Posted on March 6, 2017 by Amyas Morse
I was privileged to speak to The Strand Group at King’s College London in early February on some of the elements needed for government to successfully implement major change programmes in complex, interconnected systems. The examples on which I focused were local, adult social care and NHS services in light of devolution, fiscal restraint and Brexit. After my talk, I was asked many interesting questions, some of which I would like to explore in more detail in this post. [See here for the video and transcript.]
As I told The Strand Group, I am concerned about the combined impact of the ongoing drive to find greater efficiencies in local services alongside several major reforms being implemented concurrently, including devolution in local government and reforms to cope with an aging population in the health and social care sectors. It seems to me that joined-up decision-making and funding arrangements between connected systems – central government and local bodies for instance – are often missing, leading to service decline.
Both local government and the NHS are under pressure from central government to improve efficiency. Local councils have been subject to significant cost reductions. Prevented, legally, from going into deficit, local services have moved beyond achieving more with less to achieving less with less. This is demonstrated by what I call ‘deficit behaviours’, such as the invisible rationing of services and quiet drops in service quality.
The NHS has had additional funding, but also faces growing demands. Without a legal prohibition against going into deficit, Trust leaders – who were once ashamed by deficits – are now becoming increasingly stoic about their deleterious financial position. Their focus is now on maintaining service standards. Even there, the ‘leading indicator’ statistics such as A&E waiting times and ambulance response times are falling below agreed national standards.
Funding cuts to public services have been based on the assumption that there is slack in the system. In some places, there may still be (as my colleague discussed in Local service reform: is it all about the money?). Nevertheless, central government would be wise not to keep assuming that this is so.
After my presentation, I was asked how local councils and the health sector should ensure that central government understands the pressures on their ability to deliver services, and how central government can identify the right early warning signs of unacceptable pressure on those services.
The NAO has produced many reports over recent years on financial and service sustainability. Equally, there is plenty of evidence from NHS England and other sector leaders about the pressure they are experiencing. As a result, there has been much coverage of the pressure on the healthcare and social care systems and other local services. I suspect that the education sector may be the next to experience such severe pressures, as schools have to make £3 billion in efficiency savings by 2020 while pupil numbers are increasing and the condition of the ageing schools estate deteriorates [see our reports Financial sustainability of schools and Capital funding for schools]. In short, access to evidence does not appear to be the problem.
From my unique perspective of looking across government, I think there are several issues.
First, it is time for a debate about the level and quality of services for which people are prepared to pay. I; you; all citizens depend on those services, so there has to be some way we can say when the service decline is too great; when the rationing of services is no longer acceptable.
Secondly, there needs to be greater focus on applying evidence and identifying early warning signs. Too often central government has been slow to adjust – acting only when serious failure occurs. Perhaps most importantly, decision-making should be rooted in evidence, and I have not seen many credible evidence-based efforts to reconcile central funding to local needs.
Thirdly, there needs to be intelligent dialog between central government and delivery bodies about what efficiencies are achievable. Greater sharing of good practice and evidence would help find a more sustainable path to that more efficient future.
Finally, many central government decision-makers are looking only at their own piece of the jigsaw and making their own decisions about which pressure will be the focus of their attention. All of us need to get out of our silos, understand the complex, interlocking reform environment, recognise negative trends and be ready to shift quickly should there be warning signs. To achieve this, more needs to be done to incentivise the pursuit of efficiencies across organisational boundaries.
I am in favour of efficiency savings. However, I do think we need to think very carefully about the long-term effects of continuously requiring spending cuts. This is particularly true when it is a department requiring savings from those operating outside the department’s immediate boundary, without necessarily understanding their effect.
I was also asked to talk more about devolution. I think it is quite possible that Brexit will be such a focus for government that the momentum for devolution will slow. Brexit is likely to divert senior talent time and attention in quite a number of departments.
Moreover, perhaps the ‘Manchester Model’ is more specific to the unique Manchester circumstances than appears to be recognised. As with spending cuts, no single approach works indiscriminately. If devolution is to continue there will need to be, again, careful dialogue, flexible planning and a focus on the big picture, not just disconnected pieces of the jigsaw.
As I’ve said in previous blog-posts, a key part of our mission at the NAO is to help government improve public services. We will continue to provide evidence and early warning signs of strain in local public bodies to help government make the right decisions in a complex landscape.
I welcome your comments and invite you to contact us if you would like to discuss any issues.
You can read here the full transcript of Amyas Morse’s speech and video of his speech and the question and answer session.
About the author: Amyas Morse, Comptroller and Auditor General. Amyas has been head of the NAO since 2009, before which he was a global partner with PricewaterhouseCoopers and Commercial Director at the Ministry of Defence. He has served on a range of cross-government Boards and Groups.
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