In almost every public agency – NHS trust, local authority, and government department – there are some very passionate, competent, skilled and committed leaders. However, the reality is that there are precious few leaders with the depth of commercial skills and experience demanded by the challenges that are already looming large as we look to 2011 and beyond.
There is a need for a cadre of commercial leaders to work alongside strategic and operational leaders to support politicians make the decisions and implement them. The immediate requirement is for commercial expertise, challenge and advice to contribute to the key decisions to be taken in response to the budget challenges arising from the Comprehensive Spending Review. Commercial directors or their equivalents should, of course, not override the professional judgement of specialists but enable them to make sustainable decisions that deliver their political objectives.
Every local authority and public agency has a procurement team. Some of these are excellent and bring a commercial dimension to strategic and operational decision making. However, many public sector procurement officers have gained a reputation as being inherently risk adverse. Often working with the lawyers to say ‘no’ or why an action cannot be pursued. Some hide behind the labyrinth of the EU public procurement regulations to find the means to delay or stop action.
All too often expensive consultants are engaged to complement or replace the in-house procurement staff. Too often the in-house roles have been too junior and too isolated from the strategic decision making. This is not always the case and must never be the case in the future – there is no need for it to be so.
There has to be a dramatic and urgent change
When I argue that the public sector needs more commercial expertise I mean more than the ability to buy smarter – important as that is. I mean the skills:
- to understand and evaluate risks; and to take effective action plans to mitigate them
- to promote entrepreneurial approaches
- to properly cost activities and the failure to undertake those activities
- to evaluate options for service delivery from in-house to outsourcing to setting up employee co-operatives
- to understand, create, develop and shape supply markets
- to contribute to commissioning and to implement any consequential procurement decisions
- to understand the mindset of commercial suppliers and to manage supplier relations; and to match the commercial skills of suppliers
- to ensure value for money and Best Value
- to offer professional opinions on the key decisions and issues
The DeAnne Julius Review on the public services industry recommended that every public body should have a commercial director on the board. This was the right recommendation.
Commercial directors should not just be in post to outsource and contract services. Indeed, an effective commercial director should evaluate all the service delivery options and consequently might well find that outsourcing was not going to deliver value. She or he would provide sound advice to the political and managerial leaders and be part of their collective decision making.
There are already some examples of successful appointments in Whitehall and in some national agencies as well as a few local authorities. This has to be ramped up rapidly.
In calling for more commercial expertise in local authorities and across the public sector I am not proposing that the public service ethos should be replaced by business values. Nor am I advocating the privatisation of the public sector. I do not want to remove or diminish the democratic nature of local government and the values of public services. My aim is to strengthen democratic local government’s role and ability to promote the wellbeing of local communities.
But we must overturn the complacency, short termism, self-interest and failure to put the interests of the citizen and their customer experience truly first and foremost at the heart of policy and decision making.
What is required are commercial skills complementing service expertise and professional values with both supporting the political process and political leadership to secure the right values; and the right outcomes
John Tizard is dirctor of the Centre for Public Service Partnerships. This blog is based on his keynote address on 16 November to the Society of Procurement Officers annual conference in Brighton
