Wednesday, 22 July 2015

Services could conceivably be cheaper - but not the Osborne way

Regular readers of this blog (if there are any) will know that I am a great admirer of the systems thinker John Seddon.

He remains a controversial, even embattled figure, but I'm sorry he is no longer writing his furious e-newsletter about public services. I suppose, if you have not been well, it makes sense to calm down a little. But it always raised the blood pressure to read it; goodness knows what it must have been like to write it.

Seddon's great insight is the existence, in any system, of what he called 'failure demand' - the avoidable pressure that comes from its failures to be effective, or failures elsewhere in the system.  See his latest book about the profound implications this has for services.

The key to saving money is therefore to find out where the failure demand is coming from and to put it right.

But here is the snag. Saving money is paradoxical in the Seddon world. It's a bit like friendship - you can't do it directly.  If you can get rid of failure demand, by studying the system as a whole, and find ways of tackling it, then you can save quite large sums. If you start by trying to save money - putting IT systems in place, merging services across geographical boundaries - then the failure demand tends to rise.

What tends to happen is that the minority of cases that are not amenable to digital solutions then start banging about trying to find someone to help them, and every time they get failed they create more costs.

That is the fate of most money-saving attempts in public services, but it is also a source of hope. It means that costs could be brought down, if Whitehall understood the way services worked as a whole.

All of which is a way of saying that George Osborne's attempts to cut 25 per cent off public spending in some departments might be possible - but. if he goes about it in the way he seems to be, it will cost more money in the long-run.

It can't be done by asking Whitehall to propose 40 per cent cuts, which is a recipe for sclerosis and a boneheaded failure to see the system as a whole. Under the current set-up, it will mean that most of the cuts fall in practice on social care - which is uncivilised and will cause knock-on costs in the NHS.

This is what he needs to do instead:

1.  Scrap the vastly expensive white elephant projects (Hinckley Point springs to mind).

2.  Launch simultaneous studies into failure demand in the major services, including the NHS - if you can really improve services by reducing costs, as he says, why exclude the NHS?

3.  Give the services the time to innovate in a major way, and discourage lazy percentage cuts.

4.  Launch an initiative to turbo-charge the involvement of frontline staff in making services more effective, as Al Gore did as US vice-president. More of this later...

The truth is that, to really reduce costs, the government will have to row back from the disastrous public service policies of the Blair-Brown years, which concreted in costs in ways that Seddon has outlined.  They still haven't done that. The only way to cut costs is to develop flexible, integrated systems which can tackle people's problems or requirements once and, as far as possible, once only.

The way to lower costs is therefore not narrow efficiency, it is higher effectiveness. That requires thinking and innovation. It requires the involvement of people receiving public services in their delivery, and it requires a major devolution of power to the front line.

What isn't going to work, paradoxically, is an attempt to look at the balance sheet and shave bits off. Osborne needs to go beyond bleeding the patient.

More on some of these in my book The Human Element.

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