diseconomies of scale webinar

Poll 1Which sector are you

from?

* Public* Private* Third* None (Individual)

Poll 2Do you believe that scale

in public services delivers….

* Lower costs* Little difference* Higher costs

Poll 3Do you believe that scale

in public services delivers….

* Lower quality* Little difference* Higher quality

Diseconomy of Scale

Locality’s interest

• Experience of our Members over many years

• Introduction of Work Programme

• Myths about economy of scale – esp in services

“immutable law of economics”• Lack of any real evidence base

• Encouragement from others

© Vanguard Consulting Ltdwww.vanguard-method.com

Vanguard and Locality: Having a common Purpose

• An informed recognition that Public services work poorly

• Vanguard brings its experience of working with organisations in all sectors to transform service delivery, reducing costs by solving peoples problems.

• An understanding, based on knowledge of these systems, that the mantra that big services and scale are cheaper and more effective is flawed.

Questions?

Methodology

• Third sector experienceo Financial data from 139 VCS

organisations aspiring to deliver public serviceso Survey responses from 96 VCS organisationso Follow up depth interviews with 9 cases

• End-user experience

o Analysis of thousands of demands presented on the system, using “Vanguard Method” techniques


The Vanguard Method

• Change starts by studying, getting knowledge of the “what and why” of performance as a system (we never start change with a “plan”)

• It studies services end-to-end

• It understands service-user demands, following them through the services in order to understand how and how well the services work.

• It identifies the system conditions that hinder achievement of purpose from the services users perspective.


Ruth's experienceLearning the What and why from the service users perspective :

What mattered to Ruth:

“ I need help with

housework ”

“ I need help with

housework ”

“gaining access to the first floor of the property

“gaining access to the first floor of the property

“ These two things would have such a profound effect on

mine and the children's lives “

“ These two things would have such a profound effect on

mine and the children's lives “


What Ruth received

2 anger management courses

2 parenting programs

Help cleaning 1 bedroom

Toilet frame, perching stool and bath board for a bath she could not access

Family Intervention program

And it took this many people to deliver it……

8 social workers22 support workers allocated

30 referrals in core flow16 assessments in core flow

36 teams/services

And it took this many people to deliver it……

8 social workers22 support workers allocated

30 referrals in core flow16 assessments in core flow

36 teams/services


Cost of what Ruth wanted……..

• Cleaner (assume 10hrs/week for 4 years = £14,560

• Move to suitable property (current property unsuitable for adaptation) = £1,200

• And/or stair lift = £5,000

Total = £20,760C

ost o

f wha

t Rut

h G

ot

£106

,777

Cost of doing to, not doing what mattered for Ruth

= £86,000.00

Cost of doing to, not doing what mattered for Ruth

= £86,000.00

What else we found

• Scale thinking is rife71.2% of aspiring VCS orgs fail the 25% “rule”

• Scale thinking is destroying social capitalLoosening of bonds and multipliers – local SW case studyOrganisations going bust due to unit-cost squeeze

• Scale takes vast resource away from the front lineMega-contracts typically 35-55% management costs

• Potential savings are massiveestimated £16bn worth of diseconomies

Questions?

Poll 4Which of the following did

we find was the most common reason given for

going for scale?

* Avoid postcode lottery* Less hassle/management* Less chance of failure* Lower unit costs

The Drivers to Scale

1. Fear of failure

2. Fear of postcode lotteries

3. System efficiencies (QA, development costs)4. Internal management convenience

5. Belief in economies of scale

Call to Action

Efficiency comes from Effective services, so these must:

• Be “Local by Default”

• Help people to help themselves

• Focus on purpose, not outcomes

• Manage value, not cost

Final Question

s?

Final PollAre you convinced that scale in public services delivers Diseconomies?

* Yes* Not sure* No

www.locality.org.uk/our-work/ policy/diseconomies-scale/

http://www.locality.org.uk/our-work/

Wednesday 30 April

Neighbourhood Planning: learning from the pioneers

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diseconomies of scale webinar

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