Whitehall: putting its money where its mouth is

March 19, 2010

Chris Leslie & Nigel Keohane, NLGN
PUblic Finance

Of all the initiatives and reforms to public services of the last decade, none has had such unambiguous support from politicians of all parties as that received by the Treasury-led ‘Total Place’ programme. Neither has any reform had such apparent unanimity of support or commitment from Whitehall and localities alike. But then the concept is such commonsense – to bring all public resources together with an area to respond to the needs of that place – that opposition would be hard to muster. The question is actually what level of change is government as a whole ready to contemplate and tolerate? Will Whitehall really be ready to open the doors to its corridors of power?

The official and unofficial pilots are unearthing major failures within our public services as currently organised. And the costs of these failures are significant – inconvenience to the citizen and customer, wasted taxpayer money, an emasculation of the relationship between public servants and their clients. In many cases, inconvenience for the customer and wastage in the system goes hand in hand – pilots have revealed a dizzying array of assessments and some 50 different forms for benefits.

And it is not hard to see where this stems from, with one council discovering 120 projects or programmes, delivered by over 50 public, private or voluntary sector providers, with over 15 funding streams in employment-related services alone. Another pilot estimated that it costs national, regional and local organisations some £135m to spend £176m on economic development projects.

Conversely, intervening at the right time in the right way can mean more effective and efficient solutions: London Councils have estimated savings at 15 percent across the capital; other areas are suggesting that 10 per cent savings in worklessness and public sector assets are conservative figures.

Yet anecdotal lessons only take us so far; the real question is how best to put these wider collaborative concepts into practice, and on a sustainable basis.

What government must look like

Unlocking these financial and service benefits is no easy task. The pilots demonstrate the virtue of government thinking as one, just as they reveal the merits of close proximity to the citizen in putting this concept into practice. It is here, at the local level, where the interactions between the state and its clients can be best understood, duplications stripped out and innovative new approaches designed. Yet, we remain far from a situation where public resources can be applied and decisions be made at the local level – especially as such a small fraction of public money is under the discretion of local councils.

Major barriers also stand in the way of a ‘whole public service approach’ more generally. At first glance many appear local problems – professional, organisational and sectoral cultures, the need for local leadership and capacity to bring the whole public sector together.

However, these mask more embedded dynamics, activities and relationships across government. Performance targets, departmental programmes, vertical accounting structures, ring-fenced budgets all stand in the way of Total Place methods by generating their own conflicting practices, cultures and programmes at all tiers of government. Yet, our analysis also demonstrates that we cannot hope to respond simply by removing a series of performance measures or even ring-fenced budgets. Rather, these forces are now engrained culturally: the dependency culture locally and the centralisation culture feed off each other; performance frameworks are a symptom of a reluctance to devolve responsibility and resource to the local level; the multiplicity of programmes, funding streams, targets and systems reflect the lack of strategic coordination across government and the tendency for each department to think individually. Each of these reduces the discretion or ability to make decisions and pool public resources at the right tier of government.

Our responses in the past have been piecemeal and partial – such as reducing central targets from 1,200 to 200 – or have relied on local partners to transcend these barriers as best they can through Local Strategic Partnerships. There is clear awareness of the problem, but the next steps may need to be more radical.

So what does it mean for the way we govern?

To break us out of these cycles, NLGN propose three principal reforms to the way that government works. The first is to devolve responsibilities and funding for local services, such as public health and local policing where councils and their partners have such commonality of purpose that any other approach appears perverse. Beyond this, NLGN proposes that the Government adopt ‘Place Proposition Agreements’ as the next iteration beyond the LAA, through which the centre and localities would make practical deals on how to deliver a more efficient and effective service. We predict that localities could put forward robust business cases for devolving responsibility and resource, risk and reward, in a whole range of services including worklessness and benefits, chronic and acute care, offender management and economic development to name just a few. These dialogues between the locality and Whitehall would present the Treasury with innovative cost-effective and efficient ways to undertake public service activity within the context of restricted public resources, and go beyond the aspirational agreements of the LAA process.

Whitehall could and should become a strategic centre setting out the vision and framework within which public services should operate. But such Place Agreements on their own are unlikely to be sufficient to drive the devolution necessary nor the requisite ‘whole government’ approach to unlock savings and service improvement. Evidence indicates that Whitehall itself remains too fragmented and too opposed culturally to relinquishing the hold on the purse strings or performance measures.

The key question therefore is how we can encourage central government departments to look outwards and think as one. Many proposals and reforms have been forthcoming over the years – such as cross-cutting units and budgets – but none have created the momentum for the seismic shift in culture that is essential. As one of our Whitehall interviewees noted, ‘as long as there are clearly delineated government departments, the culture will be hard to shift’. Wholesale restructuring of all departments would be costly and may lead simply to new discrete corridors of power being established. Therefore, in the short term, there would be merit in forcing all domestic departments to perhaps funnel a minimum percentage of their departmental expenditure through these new deals with localities as a way to catalyse the pooling of resources.

However, we also recommend a major change to the shape and nature of Whitehall. Despite its best efforts, CLG has possessed insufficient presence and sway within the corridors of Whitehall to shift the mindsets and practices of its sister departments to be more genuinely oriented around the needs of place. The current architecture of Government lacks the ability to execute change across the totality of central functions. NLGN therefore proposes that CLG should be converted into a new Department for Devolved Government, merging with the Cabinet Office, Scotland and Wales Offices, the constitutional elements of the Ministry for Justice and the Prime Minister’s Delivery Unit. This major reform would create a department of sufficiently powerful strategic clout to propel the merits of whole public service approaches and devolution and drive greater cross-cutting approaches in Whitehall.

Total Place must not be seen merely as another edict or buzz-phrase generating talk but no change. It is as much a challenge back for Whitehall and any test of seriousness can be judged nationally as well as locally.


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