Could austerity save public services?

In those heady days immediately after the 2010 general election, I used to argue that 'austerity' might play an urgent and vital role in rescuing public services.

I doubt whether anyone paid much attention.  They looked at me as they often did, as if they found it hard to place me exactly.  But I argued this on the Lib Dem federal policy committee, so - who knows - it could have strengthened the ambition for austerity in small ways.

I thought that austerity might be the only way to shock services, which had been hollowed out by New Labour's targets regime and a decade or so of wrong-headed care by McKinsey and PA Consulting, into being humane and effective again.

I believed it may be the only way to force them to re-organise in innovative ways to meet people's needs.  At the time, I also believed that iron central control was costing at least £48 billion just in accountability and auditing.

There have been many times since then that I have wondered whether I was right after all.  I watched the best innovative ideas being cut and the most intractable, sclerotic companies taking over services by pushing the costs elsewhere in the public sector.

Yet there were also signs of hope.  In the north west, particularly, there was the iNetwork of local authorities dedicated to thinking afresh.  There was co-production popping up everywhere and Nesta's People-Powered Health project.

Now, for the first time, it seems to me, there is a genuine challenge emerging to the old way of doing things, and it is published this week in a Locality report called Saving Money by Doing the Right Thing - and it merges John Seddon's system thinking approach with what I would call co-production (but they call 'helping people to help themselves').

There are ambitious claims being made for th

is approach.  The report claims that £16 billion can be saved delivering services on this model.

An even more ambitious way of looking at it is set out in the blog Freedom from Command and Control, which tries to turn the famous Graph of Doom on its head - explaining that, if you take Seddon's 'failure demand' into account (the excess demand on services caused by doing them badly in the first place), then the Graph of Doom goes backwards.

This is a big claim, but it is no less than what Beveridge originally claimed for his Welfare State - that it would get cheaper over time.

The question of why that hasn't happened is one of the most important unasked condundrums about public services now.

I'm not saying that austerity is right in every circumstance.  Just because a little austerity kickstarts innovation, it certainly doesn't mean that the same would apply to a lot of austerity.  Moderation in all things, and especially when it comes to austerity.

But our inflexible sclerotic services needed an injection of life, and the debate about how to achieve that is now joined.  This blog post is my modest attempt to help it along.

More on these issues in my book The Human Element.

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