Internal markets in the council
I had a Chief Executive who said that if the work we were doing was not directly benefitting or serving a member of the public then we were probably doing the wrong thing. In the same organisation we were told to focus closely on what the needs of our customers were and seek to deliver it. Finally, I was told, as a member of a support service, that I needed to ensure that I was delivering what the frontline service needed and not just what I felt was important.
All of the three statements are correct and not necessarily mutually exclusive.
However, they do highlight the complex position that people within support services are often in. On the one hand they usually have a formal role to undertake, such as audit, finance or legal services. On the other hand they are working for a public service and therefore should be serving the public and finally they are a SUPPORT service so should really just work for the service they are supporting.
It is a quandary that local authorities have long been trying to straighten out and one of the favoured tactics is to set up the internal business unit, or if this is a bit much, the approximation of an internal business unit.
The support service can then charge the frontline services in the council for their work.
This has its advantages:
- Those managing a frontline service can plan exactly how much support service they want and pay for it. If they decide they want to flex their service they have control of a much greater part of their budget
- The support services have to be more customer focused (or at least do what is asked of them by the frontline service)
- It should help demonstrate the value for money of the support service
However, there are some perverse outcomes from the internal business unit and this is where my concern lies:
- We might be trying to set up a sense of competition but there is no-one to compete against. Internal business units rely on getting ALL of the council business. So even if the internal design team sucks and is expensive the frontline services are told they have to use them. The argument is that if we want this service internally we have to pay for it. What if we, the frontline service, don’t want them? Sorry.
- Services are essentially conservative. They roll over the support services from one year to the next without too much consideration. Internal business units assume an intelligent customer but if there is no competition then that manager is more likely to be the unsophisticated customer.
- Not everything works as a chargeable service. I’m sure services don’t mind paying as they go for design or communications work but if you get lumped with a major employment tribunal do you really want that frontline service to bear the cost of all the HR and legal support? Internal business units can, if not managed properly, focus risk rather than spread it.
- Finally, it is hilarious trying to work out the amount to charge the support services for other support services they have received which then needs to be passed to the frontline services. It’s a huge financial circular argument!
So what is the conclusion? Well, internal business units are not necessarily a bad thing but surely the only way for them to work is for there to be real competition. Maybe, my manager should be allowed to buy support services from neighbouring authorities?
After all, if we’re going to have competition and financial incentives we should probably do it properly, right?