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Sep 14

Diseconomies of scale

Enterprise, Innovation, Policy

Locality, in partnership with Professor John Seddon of Vanguard Consultancy, launches a ground-breaking research project which challenges the assumption that economies of scale are achieved in the running of public services.

Local organisations can respond to local needs in a way that large, remote and bureaucratic corporates such as G4S, A4e, Capita and Serco cannot. Serco, as one of several contractors, has been awarded the National Citizen Service contracts.

A new paper, ‘Public Services, Civil Society & Diseconomies of Scale’, outlines this research project arguing that human scale operations deliver high quality services as well as value for money.

Locality’s members, some of the most active and ambitious community organisations, have described inefficiencies in large-scale services across the UK. This ranges from youth to legal aid services, mental health interventions through to employability schemes such as the Work Programme. It is having disastrous consequences for poorer communities and smaller providers.

“We believe that there is a real opportunity to re-organise services around a common focus on the citizen. In particular areas with complex social needs require local solutions for hard-hitting local issues. Local organisations respond effectively to individuals bringing efficiency, innovation and a celebration of diversity.”
Steve Wyler, CEO Locality

Some of the best performing services delivered on a local scale include the Goodwin Development Trust in Hull which works with local volunteers to deal with post-natal difficulties prevalent in areas of deprivation, and Newhaven Community Development Association (NCDA) which takes a partnerships and community-based approach to preventative mental health.

As difficult economic conditions continue, local services are meeting an even greater demand. Locality argues that re-designing public services to operate at a human scale could deliver efficiencies and improved outcomes. Research to investigate this assertion commences today and is due to be completed by early spring 2013.