Supporting local public services through change. Getting more from strategic commissioning

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1 Supporting local public services through change Getting more from strategic commissioning

2 The unprecedented level of public sector spending cuts and the impact on local authority budgets is well documented. However, EY recognises financial constraints is only one of the many challenges faced. Local authorities need to manage social, economic, political and financial dynamics. A new approach is required to balance these competing priorities effectively.

3 The context To meet current challenges head-on, we believe that local authority leadership teams need to respond to three fundamental and interrelated questions: What are the needs of the community and which of these are a priority? How do we organise ourselves so that our resources are allocated effectively to meet these needs? What is the most effective and efficient mode of delivery for individual services given our priorities and resources? Answering these questions may seem like a daunting task. However, the current policy landscape provides the right climate for a radical shift in approach. It creates an appetite to think differently about how services can be delivered. To date, a popular response has been the adoption of short-term quick wins. But do these really provide sustainable solutions to the issues local authorities face? Ultimately, provision at current levels cannot be sustained. With high expectations for delivering outcomes, modern and innovative thinking is needed. EY believes that successful service redesign is based on fundamental challenge to the role of the local authority, the existing profile of services and the delivery mechanism used. A corporate approach means greater opportunity for delivering improved outcomes in an efficient and effective way. How can strategic commissioning help? Adopting a strategic approach to commissioning can act as a catalyst to transforming service delivery and driving cultural change and innovation. It provides the opportunity to redefine the shape of your organisation and the way it operates around your core priorities. What does this mean for your organisation? Many authorities will recognise the situation where disproportionate levels of resource are absorbed by a small proportion of population. For example, troubled families who interact with a range of services on issues such as unemployment, poverty and anti-social behaviour, truancy, drug and alcohol abuse or mental illness. Strategic commissioning provides a holistic approach to addressing these issues. Working across departmental and partner boundaries to target resources and find cost effective, outcome-focused solutions. Many local authorities have set out to reduce their organisation, as shown below. The real challenge arises in being clear of the future role of the council and how to transform successfully, at pace, bringing your staff, partners and communities with you. In-house service delivery Other models of service delivery Moving the organisation from service-led delivery to a peoplefocused outcome-based approach Smaller, leaner council Reduction in back office costs Less in-house service delivery Greater delivery by partners In-house service delivery Other models of service delivery Strategic commissioning links the delivery of strategic objectives with key operational outcomes. It involves more than deciding whether to deliver services in-house, in-partnership or externally and focuses on managing and using markets to secure desired outcomes. HM Treasury Back office Back office Design principles 1

4 Our approach EY has worked with a number of public sector organisations at various stages of the commissioning journey. From this experience we have integrated a range of our tried and tested approaches, providing a framework of support for local authorities. The commissioning journey Working with EY through this commissioning journey will ensure a robust decision-making process that: Constructively challenges your existing provision based on the value delivered Aligns expenditure clearly to what you need to achieve Appraises your options for delivery against outcomes based on a clear and robust evidence base Helps you understand the right mix of providers and relationships, across a variety of areas this should not be a one size fits all solution Delivers more flexible, sustainable, outcome-focused services Works innovatively with partners where objectives are aligned to achieve greater results We will support you in considering both what services are to be delivered and how to deliver them. We recognise authorities may be at different stages of the journey and have taken a different route. In response to this our approach is designed to provide you with flexible support when and where you need it. Key questions What will the council look like in the future? What does the council deliver now? What else can the council deliver? How can the council ensure success? How will the council implement change? Support package Priorities and vision Core business review Sustainable performance improvement Outcome Clarity on the council s organisational vision and priorities A service cost model to challenge status quo Strategic positioning of services Evidence and framework to deliver change Implementation of change The roles in a strategic commissioning authority High Managers Low Community leadership Directors High In a local authority that commissions services, managers are responsible for operational matters. Members provide community leadership and make evidence based decisions on how best to allocate resources to improve outcomes. Directors advise on how best to commission services to deliver the priorities of elected members. Service provision Low Members 2

5 Implementing priority-based budgeting The challenge A council anticipated a 20% cut in funding over five years and forecasted a rise in costs of 19%. Our approach We established a deep understanding of the drivers of current and forecasted costs, using analysis tools and techniques which the finance and service teams could use on a repeatable basis. We worked with the corporate management team to confirm and validate priority outcomes and services and drove collaborative working between finance and services to develop opportunities that helped to address the funding gap. Value delivered 125mn of savings were identified, to be realised over a five year period Our analysis supported negotiations on changes to national agreements Supported collaborative working among directors to offer up savings to fund priority areas Operationalised project management office to sustain delivery Implementing strategic commissioning The challenge The council needed to achieve approximately 70mn of savings and improve services. The council decided to establish a strategic commissioning programme aimed at providing quality services for local communities and preparing the organisation for future challenges. Value delivered Worked with members, managers and staff to build a shared vision Developed clear objectives and a programme mandate Produced and implemented a 60-day plan that enabled the council to rapidly build momentum and implement change Reviewed all service areas and priority projects to develop a three year strategic commissioning programme focused on their objectives Supported the council to build the capability and capacity to undertake this programme 3

6 Priorities and vision Defining and clarifying your vision and goals involves engaging with your executive members and key senior officers to define the role of the council and what it will look like in the future through: Agreeing vision Establishing and prioritising strategic objectives Defining organisational design principles Understanding strategic commissioning Sustainable improvement Sustainable improvement involves developing a programme of change based on a balanced portfolio of tactical and long-term solutions underpinned by a robust evidence base. We support this process through: Designing a clear programme framework, including roles and regulations for members and officers Developing an evidence base to support change Market testing new delivery models Designing an implementation route map Developing capability and capacity to deliver change Delivering change Measuring success Core business review (CBR) Priority-based budgeting It is our view that local authorities need to robustly challenge the scope of services that are currently being delivered. CBR takes a fresh view of financial planning and service design based on the cost of services and the value that they provide. Services are challenged and re-prioritised based on what is central (and what is not) to the local authorities strategic aims. Statutory services are included within this assessment. We focus on successfully sustaining reductions in costs and, at the same time, delivering improved services. We support you to identify services: Suitable for alternative delivery methods To protect and sustain Suitable for decommissioning To invest in and improve Services Service has to be provided directly by the council Service has to be funded and commissioned by the council but can be provided by an alternative delivery model Service has to either be provided directly or by another provider (public/private) Desirable service Discretionary service 4

7 Supporting local public services through change Why EY? EY has a multi-disciplinary team focused on the local government sector. We provide deep industry knowledge with a significant proportion of our professionals coming from the sector. We are a leading provider of advisory services and bring a wealth of experience in supporting change and service improvement. To find out more contact: Darra Singh Global Client Service Partner, Communities and Local Government Service Line Leads: Fiona Young Director Neil Sartorio Advisory Lead Iain Craven TAS Lead P: M: E: dsingh@uk.ey.com T: E: fyoung1@uk.ey.com T: M: E: nsartorio@uk.ey.com T: M: E: Key elements of our approach are: Simplicity: we focus on what is important to enable quick, effective delivery focused on outcomes and value for money. Integrity: we work with you to identify what works and tell you when we think something will not. Priority aligned: we understand that options need to be matched to your priorities so they can be sustainable. Flexibility: we are able to work with you at any stage in the process. Our support can be called upon at any stage of the process from the initial analysis to implementation. Collaborative: we provide structured skills transfer, working alongside and with staff to deliver projects, ensuring sustainability. Risk and reward: our commercial offer is grounded firmly in the tangible benefits delivered to you. Audrey Fearing Tax Lead T: M: E: afearing@uk.ey.com Andrew Brittain Assurance Lead T: M: E: abrittain@uk.ey.com 5

8 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC and is a member firm of Ernst & Young Global Limited. Ernst & Young LLP, 1 More London Place, London, SE1 2AF Ernst & Young LLP. Published in the UK. All Rights Reserved. ED None indd (UK) 12/15. Artwork by Creative Services Group Design. In line with EY s commitment to minimise its impact on the environment, this document has been printed on paper with a high recycled content. Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material. ey.com/uk