The founder of the World Economic Forum, Klaus Schwab, believes that we stand on the brink of a new industrial revolution. He describes how the scale, scope, and complexity of the transformation will be unlike anything humankind has ever experienced before; a fourth industrial revolution.
Across the public sector, we are certainly witnessing a seismic shift in the demand for our services and the way that they are funded and delivered. The financial and demand pressures are well discussed, but the success and wider implications of the sectors’ reaction to these challenges is less so. New funding models, a focus on prevention and demand management, digital opportunities, new collaboration models and commercialism are all set to radically reshape our public services.
Of course, this is not new for CIPFA (the Chartered Institute of Public Finance Accountancy). Back in 1885, when we held our first meeting in Manchester Town Hall, the fact that a group of public sector treasurers were meeting at all made the local news, the Manchester Guardian.
At the time, the country was undergoing turbulence caused by the second industrial revolution. Disruptive technology was causing old industries to fall and new ones to emerge, centuries of guilds were giving way to unskilled jobs, driving people out of the country into the city, causing unemployment, poverty, overcrowding, and disease. Growing social inequality was leading to social unrest.
Local government responded by embarking on large scale infrastructure investments funded by long term loans. Local government investment began to eclipse central government investment. Continuing throughout the 19th and 20th centuries, the building blocks of the modern public sector were created. Investment in large scale capital projects such as waterworks, sewage systems, road building, housing, gasworks, ports, markets, health and education, created jobs and increasing the size of the economy.
Much of this enterprise was conducted on a commercial basis through arm’s length council owned companies. These companies delivered social outcomes whilst delivering a return which was reinvested back into public services.
It was at this time that CIPFA was created to provide a platform for the people tasked with funding these projects to share experiences, put in place good financial management, good governance and financial probity at this time of rapid public service expansion.
Local government has continued to successfully adapt to the challenges and changes presented over the past hundred years or so but always in-line with the fundamental building blocks. Now, however, our political, social, technological and economic norms are once again all up the air at once and nobody knows quite how they will land.
We are seeing innovation, creativity, and entrepreneurialism, but typically at an individual or localised level. As with the enclosure of the commons centuries ago, local authorities are beginning to see their assets, their purpose, and their value in a new light. This understanding of the commercial value of not only bricks and mortar but also intellectual property is changing the sectors’ perception of itself and each other.
There is, of course, partnership working across the sector but new relationships are forming, often in direct competition with each other and increasingly the private sector.
This changing dynamic should not be used as an excuse to turn our backs on a history of collaboration and investment in public good. Instead, it could help finally shake off unnecessary bureaucracy whilst celebrating local difference rather than national uniformity. Can there be space for everyone in this new model?
Whether you agree that we are experiencing a fourth industrial revolution is academic. What is clear is the need now more than ever for public services to join to make sure we work together to continue improving people’s lives.
CIPFA are now leading a call for public services to work together to meet the challenges we face.
To that end, we’ve created a new advisory service, CIPFA C.Co. We’ve gathered together a team of leading public sector practitioners, commercial experts, business analysts, policy experts and economists. We’ve laid the challenge down for them to continue the proud tradition of improving the well-being of society through disruptive innovation and evidence based decisions. Over the coming years, CIPFA C.Co will work with local authorities, the NHS and other local services supporting them with the public service reform, collaboration and commercial agenda.
Public services have a long, proud history which go back centuries and have adapted and flourished through each industrial revolution, each time improving people’s lives. Today is no different.