Annual Lecture

Innovation In this feature l financial pressure l savings l risk the start up Alternative service delivery models come in many forms, but dr Paul mcGreary believes Shropshire Council is the first in the country to create a company to operate its services including trading standards Organisational redesign Business support and regulatory services Identifying and understanding the risk Creating a new delivery model Barriers to change Moving forward with optimism and energy Lessons learned Click each icon to the left to continue reading U sing innovation and creativity to deliver excellent, value-for-money services to residents and businesses was the aspiration we adopted when Shropshire Council became a unitary authority in 2009. At the time, very few had anticipated let alone planned for the subsequent financial crisis, which has since significantly reduced local authority budgets. Faced with unprecedented financial challenges, we at Shropshire Council decided to redesign our services, instead of taking a slash-andburn approach or burying our metaphorical heads in the sand to cope with the new pressures. We achieved this by taking the radical step of creating our own, council-owned company, ip&e, to deliver key regulatory, development management and business support services. This grouped together the key services that have a direct interface with the business community, including: trading standards, environmental health, planning, private sector housing enforcement, licensing, and natural and historic environment services. We called the grouping Business Support and Regulatory Services. We believe this is the first company of its kind in the country to be created by a local authority to deliver regulatory services functions and four months after its launch, in June 2015 it is now the councils preferred deliverer of key services. The idea for ip&e came from the councils recognition of the fundamental change occurring within public service organisations as a result of the global economic downturn and the UK governments re-evaluation of the future role and scale of the state. This gave Shropshirean opportunity to bring together skills and capacity in new and different ways. References: *SERVQUAL is a quality management system designed for businesses or organisations to monitor the quality of the services they offer. aDOPtINg a MORE COMMERCIaL aPPROaCH We anticipated the main benefits service culture, reducing same kinds of approaches to to redesign and deliver of creating a company as being: reliance on bureaucratic and risk management, business differently, to address the l The ability to generate new convoluted processes and continuity, information changing environment and income streams to support over-burdensome policies. governance and performance context in which local councils the continued delivery of core Local authorities are creatures management will apply, but are operating. regulatory services functions. of statute not only do we this can be achieved more Clearly though, the latter There is a commercial market have to do things the right way, flexibly when you start with a freedom to operate in for our specialist technical but we have to be seen to do blank sheet of paper, rather this way presents a major knowledge and expertise, things the right way. However, than 3,000 pages of detailed challenge for the councils and we have won a number this can stifle innovation and narrative. commissioning and support of commercial contracts to creativity there is normally advise businesses in much a policy that tells you what services in the market example, how could these be greater detail than we could you cannot do, rather than demanding higher quality funded if individual services if we were only operating in a one that highlights the need and lower cost. This means and teams could go to the local authority environment. for innovation. By creating a looking at all support services market for support services Our expertise in delivering new company such as ip&e from legal, HR, finance and such as HR, finance, legal, IT successful change and the idea is not to recreate the IT, and ensuring we get and customer contact? This is innovation is also providing a council, but to link the best value-for-money, services something Shropshire Council commercial opportunity with elements of the public sector of the right quality and at is still grappling with as it public sector clients. with a more commercial the right cost. This presents a continues its drive to become can-do approach. Yes, the challenge for support services a commissioning council. l The ability to create a new l The freedom to buy support services functions. For Credits Published You might also like Dr Paul McGreary is head of business Published: Tuesday 29 September, 2015 Penny wise, page 18 of TS Review, support and regulatory services, and account director for local government practice, ip&e Images: Faberr Ink / Shutterstock February 2015. To share this page, click on in the toolbar Organisational redesign After becoming a unitary authority in April 2009, Shropshire Council began to redesign its services, informed by a more robust understanding of customer needs. For business support and regulatory services, this began with a series of targeted focus groups with residents and businesses, and we used a methodology called SERVQUAL* to identify baseline satisfaction levels, as well as to explore specific expectations. Much of what we learned was not new, but confirmed that the approach we had undertaken would deliver better outcomes for local residents and businesses. For example, we piloted a single point of contact a relationship manager to direct businesses to key services without being passed from pillar to post. An interesting view expressed by residents was that we should not be advising businesses about regulatory requirements. When we explained why we did this, however, they understood more fully why business advice is an essential element of effective regulation. The feedback allowed us to reshape our strategy and approach, with a clearer focus on outcomes, informed by a better understanding of the diverse range of expectations expressed by residents and businesses. Its important not to make assumptions, and to find out what your customers need and expect and where these expectations are unrealistic to help shape more effective communication. With the initial round of savings, of around 87m, found since 2009, ip&e is now central to the councils plans for saving a further 80m. Itwill do this by reinventing the way all council services work focusing on the customer, cutting out waste, managing demand, creating job growth and, where possible, reinvesting profit for public good. As far as business support and regulatory services are concerned, the ability to trade means we can reinvest income to protect frontline services, thereby reducing reliance on traditional funding streams. If the company can achieve steady and sustainable growth, we can reinvest income into protecting or creating jobs in Shropshire, and help to build the local economy. This also ties in with Shropshires aim to become a commissioning council, with a relatively small central commissioning and democratic core. This will reduce costs and provide more focus on which key services the council wants to commission, based on evidence and a much clearer evaluation of the alternative delivery models that provide the right balance between service quality, value for money and cost. A mixed economy of services will result, with the expectation that thebest model is chosen, based on an objective evaluation of the alternative models that have been considered. It is important for the council to have in place commissioners who understand the services being delivered through a new model. For example, for business support and regulatory services, we identified this as being critical from the outset and appointed specialistcommissioners for planning, trading standards and environmental health services. This gave us a clear separation to protect the councils and ip&es interests when working on the contract and service specification. The ability to operate the company on commercial lines was a clear imperative and part of the wider business strategy Business support and regulatory services In parallel with the development of the company, work began on an innovative business model that would dictate how regulatory, development management and business support services are delivered under ip&e. The idea was to bring together most of the councils main regulatory and planning functions, including: trading standards, environmental health, licensing, development management, building control, and natural and built environment services. We gave the group working on this aspect of the project the title of Business Support and Regulatory Services. The business model was relatively simple we would: focus on reducing our operating and support costs; explore how we could generate new income streams to protect the services from the effects of continually reducing revenue budgets; and try to create a new organisational culture, taking the best of the public service ethos and combining it with a more commercially astute approach. We kept our eyes on the prize of operating in a radically different way, maintaining the quality of core regulatory services at acceptable levels, despite the scale of financial savings Identifying and understanding the risk Our first task was to understand and manage risk by identifying a number of delivery models and seeking specialist legal advice. In particular, we wanted to know whether and how we could trade and generate income, and understand whether this could compromise our core regulatory roles and duties. It is absolutely vital to avoid real or perceived conflicts of interest, and we have developed a series of robust processes to minimise the risk, we do not compromise our core regulatory role at the expense of losing a commercial opportunity. We originally looked at four options: a social enterprise model; a strategic partnership/joint enterprise; formal or informal collaboration; and delivery through a council company. We completed a comprehensive options appraisal and risk assessment, informed by legal advice, and came to the conclusion that the best option was to redesign and deliver services through a council-owned company. This model would allow us to trade commercially, with a focus on both public sector and commercial markets. The other models did not provide us with sufficient operational flexibility, were too costly or would simply have taken too long to implement. Creating a new delivery model From the outset, we aimed to reduce costs by exploiting the benefits of technology. For example, we have been working with a highly innovative local company to create an interface between a key database and a tablet to plan work activity for pest control services. This will reduce travel costs, increase the number of jobs we can complete in a day, and streamline payments and invoicing. We are also looking at a digital strategy for our transactional services, to improve customer service while reducing our operational costs. This approach is helping us to increase our productivity through a greater focus on agile working. For example, we wanted to reduce our reliance on traditional office space, moving to a hot desk environment, and using a combination of local hubs in areas where we already have a presence, or an agreement to use other public sector partners space and home working, to reduce ouraccommodation costs and to support the wider culture change we were trying to promote. This has built on our approach to ensuring thatwe create the conditions for people to do the best job they can, freed from a reliance on outdated systems and approaches that are difficult to change. We have reduced our management costs; we have fewer managers, who focus more on leadership and longer-term planning than operational management, but they also have wider areas of responsibility. In addition, we have rebalanced the professional and technical roles to deliver some functions and activities more efficiently and cost-effectively. This involved redesigning roles that we have traditionally used to undertake certain activities, to deliver those services more effectively and at a lower cost. We had to make around six people redundant in total but the majority of these were in management posts. Overall, since 2009, we have reduced around 55 per cent of the gross budget across specialist council services that could be commercialised, so really had no further to go without terminating some services we are now leaner than lean! By completing this redesign, we believe we can create sufficient capacity in the system to maintain the correct balance between delivering core regulatory services that remain fit for purpose and resilient, and generating new income streams from the public and commercial sector markets. Maintaining service quality levels and improving where we can is fundamental to the redesign. We will create capacity by continuing to exploit the benefits of improved technology to make services more accessible, while reducing our transactional costs. We also have the opportunity in ip&e to minimise reliance on complex systems, processes and bureaucracy that is prevalent in large and complex council structures. This means we can focus more on service delivery rather than feeding the corporate machine. We have extensive experience of using a robust methodology for measuring and tracking customer satisfaction and improving customer service processes, called SERVQUAL. Not terribly well-known or widely used in the UK despite being around for some time it works when combined with more qualitative approaches. It helps to create a baseline for initial customer perceptions and expectations, and provides valuable information to target improvement activity. Barriers to change Understandably, there was resistance to the proposal in some quarters, so it was important to get the right balance between protecting the councils democratic mandate, and giving its company the opportunity to grow in a competitive, commercial environment. From an ip&e and Business Support and Regulatory Services perspective, however, the ability to operate the company on commercial lines was a clear imperative and part of the wider business strategy. While other local authority services are now delivered through trading companies, we believe this model is the first of its kind for combined planning and regulatory services functions. The journey has been complex and challenging, but we kept our eyes on the prize of operating in a radically different way, maintaining the quality of core regulatory services at acceptable levels, despite the scale of financial savings required. We believe we have largely achieved this, having already won work in the public sector market. We have completed a review of a local authority regulatory services functions, and been awarded a significant contract for pest-control services. The first year of operation will be achieved through a 12-month contract and with staff being seconded from the council to ip&e. This will roll into a five-year contract, with Shropshire Council hopefully giving us some financial stability and the opportunity to grow the business on a planned and sustainable basis. Moving forward with optimism and energy In total, 260 people have transferred into ip&e across all our services. We have an eclectic mix of planning, building control, trading standards, environmental health and housing specialists. We have a mixture of generic and specialist roles depending on the function, and we have challenged and will continue to challenge our professional colleagues to reinvent themselves. As we are fewer in number, we have to focus more on delivering services that add value, and that support wider priorities and outcomes. Maintaining a narrow focus on traditional professional disciplines will not help us to do this, and some colleagues have found this challenging. We all need to build on our existing skills base and develop new skills so we continue to make an effective contribution to the business, and to serve our residents and businesses well. Simply reflecting on past glories will not guarantee future success. Our people have wide-ranging public and commercial backgrounds, and we have developed clear business and marketing strategies that align with the companys business model. Now, rather than facing the continual grind of finding ongoing savings, we are excited by the prospects for the future. Not that we can relax, because we have challenging income targets to achieve, but we face these challenges with more control over our destiny and eventual success, leading to a spirit of optimism as we move forward. Our income targets are challenging but achievable if we continue to build on the start we have made. In addition to meeting income targets, we will continue our quest for improved productivity and reducing costs, which becomes a key part of operating in a commercial business. Failure is not an option.