This New Economics Foundation briefing paper written by Josh Ryan-Collins, Lisa Sanfilippo, and Stephen Spratt, says that the efficiency agenda is eroding local public services and proposes a new Public Benefit model to restore them. It shows how the imposition of centrally driven financial efficiency savings targets, combined with the drive towards greater competition and contestability, is eroding the effectiveness of local public services as commissioners of public services focus on short term costs rather than longer term outcomes for service users. This undermines the government’s stated policy of building strong local communities and economies, and impacts particularly severely on smaller and medium sized providers whose work supports some of the most vulnerable people in our society. For example, a recent survey of providers of children’s services revealed that 68 per cent had made cuts in the last 12 months. 40 per cent cited efficiency savings as the single greatest cause of those cuts.
The proposed Public Benefit model of efficiency would rebalance the role of efficiency in public service provision, moving to measure success in terms of outcomes for people rather than the false economy of short-term cost savings. This model assesses effectiveness of outcomes in terms of their benefit to users and the wider community; and service providers are encouraged to cooperate and innovate to maximize these benefits, rather than simply minimize costs.
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Ryan-Collins, Josh, Lisa Sanfilippo, and Stephen Spratt. 2007. Unintended consequences: How the efficiency agenda erodes local public services and a new public benefit model to restore them. http://www.neweconomics.org/gen/z_sys_PublicationDetail.aspx?PID=248.