England & Wales Democracy, devolution and governance

Is risk avoidance the biggest risk of all?

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This article was first published on the Guardian’s Local Government Network.

Mathematicians distinguish between uncertainty – which is unknowable and immeasurable – and risk, which can be calculated and managed. Local government faces a great deal of both: the toughest financial settlement for a generation; a rapidly changing policy environment; increasing long-term pressures on public services. These all require a diversity of public service providers and closer collaboration between citizens and the state in the design and delivery of those services.

The government’s response to these trends is encompassed in the concept of the “big society“, in which communities look first to themselves, rather than to the state, to solve their problems. It is given legislative expression through the provisions of the localism bill. As is now well understood, it proposes new powers for communities to take over public assets, run services, and directly determine planning decisions. For me, two of the most important measures on public service delivery are the community right to challenge and the community right to buy.

While there is potential here to galvanise a critical mass of bottom-up innovation, there are also a number of important reservations. The involvement of community groups, social enterprises and charities in the delivery of services raises issues about accountability, efficient use of public resources, and the transfer and management of risk. This is not simply a question of how to avoid or mitigate risk, but how to decide which risks should be taken: how much risk is acceptable, and what level of service failure can be contemplated?

The research paper Risk and Reward found that many councils were still in a transitional period. Half of local authorities still consider themselves risk averse, and eight out of 10 are reluctant to take risks in expensive service such as children’s services or adult social care.

They are also remain unconvinced about demand and capacity in their own communities – 64% said the capability of the community sector in managing services or assets was either low or very low, while 66% said they would be either unmotivated or very unmotivated to take on such responsibilities.

More than 60% of those we surveyed admitted their commissioning and procurement procedures would be either difficult or very difficulty for the community to access. Most strikingly, 99% of councils had not considered a strategy for managing risk associated with the new community powers.

Ultimately, decisions about risk are political not managerial. The report makes some specific recommendations, but essentially councils need to take a more flexible approach to risk management, involving resilience-building in the community and a more prominent role for elected members.

The services councils deliver have a real impact on people’s lives, so it’s understandable that they don’t want to take too many risks with them. But we cannot opt out of public service challenges or the need for real innovation. In this context, risk avoidance may be the riskiest thing of all.