If we can change the behaviour of public service users, we can also save money. Council finance directors need to act now to seize the opportunity
Behaviour change has been a fashionable term in public policy circles since before the publication of Richard Thaler and Cass Sunstein’s book Nudge in 2008. The Labour government showed an interest in the work of fellow behavioural scientist Robert Cialdini and a unit at the Cabinet Office produced ‘Mindscape’, which remains a useful reference document. The latest incarnation under the coalition government is the Nudge – sorry, ‘Behavioural Insight’ – Unit.
Underlying the desire to understand human beings better is the search for the Holy Grail of public service reform. Can we get people to change their behaviour so that a) they are happier and b) the public sector spends less?
A concern about the behaviour change policy pronouncements emerging from central government is that they fail the finance director test. Questions tend to include: Can it save money in the short as well as the long term? What is the return on investment period? Why would I invest in something that front line staff have shown no ability to control in the past?
I don’t see the answers to these questions being provided by central government. But I firmly believe that if we tackle behaviour change in the right way, it should absolutely pass the finance director test. In fact, the finance director can have a key role in forcing local authorities to tackle demand management and behaviour change in a more rigorous and systematic way.
Impower spoke to 100 senior executives in local government in November last year, during the heart of the local authority budget-setting process for 2012/13. Our research reveals that, faced with real cuts to real services, demand management and behaviour change offer local authorities very significant opportunities to save money over and above traditional savings approaches.
Almost all executives (98%) believe they can reduce demand by changing behaviour. Almost three quarters (72%) believe that managing demand for services and changing citizen behaviours offer significant potential to offset declining budgets. Two thirds (65%) claim that these present the single greatest opportunity to reduce costs.
Our detailed financial research into seven key local authority service areas identified a £3bn opportunity for English local authorities, equivalent to 14% of baseline expenditure for those services. Extrapolating this over all local government services where demand management may be applied results in a potential £5bn saving for English councils. In Wales, the equivalent is £500m; in Scotland, £900m.
Through our field research, local authorities highlighted a series of barriers to seizing these opportunities. These include: lacking a sophisticated understanding of demand and what causes it; internal scepticism about the real value of behaviour change initiatives; and concern about their own ability to deliver.
But the key barrier is the dysfunctional relationship between local government and the citizen. A mere fifth (22%) of senior executives describe community trust in their authority as high – compared with 40% a year ago and 45% three years ago. This mirrors a June 2011 Ipsos Mori survey, which found that in a list of 21 roles, managers in local government sat fourth from bottom in terms of trust – below bankers, and just above journalists, government ministers and politicians generally. (Local councillors fared slightly better, being seventh from bottom).
Finance directors in local authorities need to act now to help seize the opportunity that behaviour change presents. Key steps they need to consider are:
- Challenge the commissioning process: Ask what demand should be rather than what it will be, to shift the focus from supply to demand-led initiatives.
- Ask different questions at budget-setting time: For example, ask what it would take to reduce demand by 10%. Do not accept ‘We don’t know’ as an answer.
- Invite ‘invest to save’ bids specifically based on reducing costs through reduced demand.
- Demand local information about what works and what doesn’t. Encourage rigorous testing of new approaches that provides the confidence at the right time in the budget cycle to bank on mainstreaming savings.
Jon Ainger is director at Impower. For more information, download Impower’s Changing the Game report here or contact Jon Ainger on [email protected]
