‘Tax and axe’ isn’t the only option

June 24, 2010 at 2:08 pm 1 comment

By Sarah Gillinson

George Osborne’s ‘tax and axe’ budget sets the UK on a path to eliminating its structural deficit by the end of this parliament. It does not set us on a path to solving the major social issues that both coalition parties identified as critical in the run up to the general election – poverty, the environment, a broken society and social cohesion to name but a few.

This mismatch is easily explained by the nature of Osborne’s deficit-tackling tool-kit: raising more money through taxes, making existing public services cheaper through wage freezes and other operational efficiencies, and eliminating ‘non-priority’ services. There can be no question that this combination will mean ‘less for less’ for UK citizens – fewer services, for less investment and less money in their pocket to boot. In this scenario, where deficit-cutting is a priority, tackling social issues ends up further down the coalition’s to-do list.

Innovation Unit believes this ‘either/or’ is a false dichotomy. Radical Efficiency, our report on different, better and lower cost public services describes a new approach to budget-cutting. We have spent the past nine months scouring the globe for examples of innovation in public services that deliver much better outcomes for users at significantly lower cost. In the process, we have been able to extract some common lessons from these success stories that tell us something about how to do radical efficiency in practice.

The most important message from over 100 case studies is that tweaking the design or suppliers of existing services is totally inadequate to deliver different, better and lower cost outcomes. Radically efficient innovations all begin by gathering new perspectives on the challenges they face. Innovators have to think carefully about who they should be serving to generate a clear, new articulation of the true problem they should be addressing. In this way, the founders of Patient Hotels came to the revelation that in fact they were serving two groups of people – ill and recuperating. This turned one operating model into two – from hospitals for all, to hospitals for ill people and comfortable, patient hotels for the recuperating ones.

The second, critical message is that in order to generate different, better and lower cost public services, the motivation can only be to improve the quality of people’s lives, not to make big savings. Starting with ‘how can we cut?’ muddies the focus and inspiration of innovation that relies on empathising with what communities’ lives are really like, and tackling their most important challenges. 

Clearly, this has major implications for how central government deals with the current crisis and with longer term public service reform. Innovation Unit believes there are two important shifts here: greater freedom to local government and a more positive conversation about the duty to innovate and do things truly differently. In the immediate future, we would like to see central government embed both of these changes in a series of 20 ‘radical efficiency zones’ – a set of new freedoms for participating local authorities in return for a duty to apply radical efficiency in practice. You can read more about radical efficiency zones here.

This is not just an abstract theory. Innovation Unit is working with local authorities to develop and test methodologies to support leaders to do radical efficiency in practice. We have already worked with Croydon to help push their ‘Total Place’ work focussing on families with very young children, to be more radical. We are also working with six localities throughout England on an 18 month radical efficiency process. This will help them design, develop, prototype and implement different, better and lower cost services in the early years.

Innovation Unit believes that the combination of this global evidence base and local practice suggests that George Osborne and the rest of the coalition have options. ‘Less for less’ is not the only show in town. Radical efficiency tells us that different, better and lower cost public services are not only possible, but happening. Central government could choose to liberate this approach at scale by letting go of the tight reins of central government control.

Entry filed under: Government Departments, Innovation Policy, Public Services, Radical Efficiency, Uncategorized.

Press coverage for Radical Efficiency Radical Efficiency in Whitehall

1 Comment Add your own

  • 1. Chris Watson  |  July 1, 2010 at 7:50 am

    Absolutely correct. The idea that savings have to made through cuts is political not economic. The whole aspect of modern economics should be reevaluated and treated holistically. The introduction of cuts does not allow for savings to me made by forward thinking. I am reminded of the council tax form for Lambeth which due to a redesign increased the amount of people who paid their bills on time by 80%.(Design Council 2006). Simple but effective.
    If the government want to really get us out of the economic mire then they have to look at making savings by enhancing what we have already and making savings that way rather than the tired old policies of cutting back that never work.


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