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Budget 2012: The Drive for Opportunity

by Patrick Nash, Chief Executive Connect Assist

Last week’s Budget was more of a damp squib than a firecracker.  Intrinsically the Chancellor’s message was more of the same. Perhaps unsurprising when there has been little change in the economic outlook and so no reason to revise the Government’s deficit reduction strategy.

So for public sector organisations and employees there were no surprises.  Just more belt tightening, more pay restraint, further cuts to services that are considered to be low priority and increased pressure to improve productivity; in order to make what available monies there are, go further.

For local authorities the situation is particularly acute.  The long-term spending projections in the Treasury’s Red Book show that the financial pressures on local services will stretch well into the next parliament, with projections suggesting that total managed expenditure – the best definition of public spending – is set to fall from 45.7 per cent of GDP in 2011-12 to 39 per cent in 2016-17.

But it’s an ill wind that blows no good and while it is undeniable that many Britons will face individual hardships in the coming months and years, the current economic climate also offers a period of great opportunity for the outsourcing sector, as organisations are forced to reassess the status quo in order to maintain services.

Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations summed up the possibilities when he said: “Adversity always drives opportunity.  The sector’s big opportunity is to push through better delivery, which is cheaper to the public purse.”

Traditionally the public sector has shied away from outsourcing service delivery – languishing in the wake of its private counterparts.  Fears regarding the loss of personal interaction, expertise and the integrity of the service have all been voiced and the arguments are well rehearsed.

These entrenched attitudes are why I see the current recessionary times as an opportunity as well as a challenge for the sector.  I hope it will force organisations to reassess they way in which services are delivered and to look with afresh at the benefits that carefully managed outsourced solutions can offer.

In fact some forward thinking public sector bodies are already stepping up their efforts to find creative ways to reduce costs, while maintaining or even improving the quality of core services.  One recent example is that of the Prison Service, which has entered into a partnership with the MITIE Group to bid for a series of prison management contracts.  While two police forces – Surrey and West Midlands – are looking at how they could outsource a range of services including, some frontline operations.

Within the digital arena the fact that cost savings are available to Government through the adoption of digital technologies is now widely recognised.  And making sure services can be accessed online has been a priority for the Government for some time.  The Chancellor added further commitment to this approach in his statement, setting out a plan to make all transactional Government services digital by default by 2015.  Ease of use is obviously a priority, the Budget document states: “The Government will transform the quality of digital public services by committing that from 2014 new online services will only go live if the responsible minister can demonstrate that they themselves can use the service successfully!”

In my view, this is a hugely positive step.  Effective online services can enable public sector organisations to maintain if not grow service levels at a lower cost, giving service users more choice about how to access and receive information.  It also allows organisations to target the high cost services at those who really need them.

Tameside Council calculated that there is a powerful ratio at play.  It found that the cost of face-to-face interaction is 7-15 times that of a telephone contact centre interaction and 60 times that of an online one.  This is a ratio that is borne out across my own social enterprise’s client-base.  It also parallels the way that the public typically chooses to engage with support services.  For every person who would walk into a public building, there will be another 10-20 who will pick up the phone.  A further 100 would rather go online.  While some of these might need personal assistance, if the option of the preferred channel doesn’t exist, many will go without the help that they need.

In the Government’s Open Public Services white paper, which was published last year, its commitment to opening up public sector monopolies to competition was clearly stated.  This month’s Budget looks set to speed up the demand for competition and diversification.

http://www.sourcingfocus.com/site/opinionscomments/budget_2012_the_drive_for_opportunity/