- September 25, 2024
With the recent election putting Kier Starmer at the helm of UK Government he inherits a £4bn council funding crisis. During his campaign, Starmer declared “there’s no magic money tree that we can waggle the day after the election”. More recently, Starmer has expressed a desire to “put more power in the hands of local leaders”. Whilst these policies will loosen central government’s grip, the productivity crisis persists and Starmer is not prepared to “turn the tap on” to increase funding for local authorities. Additionally, UNISON has rejected the current pay rise offer, potentially leading to further strike action this year, signalling continued pressure to raise wages. With devolution on the cards, local leaders will have greater power and ultimately more responsibility and accountability for performance and spend against ever-tightening budgets.
To tackle the crisis we must first understand how productivity is measured in the public sector. Productivity is commonly measured by dividing an organisation’s outputs by its inputs. For years public sector productivity was lazily assumed to be flat, with total inputs being equal to total outputs until the Atkinson Review in 2005. The Review had 3 key aims: Firstly, to ensure measurement isn’t limited to just outputs but considers quality too. Second, to quality adjust quantified outputs. Third, to ensure output measurements reflect value added by the services as is often done in the private sector. Following The Review, the Office of National Statistics (ONS) has spent the last 18 years gradually quality adjusting metrics for government departments. These statistics underpin the ONS Public Service Productivity Review Jeremy Hunt delivered in his Autumn 2023 statement, where he claimed that £20bn a year could be saved if public sector productivity returned to pre-pandemic levels.
Addressing this productivity challenge and achieving tangible bottom-line savings requires a holistic approach that extends beyond technology or other financial investments. For the majority public and private sector operations, resource will be the largest cost line item. To tackle the budgetary pressures, local authorities need to optimise these resources whilst also ensuring they are deployed most effectively. Some services can have their frequency finetuned, to ensure the right amount of work is done, at the right time, to achieve the desired quality outcome – avoiding any over-maintaining.
In the public sector, rigid pay bands often push great technicians into management roles to retain them. Sadly, the best technicians don’t always make the best managers, or perhaps never really wanted to manage teams. First-line managers need support and training to effectively lead their teams – driving high productivity and quality. To do this effectively, they need the right controls and measures available to them. As management guru Peter Drucker once said, “you can’t manage what you can’t measure”. By reviewing performance metrics to ensure they are accurate and meaningful, and upskilling management at the frontline of service delivery, local authorities can ensure that residents continue to receive high-quality services despite budgetary constraints. Managers can achieve the impossible – reduce costs while improving quality.