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Exclusive GO Interview – Paul O’Brien

Wednesday December 7th, 2011

Paul O’Brien, Chief Executive of the Association for Public Service Excellence (APSE) and a regular blogger for GO, speaks to GO Content Editor Morven MacNeil about the key developments taking place within the organisation and his thoughts on the future of procurement.

The Association for Public Service Excellence is a not-for-profit local government body working with over 300 councils throughout the UK. Following on from an interview last year, GO caught up with Mr O’Brien to discuss the issues that need to be addressed within procurement today and the current work being undertaken at APSE.

Since we last spoke, what are the major developments or initiatives that have been taking place at APSE?

APSE has been working with our members and the financial austerity that they face in the public sector. We’ve been working around three core issues. The first area is efficiency – working with authorities to identify how they can be more efficient at delivering services. The second area is income generation, looking at the issues of trading and charging. As budgets fall, can local authorities offset some of those reductions by raising additional revenue? And the third area is innovation, especially around renewable energy and the opportunities that arise through that.

We’ve got quite a significant research programme running at present focussing on things around sustainable procurement, renewable energy, and delivery models such as cooperatives and mutuals.  But one of the major things that we are doing is running a knowledge transfer partnership with De Montfort University. As a result of the KTP programme we have a new researcher based with APSE and over the next couple of years we will continue to build our research programme around a concept which we’re calling the ‘Ensuring Council’. We are developing a rolling programme around that theme to put in place a vision of what the future council might look like – not a council that meets once a year to hand out contracts, but a council that is significant in scale, that retains a core group of services that it delivers itself, and that works with the wider community, the private sector and the third sector, to provide political leadership within the local economy and local community and to act as the linchpin that binds together the different factors that will help develop sustainable and economically vibrant communities.

Since the launch of the Government’s Transparency Agenda, have you seen any major changes within public sector procurement?

I think people are more conscious of transparency these days, but the major procurement deals were always subject to a degree of scrutiny anyway. I doubt things have changed that significantly. People on the ground with smaller levels of contracts or supplies are just a bit more conscious now about what they’re spending money on and how it will be perceived. I don’t think there was ever a major problem with what people were spending money on, but now they’re thinking “How does that look?” as everything now appears on a list somewhere. I’m conscious that people are wary about things like consultancy; even if they procure a small piece of work from a supplier, if the word ‘consultancy’ is mentioned then the local press are going to jump on it and have a field day even if the work they have commissioned saves money in the longer term.  It is a difficult debate to have within the local press. I would also question the costs  associated with ‘transparency’. Whilst we would all support more openness the cost of putting all expenditure over £500 on line could be quite burdensome  to many councils and increase costs significantly.

What are your views on the role of outsourcing in delivering greater efficiency savings, and have you seen any evidence of this recently?

What I have seen generally on outsourcing is that people have had a look at the timescales involved in undertaking a significant outsourcing project. They’ve got limited time to make significant budget savings – in England you’re looking at 28 per cent over the next three years. They need to make more immediate savings than could be delivered through a procurement process that may take two or three years. So there’s been a rethink around outsourcing. But it still exists; people are still doing it. However, they are looking at a much more mixed bag in terms of achieving efficiency savings.

There have been particular issues around offshoring that have been raised and well reported on and of course the issue of Southern Cross which I’m sure has caused people to think again not to  mention the experiences of some local authorities whenConnaughtcollapsed leaving soem serious problems in the housing maintenance market.  I think there’s been a mixed bag in terms of performance in outsourced contracts  and people are thinking again about whether outsourcing will actually deliver the changes and the financial savings that are required, certainly in the short term.

What impact do you think the Chancellor’s Autumn Statement will have on public sector spending?

In England an additional £400 million has been put into housing to try and kick-start the market and address the housing crisis in the country. There are millions on waiting lists for housing and people can’t get loans; there aren’t enough houses being built or suppliers building them. We still need to do much more on housing. Certainly local government is not out of the woods. The future for jobs is fairly bleak with more job losses to come and pay remains frozen. There are some chinks of light in terms of the capital infrastructure plans but austerity measures will continue to dominant local government plans.

Do you think that local authorities are now factoring in sustainability when carrying out procurement processes?

I would certainly hope they are! APSE has done research over the last year or two around sustainable procurement and produced a sustainable procurement tool about six months ago. I think there’s a lot of recognition of issues such as local skills, local apprenticeships, training, avoidance of leakage from the local economy. People are getting a bit smarter with procurement and thinking through the consequences of the spend they make and the importance of that spend within the local economy. The new Best Value guidance now addresses these matters in terms of local decision making which is a positive step.

How do you see the role of procurement developing over the coming years?

I think procurement will grow in terms of importance – as I said, with budgets becoming tighter and tighter it’s important that value for money is driven out of every pound. People are becoming much more aware, due to the rise in unemployment,  of the importance of public sector spend within local economies. I think it will be important to try and ensure the maximum amount of spend is contained within the local economy. Using procurement can stimulate local economic activity. Whilst European Procurement rules are often cited as a barrier to more innovative procurement in reality it is about nurturing a culture that recognises the value of procurement spend in local economies. I think with the limited spend now available to local councils they will really be focusing on ensuring that they maximise the potential spend within their local economy. That will mean working with local supply chains in order that those suppliers and sub-contractors gear themselves up to be as successful as possible within procurement processes.  This will help keep money within the local economy, which will in turn help to create jobs, encourage apprenticeships and bring all the benefits that go with that to local communities.

Thank you  for speaking to GO.

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