Bleak public finance forecasts seem to promise never-ending constraints on investment in public services. If this is the new normal, then the underlying assumptions about how public services are resourced and managed need resetting.
As a new policy paper published by New Local argues, too much inefficiency is currently priced into our Whitehall-led model of public service oversight, which only recognises value for money within separate siloes, rather than across them collectively. When resource constraints reduce early intervention support in one spending line, demand for crisis intervention increases in another – with both human and financial costs.
Co-authored with John Denham, former secretary of state for communities under the previous Labour Government, our paper proposes establishing place-based pooled budgets across public services. This would be a route to better coordinating existing spend around the needs of communities, which by creating a stronger foundation to jointly invest upfront in prevention would be a more effective use of funding overall. Resetting how funding flows in local systems in this way would give public services a hope of being more sustainable and fit for the complex, interconnected demand challenges they are confronted by.
The idea might sound radical but isn’t entirely new. It draws inspiration from the Total Place pilots which took place 15 years ago and offered a glimpse of a different way of organising provision. Between 2008-09, 13 areas with a combined 11 million population mapped public spending across their public sector including local government, health bodies, the police, fire and rescue and a wide range of third sector organisations. This exercise identified how existing funding streams be better aligned by starting from the perspective of the citizen and then providing collective leadership across organisations to put people, and their journey through the system, at the heart of service design.
The Total Place pilots established a proof of concept, showing how waste and duplication could be driven out of the dominant model that embeds fragmentation by design. The pilot phase was never extended and didn’t get the chance to reach its potential to really shift how funding flowed in places to meet identified needs. For some with memories long enough, it was the best policy that never was. And although austerity shifted the focus after 2010 towards seeking efficiency within silos, traces of Total Place logic can be seen in some of the more ambitious attempts at integration that followed, including Whole Place Community Budgets in 2013 and the Better Care Fund which began the same year.
A lot has happened in 15 years, but notable reforms can be located on a broad direction of travel towards the logic of place based public service budgets. Devolution has focused on economic rather than social policy functions but has evolved towards single pot funding. Levelling up has had political resonance in part due to recognition that the system isn’t responsive enough to the diverging needs of places. Certainly, stark health inequalities between postcodes have deepened over the years, despite our centrally managed NHS model.
As democratically accountable local institutions, local authorities should have the power to convene place based public service budgets. On the basis of spending mapped across local areas and shared datasets, public service partners should then be required to produce a local public service plan. These plans should be put together in collaboration with communities and draw on their insight to how the system could work better for their priorities. This would establish whole population outcomes and measures to narrow identified inequality gaps, with shared service planning, design and delivery to those ends. Local public service plans would then form the basis of more effective place-based accountability – partners collectively held to account for achieving outcomes, backed up by more robust scrutiny providing value for money oversight across the entire local system.
This will require changes to the existing Whitehall model of accountability through accounting officers, which currently reinforces departmental ‘line of sight’ boundaries in places. Local government and wider public services need long term, aligned funding settlements from which to pool resource and collaborate. In return, Whitehall will need assurance through an effective local audit body, but one which is required to work with places in a context-specific way and focused on improvement to support place-based collaboration across local systems.
These reforms are not a quick fix, but a long-term endeavour requiring sustained national political commitment. The prize is a system which enables funding to follow need and by doing so, be much more capable of responding effectively to the different circumstances of places.
Place-based public service budgets: Making public money work better for communities by John Denham and Jessica Studdert is published by New Local in association with Future Governance Forum
Jessica Studdert is deputy chief executive, New Local
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