How Public Services Waste Your Money

Worth A Look, Disruption, Frontier Centre

PUBLIC sector reform will be a big issue in the forthcoming general election. Labour claims investment is evidence of improvement; the opposition points to increased bureaucracy. David Blunkett argued recently that anyone who studies the record would be foolish not to see the obvious truth that public services have improved. It puts anyone who would disagree on the defensive; it would seem carping to doubt.

Yet I do. In the past five years I have found every public service I have studied to be dysfunctional, suffering high cost and poor quality service. In every case I have found government specifications – those things the bureaucrats tell people to do – to be central to the problem. Ministers and their bureaucrats are making things worse. To argue, as the politicians do, about the numbers of bureaucrat jobs versus front-line workers is to miss the point. The big costs are not the bureaucrats themselves; the big costs are caused by their specifications being the wrong things to do..

Take, for example, local authority call centres. Ministers have mandated local authorities to provide call-centre access for services. “Beacon” councils will show off their nice new buildings, modern workstations and IT systems. Britain has invested in excess of £9bn (E13bn, $16.8bn) in public sector call centres. But has the service improved?

The call centres arrive when most local authority services don’t work very well. Because of this, the services attract high levels of what I call “failure demand” – demand caused by a failure to do something or do something right for the customer. (What has happened to my planning application? Where is my benefit payment?)

Moving the “contact” work elsewhere and insisting the people who work there communicate with the service departments through electronic means just locks in costs. The call centre might be doing well on its service level targets (picking up the phone), but costs increase and are harder to eradicate.

Government mandates new technology, too. Local authorities spend millions on “customer relationship management (CRM) systems” – which means customer databases. Aside from the obvious nonsense of treating failure demand as something that should be managed, instead of eradicated, there is little value in having a joined-up view of the customer – people who ring about their rubbish not being collected don’t need the agent to know they have a planning application outstanding. And the costs of populating and then managing these “customer databases” are extraordinary.

In one local authority, the situation is so bad that some elected members have formed a rebel group, refusing to give information – to populate the CRM system – when they call the call centre. Any caller who wants a service has to go through the pain of a long survey because the CRM system requires data input. So, for example, you ring up to ask for a special uplift (collection of junk) and the service agent wants to know your date of birth, who lives in your house, their ages and so on. The local authority service agents hate it and the customers hate it. CRM was mandated by a minister.

Government ministers mandate “back office solutions” too. Smaller district councils are encouraged, some say coerced, to join together to process housing benefits, for example. Housing-benefits processing has been destroyed in recent years by a £200m investment in Department of Work and Pensions specifications – detailed manuals showing how the work should be done and measured. To meet new service standards, people process what comes into their organisation. But claimants never bring in exactly what will be needed on a first visit. Why would they?

The government specification ensures the items brought in on a first visit go off into an electronic record through a scanning machine (encouraged by the specification) and thus create electronic inventory. Much of the subsequent work becomes managing the inventory, finding all of a claimant’s information and bringing it together. Inevitably, items get lost and work gets duplicated.

Most important, from the claimant’s point of view, time gets lost. Claimants inevitably get asked to bring in things they have brought in before. It is a design problem and the design is down to ministers.

In some local authorities the work backlog has become so bad they are encouraged to hire in “backlog busting” resources from the private sector. Re-work is treated as work.

The solution is simple and has been proven. To take one example, Swale Council went from the country’s worst at benefits to the best in a matter of months. The solution is to hold the work at the point of transaction with the claimant to get clean input and thus efficiently process the claim. If everything is in order most claims can be processed in a short time.

It is a solution that can only work at the local level, involving the claimant. But the minister for local government is insisting small councils club together to build back-office services that might be outsourced to the private sector. It is an ill-judged policy based on little knowledge of the work.

While public services are worsening, costs are rising. The modernisation disease is across the public sector. Police, social services, housing associations, health trusts and others suffer from the requirements to comply with specifications developed by people who do not understand how the work works. This has all happened on the name of accountability. It is the ministers who should be held accountable. It is time ministers got out of management.

John Seddon is the author of Freedom from Command and Control, Vanguard Press,