Exploring alternative service delivery models

ASDs are a viable long-term solution, not an easy, quick-win option to turnaround performance and reduce costs

Employee ownership is a well-established model that reaps rewards for customers, employees and shareholders in terms of productivity, engagement and profitability. The opportunity provided by the Localism Act’s Right To Challenge means that the public sector is keen to explore the implementation of alternative delivery models.

However, to be successful, the entrepreneurs who lead the change must be serious about improving public service delivery and be prepared to go through the growing pains to develop and deliver a sustainable outcome. A lack of capacity in the sector, restrictions on generating start-up capital and the lack of ability to exercise sound commercial decision-making, currently undermines the capability of local authorities to seize the opportunity. New models can reap rewards, but only over time and with investment in energy and new ways of working and governing delivery.

Public sector procurement regulation, specifically the draft EU Directive, threaten to stop ASDs in their tracks

Even a well known example of alternative service delivery, Central Surrey Health, found that public sector procurement regulation and local risk-averse thresholds for pre-qualification prevent it from securing lucrative contracts to sustain its business. This situation is likely to be made worse by a new EU draft directive that seeks to:

• Abandon the separation between Part A and Part B services
• Require member states to set up and monitor a register of all procurement activity under the rules and
• Extend the definition of public body to capture, amongst others, charitable organisations within the full procurement regime.

Central government needs to do more to enable local government to overcome the hurdles and incentivise take-up where appropriate

Local government has had the powers to do things differently for a long time and the last two governments have encouraged the establishment of ASD models. However, central government now needs to facilitate and incentivise the change by providing:

• Grounded capacity support for exploring commercial options and sharing core principles
• Financial or regulatory support to assist with the crippling costs of staff transfer
• Access to finance for start-up.

ASDs are not a one-size-fits-all panacea

For far too long the public sector has taken a paternalistic view of service provision, deciding what citizens want, and how and in what quantities and from whom they should receive it. The fiscal pressure presents a real opportunity to ask if the role of local government is in fact about engineering and ensuring outcomes delivery. Local government should reflect on whether it quickly seeks solutions through alternative delivery models or spend time properly diagnosing the real problems to be solved.

If the public sector is serious about alternative service delivery then it needs to be clear about the problem it is trying to resolve to deliver a compelling future for the public services we all rely on.