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Lecture given to North Yorkshire County Council senior management team by Aidan Rave in March 2010

Searching for the soul of local government Introduction First of all I want to thank you for inviting me here to participate in this distinguished series of lectures, I am honoured to be taking part and hope I that can make some contribution to your work here in North Yorkshire. The most progressive and by extension, most successful organisations in history have, without exception been learning organisations. Building a common understanding of the challenges, and opportunities, we face is a critical building block of our role as leaders, both collectively and individually. Lifting our heads from the daily minutiae is never an easy thing to do. I’m sure a simple straw poll of this room would illicit a thousand and one critical tasks sitting in the urgent pile on your desks. Leading communities is far from a straightforward task – and as I’m sure you can all attest, it’s becoming ever more difficult as the complexities of our society increase day by day, week by week, month by month and year by year. As the distinguished US management scholar Rosabeth Moss Kanter said, our challenge as leaders is to ‘wake people out of their inertia’ to get them excited about something they have never even seen before; to prepare them to meet a challenge that may yet not even exist. I’d also like to pay tribute to John Marsden who originally invited me over to do this. I know how much he thought of all of you and I’m sure you recognise with me the contribution he made to North Yorkshire and the rather large pair of boots he has left to fill for whoever becomes your new Chief Executive, I wish you well with that process. Your new Chief Executive will quickly come to realise, as you all do the burden of expectation on your shoulders. North Yorkshire, part of the great county of Yorkshire, has a proud history and an exciting future – a future laden with a wide range of challenges facing all of you. Today, I want to set out those challenges in a broader context and lay out some of the wider issues facing local government in delivering effective and relevant services fit for the ever more complex demands of the 21st century. Context First of all, I believe we need to be clear about where we’re starting from. At this point I’ll spare you the tenebrous warnings about the impending doom facing local government – I mean its true – but if you haven’t started to plan a way through it already, you’re probably in the wrong room.

The starting point as far as I’m concerned is that while in performance terms, this is in many ways a golden age for local government, we are paradoxically under continual and sustained attack from the more egregious elements of the press. This is an onslaught that, without sounding too much of a conspiracy theorist, has all the hall marks of a coup d’ etat; a putsch designed to distract attention from other matters of public interest. So is the tail wagging the dog? Consider this. In September 2008, the sudden and shocking bankruptcy of the previously gilt edged Lehman Brothers Bank precipitated a global financial crisis on a historically unprecedented scale. Conservative estimates put the financial implications of the ensuing global recession at over $10 trillion dollars, a figure so vast it takes twelve noughts to write it down. The glorified Ponzi trading of Wall Street and The City with their sub prime lending, collateralised debt obligations and leveraging deals has presented us with a toxic legacy so severe that it is highly likely that our children’s, children’s children will be still paying for the consequences of it many years from now. But that’s not all. By the spring of 2009, the full implications of the parliamentary expenses scandal was beginning to emerge. Now, as you’d expect, as a former Doncaster Councillor, I took more than a passing interest in this unfolding chaos. I must admit to the slightest of grins appearing on my face as I saw some of the most ardent critics of the Donnygate lot, themselves humiliated over everything from a moat to a packet of Malteesers! But, you could be easily forgiven for overlooking the fact that any of this happened at all, given that the tabloid press seem to have spent the last twelve months engaged in an ever more salacious invective about greedy town hall fat cats and their superstar salaries. This is not to pardon specific examples of avarice on the public tab – these people should be held to account - but it takes something of a vivid imagination to imagine that a Chief Executive running a billion pound per year business and earning say £200k is even in the same hemisphere as some of the crooked MP’s and even more twisted bankers. The fact is that the tail has been wagging the dog, the public is being duped and we – local government that is – needs to do much more to get into this fight otherwise there will be little, in terms of reputation, left to win. We are not in a good place. Incidentally, my solution for senior local government people is simple; publish everything on line and in the press. The Sun and the Mail will soon get fed up of printing the stories and in any case, it’s not nearly so much fun for them if everyone is privy to the facts. So publish and be dammed is my advice. Anyway, the central point is this. Local Government’s overall performance is good and has been improving consistently for a decade or so now. Indeed the sector can confidently benchmark against the wider public sector and be proud of what has been achieved.

But make no mistake, we’re in a battle here for not only hearts and minds, but moreover for common sense and no one is going to take on this on for us – so we need to be clear about our purpose in the coming years and be both resolute and ruthless in delivering it. In my view, the evolution, sustainability and even survival of local government depends on four separate but interrelated factors. First we need to overcome the immediate challenges we face. The forthcoming election will, regardless of its political outcome, invoke a period of prolonged fiscal austerity for the public sector. Put simply, we’re in for a tough couple of years. Second, we need to secure our legitimacy in the face of what, as I have already described is a serious battle for hearts and minds. Of course, it’s about much more than simply what the Sun says; we need to be more self confident and self assured in undertaking the work that you, and thousands of others like you, are engaged in on a daily basis. Third will be our collective response to the challenges presented by an ever more complex and diverse society. Linking the geopolitical machinations of war and peace , environmental sustainability and global commerce and trade might somewhat seem remote from the daily challenges of North Yorkshire, but increasingly the implications of global actions continue to have a local impact, the credit crunch and 2005 London bombings being just two vivid examples. Finally, the next few years are going to test the resilience of both the structures local government and the people who populate them – both political and professional. So the final question I’m posing is simply this; do you have the character – the mix of desire and fortitude needed to prevail? Make no mistake, it will be tested. Let me deal with each of these in turn. Capacity First is a simple matter of capacity. Not will, or desire, or sheer esurience, just simple capacity. Let me put that will, desire and esurience in the context of a simple analogy. It can’t have escaped your notice that the football world cup is coming up in South Africa this summer and what with Beckham’s recent travails, the England team manager Fabio Capello will be looking for a suitable replacement on the right wing; an impact player; twenty minutes to go, one good ball, Rooney on the end of it… You get the picture? Now, I’m sure I’m not alone among the football fans in this room in saying that I’d love to play in a world cup finals; not going to happen though is it? It doesn’t matter how much desire and will I demonstrate to Fabio, I’m not going to be replacing Beckham.

The analogy holds for local government, so the first question we have to deal with is facing the expected financial paroxysm of the forthcoming comprehensive spending review is quite simply have we the capacity to survive it? I’m sure that the instinctive response of many of us is an overwhelming yes! And rightly so. However, let’s explore that question a little further. Capacity can be measured in a number of ways, but the simplest metrics I would use are one; financial resource and two; skill base. Let’s consider those in turn. First, resources. While in the run up to the election, there is an understandable degree of managing the political message, there is also a general (and surprising) level of candour from each of the three main parties that financial cutbacks are on the way for the public sector. Now, if we work on the assumption that political expediency will largely protect both healthcare and education spending (wrongly in my view) then the gearing effect of cuts on the wider public sector is going to be even more severe; particularly when you consider the stark reality that almost two of every three pounds spent on public services is spent on health, education and welfare. Even the most rudimentary economic analysis therefore suggests that there will be a disproportionately harsh effect on other services – services which, let’s not forget, are often the most visible and highly prized by the general public. This is going to be much more than the next incarnation of Gershon type savings, put simply, there is not enough salami to be sliced to satisfy savings on this scale. What we require is not a new budget, but a new way of budgeting; a paradigm shift that fundamentally restructures the way services are conceived and delivered, demanding a different approach from councils and their partners across the wider public, private and third sectors. It will also require a dialogue with the public about our collective role in this evolution. We cannot simply go on affecting the supply side of the public sector equation while ignoring the demand side. Of course this change will be far from easy, it will demand leadership and accountability at all levels, which brings me to the second point in considering capacity. The political and managerial skills required to manage this transition will be considerable. What is past is prologue, so the saying goes – In the 16th Century Niccolo Machiavelli in his seminal polemic novel, The Prince, described what we might now call change management in rather stark terms when he said: ‘There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things’ If structural change is to be led effectively, it is going to take a new kind of political leadership and a dramatically different type of management thinking which in both cases will be a world away from the traditional axioms that have governed the sector for the last two hundred years or so.

To be clear, I’m not suggesting for a moment that local government hasn’t changed, it has, dramatically and admirably – indeed other sectors of the economy, public and private, could learn a great deal from the example you have shown. But different thinking must also elicit different outcomes. The way the sector views the provider market must change – as must equally importantly – the markets view of the sector. We need to move away from the transactional relationships that have prevailed for so long and shift towards a much more strategic and partnership based approach. Of course that in turn will bring its own challenges in terms of procurement, probity and transparency, but none of these challenges is close to being insurmountable. We must also be much more resolute about identifying and developing talent – this will be equally challenging as difficult times are often times when caution prevails – but we must create talent pools where diversity is the norm and where challenge and innovation can flourish and that’s something that we can all do today within our own sphere of influence. So, here’s my first conclusion. On balance, the capacity we need to not only survive but also prosper through the next few years is out there – but we need to ensure we can identify are able to see it and challenge ourselves to be less myopic and be much more externally focused in our thinking. We must build a broad coalition of what works and we simply cannot do that if historically preconceived ideas preclude particular sections of the market, be it public, private or third sector. The only way we are going to pull off the trick of doing more with less is to do everything better and that demands a broad coalition of all the skills available. Legitimacy Now, the second challenge; legitimacy. Let me say from the outset, what I believe legitimacy is not about. I get heartily tired when I hear certain members of the local government establishment using the phrase ‘democratic mandate’ as though it were some sort of ‘access all areas’ backstage pass giving special precedence over anyone else with an interest in delivering services. Such paucity of imagination and emotional intelligence is staggering, not to mention the stratospheric level of insecurity it projects on all our behalf’s. A quick examination of my own entry into local government tells a very different story. I was elected to Doncaster Council in May 1999, into what was one of the safest Labour seats in the borough. In that election I received 1671 votes on a turnout of 23%; my nearest challenger received just over 600 votes, so on the face of it, it was a comfortable victory. Overall then, of those that voted, I received 62% of the popular vote. But if we take the electorate as a whole, their new councillor was elected by only 14% of the electorate – and that’s in a safe ward, only 14%.

As far as I’m concerned, 14% is not exactly unfettered legitimacy, it’s more an indictment of an electorate who, having seen the name of their town name dragged through the mud during the infamous Donnygate scandal, had just about had enough of the lot of us. My point is that legitimacy is about much more than simply clinging to a voting statistic and as local government becomes more and more integrated with other service providers; we will need increasing humility to develop effective working relationships. What is also becoming increasingly clear from a managerial perspective is that the skill set required to be a senior officer in local government in 2010 has evolved dramatically from what it was only five or ten years ago. Those of you with aspirations to be a Chief Executive or Director in your careers will no doubt be already developing new skills around influencing and building coalitions with key providers rather than harnessing the more traditional vertical management skills of years gone by. Galvanising our legitimacy in local government is not about protesting about mandates, it’s about adopting a positive and confident posture, it’s ironically not about the acquisition of power but about the ways we can find to give it away. The power of local government doesn’t come from our arcane voting system that still asks people to enter a cold village hall in May and mark an ‘x’ on a ballot paper with a pencil tied to a piece of string. No, real power is actually vested in the proximity to service users we are privileged have – a proximity that other providers simply cannot manage. We are the gateway to the panoply of services that people use on a daily basis and in general terms, to the services that, on a daily basis, affect people most. Of course as in any relationship, the dynamics cannot be simply one way. Part of our legitimacy must be drawn from a level of candour between councils and their communities. There is a critical point here. Local government has been successful in the last few years at engaging the public around agendas such as ‘cleaner and greener’ and ‘safer communities’ – perhaps, given the financial challenges I spoke about a moment ago – too successful? The thing is, leadership and the legitimacy that stems from it is not just about saying yes, it’s about saying no too and sometimes about introducing a few home truths which might be not only uncomfortable but also at times difficult. Consequently, legitimacy is about leading as well as representing; it about sometimes doing the unpopular as well as the popular and then standing up and being counted about why difficult decisions have been made and not hiding behind statistics or government policy. True legitimacy demands accountability and accountability cannot be delegated – that means we might well take the rap from time to time for the faults of other organisations or circumstances, but that in turn goes with the territory of leadership. If we manage that relationship well, many of the more asinine attacks from the press that that I mentioned earlier will simply melt away. They will still be challenging, as they should be in a robust democracy, they will even step over the line of good journalism on

occasions, but if we are secure in our relationship with the people who really matter, our true legitimacy will overcome it. Diversity Let me now turn to my third point and this, in my view, is the biggest challenge we face. The world out there is changing at a phenomenal pace and the implications of an ever more interconnected world mean that the increasing diversity of society is becoming ever more salient. Again, let me begin with a clarification of what I’m not talking about here. The term ‘diversity’ has become something of a generic nomenclature to be attached to a particular issue with only the most superficial of analysis – the term ‘sustainability’ suffers much the same fate, though obviously in a different context. The reality is that diversity is not just about what too many of us lazily believe it to be, i.e. gender, race and the like. While it is about those things, it’s also about technology, money, the environment, geo political decisions that are taken and just as much, about geo political decisions that are not taken. Of course people are at the heart of this equation and the effects of decisions taken in Washington, Beijing or Brussels have an increasingly direct effect on the people who live in North Yorkshire. Take technology; I’ll share with you a favourite statistic of mine, one that no matter how many times I recall it, still amazes me. In the early 1990’s, I embarked on a degree and as part of the coursework, I undertook some research into the impact that technology might have on social interaction between groups in the future. As part of this research I studied the new and relatively unheard of phenomenon called the internet – or to be more precise, the ‘information superhighway’ as it was more commonly known by the few scientists who had anything to say about it at the time. Now, notwithstanding the fact that the early internet could do little more than transport a few words or monosyllabic sounds, the really mind bending fact is that in 1993, there were still only about 50 sites on the world wide web. Unbelievable, 50. Within a decade that had grown to about 500 million and now there are over a billion with the value of annual transactions measured in the tens of billions of pounds. In fifteen years we have completely revolutionised the way we think about information and while governments and councils have done much to exploit this technology, we have simply not been able to keep up with the pace. But of course, the internet is not just about technology. For all its faults, and there are many, the internet is primarily a tool of social enlightenment; it enables us to procure not only goods and services, but critical information too. I have a friend who is a doctor, and he tells me that probably one in every two patients he sees now have undertaken some form of primary research on Google or Wikipedia or whatever prior to coming along to see him. Now notwithstanding the dangers of a little knowledge being a dangerous thing – the key issue we need to understand is that people have access to a vast and ever growing reservoir of knowledge and are increasingly less inclined to listen to authority – and that has implications for councils just

as much as it does for doctors. Information and the way it is procured is becoming more and more diverse and it’s fundamentally changing the way services are perceived, so it, in turn, needs to change the way they are delivered. Demographically we are also becoming more diverse. Those of you working with older people will know the stark effects of an aging population are starting to have on budgets and those of you not directly connected to it will need to know because the financial implications of people living longer are going to affect your services too. London School of Economics Professor Howard Glennerster has recently estimated that the equivalent of an additional 6% of GDP would be needed to meet the social costs of our ageing population. Alongside HM Treasury forecasts, this would increase the share of national income spent by government to over 45% by 2020 and nearer 47-48% by 2030. Given public tax receipts have rarely been above 40%, Glennerster argues that our current welfare funding arrangements are simply not sustainable. But it’s not just about getting older. Those of you working in community safety will know that one of the consequences of an increasingly stretched age range between young and old is alienation leading to mistrust and fear. The notion of kids ‘hanging around’ and older people being scared out of their minds only scratches the surface. The irony of all this is that as the world becomes increasingly interconnected through Face book and Twitter and the like, it also becomes more detached and, perceivably anyway, more dangerous. We are in danger of descending into hermetically sealed social groupings who only virtually communicate with each other and whose respective quality of life suffers as a consequence. Again, you might question the direct implications for North Yorkshire – well the cost of satisfying our desire to feel safe is considerable and the cost this division and its implications can be measured in the billions of pounds. Globally, we are also becoming more diverse. The implications of economic migration are well known and bring with them their own challenges in terms of community relations and harmony. The reality is that the ecological consequences of global warming will make 20th century migration pale into insignificance; the consequences of both could be stratospheric. It’s easy for us to talk blithely about the wonders of the global economy, but how can we have a global economy if so many people are excluded from it? Half the people on earth aren’t part of the so called global economy. Think about this when you go back to your desks this afternoon. Half the people on earth live on less than two dollars a day. A billion people, less than a dollar a day. A billion people go to bed hungry every night and a billion and a half people - one quarter of the people on earth - never get a clean glass of water. One woman dies every minute in childbirth. So you could say "don't tell me about the global economy, half the people aren't part of it, what kind of economy leaves half the people behind?" Look, the purpose of me saying this is not to make us all feel bad, although given those statistics its worth just remembering how genuinely fortunate we all are. No, the central point I’m trying to make here about the increasing diversity of our world is that whether

things happen locally, nationally or internationally, the consequences of those actions can permeate boarders in seconds. The global age is knocking down walls as quickly as it is putting new ones up and the consequences matter as much for Northallerton as they do for Nairobi. Character All of which brings me neatly to the final point I want to discuss with you today. Given the sheer magnitude and breadth of challenges we are facing, do we have the stomach for this fight, or not? This is far from a given and I’m certainly not pulling the old three card trick of putting up a patsy question so I can give you an affirmative answer and everyone goes home happy. I’ll tell you this much, I spend much of my professional life in one way or another peering into the underbelly of councils and there are several I could recall here and now who will struggle badly to cope with even a small percentage of the challenges I’ve already talked about this afternoon. No, this fight is there to be won, but the conclusion is far from certain. Let me lay out exactly what I think the potential scenarios are, before outlining briefly what we might have to do to overcome them. First, there is a real danger that professionally we remain too rigidly tied to age old specialisms and that as a consequence we have neither the confidence nor entrepreneurial flair to succeed. There is considerable evidence to back up this rather pessimistic analysis; only a few days ago I was speaking to the Chief Executive of a well performing council who was concerned that in recruitment terms, the rate of change expected in the next few years is likely to be so great as to render many of the skills within his organisation redundant, or at least, increasingly less relevant unless they are continually updated in the context of new and unfamiliar challenges. This is not an exhortation for less professional skills – quite the contrary we are likely to need more, not less. The challenge is much more, what do we do with those skills, are we able to set them in the context of communities rather than just organisations and can our success be defined through outcomes rather than simply the vigor with which we speed around our professional hamster wheels? Perhaps this is a good time to take stock, to re appraise the simple equation that pits our capacity against demand and to consider whether or not we and our partners are fit for purpose. The second danger is that politically we are unable to commission services beyond the narrow band of self interest that affects outcomes at the ballot box. Taking the longer term view and planning for challenges that we can’t even foresee yet is never easy – I

should know – but the consequences of short term thinking in the current climate could be cataclysmic. I need not remind you of the growing band of political charlatans who are all too eager to cozen the electorate with their easy answers and dubious promises. Politics is entering a new and potentially dangerous epoch; it is time for brave leadership and selfless decision-making. The third danger is that in our desire to overcome these many challenges, the providers of services descend into a farrago of salesmanship and largely empty promises. This is an easy danger to be seduced into as it can be done with the very best of intentions. As service providers, councils and their partners have been probably too successful in engaging communities around the cleaner greener agenda. The problem is that we created a vast apparatus of reporting hotlines, web portals and customer services help desks that produce a real danger of us making promises that, long term, we simply cannot keep. We need to get much smarter about affecting the demand side of the public service equation as well as the supply. At what point do we recognize that not dropping litter in the first place is a much more cost effective solution that being able to pick it up 25% cheaper? Same goes, though with much bigger number s and implications for education and pubic health – as the old saying goes if you think education is expensive, just consider the cost of the alternative. Similarly the prospective cost of childhood obesity alone will quickly swallow up the projected 20% efficiencies we are currently looking at taking form the public sector within 25 years. We can’t simply go on ignoring the balance here – but as Jamie Oliver found out down the road in Rotherham, this is not going to be an easy challenge to overcome, but its not one we can afford to ignore for any longer. Desirable though cleaner communities are, we know we simply cannot keep up the pace, so we need a dialogue with the public about their part of the equation. Finally, we have the vexed issue of the role of the market in all this. Despite numerous examples of individual success, there is still much to do in terms of building an effective and productive commissioning relationship between local government and its suppliers. I believe there are three key obstacles standing in the way of real progress on this. The first is based on the traditional approach both commissioners and suppliers have had to dealing with such work. In short, we have gone for the low hanging fruit – relatively simple, transactional services often couched around an adversarial and heavily litigious contractual relationship. This needs to change. But what if an organisation was to be commissioned, not on the basis of outputs but of outcomes? Let me explain what I mean. Let’s say that as a provider, you ask me to improve KPI for litter and detritus by 3% over two years, while at the same time decreasing costs by 12%. Fine; now lets say I do that and collect my cheque at the end of the process.

Ok, but say that in the areas I saved you money and improved the KPI people were still no happier because despite the fact that the streets were cleaner, there were still problems with graffiti, antisocial behaviour and fly tipping? In this example we’ve hit the target but collectively missed the point. Now, here’s my real point. What if when commissioning me to do this work, instead of asking me to make savings and hit the KPI, we based our collective success around a key local outcome such as resident satisfaction in a given area. Now the litter picking becomes only part of the equation, because in order to be successful I have to achieve an outcome, not just an output, so the commission forces me to engage with the kids on the street corner and to ensure that the graffiti is cleaned from the wall. All of a sudden my financial success, your professional success and the residents’ quality of life success are bound together indelibly. We need to become much more sophisticated in the way these contacts are negotiated – again it’s going to be far from straightforward, but not insurmountable. Now, second we have procurement itself. Trust in public institutions is pretty low at the moment, thanks to the MP’s scandal and yes, not forgetting issues such as Donnygate, people rightly want evidence, not just assurances about probity in public life. The danger is however that the only people who win out of this process are the lawyers negotiating the deals. Take PFI for example. There is a council not a million miles away from here who have a PFI team of approaching a hundred people. That’s a lot of salaries and on costs to pay before we’ve even waived a pen in anger. My point is this. Adversarial and litigious relationships between suppliers and commissioners waste money whereby true strategic partnerships often produce hitherto unforeseen value added from little more than the joint mission established by the protagonists. Again, I’m not for a moment suggesting that this will be easy, but we can surely find a way to build effective relationships without the need for a room full of lawyers and still be totally demonstrable about our actions in order to maintain public trust? Third is ideology. I grew up in a political environment where involvement of the market in public services was akin to inviting the devil around for tea! For too long the fractured ideologies of a few has cost the rest of us dearly. Now of course I’m on the other side – some of my old colleagues might still say the dark side – and you know what; I still hear bigoted comments about how the public sector isn’t as good as the private sector at managing contacts, or the private sector doesn’t understand the ‘special’ demands of dealing with the public. Utter rubbish, there are good organisations and bad organisations as a result of good management and bad management. Indeed, the mutual loathing and contempt which is reserved for the third sector – a sector upon whose shoulders I might remind us carry the burden of a considerable proportion of caring services in this country.

The truth is if the third sector ceased to exist for just one day, the implications would be immeasurable – the country would quite simply grind to a halt. The truth is that no one sector has the panacea here, we all need each other and the sooner we rid ourselves of the last vestiges of dogma that have held us back for so long, the better. So on my final point – do we have the character to succeed and prosper in the coming years? Of course I still think yes, but its going to take some different thinking and as ever, the need for support across the sector, with the more progressive supporting, and if necessary compelling, the more intransigent to improve their performance. The stakes are high and consequences of failure dramatic. Conclusion Let me finish then with a look to the future. Despite the many challenges, I remain above all optimistic about the prospects for local government looking forward. The kaleidoscope of public services has been shaken up like never before, we’re in a game with everything to play for and despite the fact that for decades the levers of power have been shifting towards Whitehall, there just might be a window of opportunity to win back some influence for the town hall. So that’s really what I want you to think about today. I hope we can see the threats just as clearly as we can see the opportunities; the great thing is that we’ve all got a role in what comes next. I know you want the very best for the people of North Yorkshire; I know that’s why each of you gets up every morning. So let’s look to the future with a – dare I say typically Yorkshire - sense of confidence tempered with determination and grit? Let’s make sure that the brave, new and interconnected word we’re part of draws us closer together, not makes us prisoners of our own fears and insecurities. As I said at the beginning of this, you carry a heavy burden of expectation – as the great Irish poet William Butler Yeats once noted, ‘in dreams begins responsibilities’ - but with that same burden comes the realisation that you are shaping the future for our children and no job in the world could possibly be more important than that. Thank you very much for listening and good luck with your work.