Audit Commission

In 2002, a best value inspection of Southwark's revenues and benefit service found it to be 'poor'. Claims were taking 120 days to process.

The Council was involved in a more traditional contract with Liberata at the time. Following the best value review, the Council renegotiated the contract to one that allowed more flexibility with mutual goals. The Council now processes claims in 34 days, inside the government's target of 36 days.

Additional information provided by the council

Southwark LBC benefit service vision statement 2004

In 2002, a best value inspection of Southwark's revenues and benefits service found it to be 'Poor -'No Star'. Published BVPIs revealed that the average time taken to process a claim for benefit was a truly dismal 120 days and surveys found that the amount of users satisfied with the service was just 36 per cent.

Inspectors considered public access arrangements to be deficient and were particularly critical of the absence of any links between these services and the Council's wider commitments in relation to tackling poverty.

The story here is one of how Southwark, its private-sector partner Liberata, and a range of committed local stakeholders were able to build a highly successful public-private partnership and first-class service out of the ruins of a failed contract.

In 2004, the rapid progress of the previous 18 months culminated in Southwark's benefit service being given a 4 rating under CPA. The benefit service was in fact the only Council service given a 4 rating and this contributed significantly to the improvement in the authority's overall CPA rating from Fair to Good.

Average benefit claim processing times had been cut to just 34 days, placing the Council among the best performers in the country. User satisfaction had risen to 75 per cent overall and a range of new initiatives introduced in 2004 saw the benefit service become a key player in driving forward the wider ambitions of the council in terms of tackling poverty, increasing housing choice and removing barriers to work.

Getting it wrong

In 2005, the council defined a public/private partnership as ' a risk-sharing relationship resting on an agreed aspiration between public and private partners to achieve a number of public policy aims, usually through the delivery of a publicly funded service. The relationship will typically be long term and flexible but outcome-based. A properly specified contract will underpin that relationship, but should not define or limit its scope.'

The decision to outsource revenues and benefit services in Southwark, as elsewhere, was driven by the financially based CCT rules. Revenues and benefits was also a service that was seen to be 'failing'.

In retrospect, the Council probably regarded outsourcing, falsely, as a panacea. It failed to develop any clear rationale for taking the steps it took. Nor was there any attempt to actively engage with the workforce, service users, stakeholders, or the wider public, as a means of 'legitimising' the new arrangements either before or during the process by which the service was handed over to the successful bidder.

The contract itself was flawed in a number of ways, though this was perhaps inevitable given the relative inexperience of the contractor, the immaturity of the market and the Council's lack at that time of a procurement strategy, expertise and capacity.

The contract was unrealistically tight and attempted to shift too much of the risk onto our service provider via a complex array of financial penalty clauses. Insufficient attention was paid to the need for a strong client to engage in continuous dialogue and negotiation with the provider about how and to what standard services were to be delivered.

That the service provider accepted these conditions possibly reflected both its own lack of experience in the sector and its own over-confidence amid a general climate of over optimism.

Unfortunately, if organisations assume that everything is going to go right, as Southwark did, then there is nothing to fall back on when things go wrong and, as the council discovered to its cost, the initial contractual arrangements laid the ground for the almost complete collapse in service standards, as described in the introduction, as well as a breakdown in trust between the Council and its service provider.

Learning lessons

A best value review of the service was carried out in 2002. Best value has its critics, but it did force Southwark to confront hard questions about the future of the service and lessons were learned.

One lesson was that major decisions should not be driven by short-term expediency. Sustainable long-term solutions were called for and patience and hard work would be required to see these through.

Another was that quick fixes should be rejected. The most obvious quick fix would have been to bring the service back in house. Other London councils that had outsourced these services were responding to similar difficulties by doing just that. The Council resisted the temptation. It had learned that outsourcing was no panacea for a failing service and recognised that bringing these services back in house was no more likely to turn the situation around.

Perhaps the most important lesson to emerge from the best value review and the problems of the previous years was that they revealed these services to the Council in an entirely new light. It forced them, for example, to ask service users and stakeholders what they thought about the service offered -an unprecedented step.

What the Council began to realise was that, even before outsourcing, it had in fact been providing its residents with a disservice. Southwark is among the most deprived boroughs in the UK . One in three households rely on housing benefit to keep a roof over their head. By giving little thought to how its services were delivered, it generated stigma and damaged residents' dignity, or worse.

How did the way that services were delivered affect residents' choices about where they lived or the quality of their accommodation? How did the way services were delivered affect those seeking to get off benefits and into work? What service was the Council providing to ensure that all its service users, by definition the poorest of its residents, were maximising their income? These were questions the Council had not asked previously, but it began to ask now.

Birth of a partnership

Partnership may be the most over-used term in the local government lexicon, but it remains an elusive concept. For Southwark's part, the Council had acknowledged that what it was providing was not a 'department' or a 'contract', but a service. It accepted that to deliver that service to best effect it needed to work with users, not just for them.

The Council, in the shape of its beefed up revenues and benefits client unit, was, of course, a privileged partner. And if it could use its position to broker an arrangement analogous to a jigsaw, allotting the right pieces to the right positions, it would have the essential pre-conditions in place not merely for a first-class service, but for a more joined-up approach to some of the challenges that face its local area.

The Council now conducts user surveys on a quarterly basis asking respondents to identify their personal priorities for improving the service and developing key driver analysis of the results.

In 2004, it ran what is now an annual Stakeholders Conference, inviting all parties, local and national, statutory, commercial and voluntary, with an interest in its revenues and benefits services. This was about charting a way forward for these services that met the needs of the residents and supported the wider ambitions of the community.

Annual Southwark LBC Revenues & Benefits Stakeholder Conference, Glaziers Hall, London SE1 (Oct 2004)

Out of this work emerged a vision of the kind of service the Council aims to deliver. Users' priorities were that benefit was paid more quickly and that the Council simplified the process by which benefits are claimed and administered. Interestingly, residents are also highly intolerant of benefit fraud and are keen that Southwark clamp down on perpetrators.

The expectations of stakeholders with regard to the benefit service largely chimed with the wider objectives of the Council itself in terms of creating modern accessible services, tackling poverty, removing barriers to work and widening housing choice. Another key group was landlords. They demanded, and have largely got, changes to the way we serve they are served, through dedicated support, service level agreements and so on.

Southwark LBC Benefit Service Vision Statement 2004

During 2004 the Council upgraded the revenues and benefits content on their website, introducing council tax e-payments. It was the first Council in London, and only the second in the UK, to offer users the option of housing and council tax benefits online.

Feedback from residents reported that as many as one in four find it difficult to complete Council forms. In response, it not only introduced a new form this year, designed in conjunction with a number of our stakeholders, but modernised the entire claim process to meet users' concerns.

The new making benefit easier concept, launched in 2004, gives all new and existing service users the opportunity to discuss their application with an adviser, who will offer them one of three options likely to be the most suitable method of application for them. For elderly or vulnerable users this is likely to be a home visit from a specialist adviser equipped with state of the art wireless technology.

Tackling poverty is one of Southwark Council's top priorities. Lots of extra financial help is available to those on lower incomes, but much of it goes unclaimed; the Council estimates at least £1 million a year. In some cases, families are missing out on more than £100 a week and pensioners on £20 a week or more.

The Council is determined to ensure that all its elderly residents get all the income they are entitled to, that working families get all the income that's available and that it gets the message across to those who are out of work that work pays. Southwark's benefit service holds a huge amount of data on the make up and means of our lower income households and is therefore uniquely well placed to support the Council's commitments. The Council's Rightfully Yours campaign was launched at the 2004 Stakeholders Conference. To date, it has secured more than a quarter of a million pounds in additional income for some of its least well off households.

The role of the service provider has been critical in delivering the vision and might have suffered from the strain placed on the relationship by the problems of previous years. As a first step, the old contract was torn up and the process began again.

At its core, revenues and benefit administration is a relatively straightforward business process operation. But, as those involved now realise, it's also a vitally important service to the 40,000 or so households that rely on it. It's about getting the right sum to, or from, the right person at the right time.

The devil is often in the detail, but the Council believed that getting the little things right could be transformative. Its view was that the strengths, actual and potential, of the contractor lay in delivering this core administration. Running standardised BPOs of this kind was the service provider's whole raison d'etre. What they could still credibly offer was experience and expertise in this field.

Of course, creating the environment in which a partnership could flourish would require much more that simply re-drafting the terms of the contract. In recent years, considerable effort has gone into developing a greater team ethos between client and contractor management.

The service users chief contribution to the wider vision lay in dramatic improvements to basic or core administration, making it speedier and more efficient, thereby meeting users' and stakeholders' number one priority. They were also keen that the system be secure -identifying and punishing more fraudsters than ever before .

In relation to the efficiency challenge, what barriers did they encounter?

• Risk aversion
• Partnerships
• Staffing issues
• External pressures