Why Demand Management is important to local government

In a world where resources are constrained or reducing, organisations have the potential to either reduce their supply side costs or change the nature of demand in order to be sustainable and effective.  Across the private sector we see many examples of how this has been achieved, for example on-line shopping, booking holidays etc.  

In the public sector though, this is only starting to take hold. Many of the supply side efficiencies in local government have been taken (procurement, downsizing, outsourcing, salary reduction), but there is a limit which has nearly been reached.  Furthermore, government funding will not come to the rescue whilst more inefficient public services continue to be ring-fenced. With a projected £38billion minus debt interest still to come out over the course of the next parliament, and this could rise if new ring fences are announced – councils are anticipating a further 30% reduction in funding. 

But as local government continues to endure a disproportionate share of the pain of austerity, a new Management Consultancies Association (MCA) Think Tank report, Local Government – Time for Reinvention highlights how effective demand management really can transform local services. The report recommends that by taking a more imaginative look at service users through the deployment of behavioural analysis (and not just the traditional assessments of socio-economic need), councils can segment and tailor services in ways which may see reduced levels of demand.

To achieve this however, Local Government must adopt a capacity surplus perspective rather than a deficit model, where understanding the behavioural dynamics of expensive people based services can be used to allow citizens to support themselves in different ways. This is not a simple task, generating a sense of agency requires as much of a behaviour change from the public service professionals in question as it does from the citizens we hope take more responsibility for their own wellbeing, and allow the supply of support and intervention from local government to be reduced.  The most vulnerable and in need should still be provided with the appropriate support, but to achieve this we must liberate those citizens who are able to lead independent lives rather than smother them.

Government is changing. Granted, not as quickly as many of us would like but it is happening. What my children want from their government is not the same as what my parents did. The challenge for those of us invested in creating a better state, is understanding what those differences are. We therefore completely endorse the MCA Think Tank call for greater use of demand management and behavioural analysis. They are both important parts of local governments’ response to the funding challenge it faces. Yet more importantly, they offer a snapshot of local governments near future; the owners of our society’s most complex social problems and the tools and methods needed to address them.

Originally featured on Gov Today.

Martin Creswell is Chief Executive of iMPOWER and a member of the MCA Think Tank. The new MCA Think Tank report, Local Government – Time for Reinvention says the future of local government needs a radical rethink early in the new Parliament – to define what councils are for, what functions best suit them, and what should be undertaken by others.

The report is based on the views of the UK’s leading consultants – experts in local government – working with councils the length and breadth of the country. To download a copy of the report, click here.