The finances of local authorities around the UK are being squeezed from both sides. Austerity policies have resulted in funding cuts, while demand for services continues to rise. Hard decisions have to be made due to our ageing and increasing population and the widening gap between rich and poor. So how are we to get better value for money and improved outcomes across the public sector?
The answer is Value For Money (VFM) exercises and having in place associated performance indicators. These are important benchmarking tools for working out cost minimisation, efficiency and effectiveness.
As the public is understandably seeking answers to some fundamental questions about VFM aims and objectives; councils need to prepare, and an audit is a great starter to identifying better value for money:
1. Are the current resources being used effectively and efficiently? Notably public sector bodies need to start aligning their working culture with that of the private sector. As sectors merge and align, is there a way that they could share services or change operations that would make things more efficient?
2. What are the tangible effects of VFM initiatives on service delivery or customer service? In the NHS it is notoriously difficult to get through to staff in certain hospitals, but staff are not permitted to say to irate callers that the reason for the delay is ‘less staff’ or ‘systems are down’. So, here we have an example of inefficiencies having a direct impact on customer experiences. In this instance, we shouldn’t compromise the amount of patients seen or time spent with them in search of value.
3. How could you innovate to make sure funding shortfalls don’t lower performance? An important aspect here is to identify lower priorities and then only identify them following comprehensive and transparent service-user engagement.
Over the years Councils have used audits primarily to review arrangements and processes for monitoring and tracking VFM. Audits should really focus on the questions around impact on service delivery and customers, especially given that over half of the planned austerity measures have yet to bite.
Reviews done with the questions above in mind, provide a thorough examination of a given service area, looking at resources systems, operations, governance and outputs. They provide a much more effective use of audit resources.
One council, for example, in readiness for a big change in the way it delivered and managed services, asked for a VFM audit of its recently outsourced refuse and recycling service. This was to gauge the effectiveness of its improvement plans following an earlier damning external inspection of the service.
The review found that the service was markedly improved in terms of bin collection times, the state of the streets following collection and general taxpayer satisfaction. This was even though it was paying the same price in the first year as it would have cost to run the service in-house.
Importantly, the council’s team responsible for managing the refuse contract had put in place robust arrangements that allowed it to maintain the right measure of control over its contractor, making sure that it only paid for a level of service it actually needed. These practices were eventually shared across the council and helped shape and influence the organisation’s wider approach to outsourcing and managing contractors.
In another example, the VFM audit of a council’s customer service centre identified efficiencies in the way calls relating to Disabled Parking permits were being handled, logged and processed. The audit recommendations resulted in cost savings thanks to better processing and better customer service (by speeding up the application process). The findings of the review were used by the council as ‘best practice’ that it then sought to apply to other application processes within the council.
VFM is more than just saving money. The amount of money available has already been taken care of by central government cuts. The primary focus needs to be on efficient use of the resources available. To do this, public sector bodies need to be their own harshest critics, self-analysing, challenging the norm and being bold about decisions about both what its service priorities are and how it intends to achieve these.
More importantly, these audits should not be a one off thing. Regular observations of the way you work can lead to continual improvement. VFM auditors can and should be the primary advisor to management, providing the impetus to change initiatives and identifying actions for improvement that can then be shared across the organisation. Reinventing the wheel isn’t a good use of resources. Learning from others and applying tried and tested best practices and innovating should be the way forward.