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March 17, 2010

Public services – ‘John Lewis’ style

But maybe there is hope on the horizon. Albeit a distant horizon – all the way from the London Borough of Lambeth. Faced with a 20% cut in the Council’s budget, the council’s  Chief Executive considered his options – strip everything back ; introduce means testing ; charge for everything ; or deal with the challenge in a different way entirely by involving users and giving them an incentive to provide the services themselves – ‘John Lewis ‘ style…..

The future for local authorities: is it John Lewis or easyCouncil?

For the last few years Steve Reed, leader of Lambeth council, has surveyed a dismal financial landscape in which he is supposed to keep on providing the same services with 20% less funding. Increasingly he has eyed the disparate network of community groups working wonders with nothing but free time.

He rated the network so highly that he even pushed to give it a lot of that diminishing pot of community money lying in the council’s vaults.

After a four-year process, the £6m Lilian Baylis old school will soon be owned by a local community trust. The council has also set up what it believes to be the first community land trust in an urban area, and hopes a patch of land beside a railway will be turned into a shared-equity housing estate.

Reed believes getting users involved in providing services will save money eventually.

Mimicking the most famous example of this, he is trying to create what he is proud to call the first “John Lewis” council, bringing himself into direct conflict with Conservative councillor Mike Freer in the more affluent north London suburb of Barnet, where they are pioneering the art of the two-tier service.

“I thought when I read about the easyCouncil, ‘that’s the polar opposite of what we’re doing in Lambeth’,” Reed said. “We won’t be planning to offer two-tier services, where people in effect pay twice for services that are substandard for everyone – and if you’re wealthy enough to pay for it then you buy better services.

“What we’re facing is an overall reduction in funding coming in from central government of about 20%. You have four options – you can either strip back all services, you can ration them by means-testing, you can charge for them, which is what Barnet is doing, or you can deal with it in a different way, which is what we’re doing: try to involve the users in providing it at lower costs.”

Last year Reed took the unusual step of hiring a local resident, Sue Sheehan, who with friends had created a green co-operative growing vegetables in Balham. Reed gave her a job developing the same idea across the borough. Aware that her expertise might have more limited application in some of the tougher areas of Lambeth, he asked her to set up just six such co-ops in her first year in the job. Within that year Sheehan had created 50.

Under Reed’s plan, his “John Lewis” council would see a community manage a £6m asset such as Lilian Baylis as well as growing local vegetables. The same could be true of community centres, housing associations, primary schools, or whatever they want, said Reed. “With services like Sure Start, the people in the local area would be given the right to ballot to turn it into a mutual – and then it’s over to them.”

Research is said to show productivity within workers’ co-ops rising by 5%. Reed also wants to mutualise the management of personalised budgets – another public service reform shown to save money, he says – and then hand over some of the council’s more simple tasks to the voters to sort out for themselves.

“If a group of neighbours identify a grot spot or a piece of derelict land, instead of the council coming around and cleaning it up we help them to help themselves.

“Last weekend we sent a skip and shovels and some Community Payback kids – young offenders – and they made a neighbourhood garden. The marginal costs for the council of this project were £300. If we had done that ourselves it would have cost a lot more.”

There will also be the prospect for voters of seeing some of those savings further down the line, when the ethos of the John Lewis council could become an actual John Lewis council, since staff at that firm receive financial rewards.

“With a co-operative firm you get a dividend. Why not get one with council services too: we would call it the ‘active community dividend’. I’m sure there will be legal issues but we are very much in favour of this,” said Reed.

Some of this will sound familiar. The Tories announced on Monday that a Conservative government will allow public sector workers to form co-operatives. But the difference between the two models, as Labour sees it, is that Labour wants users involved alongside workers.

The government may have arrived at a similar conclusion as Reed and be planning to put similar ideas in its general election manifesto.

If his consultation goes according to plan, Reed may find himself able to implement some of his plans, assuming he is re-elected on 6 May.

The Labour government’s own post-May chances of introducing the ideas across the country are in greater doubt.