The way ahead: roundtable

PEYE-100311KB2-0044 Senior managers and advisors share their thoughts on the future shape of public sector reform in a time of austerity.

What are the drivers for change?

Michael Smyth

In the short or medium term, it is dealing with the austerity programme that we’ve been handed as part of the Comprehensive Spending Review. Longer term, there is a debate that we need to rebalance our economy and part of that rebalancing will mean that the size of the public sector shrinks.

We need to replicate what the Republic has done, notwithstanding its current problems, and that is grow the private sector aggressively. Northern Ireland has to rebalance our economy in a positive sense by growing the private sector and that means creating the resources to enable public services to improve. There is a sterile debate about “we need to cut the public sector in order to create space for the private sector” and that’s the wrong way to look at it.

Stephen Peover

Over the next few years, we’re all going to be focused on trying to ensure that we live within our means. Our big issue is about rebalancing the economy and there is still work going on between us and the Treasury. We’re producing a consultative paper on rebalancing the economy. Growing the economy has been the first priority in making the Programme for Government and will almost certainly be the first priority in the Programme for Government when the new Executive takes up office and has time to think these issues through.

Dealing with the effects of constraints on the public sector, which will be exacerbated by any changes in corporation tax, but also trying to maximise the benefit that may come from the flexibilities you could get from managing the economy and growing the private sector in Northern Ireland.

Ian Coulter

There are some areas of the private sector that are continuing to thrive in difficult economic circumstances, for example in the technology and the agri-food sectors. I’m a great believer in the need to be positive and look forward to growth, but for the next six or 12 months there will be significant

challenges across most areas of the private sector. There are likely to be a number of high profile casualties and that is going to affect confidence, it’s going to affect supply chains, it’s going to affect smaller contractors building into bigger companies and then consultancies. That’s before you even get into the effect of Nama and how that’s going to play out.

David Lamb

Being on the cusp of an election, the probable shift in ministerial portfolios will undoubtedly create drivers for change in certain areas.

PEYE-100311KB2-0001 Aideen McGinley

I believe austerity demands ambition and audacity. In the past when we had the money, we probably took the easy way out for certain things, as you never actually had to ask questions like: “What are the things that really will make a change?”

We’re doing the regeneration plan in Derry at the minute where we’re putting together an investment and delivery strategy. Some of it is about fiscal incentives. We know from our plans we can deliver 12,500 jobs and we can save £200 million on the public purse, but what’s the incentive to do that?

I think there are some very interesting conversations that can be held within government and there is an openness to new thinking we found in particular with DFP, where they have said: “What way can we do things differently?” So there are hard decisions but there are also opportunities to actually do things in a much more targeted and effective way.

What changes are coming down the track in the private sector?

Barry Byrne

We work closely with both public and private sector and throughout the province and we’ve seen a lot of the challenges in the private sector where clients and customers are struggling and hitting the wall. We’ve also seen challenges in public sector clients in trying to drive efficiency.

The first is being lean, being efficient in whatever we do, and like any organisation in public or private, in the good times you become inefficient by virtue of human nature. Organisations in the private sector have gone through that lean process in the last two years, cutting out whatever we can cut out to survive, and I think there’s an element of that actively going on within the departments.

The second for me is around the innovation side of it, thinking differently. I think there’s a commonality here in terms of public and private sector, within the reality of the financial climate that we’re in. For us, the whole market has changed, things are not going to be the way they were two or three years ago and I think we all need to recognise that. But we can use that as a driver to say: “Well, let’s challenge our thinking and think differently.” The standard methodology of “that’s the way we’ve always done it” just has to be written off.

We’ve got a challenging political dynamic in Northern Ireland because there are elections and because of the relative immaturity of the political system. We’ve got to recognise that, and be alert and mindful of what constraints that will put on innovation.

How do we balance cost effectiveness with meeting customer needs?

Catherine McCallum

I agree that austerity can drive innovation. When there are no funding pressures, there’s less likelihood of applying a discipline to how we approach our business. When you are delivering frontline services, however, there is always the dilemma in terms of what you stop doing and how it will impact on those you serve.

We are reasonably fortunate in terms of the Budget where our Minister has sought to protect, as far as possible, our frontline services. For the first three years of the Budget period we’re reasonably confident that we will be able to continue to deliver the current level of service. Obviously we had been well warmed up to the fact that there were cuts coming down the line so over the last year we have been considering how we might deliver savings. Of course there may be challenges post-election, as who knows what priorities a different Minister might have?

Stephen Peover

There is work going on. The budget review group’s work is continuing and it is looking at issues of efficiency and effectiveness and revenue raising. These are relatively new phenomena and arrangements and they will develop as the Ministers come to terms with their responsibilities. There’s a lot of dynamic behind this and I don’t think the public sector is resistant to change. Simply recycling the existing processes we’ve got in Northern Ireland and shipping something from the public sector to the private sector doesn’t necessarily add to the sum total of human happiness or wealth. Austerity will drive radical change over the next few years.

PEYE-100311KB2-0023 Michael Smyth

There seems to be a set of short-term issues here around austerity. I think this is really about longer term.

I’ve seen all this before. I remember the 1976 austerity, the IMF, the borrowing. There was never a word about how we repaid that and it didn’t put my taxes up and it isn’t going to do that here. By the Budget of 2012 or 2013, the Chancellor of the Exchequer will have to start to loosen the purse strings. So, in Northern Ireland although we have a Comprehensive Spending Review, that will change. Our problem is now and over the next two years, doing what we thought we could do with less money. Thereafter I think if economic growth permits, you will see a more generous public sector settlement. We need to look at this in the longer term because public sector change takes a long time; it is very people intensive. Our political system is very immature and that will slow up the appetite for change. We have a short- term problem; this is not an Armageddon.

Ian Coulter

The short-term problems that we have discussed are with us now, no matter what anyone does. There were 60 administrations in the last quarter and whilst some of those were connected, a lot weren’t.

Mid-to long-term I’m actually extremely positive. I’ve been very impressed by the fact that there are a lot of good ideas of how to innovate and grow revenues from within organisations.

The key to the success of many of these good ideas is making sure that we can engage effectively with our political leadership. Hopefully, when these elections are over, we will have more time and more appetite to look at how these ideas can be successfully implemented.

Stephen Peover

The Budget reflects the existing Programme for Government and it would have been odd to have had a new Programme for Government without a new Executive and a new Assembly.

Things don’t change that quickly over a period of time so there’s an essential continuity between where we’ve been and where we’re going. I’d like to think that we will cope with those short-term pressures and we will then turn our minds to the horizon.

What will be the impact of the cuts to public infrastructure investment?

Killian Margey

We’re looking at a once-in-a-generation opportunity to make these changes and to improve the delivery of value and services for the public sector and for citizens. When things start to improve again you lose that impetus, so I would see that as an opportunity now.

We know that we have to try and create our own revenue from our own resources and assets, and to promote an export-led strategy. Innovation is key, particularly through IT. The www.nidirect.gov.uk website is a very good example of how significant savings can be delivered.

Aideen McGinley

We’ve actually found it helpful because in the regeneration process in Derry, which has been two years long for which we make no apologies, we have been building up a coalition to deliver. The interesting thing is we ended up with 189 priorities and all of a sudden reality set in. We got it down to five themes and 11 catalyst projects; that will be a really robust analysis. We know the outputs and we know we can do it in an integrated and holistic way.

We’re looking at what is short-term, medium- term and long-term, which is a dose of reality. It actually cuts through a lot of the positioning for my “pet project” and a lot of people realise now that we will still get the 189 done if we do these 11.

Killian Margey

It strikes me that, yes, the public sector has to deliver but I think citizens have to deliver as well and maybe there has to be a re- education to develop a keener sense of civic responsibility and duty.

Catherine McCallum

I think the whole welfare reform agenda will drive out some of the changes that are needed in terms of civic responsibility. Strengthening the economy will, of course, be critical to the success of the welfare reforms because the emphasis will be more on what people can do, rather than what they can’t do, and unless the jobs are there to support the policy, the benefits may not be realised.

PEYE-100311KB2-0050 David Lamb

I think one of the issues is to try and get away from this “public bad, private good”. We should be trying to merge those concepts so we each have the opportunity to do better. In a way, the Housing Executive is a somewhat insular organisation. Our 90,000 tenants live in the six counties; we spend almost all of our money in the six counties, largely by private sector organisations. One priority to crack is how the public sector deals with smaller players in the private sector. Small people are nimble, small people are inventive; they have niches that need to be exploited.

Stephen Peover

We need to use new technology a lot better. We had Martha Lane Fox here last week doing a master class, the digital champion for the UK Government. We need to respond to the changing patterns of people’s interaction with public services. I was at a conference in Birmingham last week, where they’ve been going through a reform and modernisation programme. They have found that an online interaction with the public is 46 times cheaper than face-to-face contact.

Those things will have to come and they’re already happening in some places, and techniques like Lean are being used in the public sector. One of the things we’re not good at is making available to colleagues the good practice that is already happening in

many places.

I chair a reform group on citizen-facing reform and we’ve been going around and looking at some of the good practice in Northern Ireland. Quite a lot of it is in the Social Security Agency, where Lean is quite widely used. Processing times are dropping by a factor of five or 10 times. People are getting a service quickly. They’re getting it effectively and efficiently, without having to submit lots of paper, and that’s the way it should be.

Ian Coulter

One area where we have an opportunity to drive and shape infrastructure change is in the healthcare sector, because in Northern Ireland there are some world class new technologies being developed at an exponential rate. We’ve got some global market leaders like Randox.

Stephen Peover

We’re having contact with the Cabinet Office about mutualisation and they’re running a number of pilots. It’s an issue that will need to be talked through in Northern Ireland. It raises a whole set of policy problems about how those organisations work and operate, where they fit into the system, and whether there’s a long-term agenda of heading towards outsourcing or privatisation.

To mention the Birmingham example, they have £671 million in their reform programme and the way they’ve done that is through prudential borrowing.

Killian Margey

There are examples of changes in existing institutions. For example, healthcare is a good illustration where the delivery model has changed: domiciliary care services, maximising GP services to reduce A&E time, tele-health and telecare. That will deliver value and savings in the medium-to-long term.

Aideen McGinley

We could be a world leader in connected health but will we do the minimum to keep us in the marketplace and actually lose the leading edge? If we want to do it well, we actually have to take a further step and then keep going. It might be longer term. It might still be in an R&D phase.

Michael Smyth

The EU’s €87 billion budget for innovation and R&D is only one-third allocated, and it finishes in 2013. They’re going down the long list of Framework 7 projects that didn’t get funded in the first round and presumably that will only take them so far. So there will be opportunities for those that are leading edge projects if they’re not already receiving European funding.

What about a bigger role for the private and voluntary sector? Do you see that coming down the track?

Aideen McGinley

We found a huge gap between private and voluntary sectors and one of the big achievements was that we got the community and voluntary sector to recognise that they needed the economy to be a driver, and got the private sector to realise that we can’t really change the economy unless they bring the community on board.

I think we’ve started to crack the nut. Increasingly, as you look at examples such as Bryson House, we need to be replicating those models. In business as well, it’s more than corporate social responsibility, it’s about how you build your business, helping the voluntary sector to deliver professionally, and vice versa. Businesses that are now leaner need to have a feeling of worth. Sometimes you’re trimming so far, you lose that particular interface that motivates and inspires employees.

David Lamb

Bryson House have certainly changed and grown as an organisation. They are now responsible for managing half of the Warm Homes programme in Northern Ireland. We need to allow more players in, from whatever sector. We need to grow the 10- man business into a 20-man business, the 50-man business into an 80-man business. Barry Byrne

Our experience is quite extensive at a national level, in terms of working with the third sector and working more collaboratively with the public sector.

Justice is one area that we’re involved in, and we’re involved in one component part of it. Whilst that’s delivering a benefit and a potentially large efficiency saving, because the budgets are all ‘siloed’, you’re not realising the benefit in the next one along.

That’s where the voluntary and private sector can help, in coming at it from an holistic view, and looking at an end-to-end problem. Look at all the departments that have an impact on health from a societal point of view. That’s where the maturity of the government needs to come in and say: “Let’s step back, and let’s override our organisational dynamics, and understand the societal challenges.”

And that may mean moving money. It may mean moving departments. It may mean merging services. It may mean different collaborations with the public and private sector. That’s leadership we need and thus far hasn’t been there.

Ian Coulter

You can have a silo mentality in a business, when what is really needed is to get people joined up. If that can happen in a relatively small business, just think of what can happen in a huge organisation within the public sector. The point about engagement is really important.

One of our strengths, if we really focus on it over the next 5-10 years, is the level of access and engagement between public sector and private sector and all the different stakeholders. It’s actually very strong here as long as it’s approached the right way and in the right spirit.

Catherine McCallum

I think there’s huge scope for us to learn from how voluntary sector organisations do their business. We’re often driving out a lot of what’s happening, but in essence you could argue that these people are on the ground and can actually see and inform to a large degree how best to make things work.

Aideen McGinley

In the Cityscope analysis, the politicians were very determined that what we put in was as robust as possible, in terms of evidence, so we have 3,000 pages online of statistical analysis. We’ve everything from NISRA government statistics to Oxford Economics’ econometric model.

With the Cityscope survey, we tendered it and it was a local community organisation, Greater Shantallow Partnership, who won the tender. They trained 85 local people as enumerators, who went out and did 500 in- depth questionnaires in the 20 per cent most deprived neighbourhoods. We had a fantastic response, with detailed and reliable information.

It affirmed a lot of what we knew but we can say it with authority now, and we also know where to target and will repeat the exercise in 2012 and 2014.

Looking into the next two years, what advice would you give senior managers in the public sector?

Catherine McCallum

As public servants, we all have pride in what we do and that pride drives us in a positive way. Those of us who have leadership responsibility can influence the people around us, and it’s really important that we don’t let all the negative talk of austerity discourage us from being innovative and striving to achieving excellence in service delivery.

Stephen Peover

When we talk about the public sector, the important word in that is public. We exist to serve the public, and if we don’t serve them properly and effectively, and don’t give them what they want and in the way that they want it, then we’re not doing our job.

I think people do want to do a good job. That public sector ethos does still exist but it’s easy to get lost in a bureaucratic point. When times are easy, organisations blossom and aren’t efficient and effective.

If we’re going to be innovative, do new things and do them differently, we’re going to fail sometimes.

If every time something goes wrong it becomes a hanging point for the Minister concerned or criticism of the officials, then it is going to inhibit people trying to do things differently. And that’s the exactly the opposite of what we want to encourage.

If it doesn’t work, it doesn’t work. We’ll go back and do it the old way or find another way of doing it. That’s the way business operates; failure isn’t necessarily a bad thing. And that’s an attitude we haven’t really got in the public sector at the moment.

Ian Coulter

After the elections are over we need to collectively grasp the opportunity to engage and see what NI plc and its stakeholders can do. I’m tremendously hopeful about what can be achieved over the next five to ten years.

We just need to careful that the objectives set out in the economic plan are aligned with the Budget. If we are going to be focused on an export-led economy, we’ve got to make sure that the funds are there to do that. Invest NI has been given £5-8 million per annum on export-led initiatives. Is that enough?

Barry Byrne

There are two real issues for me. One is confidence-building around strategic leadership and the potentially profound effect that would have on the overall market. It’s how you spend money, how you present plans and effect change. Change must be confidently led in a positive way.

The second thing is focusing collectively on strategic outcomes. If we focus on outcomes and have a slightly longer time horizon, we’d have a much greater chance of delivery. Whereas if we focus on the here and now and the immediate cuts and savings and headcounts, that’s a downward spiral.

Aideen McGinley

We have to look at this as an opportunity. In the public sector, there was almost this taboo: “Don’t dare ever approach anything that is novel and contentious.” Now, it is: “Maybe we should be looking at novel and contentious, because maybe that’s the answer.”

My other plea is on skills and young people. So many of them now are just automatically assuming that there is no future here. There’s a complete mindset piece to say: “Go, but come back because we’ve something for you”, and we need to create it.

Michael Smyth

I’d be slightly less worried about it but I think we’re too hard on ourselves here. We’re part of the United Kingdom and if you look at every facet of public life across these islands, people from here are at the very top in everything. When Labour were in power, you could say the Scots mafia ran the country but scratch beneath the surface and you see four chairmen of FTSE 100 companies from Northern Ireland. That’s pro rata far higher than our population share.

I would want every household in Northern Ireland, with their kids growing up, to know that they have the choice to reach their potential here on this island rather than have to leave.

David Lamb

The number of 16-year olds who are functionally illiterate is an ‘elephant in the room’ and must be addressed if they are to play a full part in making this a better Northern Ireland. We cannot let them down again.

Killian Margey

Failure is an inherent part of success when you need to innovate and managed risk is ok. I think there are times when the public needs to cut the public sector a bit of slack on this. But if you are going to fail, if possible you want fail quickly and you want to fail cheaply and then move on to the next project.

On managing performance in the public sector, I think there needs to be more positivity in your workforce at every level, more engagement with the frontline, more transparency and more accountability as well. Success should be properly rewarded.

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