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Harsh economic realities mean local government must learn from the private sector to survive, says Richard Crouch. I remember someone saying to me when I first joined local government in the 1990s that I would be ‘wasting my time'. When he explained what he meant, it was in relation to his perception of what the sector did – and how it did it. My colleague was comparing my new world with his commercial banking world, and saw very little comparison. His world was fast and mine was slow. His world revolved around large gains in a cut-throat, competitive marketplace, whereas he saw my world as making no real gain and not being in a marketplace at all. Over the years, I have managed to win him over – but only in part. He now understands better local government's place in society and the real difference it makes to people's lives. But what he still fails to understand is the reason why we deliver local government in the way that we do, and I've been unable to convince him about this, because I'm not entirely sure myself. The depth and magnitude of the current world recession is eye-watering and it is clear that those in the private sector are smarting the most. There is no doubt that we in local government are now beginning to feel the effects, with falling income streams and rising demands on our services. But this is nothing like what is soon to come at us. Like a tsunami, we are most certainly going to be engulfed in a recessionary storm so severe that even our survival is under threat. In this respect, we have two storms to brace ourselves against. One is the recession itself and the other, far more damaging one, is in helping to pay back the cost of getting out of it. This tsunami effect calls for a very different way of thinking in the public sector, and a completely new direction of travel. Gone, perhaps, should be the hitherto emphasis on quality and added value, and in its place, a perspective based on ‘fit for purpose', affordability and value for money. It is times like this when we would perhaps do well to consider those business-survival tactics used in the private sector, and apply them in such a way that supports these new ends. Take the car industry, as an example. There will be some who remember the bad, if not terrible, days of British Leyland, and mention of an Austin Allegro model, with the bonus of a square steering wheel fitted, will still put shivers up the spines of those who were unfortunate enough to drive one. Even now, there are few people who will admit to have owned one. What, though, we often fail to remember is that many Japanese cars of the time were also dreadful, and were often referred to as nothing more than ‘flimsy rust buckets'. How things have changed, and the fundamental difference between the Japanese manufacturers of the time and British Leyland was that one listened, learned and developed – and the other didn't. We also need to look across to the private sector and consider how we can learn from its production systems. The car industry, as an example again, does everything it possibly can to simplify its production systems, and strips out both waste and cost. It is truly lean. In a mature industry, such as local government, we have tended to do the opposite, by layering system over system, and process over process, resulting in a supply chain which is so complex and convoluted that even those in our own organisations often don't understand them. The biggest cost – by a long way – in our production line is not robots, nor is it steel, but its employees. If we can simplify our production lines and other internal processes, we have the potential of making very substantial savings and, at the same time, delivering better services far quicker. And, of course, it's not just our ‘products' and our internal processes to deliver them that we should be looking at, but also our whole organisational infrastructures as well. Funding an organisation itself costs big money, and perhaps even to think the hitherto unthinkable, now needs to happen if we are to be prepared for the storm ahead. Richard Crouch is PPMA lead for leadership and organisation development

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WHITEHALL

Prepare for the coming tsunami

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