Locality, an umbrella body for community organisations, claims that English local authorities could save £16bn per year, and improve services, by commissioning services on a “local-by-default basis”.
The report, Saving money by doing the right thing: why ‘local by default' must replace ‘diseconomies of scale’, which was carried out in partnership with Professor John Seddon of Vanguard, argues that the current model of public service contracting is inefficient and that local authorities need to “abandon unhelpful beliefs about ‘economies of scale’ and standardisation”.
The research tracked individual demands from service users over time to understand how well the system was meeting their needs by looking at case notes, database records, files, phone calls and other interactions.
It found that “when people don’t get help that matches their need, they re-present or present to different services or voluntary sector organisations until they do”, and therefore create more work than if their issue had been addressed the first time. The report authors came up with the £16bn figure by extrapolating savings from a number of sites already using a local-by-default approach.
The report uses the Work Programme as an example of the “unintended consequences” of the “belief that the only way to save money and deliver services is by ‘bulk buying’ support, at scale and at rock bottom prices”, the report suggests that services should be “local by default”.
It adds that relying on an outcomes-based or payment-by-results model exacerbates the problem.
Steve Wyler, chief executive of Locality, said: “The drive towards standardisation and larger and larger contracts has generated billions of pounds worth of unnecessary demand on public services, and has fed the monster of corporate greed. We must stop feeding this monster.”
Locality also surveyed 96 voluntary sector leaders on the effects of scale ideas on their organisation with 85 per cent of respondents claiming that larger contracts would diminish the range and quality of services available.
