IF PUBLIC services are to decide the election, how Tony Blair would like every town to be like Liverpool. Rewind to 1999, and the Mersey seaport was a travesty- as council leader Mike Storey put it - a seaport without ships a world-renowned music centre with no big-time venue. Once the second-most important centre of an empire, Liverpool was a wasteland that businesses and inhabitants were deserting in droves.
Council services were third-poorest in the country, council tax the highest. Education was about to be privatised. The city's fabled Victorian fabric looked more candidate for demolition than heritage, and a night out in Liverpool was like being in a Harry Enfield sketch: within half an hour of arriving at Lime Street station around that time, I had been tapped by a beggar, asked what my problem was by a passer-by and harassed in a pub by a drunk of world-class obnoxiousness. Why would anyone go back?
Six years on, no one would claim the makeover is complete - but neither would they deny that the city is undergoing a real renaissance. A pounds 700 million retail development - the largest in Europe - is helping to regenerate the centre, the Mersey waterfront has become a World Heritage site, the exodus from the city has been reversed and Japanese tourists asking directions for the Cavern Club are outnumbered by visitors inquiring about the secrets of the 2008 European City of Culture's success.
At least part of the answer lies in what can only be described as a transformation of council services. 'The council doesn't create jobs', Storey says. 'But we can set an encouraging climate and we can't preach to business unless we deliver services efficiently and well.'
Since 1999, when an all-new executive team arrived, Liverpool has proved that the politicians' Holy Grail is possible: you can cut costs (and council tax, now not even in the country's 100 highest) and improve services. From 'failing' it has hauled itself up to 'good' in the Audit Commission's rankings, becoming the fastest-improving council in the country while removing pounds 120m from its cost base.
Managers insist that cost and service trajectories are related. Falling costs are not the starting point, but the natural result of focusing on the customer. 'Much of local government is a monument to problems of the past,' says chief executive Sir David Henshaw. Liverpool's approach has been to demolish the relics and start again from scratch. Henshaw calls it an 'intelligence-led model of local government', re-engineering services to improve delivery to the customer, often using partnerships, while stripping out accumulated administration and support costs.
Nine human resources systems and 200 people have been streamlined to one system and 78 employees 30 ways of claiming car expenses have become one. Swollen managerial overheads were dramatically reduced as departments were slimmed from 11 to five. 'We're continuing to collapse things down,' says David McElhinney, executive director responsible for customer service. 'Consolidate, analyse, rationalise. The more you do that, the easier and cheaper it is and the less you have to manage.'
Liverpool could not have consolidated the much-maligned back office so radically without also re-engineering the point of contact where the citizen meets the council. Instead of the myriad agencies and departmental channels of the past there are now basically two: a call centre, which accounts for 70 per cent of contacts, and a network of one-stop shops giving face-to-face access to all the city's 770 services. People can also communicate with the council electronically through e-enabled street kiosks, or 'pavement pods'.
Perhaps surprisinglythe jewel in the Merseyside crown is the call centre, Liverpool Direct. A 10-year, pounds 304m joint venture with BT (now replicated in Suffolk and Rotherham), Liverpool Direct boasts of being the highest-paying call centre in the land, as well as the largest run by local government and possibly the one with the lowest labour turnover, at 2 per cent a year. Its present 300 seats will rise to 450 as it takes on additional council, and perhaps even private-sector, ser vices. And don't call it outsourcing. It's the reverse, says McElhinney, who runs it. BT provides the technology, but all the people are on secondment to the joint venture, which is an integrated part of the council organisation.
Crucially, says McElhinney, this lets staff work on resolving calls first time by having expertise available (hence the high salaries) and slashing the number of repeat, or 'failure', calls - a good, if unusual, measure of success. 'Our job is to drive out system failure,' McElhinney says.
What's more, the Liverpool Direct contract is constructed in such a way that when it ends in 2010, all the assets and accumulated know-how from the venture are retained by the council.
'So we have the assets to do what we want with at the end,' says McElhinney. 'It's a good means of managing risk, and quite a clever way of rebuilding the family silver.'
Liverpool still has a way to go to meet its goal of an 'excellent' service rating in 2006, and more broadly being recognised as a 'premier European city'. It also has to live up to its designation as European Capital of Culture in 2008 - a monumental step up in ambition and confidence. 'This is our big contribution to the vision of Liverpool's future - great services and low council tax,' says McElhinney. His sentiment is echoed by Sarah Parr, head of learning: 'It's about making 2008 real. How is the Capital of Culture going to benefit people in the housing estates outside the centre?'
Even before then, however, Liverpool's experience already delivers a number of important lessons for others. First, improving service and cutting costs are not incompatible - provided the focus is on the customer. This is easy to say, harder to do.
Second, the answer is not technology. Technology is useful, but everyone agrees that leadership and civic vision are much more so. Third, the distinction between front and back office is a false one: both are part of the same flow, and the full engagement of each in finding better ways to do things is essential.
Finally, although local government often rightly grumbles about one-size-fits-all diktats handed down by central departments, essentially their fate is in their own hands. 'What we've shown is that you can start the transformation wherever you are,' Henshaw says.
For Blair, of course, the only thing not to like about Liverpool is that the transformation also included politics. In 1998, the city went Lib Dem.
The Observer, 17 April 2005