Scottish Government

CHAPTER EIGHT STRUCTURES, OUTCOMES AND PEOPLE

Introduction

8.1 This section of the consultation included five questions and the first four are examined in this Chapter. The fifth question 'What are your proposals for locally developed reform initiatives?' generated a considerable volume of information about a wide range of initiatives which are to be carefully examined by the Executive in order to map out examples of innovation across public services.

8.2 Although responses were received relating to all four other questions, most responses focused on the issues of the proposed move to outcome based approach and incentivising success. Both theses issues particularly generated responses from Local Authorities.

What are the potential benefits and drawbacks of a radical move to an outcome based approach?

8.3 There were around 30 responses to this question, with some responses including potential benefits, some including potential drawbacks, and some including both. Just under two thirds of local authorities provided a response, while only around a third of agencies, NDPB, and central government agencies, and professional groups responding. Almost all voluntary organizations answered this question, while only 1 health body and 1 individual provided a response.

8.4 Perhaps the first key point to consider is that made by one of the Local Authority respondents that actually a shift towards outcome based reporting is not radical,

' While the discussion document suggests that moving to an outcome based approach for scrutiny is radical, local authorities are reporting on outcomes in a variety of ways e.g. community safety, antisocial behaviour, regeneration etc. In addition the Audit of Best Value and Community Planning is rightly becoming increasingly outcome focused.' (Local Authority)

8.5 This position was not commonly shared however as a minority of responses focused on whether it was desirable to make such a change. For example, another Local Authority response noted,

'No. National priorities are not about outcomes, they are about balanced considered and collective decisions which produce the outcomes'. (Local Authority)

8.6 However, the majority of responses were broadly supportive of becoming outcome focused as long as agreement could be reached about which outcomes to consider, how they are measured and the importance of including soft outcomes. Additionally, a potential pitfall which many responses noted was the need to avoid an associated increase in bureaucracy, administration and centrally imposed targets. There was also some concern that there is perhaps a perceived tension between such an approach and user focus. For example,

' The development of outcome agreements cannot be purely numeric but must involve local communities. Local Community Planning can provide mechanisms for this participation and involvement. ….. The Outcome Measures need to be right and useful not just what can be measured and if budgets / funds are linked to performance there needs to be caution in unintended consequences. Penalties for poor performance should not impact funding for services which impacts service users / citizens.' (Local Authority)

' If contractual payments for outcomes can reflect success in the softer areas for progression, this will add a valuable contribution. Contract structures need to be sophisticated and forward-looking. The value of soft outcomes to the overall good of communities and the country as a whole cannot be overstated. ……. Crude, outcome-based programmes for public service delivery do not represent an appropriate strategy for the society of Scotland's most disadvantaged people.' (Voluntary Agency)

' Outcome agreements are superficially attractive but the experience of local authorities with them so far (for example, in community regeneration and anti-social behaviour) is that they can be bureaucratic, burdensome and disproportionate in the detail they require for sometimes modest levels of funding.' (Local Authority)

8.7 Within the context of some of the overall concerns outlined above, a range of potential benefits were identified as follows:

• improved services/better quality services
• clearer roles and responsibilities and less confusion for the customer
• more effective concentration of efforts on the things which make a difference locally
• improves the scope for producing the outcomes which are sought at local level
• all organisations have a common understanding of the part they play in delivering an outcome
• stakeholders see through reported performance against published measures of success, what progress is being made and how this progress translates into 'what's -in-it-for-me'.
• less inspection and audit of inputs and processes
• better understanding of how services are delivered
• identification of aspects which do not add value to the achievement of the declared outcomes
• opportunity to focus on headline areas of service delivery which public services are working to achieve
• encourage a holistic approach,
• enable agencies to focus and be clear about outcomes
• associated need for flexibility and innovation to achieve will encourage joint-working and reduce duplication
• associated increased accountability will support collaborative working
• Increased security/certainty of funding.
• Capacity to improve staff security by issuing longer, fixed term contracts.
• Release time currently spent preparing bids for ring-fenced funding and associated monitoring.
• Benchmarking can take place more systematically

8.8 However, even among respondents who saw overall benefits to the move, several potential drawbacks were identified.

• requires fundamental culture change
• will need long timescale to achieve
• possible tension if central and local governments had different political agendas that could influence their prioritisation of outcomes
• it could become outcomes at any cost unless there is clarity about what outcome is desired and what needs to happen along the way
• can be bureaucratic and burdensome
• risk of an increase in short term costs

8.9 As indicated above, there was a broad consensus that, if sufficient consideration was given to the nature of outcome agreements, they were the way forward. However, a minority of responses noted caution:

' We would urge a degree of caution in the Executive's attraction to an 'outcome' approach. We agree that an outcome-based approach is inherently superior to an 'outputs' based approach, as it takes into account the wider impact of a service, and provides flexibility to providers in how they ensure that impact. However it can also deprioritise consideration of the means by which that outcome is achieved, and can therefore be in tension with a user-focus to services, particularly when there are also pressures for greater efficiency savings.' (Voluntary Sector)

8.10 There were some specific suggestions in relation to making outcome agreements a success:

• Clear national outcomes need to be specified for public service delivery;
• Specific local contributions to outcomes need to be set through dialogue between local areas and organisations and the centre;
• Resources need to be appropriate to the need for information and monitoring;
• The Scottish Executive needs to improve its internal co-ordination of its different strategies delivered by local public services;
• Outcome agreements cannot be purely target driven but must involve local communities;
• Community Planning can provide mechanisms for this participation and involvement e.g.
• Outcome Measures need to be right and useful not just what can be measured;
• The linking of budgets or funding to performance needs to ensure that it does not lead to unintended negative consequences; and
• Penalties for poor performance should not impact negatively on service users / citizens.
• In terms of setting performance/service improvement targets, these an be built into Corporate Plans and Senior Management Board objectives that government can use to judge organisational performance the proposed move from targets to an outcome based approach is seen as essential.

What more can we do to incentivise success - in achieving outcomes or high quality, efficient services?

8.11 This question did not generate quite as many responses, with just under 25 responses including an answer to this question. Just under half of local authorities, professional groups, and voluntary organizations responded. Less than a third of agencies, NDPB, and central government agencies provided a response. Only 1 health body and 1 individual provided an answer to this question.

8.12 Responses to this question demonstrated some evidence of resentment towards the Scottish Executive for this question with the majority suggesting that incentives are not necessary. In fact, some respondents seemed some quite 'offended' that public sector and voluntary agencies needed incentives to encourage them to provide good services. Popular themes among responses were that it was more important for the Executive to provide adequate funding with the potential for flexibility and demonstrate confidence in agencies to undertake their functions.

' The Scottish Executive [should] recognise that there is already a high level of motivation.' (Local Authority)

' Voluntary sector, charity-based social work organisations do not need state-provided incentives to achieve high quality, efficient service delivery. We exist because that is our mission. But for us to be effective, full cost recovery on public service contracts is absolutely critical.' (Voluntary Sector)

' One major improvement towards incentivising services is perhaps for the Executive to trust public service bodies and employees more and to acknowledge achievements … there is too much focus at times on establishing overly bureaucratic systems of regulation, monitoring, reporting and highlighting what is still to be achieved, which acts as a disincentive to the innovation and creativity that can bring improved outcomes and higher quality and efficient services.' (Local Authority)

' Central imposition and arbitrary target setting will lead to a culture of conformance, not one of innovation and continuous improvement. The type of incentives hinted at in paragraph 88 suggest punishments and rewards for what is deemed to be appropriate or inappropriate behaviour.' (Local Authority)

8.13 Others noted that the simplest way of incentivising success would be to remove some of the existing bureaucracy. For example,

' In order to achieve incentivisation there is no greater carrot than being given an outcome with appropriate resources and planning to achieve it without interference.' (Local Authority)

' To incentivise success, it will be necessary to reduce considerably the number of plans, central targets and regulation.' (Local Authority)

8.14 There was also a common feeling that the consultation veered towards punishing failure rather than incentivising success. In particular, there were concerns over the possibility of reduction of funding for 'failing'.

'To introduce punitive measures to withdraw funding from services that fail to make agreed outcomes would be irrational, services should be encouraged and provided with help and guidance to enable outcomes to be met, not introduced to a downward spiral making outcomes even more difficult to achieve. Mentoring, good practise, adequate resources and easily obtainable help and guidance should be made available.' (Local Authority)

'Existing proposals to incentivise success have some merit, e.g. relaxing controls, affording more freedoms and financial rewards, however, caution may need to be exercised particularly where financial incentives are concerned. Financially rewarding successful public services whilst penalising un-successful ones may result in a further downward spiral for those organisations not succeeding.' (Other)

8.15 A few respondents were supportive of the notion of incentives if they were in the form of additional funding or the relaxation of inspection for those achieving targets. For example,

'Based on practice elsewhere in the UK, particularly in England and Wales through the work of the Beacon Councils, there is scope for the awarding of incentives for good performance and effectiveness in sharing learning and best practice. This takes the form of high performing Councils having access to additional funding for capacity building and increased grant freedoms through the relaxation of ring fencing requirements for Government grant allocations.' (Local Authority)

'[The responding organisation] believes the best way to incentivise success is by linking it to enhanced freedoms and flexibilities for high performing organisations. However this could also prove inflexible and sometimes those organisations operating under the most difficult circumstances, such as in areas of high deprivation, could find it all most impossible to achieve thresholds. This could ultimately turn into a de-motivational tool.' (Professional Groups)

'If targets are being met then there should be recognition of this with a relaxation of scrutiny and audit. This relaxation must relate to consistency of delivery across a number of initiatives and not just issue by issue.' (Local Authority)

Are there areas where structural change would bring better outcomes than improved working together across boundaries?

8.16 There were just under 30 responses to this question. Around half of local authorities, voluntary organizations, and individuals provided a response. Only around a third of agencies, NDPB, and central government agencies, and professional groups and only 1 health body answered this question.

8.17 Although there was general agreement that improvements in joined up services were needed, structural change was not necessarily seem as the most appropriate route. Of course there were a few exceptions and specific suggestions as to what changes would help which are listed at the end of the section but many thought the best way forward was to improve upon existing arrangements (such as Community Planning and joint working) and not 're-invent the wheel'. There was also a belief that the focus should be on how different services can best be delivered and not necessarily about the structures that currently deliver them.

'….there is the need for the reform process to assess and evaluate the appropriate delivery level for public sector services. This would centre around an analysis of what best sits where: For example what services sit best at: The national level, the regional level, the local level and the neighbourhood level. The issue of structure would subsequently follow on. Should the Scottish Executive wish to go down this route some form of independent review would need to be commissioned.' (Local Authority)

'Structures can lead to poor outcomes but will not bring about change and improvement without the people involved. The public sector in Scotland exhibits a high standard of professionalism, expertise and shared values which can be built upon.' (Individual)

'There may be, but working together across boundaries and in partnerships is a very good place to start. Successful work in this direction will surely lead to more good practice models which can be transformed into more effective structures and policies .' (Charity)

8.18 As indicated above, there were a few respondents who believed that there was a need for structural change to rationalise and simplify structures but that this would need to vary from service to service. For example,

[Responding organisation] supports the view that some simplification and rationalisation of structures is desirable. However, we are concerned that rationalisation is not forced through against commonsense. Efficiencies, including rationalisation, have to come from working with communities with shared characteristics, needs and interests. In enterprise this may be travel to work areas, for NHS it may be distance to primary and secondary care facilities, in local government it may be geography. The requirement is to balance efficiency with effectiveness and to match appropriate sized communities to service delivery structures. ( NDPB)

It would seem appropriate to reflect anew on the existing arrangement of the public sector in relation to some key principles (including, for example, local democratic accountability and the efficient use of public money) and any trade-off between them. …… In tandem with any discussion on structural change needs to be a review of public sector finance and the establishment of a model which properly reflects the accountabilities of the various parts of that sector. (Local Authority)

8.19 One respondent suggests that two major areas where structural change would be a better option than working across authorities are regulatory services such as building control, environmental health, training standards and planning and major infrastructure services such as roads. For example,

'In both cases there would be economies of scale in terms of staffing and resources such as plant, specialised equipment etc. A specific example would be a single structure to manage fleet services. There would also be an opportunity to develop specialist areas of knowledge, more important than ever in a milieu of ever-increasing legislation. Joint Board arrangements can and do work so the Scottish Executive might like to consider wider scale introduction of these to benefit service users.' (Local Authority)

8.20 Other specific areas for clarity or change mentioned were in relation to geographical boundaries, for example:

'The Strategic Transport Authority has different boundaries from Communities Scotland who have different boundaries as the Criminal Justice Authority. This could be easily sorted.' (Local Authority)

8.21 A broader range of suggestions are as follows:

• there is a need to explore Scottish-wide opportunities for shared services within areas such as Assessor Services and Trading Standards.
• the advantages of co-terminosity with the other public service agencies within [area] results in improved working arrangements and better service delivery and that the long standing boundary demonstrates the advantages of maintaining consistent geographies for service delivery.
• The council believes that structural change within the public sector would lead to greater economies of scale and increased efficiencies. It is important to ensure that local access to services is fundamental. Service users need to be assured that the services they require will be available at the point of need, regardless of who the provider is.
• Formalised joint working with other public sector agencies could lead to significant improvements particularly in relation to back office functions. For example, payroll services for all public sector employees could be centralised. Maximising the use of IT alongside simplification and standardisation could streamline and speed up communications, financial transactions and other processes.
• The adoption of less rigid structures within public sector agencies and staff secondment schemes between agencies would improve understanding.
• Greater integration could be achieved through information sharing between agencies.
• Bringing together the particular remits and specialisms across of all relevant agencies would add considerable value and quality to reform outcomes.
• Change management training across the public sector would support the creation of a new Scottish public sector culture.
• A move to a single public sector inspection agency, and to a single public sector improvement service should be given very serious consideration.

Are there better models for the relationship between central and local agencies?

8.22 This question generated the least response, with less than 20 responses including an answer to this question. Just under half of local authorities and individuals responded to this question. Only 3 agencies, NDPB, and central government agencies, 1 professional group, and 1 health body responded. There were no responses from voluntary organizations or private sector organizations. Generally it appears that many of the issues relating to this question had been addressed in relation to the preceding questions.

8.23 Some of the key issues relating to this question have been discussed at previous stages of the report - for example the preceding section and the sections on outcomes, minimum standards and accountability. However, there were some specific responses to the consultation question several of which suggest some current frustration particularly among local authorities and their representatives with the current relationship model.

8.24 As demonstrated by the following quotes, many local government respondents would prefer more autonomy, flexibility, consultation and communication:

' Yes, central government needs to become much more enabling and far less regulatory and controlling. True localism demands that local communities do what they do best and in turn power is devolved to local communities as far as this is possible to do. It should only remain to central government to do those things that it has to do like set national standards, set the overall strategic and budgetary framework, deal with matters of true national significance.' (Local Authority)

'More of a two-way partnership rather than just central government driving local agenda. Reduction in Central Government bureaucracy through minimization of audit/inspection/monitoring demands of multiple agencies.' (Health Body)

8.25 Again reflecting comments made elsewhere, there was specific support for more responsibility being taken on at the local level. For example,

'There are areas where local agencies, specifically local authorities, should take on both their legislative responsibilities (development planning) and play a greater role in leading on regional initiatives. The latter will develop with the lead role local authorities have in Community Planning. although there is considerable room for the adoption of best practice. ( NDPB)

'The model that is being proposed for Scottish Enterprise with a centralised strategic function and local level operational functions has the potential to be a good model for the central/local agency working relationship'. (Local Authority)

'Responsibility for delivering local services provided by central and local agencies should transfer to Local Authorities. These could then be more easily accommodated within community planning. Although community planning is being driven by central government, local government are far better at engaging the community in the provision of services and central government must learn to do the same.' (Local Authority)

8.26 Again, reflecting responses to the question on whether structural changes are required to improve the provision of joined up service; there was support for strategies to avoid confusion and duplication but not necessarily by introducing new models but by rationalising existing models. For example, there was further support for the strengthening of Community Planning.

' Community Planning can provide the mechanisms by which local and community contributions are made to national strategy with a strong Community Planning Partnership providing countervailing and negotiating authority to influence priorities and participatively agree contributions both to national priorities and from communities.' (Local Authority)

'Existing community planning structures whilst successful, only provide a context within which some public sector agencies can operate together within a local context because they are dispersed to deliver to discrete geographic areas. Reform should strengthen community planning arrangements by strengthening engagement across the Scottish public sector.' (Local Authority)

8.27 Specific examples were made of areas where the balance between local and central government caused difficulties at a local level.

' Often it can be confusing when policy is made centrally but implemented by a NDPB. The interpretation of the implementation of the policy can be open to question. The system is also often overly bureaucratic where instead of dealing with one organisation Councils have to deal with NDPBs and the Executive'. (Local Authority)

8.28 However, these views tend to suggest changes in procedures rather than any fundamental structural reform. In fact, several respondents suggested that structural change was not required or desirable.

Summary

• The notion of becoming outcome focused was broadly supported, as long as agreement could be reached about which outcomes to consider, how they are measured and the importance of including soft outcomes. The need to avoid an associated increase in bureaucracy, administration and centrally imposed targets was also highlighted, as was the perhaps perceived tension between such an approach and user focus.
• The range of potential benefits identified included improved services/better quality services, and clearer roles and responsibilities and less confusion for the customer.
• Potential drawbacks included that this would require fundamental culture change and a long timescale to achieve.
• Some respondents seemed some quite 'offended' that public sector and voluntary agencies needed incentives to encourage them to provide good services. It was felt to be more important for the Executive to provide adequate funding with the potential for flexibility and demonstrate confidence in agencies to undertake their functions. Another suggestion included removing some of the existing bureaucracy.
• There was also a common feeling that the consultation veered towards punishing failure rather than incentivising success.
• Although there was general agreement that improvements in joined up services were needed, structural change was not necessarily seem as the most appropriate route. Many considered the best way forward to be improving upon existing arrangements and not 're-inventing the wheel'. There was also a belief that the focus should be on how different services can best be delivered and not necessarily about the structures that currently deliver them.
• There were a few respondents who believed that there was a need for structural change to rationalise and simplify structures but that this would need to vary from service to service.
• In relation to better models for the relationship between central and local agencies, there appeared to be some current frustration with the current relationship model, with many local government respondents preferring more autonomy, flexibility, consultation and communication.
• There was specific support for more responsibility being taken on at the local level, and there was also support for strategies to avoid confusion and duplication but not necessarily by introducing new models but by rationalising existing models.