Public sector could save £16billion by working with local charities

Locality, an umbrella body for community organisations, states in its new report that English local authorities could save £16billion per year, and improve services, by commissioning services on a local-by-default basis.

The report, entitled 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, states 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 do not get help that matches their need, they re-present or present to different services or VCS 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 £16billion 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, and suggests that services should be local by default. It adds that relying on an outcomes-based or payment-by-results model exacerbates the problem. 

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Locality also surveyed 96 voluntary sector leaders on the effects of scale ideas on their organisation with 85 percent of respondents claiming that larger contracts would diminish the range and quality of services available.