14 December 2006 | Paul Snell

Having a smaller budget may encourage local authorities to transform their approach to public services, according to a top government adviser.

Sir David Varney, senior adviser to the chancellor on transformational government, told delegates at the t-Gov procurement conference earlier this month that less money is a positive catalyst for change.

"Unlike many in public service, I actually believe that poverty is good for you," he said. "If you run a business where revenue is going down you have to become cleverer and more efficient. The [projects] we set ourselves up to do, we have to do."

The conference explored how purchasers could bridge the gap between running pilot programmes and creating ones that deliver results. One buyer said this was often a problem in local government without requiring additional resources.

Varney's response was clear: "If you want to do something different, you have to stop doing something else. There is not enough time to make it better."

He discussed an example from mobile network O2, where he was chairman. He explained that because the company had been performing poorly, it couldn't spend time trying to fix problems, but instead had to decide on a strategy and implement it. He said rather than costing more, this actually saved the company money.

Varney also said that an increase in shared services would be vital to the delivery of better public services over the next 10-15 years.

"What worries me is the growing gap between public and private service delivery," he added. He maintained that the key to delivery "always comes back to leadership. You need to have bags and bags of energy and commitment."

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