29 November 2012

Bambos Eracleous, who leads our local government practice, discusses how the modern council’s relationship with the private sector is evolving...

With big question marks hanging over several high profile privatisation plans, and senior figures raising doubts as to the suitability of traditional outsourcing models - it appears that local government is in the process of re-thinking its relationship with the commercial sector.

In an age of austerity and uncertainty, councils are finding it harder than ever to predict future service demands, requirements for delivery and all their associated costs. Although many believe the private sector still has a role to play, the common argument seems to be that commercial partners need to raise their game and offer an alternative that is more than just ‘a bit better for a bit less’.

In my opinion, the private sector therefore needs to look beyond a ‘one size fits all’ approach if it is to remain a serious option for local government. Rather than delivery models being designed around standard templates, off-the-shelf IT platforms and economies-of-scale, partners will need to tailor their offering to suit individual councils, their environments and bespoke needs. It won’t be easy, but they will need to offer new products that are more flexible and agile whilst being both joined-up and best in class. Interestingly, Stephen Hughes - the Chief Executive of Birmingham City Council - recently wrote in the LGC[1] that the private sector needs to respond to the new ideas being generated by local government. This new way of thinking will – in turn - mean a level of risk-taking and innovation to match that of a modern council.

That said, many Chief Executives I have spoken to have stated that local government can still do more to move the agenda forward by ensuring councils have the necessary expertise to transform services and to ask the right questions of both current and future external partners. Paul Blantern, the Chief Executive of Northamptonshire County Council, made a similar point in another article for the LGC[2] where he said the modern local authority needs to be a “market maker, prosperity catalyst and productive business partner simultaneously”. This would - of course - require a strong mix of entrepreneurial, commercial and business intelligence skills amongst its people but it could well be the future.

The changes forced upon local government meant that in the first instance at least, a large number of councils were pushed to cut their commercial expertise whilst protecting their frontline services. This has led to a skills vacuum within some organisations and we have seen a big increase in the level of commissions asking us to place interim executives into big transformation and commercial roles. The latter - in particular - has led to two types of placements; firstly, assignments that look at current contracts and the structure of any new procurements so they generate innovative proposals and the necessary flexibility from any future contractors. And then those focused on the creation of new delivery models, such as the introduction of shared services, joint ventures or innovative trading companies.

The landscape will - no doubt - continue to evolve as will local government’s relationship with the private sector, but as reform gathers pace, and attitudes continue to shift, opportunities will arise for all concerned.

If you would like to learn more about Bambos or his work, please do check out his profile.

1. http://www.lgcplus.com/briefings/brave-new-entrepreneurial-councils/5049656.article

2. http://www.lgcplus.com/briefings/why-outsourcing-wont-happen/5049893.article

Categories: Local Government


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