A choice way of saving

April 10, 2009

Nigel Keohane, Senior Researcher, NLGN
Public Finance

Powerful arguments in favour of giving choice and control over to individuals and communities have been a constant message from both Gordon Brown and David Cameron over the last few weeks and months.

But the Guardian has recently unearthed a new scepticism. ‘Forget personalisation’, managers at Jobcentre Plus have been quoted as saying. The argument is that personalisation is pointless in the current economic climate and unable to cope with the weight of new customers flooding through their doors.

This opens up a much wider question about public services – is this the right time for government to seek to redesign services around the individual? With financial settlements for all parts of government tightening over the coming years, should we focus on the basics and postpone a wider radical restructuring of the services we deliver?

The answer should be a resounding ‘no’.

In fact, there is a very strong economic and business case for introducing and deepening personalisation not only into re-employment programmes but also into health, social care and beyond. New research by the New Local Government Network suggests that if the right approach is taken, then personalisation has the potential not only to provide more choice and control to individuals and communities, but also to unlock significant financial efficiencies.

However, to bring about this change we must have a completely different perspective on efficiencies. Traditionally, government has conceptualised efficiency primarily as an issue of productivity.

Therefore, we have seen more block contracts and an emphasis on standardised services; we have observed efforts to remove supposedly unnecessary tiers of government; we have witnessed larger, cost-focused procurement exercises based on longer and bigger contracts to drive rationalistion and economies of scale. In such a scenario, customer choice has been seen as inefficient requiring as it does surplus provider capacity. And, although some £4 billion of efficiencies have emerged from this approach, such savings are fast drying up.

Neither should the track-record of the central state in driving efficiency or public sector productivity encourage us to look up to Whitehall for the answer. Investment in the policing service and the NHS have not been met thus far with a commensurate increase in productivity.

However, rather than being concerned with productive efficiencies, we should focus instead on understanding demand and what precisely should be allocated.

This shift is implicit in the act of giving control and choice over to individuals. If needs are calculated more intelligently and fully – and it is people themselves who know best what they most need – then a more nuanced and varied resource allocation can be carried out.

In adult social care, individual budgets have laid bare the gross wastage of the old standardised approach. Some individuals are receiving care far above their needs and requirements – and the state is wasting many thousands of pounds on many thousands of these individuals, when their needs can be met more directly for less. On the other hand, many vulnerable clients are receiving inadequate provision. Even here efficiencies are ripe to be made. For, by providing stable and appropriate support to individuals, they are less likely to require high-intensity crisis intervention in health, homelessness or worklessness. This is a major plank of the whole preventative agenda across health – and this can only be delivered through personalisation.

Taking advantage of a more competitive market of suppliers and a better understanding of clients’ needs, savings of nearly seven percent have been unlocked from the pilots of adult social care. Lessons from personalised health systems in both the Netherlands and Switzerland reveal the same.

But beneath these clear-cut economies lie further hidden opportunities. In the first place, if we harness latent social capital in communities, personalisation can shift expenditure currently carried unnecessarily by the state to non-state enterprises. Community safety and the local environment are just two such areas where we may be able to give greater ownership to local communities to co-produce their own services. So we should devolve budgets and responsibilities to the street and neighbourhood level.

Second, unsuitable and inconvenient access channels to services (such as limiting choice of GPs) may divert people from economic activities. NLGN, therefore, suggest that we should take advantage of the advent of electronic patient records to allow individuals to register with more than one GP so that commuters do not have to take time off work to visit their doctor.

The economic arguments in favour of personalisation are compelling. But, so far they have been drowned out by more politically engaging arguments such as the need to empower citizens and to meet rising citizen expectations. These are themselves cogent motives to devolve choice and control. Yet, in an environment where we must prove the worth of everything that we do, personalisation also offers a choice way of saving money.


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