A different dimension to local authority externalisations

I’m starting to wonder if we have all been looking at alternative business models for public services from the wrong angle.

Traditionally the approach has reflected the way in which government organisations are structured.  Hence we have a range of outsourced blue collar services,leisure trusts,and shared back offices that tend to be scoped around the full operational and support aspects of the service.  If the service was outsourced, then typically so was the customer contact, the transactional support, often the property/accommodation and other assets needed to do the job.

In recent years the delivery models have become more extensive with youth services mutuals, arms length housing companies, schools support social enterprises, community owned bookshops and so on forming part of the public sector supply chain.  As one might deduce from this list, the embrace of new service delivery models beyond straight outsourcing has been gathering particular traction in the local government space and I suspect few Councils are refusing to consider at least some externalisations of service nowadays.

At the same time the residual bits of Councils are also changing.  They are breaking down the service silos through focus on neighbourhoods and strategic commissioning.  The operating model of a Council is perhaps now easier to draw in horizontal layers (policy, commissioning, delivery, insight, customer contact) than in the vertical, departmental blocks of the past.

But in that case why do we still often outsource, spin out, or share on a purely service basis?  Why do we set up organsations to run leisure centres but not contract with others to generate borough-wide insight on the best way to commission for improved health outcomes.  Why do some Councils enter into customer contact partnerships but carve out aspects that remain indivisible from other service contracts?  Why is the public sector often prepared to hand over the responsibility for procurement, but rarely for clienting and contract management?

If I were redesigning a public sector organisation from scratch I would want to understand which of these functional layers I could manage effectively in-house and which might benefit from some form of externalisation.  The benefits of the latter approach might be appraised in much the same way as current service review processes, but I think it would allow a greater degree of honesty about what the organsiation does – or can – excel at.

So I might conclude that the policy and governance layer is pretty well covered, the expertise to design commissions to deliver corporate objectives exists within my organisation and that I would want to retain control of both.  On the other hand I might think that the commercial skills and flair  to manage my key suppliers and internal delivery units is in rather shorter supply and that the private sector might do a better job, being used to extracting value from it’s own supply chains.  Or that there is spin-out potential in managing the consultation, engagement and directive activities to reduce direct demand upon Council services within localities.  Or a pan-sector shared service for insight generation to rival or even partner with the Office for National Statistics.

Some of this is happening organically as BPO firms create centres of excellence and harmonise service delivery across their contracts.  But I think there is great potential in exploring externalisations of all types from this perspective.  Who will be brave enough to try it?

For more information

Get in touch

If you would like more information please call or email us

07768 554527 enquiries@newnetworks.co.uk