. That’s the idea behind it, simply-put. So the phrasing of requests is quite important. We think there are opportunities there for local government. One is that there is a chunk of funding on public health which is going to transfer to local government shortly. So can authorities find different ways of messaging to their residents to stop them from smoking.

An example that Impower reports on demand management is special educational needs transport where something like 120 parents in an area rather than using the long standing council service, chose to drive their own children to school with a personal travel budget for it. Some people became independent altogether and the result was a saving of something like 15-20% of the budget. Just by recasting the way people look at it.

Room 151: What did you find were the main barriers to the use of Social Investment Bonds?

AT: They’re risky by definition because you’re putting money upfront in the hope that there will be a return; there’s a risk in that. And there’s always a risk that it’s not as easy as one would like. People want a greater return depending on how risky they perceive an investment to be and that isn’t always easy to get.

There is also the policy risk aspect of it, it’s a new way of doing things. What we note in the report is that where there is SIB in the UK, Peterborough Prison for example, support has come from elsewhere like Lottery money, for example. The point being that the model is not at the stage yet where it can stand on its own two feet. It’s very early days for that stuff but the potential is there.

The other barrier here is about measuring outcomes. What outcomes are you getting? How do you measure them? Are you sure you can attribute changes in outcomes to the intervention? That is where it becomes really complex.

Room 151: Is there a solution to the cost and complexity of Community Asset Transfer? You mention long lease transfers?

AT: The short answer is there is no simple answer. I remember looking at this two or three years ago and even back then the last government made lots of positive noises about how they were going to write a report, and there was lots of interest, but there wasn’t a lot of it going on.

Complexity is the number one thing and cost is a little below. From a legal and organisational standpoint you need to be careful. Local authorities are guardians of a public asset and you need to be very careful about how you go into it.

The organisations in question needs to be comfortable that they have the capacity to manage the assets. There’s also the question about how long term it is, you don’t want to be relying on an organisation which has one or two inspirational people which would fall apart if they weren’t there. You need to be sure you know what you are doing.

The follow on from that is one good way of approaching it could be not to transfer the asset in its entirety. Don’t transfer ownership wholly because then you have lost control but if you do it on a long lease you can always bring it back if things were to go wrong.

Part of the work the local authorities need to do to make this happen is not just assess things, the capacity of a given organisation, for example, but to help build that capacity. That said, there are plenty of examples going on right now. In libraries for example lots of councils who have less money for libraries than they had before have looked at them and thought let’s let local groups help run them, the library is then not shut but the council isn’t funding the staff.

Broadly speaking though we do thoroughly applaud this. Giving communities something to do to play a role supplying services that may not be financially viable for a local authority to do is a good thing – it’s the right thing to do. Roughly speaking once an asset goes it’s not coming back, so keeping it going is the trick.

Room 151: Tell us about your ‘Commission on better commissioning’ idea.

AT: The government has announced the idea of a commissioning academy and we thought that local government, central government and the LGA should form a commission on better commissioning. There’s still plenty of confusion and people are not quite sure what they can and can’t do with EU procurement.  A lot of this is a new landscape: it’s not just, here’s a contract, walk away. It’s about commissioning in a smarter way so there is shared risk and reward and getting that right is a real art form.

Finance directors and others need to be confident they’re striking the right deal and there’s good value for money, potential return via growth and flexibility so that contracts can be changed. Not everyone has been doing that.