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Executive summary
Background
1. The Scottish Agricultural College was commissioned by the Scottish Executive to undertake a study on the benefits and costs of co-locating services in rural Scotland. This report discusses the findings of this research.
2. Improving the accessibility and quality of key services in remote and disadvantaged communities is one of the Scottish Executive's targets. 1 In rural Scotland service provision is challenged by demand and supply side problems that affect the viability of many services that are taken for granted in urban areas. In rural areas, more flexible and innovative routes of service delivery may therefore be required.
3. Co-location of services (two or more services typically housed in one facility) is perceived as being a possible route to more efficient delivery in sparsely populated areas, but the benefits and costs of this have rarely been quantified. While costs of service delivery are generally observable, the social benefits are not. Accordingly, this research has attempted to measure benefits of co-located services relative to costs. The extent of benefits and costs of co-location will depend on the 'counterfactual' or baseline. That is, co-location may widen the range of services relative to current provision but it may require individuals to travel greater or lesser distances, depending on the location of current single services and the location of co-located services.
Methods
4. The study combined qualitative and quantitative methods. An initial literature review scoped the potential for co-located services and informed overall study design. Qualitative stakeholder workshops were used to explore attitudes to service delivery and to further the understanding of benefits and costs. A survey was administered using face to face interviews in interviewees own homes in three case study areas (Applecross, Stornoway and Eastriggs). The survey had two parts. The first was an attitudinal section related to service priorities and use. The second was a 'choice experiment', asking individuals to state their preferences for different attributes of service quality and price (attributes were derived from the qualitative research). The quality attributes were co-located (or single services at various distances), opening hours, staffing, range of services provided and price. Price was included in terms of an increase in annual council taxes per household. The inclusion of a price allowed the social benefits (or economic value) of the service attributes to be estimated.
5. Since preferences will ultimately depend on the actual distance to be travelled to the service location, the welfare losses associated with increased distances were also estimated. These welfare losses were then used, along with information on implied prices of service attributes and cost, to explore the benefits and costs of alternative service delivery scenarios.
Findings
Literature review
6. Findings from the literature and initial consultations revealed the following:
- Services commonly identified as being key for rural areas include primary school, shop, GP, bank and post office.
- Common co-located services are computer and IT training, catering facilities ( e.g. tea room or bar), community education activities, computer and internet access, health centre, surgery, nursing centre, ambulance, dentist, sports and fitness facilities and activities.
- Not all services will be suitable for co-location. Suitability may be based on the nature of the information, expert, social and physical functions provided by the service.
- Literature from England suggests that in some cases rural service delivery can be twice as costly as delivering an equivalent service in urban areas but there is limited evidence specifically on the costs of co-location. Data on social benefits is also extremely limited.
- There are many existing examples of co-location initiatives in Scotland suggesting that co-location is already playing an important role in the sustainability of rural services.
Benefits - Attitudes to services
7. Across all three case study areas there were high levels of agreement that a range of services should be provided locally, and premises shared if required. The social role of local services in providing a community focal point was particularly recognised in Applecross and Stornoway.
8. The most frequently used services were reported to be post offices, grocery shops, council services and healthcare. These were considered to be of good or very good quality by the majority of respondents in Applecross and Stornoway.
9. Grocery shops and post offices were the services considered most suitable for co-location in Applecross and Stornoway. Primary schools and nursery schools were considered most suitable for co-location in Eastriggs. Police services were considered least suitable for co-location in each sample.
Benefits - Preferences
10. Respondents in all areas strongly preferred having co-located services locally to having services at a distance. As would be expected preferences for co-location were stronger when respondents were presented with an alternative of longer distances for service access. Longer opening hours were preferred in Applecross, although respondents were indifferent between having all day opening and extending hours to include evenings. Respondents in Eastriggs were indifferent to having longer opening hours as well indifferent to who staffed the services. Respondents in Applecross and Stornoway preferred to have staff who knew them, confirms the recognition of the role of services in providing social and community focus. It was also important to respondents in all areas that there was a full range of information or services available.
11. The loss of welfare for each additional mile travelled to access services was estimated for each case study area. Each additional mile travelled to access services reduced the welfare of households by £3.76, £3.40 and £2.97 per year in Eastriggs, Applecross and Stornoway respectively. These reductions in welfare due to distance are over and above the costs of transport that would also be incurred in accessing services.
Costs
12. With co-location, costs can clearly be reduced by sharing some capital and operating expenditures, but the variety of sharing options and the varying scales of outlets, precludes any rules of thumb about the relative cost savings of co-located services. The limited evidence on costs suggests that the combined host and guest cost sharing as a percentage of total costs may be less than 20% of total costs to a host provider.
13. To date, the good practice examples tend to have overlooked the details that specify the cost sharing arrangements. In many cases there is anecdotal evidence that these arrangements are informal with minimal cost accounting procedures being followed.
Comparison of Benefits and Costs
14. Co-located services are likely to be delivered through existing premises, offering an opportunity for host providers to share some costs and opportunities for cross referral. These advantages imply cost savings for host and guest providers. While these savings may provide a significant financial incentive to providers, in many cases, their magnitude is likely to be less significant than the social benefits deriving from the presence of services.
15. Reduced distances to services under co-location was the primary driver of the net benefits of the different service scenarios. However, as the distance to alternative service provision is reduced, other service attributes such as opening hours and level of service become important and reduced distances may be insufficient to compensate for services that are poorer in other respects.
Policy Recommendations
- Co-located services delivers the greatest benefit where it reduces distances required to access services. Service providers should also recognise the importance of other service attributes.
- Co-location is not a "one size fits all" solution to service provision. Different communities with varying circumstances will value and prioritise different elements of services. This should be recognised when planning service delivery.
- The existence of social benefits should be considered when assessing options for co-location where commercial considerations might otherwise preclude provision.
- The social and community focus provided by local services, particularly in more remote areas, suggests a role for local communities in providing services through volunteerism and provision of services by local community trusts. Co-location of these services may provide community focus, as people using different services are drawn to the same hub.
- Cost considerations are an important factor in judging service efficiency, but it is often unclear how costs are being shared and what savings can be inferred. More transparent cost accounting would facilitate cost comparisons.
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