NHS Confederation Conference, Birmingham

Published by webmaster for Audit Commission in Communities

Local Choice, Effective Partnership and Public Engagement

Sir Michael Lyons, Acting Chairman of the Audit Commission

These are challenging times for everyone involved in public services. We face:

• rising expectations of quality and responsiveness from consumers who are better informed and more aware of their distinct and different needs;

• a society which is affluent and comfortable for most but in which some seem to be falling further and further behind;

• an ageing population with complex needs especially for health care;

• constant pressure for more efficiency and cost effectiveness, in a context of intensive scrutiny from the media and more open access to information;

• seemingly constant rounds of restructuring and reorganisation, none of which makes it easier to recruit and retain key skills and to maintain staff enthusiasm.

We will need a lot to carry us through these challenges: resources and skills, management and leadership.

But above all what we need is a clear and animating sense of purpose that we are helping to solve issues that really concern people.

We need the confidence that public services command public support because they are meeting needs and delivering value for money.

The very best public services do not simply serve people; they can shape their lives. And it is that ambition which must motivate us all.

A modern public service ethos has to be rooted in understanding and seeking to meet the needs of our users – individually, at the level of neighbourhoods and communities and in even larger groupings when costs and benefits are shared more widely. We need to reengage with those for whom services are being designed and who eventually pay the bill.

Compared with the 1980s we are in a much stronger position. Then there seemed to be a widespread feeling that the public sector was at best a necessary evil and at worst a parasite on the healthy body of the competitive and commercial economy.

One way to look at it is that public services have been through a period of intense recuperative care, with higher investment, new systems, tougher targets and more regulation.

It is easy to blame the centre of government for too much command and control.

It can introduce unnecessary rigidities.

It can distract us from engaging to provide services which are sensitive local conditions.

It can mean an expensive and confusing overhead with partners and patients.

But if we are honest with ourselves that pressure has exposed public service weaknesses, that are still far too common:

- services that work in silos and that do not join up;

- steam age information systems;

- confusion and under confidence about the role and responsibilities of management;

- paternalistic approaches to provision.

So, after a period of intensive care, including some invasive surgery, the patient is recovering, stronger, fitter and healthier.

But as anyone working in health or social services knows there comes a point in a recuperative care programme where the professionals need to make a decision, with the patient.

Do they continue with costly professional care?

Or do they encourage the patient to take more responsibility for their own life, to stand on their own two feet and eventually become independent.

That is the point we have now reached. 

Across the public sector I think we need:

• fewer and less detailed targets;

• more room for local innovation and discretion, so long as it clearly leads to a better set of outcomes and improved value for money in the eyes of the users;

• greater clarity about who is responsible for what and less second guessing from Central Departments; and

• clear lines of accountability so that service users know who to go to get things put right.

None of that will be possible unless we directly connect with our users and are clearly accountable to them, rather than solely upwards to ministers.

The alternative to control from the centre is not the freedom to do whatever we like; the alternative is more accountability to our users and taxpayers.

We need to move into a new, more dynamic and creative phase of public service improvement.

Whether we can make that shift depends on the interaction of two critical components.

First, how politicians and policy makers set the overall frameworks for public services in terms of resources, goals, regulation, incentives and governance. As I said we need a framework that encourages more direct accountability to users and less detailed supervision from the centre. We have had invasive surgery, now we need an approach to policy that works more like keyhole surgery: it does its job without leaving a trace.

Second, how public services organisations are lead and managed, to make the most of new freedoms and responsibilities that should emerge.

We still have a lot to learn about the interaction between these two as the current controversy over NHS funding shows.

Broadly speaking we’ve been offered two accounts of what might have happened to NHS finances in recent months.

Some have given the impression that there is nothing wrong with the way the NHS has been managed overall and that the problem has lain in weak local management.

Some health service managers and doctors have given the impression that it is nothing of the sort. The trusts are all pretty healthy and the problems all stem from malfunctions in the system, which are creating problems even for well run hospital trust.

You might expect me to say this, but at the Audit Commission we believe the truth is a subtle mixture of the two.

This is not the time or place for me to go into detail about NHS funding. This was, in part, covered in the joint Audit Commission and NAO report which was published last week. And we will have more to contribute following the review of Financial Management and Accounting which we have been asked to undertake by the Secretary of State. In truth the deficits are neither a wholly systemic problem nor the fault of individual organisations.

Changes need to be made both to the system and also to the management of individual organisations. There are some lessons from which all could learn about risk management, Board reporting and leadership and about keeping an eye on the financial ball, particularly during time consuming distractions such as mergers.

I support the general thrust of government policy which is to give people more choice over services and to clarify the responsibilities of hospitals and PCTs. To move away from the confusion, lack of accountability and failure to reward efficiency which has often marked the past.

The health service needs a clear and stable framework which encourages better planning, stronger financial and information systems for finance and patient information and more sophisticated demand management. It will take time for payment by results to bed in. During that transition people will inevitably spend more time on the mechanics of making the system work than is desirable. But the system should in due course allow more attention to be paid to the quality of care we deliver for people.

More choice should be good for the individual, so they can find a service better tailored to their needs. We need public services that respond not just to our professional definitions of need but to the diverse aspirations and ambitions of users.

The other day I was told about a group of adults with learning disabilities who were describing their experience of using person centred planning to set the goals for their care plans. One wanted to climb Mont Blanc, having already scaled most of Everest. Another wanted to cut the grass at Aylesbury Football Club. A system that does not respond to these different aspirations and ambitions is not personalised.

Choice should also be good for the system as a whole if money follows good choices and that in turn helps to make sure that resources are allocated more efficiently, with effective providers rewarded and the inefficient penalised.

So far so good. But most studies of the introduction of choice into public services show that great care must be given to implementation.

Users need to have the right amount of information and, where appropriate, support and advice on how to use it. As our recent report Choosing Well pointed out, choice can improve overall value for money. But it does not do so automatically and it can be costly. It all depends whether services respond by making themselves more effective.

We need to take care introducing choice, learning lessons from when it is well designed and cost effective.

But choice has only been one idea at stake in this debate. The other, less openly discussed is failure.

The NHS funding controversy has underlined once again how far away we are – politicians very much included in this – in having a mature and sophisticated discussion about how we learn from setbacks and mistakes to improve public service.

Imperfection is the midwife of innovation. As Tom Kelley, the co-founder of Ideo, the world’s leading design company, puts it in his book The Art of Innovation: fail often and fail early is the best motto for an innovator. Success invariably leads to complacency and arrogance, whereas setbacks often provoke people to learn and adapt.

And failure is endemic in market systems. When Leslie Hannah, the economic historian looked at what had become of the top 100 US companies in 1912, he found that only 19 remained in the top 100 in 1997, 29 had gone bankrupt erasing billions of dollars in shareholder wealth and 48 had been consumed into mergers. Every year 10% of US companies go out of business.

The implications of these figures, drawn from Paul Ormerod’s book Why Most Things Fail, are stark for those urging much more radical market based systems in health: we would have to countenance what he calls "waves of extinction” sweeping through public services, in order to get the kind of innovation that markets produce.

So long as health care is largely collectively funded and publicly controlled it is difficult to imagine that happening. Could we really tolerate such a pattern? Would  the local implications for communities and those they elect be accepted? I suspect not.

That said we can learn – to quote the playwright Samuel Beckett – to fail better.

Setbacks are more easily accepted when they are openly acknowledged and well intentioned, in other words not the product of incompetence or negligence. People are more likely to forgive mistakes when those who lose out are compensated and there are clear efforts to learn what went wrong. Dealt with openly, recognising that some level is inevitable, failure can galvanise improvement.

That is vital to retain public trust in a service. And public trust is vital to whether people feel they are getting value for money.
 
Financial mismanagement, especially over a long period, undermines the credibility of public service providers and can sanction radical changes with long lasting impacts.

Local government still feels the constraints of financial regulation introduced in the 80’s by a Government intent on reigning in a small number of high taxing councils.

The lesson from local government at that time is that it is vital to get your financial house in order, otherwise public distrust and central regulation will grow around you.

However better financial management on its own will not generate higher levels of public satisfaction with a service, nor should it be equated with a much more important idea: value for money.

Our evidence at the Audit Commission – from a wide range of public services – is that whether people feel they are getting value for money depends on whether they feel their needs are understood and attended to.

People’s sense of the safety of the area they live in has little to do with actual recorded crime, police services and clear up rates. It has much more to do with, what happens immediately outside their front door, graffiti, vandalism, anti-social behaviour and abandoned cars and homes.

Learning what matters to people, individually and collectively, is the starting point for creating value for money.

It is vital we draw out these lessons as we chart the future of Primary Care Trusts – some might say without a clear map, a compass and operating in a dense fog.

I understand the case for reform to PCTs.

Critics argued that some were too small to yield real economic of scale.

Some PCTs seemed to have quite idiosyncratic boundaries that were at odds with those of local authorities.

That is not just an issue of administrative tidiness. PCTs will be more effective in improving local health outcomes, not just local health services,  only by working in tandem with other local services in education, leisure, culture, transport and housing.

They will be more effective by being more deeply rooted in their communities and that will be best achieved through a deeper alliance with local government. That is made much easier if we share common boundaries that encourage shared agendas, working and accountability.

Yet I can also understand the consternation the reforms have caused, with people reapplying for their jobs, some losing theirs and so much energy consumed by internal reorganisation and what must seem to some musical chairs.

However given that we are reorganising we must make the best of it, to ensure the reforms lead to better value for money and higher public satisfaction.

I would urge those working in PCTs and Trusts to resist the temptation automatically to blame the government for all their ills.

We have to remember how we are seen by the public who often find our debates within the public sector arcane and often irrelevant to their lives.

Blaming each other simply implies either that we cannot take responsibility for our own actions or we are powerless. Either way it corrodes trust in the whole system of Government and public service.

I want to propose two, simple, design rules to shape the future of PCTs and provide a stronger basis for public trust.

These two rules are drawn not just from the work of the Audit Commission but my other day job, the Lyons Review of the future of local government.

The first design rule is that new PCTs must engage effectively with the public in their localities. The more publicly engaged the PCTS are, the stronger they will be.

All public services funded through taxation should be worried by what some regard as a deep-seated dynamic of political disengagement in this country.

It seems that young people are more likely to vote in Big Brother than in parliamentary elections.

More people trade on eBay than are members of political parties.

Meanwhile involvement in alternative forms of politics – single issue campaigns that are either intensely local or global – is growing, often fed by the media and celebrity endorsements.

None of that is good news for people who work in services that are collectively funded. If democratic engagement continues to wither then so – eventually - will the political basis for collective funding of services.

PCTs have a huge opportunity in this reform to close their engagement gap with the public.

Personally I believe that local government should be given new responsibilities to work more closely with PCTs. I make no apology for that. I support the idea of a convening role, encouraging local choice and strengthening the voice of local neighbourhoods and communities in both service design and resource allocation.

For me this is an important key to the way forward. We can only increase public satisfaction and respond to ever growing pressures on the public purse by involving our fellow citizens more fully in the key decisions about what we can afford to provide.  Turning the straight jacket of Post Code lottery into the freedom of Post Code choice.

Involving users in the design and delivery of services – co-production as we might call it – offers the prospect of both higher satisfaction and better value for money.  No where is that clearer than in health care.

- involving people in the design of services like front end reception at A & E is likely to improve its effectiveness and increase satisfaction.

- identifying opportunities for greater Voluntary and Community contributions in, for example, counselling and support for those in crisis, can help us to stretch the public pound further.

- Perhaps most important of all, encouraging people to change their personal behaviour and to take more responsibility for their own health, in exercise and diet, offers the clear prospect of higher satisfaction and better focus and value for public expenditure.

Returning to my point - the potential value of a closer relationship between PCTs and their local Councils.

We also need to acknowledge the power and appeal of campaigning politics that draws people in as participants and contributors.

I am not suggesting that every PCT needs a celebrity chef to promote their policies but we do need to find different ways to connect with people.

PCTs and local government have a huge shared interest in engaging with people more fully.

The Council has a unique role to play.  Election does, I believe, bring a special legitimacy to speak for and make difficult public choices on behalf of its citizens. But I recognise the need for a new style and new skills if that job is to be done well in the modern world.

The more we engage with the public, in ways that make sense for them, the stronger we will be.

The second design principle is that we will achieve more if we work together effectively than working in silos.

The primary health agenda is increasingly inseparable from social care, education, leisure, culture and transport. People are healthier if they are part of cohesive and vibrant communities that give them lots of opportunities for social contact. As any GP knows people may present themselves at a surgery with a medical complaint but the real issues affecting their lives might be a complex mix of money, housing, work and personal relationships.

According to one estimate 90% of most health incidents are dealt with at home or within walking distance of it. More people want home-based health care, especially people with chronic conditions.
 
The front line of health care is increasingly going to be found out in the community not in doctors’ surgeries.

Now before I go any further, let me again be clear what I am not saying.

This is not a blanket endorsement for all kinds of partnership working.

Partnerships can be ill-conceived and poorly led.

At their worst partnerships can become talking shops that eat up resources, cloud accountability, multiply transaction costs and make it harder to get things done.

We need to be discerning. Retaining only those partnerships that get the jobs done.

But when partnerships work they can make us far more productive, through deeper collaboration, that eliminates duplication, allows more sharing of resources, and enables the creation of more integrated services.

A prime example are the Children’s Centres created by Blackburn with Darwen council that draw together in one place all the services that mothers and families need: child care, a library, the GP surgery, health visitors, social workers, adult learning and job search. Instead of a mother with two small children trawling around from one service to another they can find it all, put together in a single place.

Again we should learn from emerging practices that do this well. The Innovation Forum of leading councils, for example, has led a three year programme with nine councils working with their PCTs to significantly reduce unplanned admissions of older people to hospital by developing recuperative and home based services that draw together health, social services and the voluntary sector. Each of the nine authorities involved found that solutions need to be tailored to their particular circumstances. Solutions mandated from the centre would be far too inflexible. 

Hampshire County Council and its PCT partners, for example, focussed on frail older people with multiple social and clinical problems – they tend to be isolated and suffer from several chronic conditions. However having identified this target group of intensive users, the team found it difficult to find relevant information to track them down.

And the team found they needed to focus on people not known to the health service. This group were "tottering” on the edge of crisis. Preventing them tipping into crisis was critical.

Their response was to adopt highly personalised services based on conducting in depth assessments of people’s needs and working with them to design care and contingency plans, using community based resources wherever possible to minimise the chances of a crisis requiring a visit to hospital.

The lessons from these successful partnerships are that it takes time to build up trust, they need leadership to take them forward, and we can see that those partnerships with the highest ambitions to change services are the ones that achieve the most. And they need to be highly pragmatic, drawing in other partners as it becomes clearer what supports people need.

Creating what we might call primary health partnerships, by definition, is not something PCTs can do on their own.

Local government has a vital role to play and to play that role it will have to adopt new styles of leadership and engagement.

The interim report of my inquiry into the future of local government argued that local authorities need to raise their game with stronger leadership, closer engagement with residents and a consistent commitment to efficiency.  A more open approach to partnership working - sharing information, risks and budgets more equally with partners - will be critical to this.

Local government spends a lot of time telling central government to let go; it may need to take some of its medicine as far as partnerships are concerned.

Organisations like the Audit Commission also have a role to play. At the moment we at the Audit Commission inspect local authorities through our comprehensive performance assessment, and we work closely with the Healthcare Commission and Monitor. Reflecting our shared belief that regulators must reflect just the same joining up as we seek to achieve for public services.

As many of you will know the Audit Commission assesses local authorities through a process called Comprehensive Performance Assessment introduced in 2002. We have been thinking hard, with the Local Government Association and central government, about how to develop CPA to maximise our impact on improving outcomes for local people.

Our current thinking on how CPA might operate after 2008 is that rather than review groups of services or even management and information systems across a council, the emphasis in future should be placed on examining with our partners how all public services in an area are contributing to broad outcomes such as health, community safety,  learning, environment and economic prosperity.

Joined up assessment and improvement for joined up services.

PCT assessment could in this future be tied more closely to that of the local authority and other services that contribute to local health outcomes.

Under such an approach PCTs might get more freedom from central control, but in exchange they would have to accept more local accountability, to their partners and directly to local people.

So, in conclusion: the public sector is making progress, compared with where we were ten or fifteen years ago.

The public sector is recuperating.

In my opinion it is poised to make another big step forward, towards greater independence from central control.

But that will only happen if central government stops acting like an over anxious parent and learns to let go, in the right way.

Central government has to be the architect of frameworks that promote innovation and improvement without making everything revolve around the centre.

The quid pro quo is that local service providers need to take more responsibility and accept clear direct local accountability to users and taxpayers.

It is too convenient for us to blame centre for all our ills.

We have to sort ourselves out. Better partnership working is vital to that. But so too is deeper public engagement.

If the democratic base for collective decisions withers away so will go the public support for our institutions and everything they do.
 
Ends

Press release issued: June 16 2006