Partnership working forpublic service delivery

July 2013

Professor Tony BovairdINLOGOV and Third Sector Research Centre

Introduction

“Partnership is just a way of transferring my work to the private sector, where it will be done for lower pay and worse conditions of service”

“We have found that when the public sector proposes a ‘partnership’, what they generally mean is that they want to transfer the responsibility for a particularly difficult service or issue to us, and give us a lower budget to deal with it than they were previously spending themselves”

We think that we have shown the public sector how to do their work faster, better and cheaper … and that there are lots of other areas where we could do the same”

Informal economy outputs

Informal social value-adding outputs

Value-adding outputs in market, public and third sectors and in civil society – how big are these different circles?

What’s going on ‘out there’?

Formal volunteering

Private and third sector

market outputs

Public sector outputs

Informal social value-adding outputs

A new model of Value for Money in local governance?

But … some doubts

Is there real commitment or just ‘partnership claiming’ to show willing and to qualify for funding?

Are these partnerships between equals … or just new clothes over old relationships?

Will these partnerships make a real difference to service quality or costs?

Are they just a ploy to disguise lack of new resources?

Why partnerships are so liked … some potential benefits

Services designed for users, not for providers Better co-ordination of activity, less confusion for all More meaningful focus of participation from all stakeholders

- users, staff, politicians, others Synergy from working together

– greater efficiency in resource usage

– more specialist resources affordable

– faster communication Greater user satisfaction, better public image, greater staff

satisfaction

… and so hated

Fragmentation of structures and processes, which makes co-ordination more difficult

Blurring of responsibilities and of accountability, especially where the partnership is reluctant to share information on its activities (‘commercial confidentiality’)

Fear by staff of losing their jobs Fear by politicians of losing control over policy making Fear by service users and citizens who do not wish to

become objects of a profit-making calculus

Purposes of partnership Improving the co-ordination and integration of service

delivery among providers Developing new and innovative approaches to service

provision (by bringing together the contributions and expertise of partners)

Increasing the financial resources (e.g. by diversifying funding streams or achieving cheaper procurement) available for local services

Sharing risk (and therefore reducing organisational vulnerability)

Adapted from Geddes (1999)

Partnerships Continuum

AUTONOMYPARTNERSHIPS

CONTRACTSALLIANCES

JOINT VENTURESGROUP STRUCTURES

MERGERS/AMALGAMATIONS INTEGRATED UNITARY

ORGANISATIONS DEPENDENCE

Independence decreases

Integration increases

Transaction Costs increase, Scale Economies decrease

Partnership – many shapes and sizes

Public-Public Partnerships– Local Service Boards

Public-Private Partnerships (PPP,PFI) – infrastructure (e.g. London Underground, M6 toll road, facilities maintenance)– public services (ICT services, contact centres, prisons)– joint venture companies (e.g. Service Birmingham)

Public-Third Sector Partnerships – public services (e.g. community care)– community services/activities (e.g. community management of leisure

centres/libraries)– public–business-third sector partnerships (e.g. Work Programme)

Co-production – partnerships between users and commissioners (co-design of day centre activities)– partnerships between users and providers (e.g. expert patients)– users involved in commissioning and procuring (e.g. young people’s discretionary

services)– co-payments (e.g. fundraising for school equipment)

Evaluation framework for comparing organisational forms (partnership v. merger)

Synergy, economies of scale and economies of scope Collaborative working through relational contracts Collaborative working as ‘joined-up services’ Collaborative working as ‘resource sharing’ Collaborative working as ‘risk-sharing’ Assessing the benefits of collaborative strategy

Strategic management rationale for partnerships

Economies of scale in provision

Economies of scope in provision

Opportunities for mutual learning between partners

LEADS TO ARGUMENT THAT ONLY WHEN ALL PARTNERS HAVE EXPERTISE IN ACHIEVING ‘COLLABORATIVE ADVANTAGE’ CAN THE PARTNERSHIP ITSELF ACHIEVE ‘COMPETITIVE ADVANTAGE’ RELATIVE TO OTHER POTENTIAL SUPPLIERS

Economies of differentiation and specialisation

Economies of scale– the bigger the volume of output, the lower

the unit cost of provision

Economies of task learning– the more detailed the task, the easier it is

to learn how do it better and to innovate

Economies of scale

Indivisibilities – e.g. machinery Mechanisation and automation Division of labour – making use of natural aptitudes Increased precision, reliability Cheaper procurement of inputs Efficient use of materials (less waste) Cheaper or readier access to finance

But … More vulnerable to instability in demand (‘putting all eggs

in one basket’)

Conventional wisdom as driver of mergers

The culture around the Gershon efficiency savings has driven created a national policy perspective that believed that ‘bigger is better’, without really examining ‘what is better bigger’.

While this perspective may often be appropriate for finance and payroll services, it probably doesn’t make sense for personal services like teenage pregnancy services.

Again, there is evidence that public services could be used better to develop local economies, e.g. through their role as employers – and TSOs can help (though larger TSOs may be less locally-based).

However, more generally, there is some evidence that large organizations create bureaucracy that reduces flexibility, innovation and responsiveness.

So what does ‘scale’ now mean? Economies of scale: where an increase in

inputs brings a larger increase in returns ... (e.g. handling all customer contacts in one system?)

... but an increase in WHICH inputs? Up to now, there has been major attention to

inputs made by or paid for by public agencies

This is misleading in terms of the ratio of outcomes to costs in the community ... (e.g. the extra time taken by housing clients to get their repairs done through a multi-purpose joint venture call centre)

... but we would need to measure user and community inputs in the future if we wanted to take account of this

Warning: many empirical studies suggest constant returns to scale, others also find diseconomies of scale

Economies of scope Making more use of the range of abilities of the staff and

the organisation

Allows ‘hidden’ or underused skills and abilities to be put to use by the organisation(s)

Also allows staff to engage in multi-tasking, making better use of their time

A key element of most professional training and experience, which equips professionals to undertake a wide range of tasks

Importance of ‘economies of scope’ and ‘economies of learning’

Only in 1980s did importance of economies of scope become widely appreciated – savings which occur when the RANGE of activities undertaken by an organisation (or partnership) increases (because they have joint costs) – e.g. where the ‘meals on wheels’ staff check and report back on wellbeing of meals recipients

... and importance of economies of learning – where savings occur over time as staff AND users learn how to co-produce the service better – e.g. getting inquirers to have details with them when they call the call centre, getting ‘meals on wheels’ deliverers to respect agreed time of delivery and users to wash yesterday’s reusable tray and dishes

– means we should avoid disruption - ‘churn’, ‘initiativitis’

Economies of scope through personal relationships Personal relationships are often more important than systems in

delivering outcomes for users (recognised by Beecham and Christie reports in Wales and Scotland)

Economies of scope are often available in relationship-oriented activities (exploiting the existence of customer knowledge, team working, partnership commitment)

These are too often undervalued by the one-dimensional commissioning frameworks

So providers with strong local and customer-based relationships can cheaply provide wider range of services than less trusted providers

Economies of Scope may exceed Economies of Scale

Co-production in practice: the Four Co’s

Our definition of co-production“Co-production of public services means professionals and citizens making better use of each other's assets, resources and contributions to achieve better outcomes and improved efficiency”.

SERVICE USERS AND COMMUNITIES know things that many professionals don’t know ...

... and can make a service more effective by going along with its requirements.

... and can change their behaviour to prevent or defer need for future services.

... and have time and energy that they are willing to put into helping others.

““It takes ‘two’ It takes ‘two’ – –

professionals professionals and and

communities.”communities.”

““It takes ‘two’ It takes ‘two’ – –

professionals professionals and and

communities.”communities.”

Different types of co-production

Co-governance of area, service system or service agencies – e.g. neighbourhood forums, LEPs, HWBs, school governors

Co-commissioning services – e.g. personal budgets, participatory budges, devolved grant systems

Co-planning of policy – e.g. deliberative participation, Planning for Real, Open Space

Co-design of services – e.g. user consultation, user-designed websites, Innovation Labs

Co-financing services – fundraising, charges, agreement to tax increases, BIDs

Co-managing services – leisure centre trusts, community management of public assets

Co-delivery of services – peer support groups, expert patients, Neighbourhood Watch

Co-monitoring and co-evaluation of services –user on-line ratings, tenant inspectors

Why ‘user and community co-production’?

We now realise that service users and their communities know things that many professionals don’t know … (‘users as thinking people, communities as knowledge bases’)

– E.g. co-design of services, co-authors of user manuals

... and can make a service more effective by the extent to which they go along with its requirements (‘users and communities as critical success factors’)

– E.g. self-medication, self-management of long-term conditions

... and have time and energy that they are willing to put into helping themselves and others (‘users and communities as resource-banks and asset-holders’)

– E.g. peer support (Knapp et al, 2010); expert patients programme

TSOs are a key mediator of these relationships

Implications of economies of scope Activities which gain from being done together

SHOULD BE done together – either in a single multi-purpose organisation or in a ‘seamless service’ in a partnership

Transactions costs of SEPARATING activities which naturally have ‘joint outputs’ may override economies of scale – e.g. joint needs assessment rather than single needs asssessment

Smaller but holistic may be better than large but disjointed

Evaluation framework for comparing organisational forms (partnership v. merger)

Synergy, economies of scale and economies of scope Collaborative working through relational contracts Collaborative working as ‘joined-up services’ Collaborative working as ‘resource sharing’ Collaborative working as ‘risk-sharing’ Assessing the benefits of collaborative strategy

RELATIONAL CONTRACTING

Recognition that spot purchasing is wasteful and uneconomic

Recognition that in-house can be unimaginative and expensive

Possibility of negotiated tenders, profit-sharing, and flexible contracts

The specification as the ‘worst permissible outcome’ – the agreement is that partners will work together to ensure that the service becomes better, quicker and cheaper than the specification every year

Some difficulties in partnership working Cultural - professional, managerial, community-based Time consuming to initiate and get going Time consuming to maintain Potentially bureaucratic and slow Unclear accountabilities Lack of trust - based on ‘history’ (real and imagined) Need for compromise - loss of ‘sovereignty’ Lack of commitment by some members ‘Contract fixation’ Attempts to steal the credit and dump the blame (e.g.

through separate, self-centred evaluation of own organisation’s contribution)

‘Good governance’ within partnerships

Accountability Citizen engagement Transparency Leadership Equalities and social inclusion Ethical and honest behaviour Equity (fair procedures and due process) Willingness and ability to co-operate Ability to compete Sustainability

Issues for partnership governance

‘The ends do not justify the means’ – observing good governance principles is also important, not just achieving outcomes

However, it may not easily be possible for all these ‘good governance’ criteria to be met simultaneously – partnerships may have to prioritise them

In particular contexts, some of these criteria may be given higher weight than in others

1 2 3 4 5 Quality of L ife Issues Liveable

Environment: quality of housing

Carrick Housing Staff

Board members

Voluntary groups

Carrick District officers

Public officials

Liveable Environment:

quality of housing services

Carrick Housing Staff

Board members

Voluntary groups

Carrick District officers

Public officials

Liveable Environment:

quality of surroundings

Carrick Housing Staff

Board members

Voluntary groups

Carrick District officers

Public officials

Community safety

Young families Media

Health, social well-being and disability

issues

Disab. Tenants

Board members

Education and Training

Young People Business

Governance Princ iples

Transparency Young families Board members

Media

Partnership working

Carrick Housing staff

Board members

Public officials

Voluntary groups

Sustainability Carrick District officers

Young people

Honest and fair

behaviour Disab.

Tenants Private

contractors Business

Governance Test: Perception of different groups of current quality of life and state of public governance on Carrick Housing estates (Governance International)

Future of partnerships?

Impacts on organizational efficiency and service costs?

Commissioning and procurement procedures are often inappropriate – if they do not leave enough time in the run up to the bidding (e.g. in worklessness programme ), then TSOs can be squeezed out.

Similarly, payment systems are important – where there is payment by ‘results’ (outcomes), organizations are incentivized to focus on easy ‘results’, so commissioners are incentivized to target on harder ‘results’

DWP has so far managed to get away with ‘outcome-based contracts’ but only after a lot of ‘shenanigans’ (mainly renegotiation of contracts in mid-flow), which implies relational contracts (a surprise?)

Impacts and outcomes Rare to consult users on outcomes, except through Place Survey Impacts of partnerships on services and users: often too early to

say, or not monitored Concern about how to measure impact on services, especially in

downturn Hard to find evidence for cost savings, especially where it wasn’t

the object of partnership (except in housing mergers?) It’s hard to compile evidence about benefits or otherwise of

partnership – because of ‘warm glow’ and attribution issues Nevertheless, partnerships strongest where there is external

funding to be pursued AND partners have ownership, AND clear (shared) purpose AND potential synergy – conversely externally mandated & steered partnerships the LEAST SUCCESSFUL

And in the future? Some interviewees are becoming more skeptical, suggesting that the

‘partnership edifice’ is starting to loose its rhetorical power, and with cutbacks people will go back into their organizational shells.

Others believe that the future third sector will involve larger providers, with a long tail of niche providers of services?

Views are divided as to whether to move to larger providers will come about by organic growth, by mergers or through looser collaborations and federations.

Some interviewees argue that small niche providers will focus more on their core missions and will recognize that there are some things they can’t do by themselves, e.g. ‘back office functions’ and property services, which will be provided as shared service or outsourced. This will help them to achieve savings but not necessarily sackfront line workers, as budgets are cut.

These shared services may be achieved through more consortia led by TSOs.

Conclusions Partnerships are highly diverse … and not all are value for money

… but MOST are likely to continue to flourish in public services

Needs experimentation – current partnerships are not ‘the last word’ - experimentation needs resilient systems (e.g. ‘last resort intervention plans’, slack resources) – and resilience needs to harness user and community co-production

In future, partnerships are likely to have to show ACTUAL CASH SAVINGS as well as potential quality improvements

Partners will need to be more comfortable with striving to achieve public goals

This will require relational contracts, not traditional transactional contracts

NGOs and third sector organisations may need in the future to play more critical watchdog roles, to stop partnerships becoming too ‘comfortable’ – or potentially corrupt

Good news, bad news – partnerships CAN be like this, but many currently are not

DOUBLE OR QUITS: SAY ‘NO’ TO PARTNERSHIP – except for the ones which work, which you should invest in

Contact

T.Bovaird@bham.ac.uk