Guardian Public Service Summit 2011

Last year I blogged about the summit .  Here are my thoughts from this year:

What is the Summit and Who Goes?

The Guardian Summit is held annually, lasts two days, and attracts a good range of speakers – examples this year included  Nick Clegg, Katherine Kerswell (Kent CC), Peter Marks (CE of the Co-operative Group), Nick Chapman (CE NHS Direct).  There is a broad audience across the sectors – about 200 people this year – including Central Government departments (eg HMT, Health), Not-For-Profit (eg ACEVO, Social Enterprise London), Local Government (eg Essex CC, LB Tower Hamlets), Private Sector (eg BT, CSC), HE (eg Univ Birmingham, QMC), and various relevant quangoes.  The Corporate Sponsors this year were PwC, BT, CSC and The Guardian.

The Theme of the Conference was “New Models, New Relationships, a New Era”.

Messages from the Summit

The overview message is the perhaps obvious one that public services are in transition at the moment.  There is a considerable amount of ambiguity and uncertainty, and a lot of new ideas and divergent thinking.  There isn’t a “new normal” yet.  Within that caveat some core themes for me were:

• No-one is suggesting that the private sector is a significant part of the solution, indeed some active antipathy to the private sector
  • “I don’t see how we can justify taxpayers’ money going to private shareholders at the moment” – County Council Chief Executive
• No quick funding fixes.
  • Answer to an expert being asked “when do you think the public sector may see an uplift in funding” was “not for two parliaments”
• An emerging uneasy acceptance of localism, and diversity in service provision, with different organisations doing things their own way, and a growing role for social enterprise, but with no-one really clear about the form of that.  Some emerging squabbling between charities and social enterprises about which offers the best local delivery option.  It is clear that some in the charity sector see social enterprises as the private sector stealing their best lines.
• The “now” thinking has been done.  The people I was talking to at CE level seem now to have figured out what they’re going to do to get over the budget problems, and although it is yet to be implemented, and no-one thinks that will be easy, the problem is conceptually solved, and becomes a task of leadership and staff and citizen engagement rather than a strategic or visioning one.  The CEs are ready to tackle the next conceptual problem, which is about future delivery models, and how they will shape their own immediate team of Directors.

Some more specific comments follow, grouped under the session headings.  The rules of the summit were that things that the speakers said were “on the record”, contributions from the floor were Chatham House – they could be repeated but couldn’t be attributed.  I’ve followed those rules.

Plenary: Nick Clegg

Nick Clegg pitched quite well to his audience, invoking a thoughtful argument that went back to Beveridge and Gladstone in saying that the public services as they are at the moment would not be in line with their intended underlying principles at the time.  He made the telling point that “regardless of the budget deficit a health service that has to have 6% more year on year is never sustainable”.  He also made the point that the public service ethos can be found in the private sector, and simply being paid directly by the state doesn’t mean that you have the best interests of the customer at heart.  He sought to position the Lib Dem difference between Labour and Conservative as “unlike the Conservatives we think public services should be well funded, but unlike Labour we don’t think they should be provided by a monopoly”.   He was big on the state funding service provision, but not running it.

He was less clear around the role of the private sector, insisting that no-one should ever make any profit out of running a (state funded) school, but seemed willing to allow a profit to made from health.  He was caught between two ideologies and failed to reconcile the two under questioning.  He was also vague on accountability, talking about freeing up alternative service providers to do things without lots of costly intervention, yet “holding their toes to the fire” to make them deliver.  There was much talk of “Which?” user feedback ratings as an alternative to service level agreements and formal contracts, with the role for local councillors left a little vague.  Conclusion: there is “work in progress” within the coalition government around accountability mechanisms and the role for private profit in public service, but a strong commonality around supporting different delivery models.

In discussion afterwards a senior and slightly weary civil servant remarked that “it always take three years before a coherent narrative emerges from a new government”.

State of Play: David Walker

David was previously editor of Guardian Public Magazine then went to the Audit Commission, which he has recently left.  He was not terribly happy with the emerging agenda (as articulated by Nick Clegg above) and said “we deinstitutionalise the public sector at our peril”.

What was interesting in a broader sense is that there was clearly some support for his point of view in the room.  So even amongst people who have explicitly signed up to attend a conference with a theme of change there was some significant resistance to it.

Building the Foundations for Growth

Odds of a double dip are 1 in 3 and worsening, according to PwC, but the principal drivers of the economy are out of our control and we are heavily dependent on the economies of our export markets.  There was a call for a regional growth fund to help find work for the public sector people who will lose their jobs, and some potential optimism for the role of LEPs as being a return to municipal entrepreneurialism.  An interesting “new” perspective came from Will Straw who suggested that the fundamental logic of PPP needed to be reversed, so the public sector should invest in and build infrastructure eg rail, bridges etc and then “lease” it to the private sector through tolls.  This would take advantage of the lower cost of capital to the public sector and improve national competitiveness, though this should only happen for investments where a specific return revenue stream can be identified.

Personal Responsibility versus Public Services

The most useful thing in this session was the Chief Executive of the Co-operative Group talking about the role of mutuals in public service delivery.  He made the point that he thinks that “the John Lewis Model” (ie where the company is owned by the staff and run for their benefit) is potentially dangerous unless the market is competitive to keep the staff honest and efficient  (which it is for JLP but would it be, for example, for local town planning services?).  He (unsurprisingly) preferred the Co-operative model in which the company is “owned” by the customers but again he felt a need for competition to keep things honest, and when he described the governance he has around him as result of belonging to his 6 million members and with a board of 20, elected by the members, it sounded an awful lot like a local authority!

From the on-table discussions as part of this session it was clear that people are interested in having a plurality of provision for local public services, but that none is being approached in a “starry eyed” way – people are taking a sharp view of the risks and benefits.  It also becomes clear that generalising about local provision is very difficult.  What will work in one area won’t necessarily in another, and as a public service sector we don’t have the language for describing that yet.

Organisational Change

Max Wide leads on Strategy for BT Government and spends lots of time seconded to organisations that are leading the way.  His key assertions were:

• We are entering a new phase, following on from post-war welfarism (public provision of benefits, social insurance safety nets), new public management (eg the move from “town clerk” to “chief executive” – managerial advances), and networked local governance (eg LSPs, CDRPs, ECM etc)
• Next generation of Organisational Development requires organisations to listen to previously excluded voices and to engage differently (eg personal budgets, local budgets)
• Even as we change it’s important to hold onto the gains we have made around single access points for customers and eg shared IT.  By analogy with Apple’s App Store perhaps it’s local government’s job to create a regulated infrastructure within which others can innovate and compete
  • This analysis allows a continued way in to the market for firms such as BT so could be seen as self-serving, though it is plausible given unceasing cost pressures.

Another speaker was Jonathan Baum, Secretary General of the First Division Association who was sceptical about staff willingness to leave the certainties of their current pensions and jobs for the uncertainty of staff mutuals (although he seemed to think they’d have a choice, which may be a big assumption).  He also thought that different leadership skills would be needed (though appeared to miss the point that some of those skills could be bought in on a temporary basis, and that the skills overall needed to be found in teams not in superhuman individuals).

Katherine Kerswell was a mixture of practical and theoretical.  The key points I took away were:

• Staff communication is especially difficult at the moment because of what she called “the organisational rain”
• She says that staff have moved beyond “what are we going to do?” to “how are we going to do it?”
• Whilst making decisions locally we might want to have a think about aspirationally how we might want to source the civic society from across different sectors – ie nationally what percentage of our public delivery would we want to be provided by different sectors
• The sector mustn’t wait for Central Government direction, because it will never be forthcoming in a useful or timely way
• If we are to change the whole system of public services then we need to make changes to the “authorising environment”.  This being a term specific to theory of Public Value which describes the collective accountability environment for public services and is the analogue of the market environment for the private sector.  So, I interpret that as meaning things like who gets to decide what, how often, based on what and so could end up meaning a radical rethink of the democratic and accountability shape of local governance.  In other words we will need to think (for example) about the role of local elected members, the nature of public services scrutiny, whether we continue with existing Leader and Cabinet models and how eg locally elected police commissioners may fit with this.

Co-Creation and Innovation

Christian Bastion from Denmark’s Mindlab spoke about how other European countries are approaching public innovation and the answer is “pretty much all the same”!  Some of the techniques that they have been using are similar to some methods I was applying in NatWest in the 1990s (such as what might now be called customer pathways, prototyping, various visioning methods).  One thing I quite liked was that someone strapped a video camera to his knee and then moved around a nursery space to watch afterwards to see what the space looked like from toddler-level.

What Should We Expect from the State?

In what was one of the most interesting sessions two chief executives spoke about the new models they are developing in their authorities.

Some key points from John Barradell, CE at Brighton and Hove:

• Brighton Festival is a great example of a great result from a community led initiative which is (simply) supported by the council
• Local Government’s contribution to Big society should be about creating and sustaining local networks which can then do their own thing their own way – but that level of genuine public participation will require an attitude shift in council officers
• Remember to leverage and support the private sector in your locality as that’s much bigger than the public sector
• Referencing work by Arie de Geus on “the immortal company” John reminded us that the characteristics of really long-lived organisations are that they are loose ecosystems defined by shared values and culture, which treat local customers differently rather than trying to do so uniformly.  A useful model for local public services
• Important that local authorities safeguard their role as democratic arbiters and holders-to-account
• We have got to learn to love quick and easy failures
• Brighton are doing public sector talent pooling across all of the local public employers, with the help of the University.
• A role for the LA as “Convenor and Curator” for the locality.
  • My personal view is that there’s something quite powerful about that “curator” analogy.

Social Enterprise: Is it the Panacea we are Looking for?

No, was the unanimous conclusion.

But it is interesting, said Peter Holbrook, CE of Social Enterprise Coalition, that staff sickness rates invariably improve once people become part of a social enterprise rather than public departments – a mix of social purpose and competition/ entrepreneurial possibility seems to unlock something positive from people.

Ray Mills of PwC was clear that it was important to build social enterprises on substance rather than hype, and not rely too much on a “mystic quality”.  Social enterprises have the same difficulties of accessing funding that private businesses do.  They also need access to some specific skills (which is a potentially important fact for Veredus in this market, as we have experts with extensive and relevant experience).

We then had Andrew Harrop from AgeUK speaking up for the advantages that Charities have over social enterprises, including deeper insight, a more holistic offer and more volunteers … which failed to convince the CE of the Social Enterprise Coalition!  It suggests an interesting dynamic of tensions within a space that to an outsider can look pretty homogenous.

The Chief Executive Salary Trap

A short piece I wrote for a recent LGC section, reproduced with their permission.  All the other stories, including an analysis by LGC that shows that contrary to past trends many incoming CEs are now paid less than the incumbent, is here.

Two years ago many authorities found that upward CE salary pressures meant they had to pay more for a new Chief Executive than they had been paying to a very experienced and able incumbent.  This often presented some real political difficulties and local outcry, perhaps most famously at Suffolk CC.

Now, as the LGC analysis shows, we are seeing that trend reversed, and salaries for new CEs are less than that of the previous incumbent.  Some of this reflects the mood of the times, and Chief Executives are pretty pragmatic folk – whatever their reputation for uncaring venality as articulated by various government spokespeople.

The reality of this is that the pool of candidates for these top jobs will be different as a result of this change.  There are some superb candidates whose personal circumstances mean they can move sideways, or even take a small pay cut, to get a more challenging and attractive job, but some of the more experienced and able CEs are painted into a salary corner and now see that their next progression step is linked to an unaffordable salary drop.  This in turn will mean less movement and fewer bridging opportunities for those coming through.

We will see some very able but relatively inexperienced people leap-frogging a “stuck generation” into more senior jobs.  There are people in that next generation who are very capable of this, but the depth of assessment and testing they will need to check their ability, and the onboarding support they need, will be greater – but then they will fly.

Meanwhile there will be a need for the stuck generation to be mindful of the need to reinvent themselves and their approach to keep themselves fresh, and valuable in a context where they look expensive.  We will see more shared CEs, and we may even see CEs undertaking paid work alongside their core role to reduce the cost to the authority.

All of that will come to pass if trends continue – but it will be interesting to see if the fundamental reality reasserts itself – there is a shortage of really top talent, and a desperate need for it.