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Let's make it count in local government

Andy Theedom, Capita local government market director, discusses how local authorities continue to meet the twin challenges of ongoing growth in demand for services and unprecedented cuts in funding.

2015’s summer budget was promoted as the budget to redefine the relationship between citizen and state. Chancellor George Osborne promised ‘no roller-coaster ride in public spending’ in his address to the House of Commons where he produced the first Conservative budget in nearly 20 years.

The new government had used its first budget to loosen significantly the impending squeeze on public services, financed by welfare cuts, net tax increases and three years of higher borrowing, according to a report by Office for Budget Responsibility. 

But for councils that have already seen their funding cut by 40%, much of which is yet to be achieved, the Chancellor’s plans to cut Britain’s deficit at the same pace as in the last parliament continues to provide significant challenges.

And, as we reported last year, lack of resources, skills or capacity within councils is the biggest barrier to achieving cost saving ambitions, according to the latest survey of local authorities themselves.

The survey, conducted by Capita in partnership with the Municipal Journal, asked councils including county, district, metropolitan and unitary authorities, for their views on a range of issues, including austerity, service delivery and enabling change.

Nearly half (45%) of local authorities questioned in the 2015 research cited lack of resources, skills or capacity as the number one barrier to securing further budget cuts.  In addition, nearly a third of councils (28%) blame political decisions or manifesto commitments that preclude some otherwise viable options.  This suggests that the – relatively – easy ways to make cost savings of previous years are nearly exhausted and that councils are having to face making further cuts without either the political will or the ability to do so.

So how do local authorities continue to meet the twin challenges of ongoing growth in demand for services and unprecedented cuts in funding?

Councils tell us that a combination of factors, including equipping management with new skills (equipping staff with ‘lean’ tools and the provision of help and advice from external sources are all helping with identifying cost saving, but the most popular response in this category was a combination of these approaches (79%), suggesting that few councils are focusing on one approach only and that the vast majority are engaging with as wide a range of options as they can.

Nearly three quarters (72%) of respondents to our survey believe that members and officers are broadly aligned in terms of both the need to achieve savings and the mechanisms for doing that, but there were some differences based on type of authority, ranging from just 40% among respondents from metropolitan to, more than twice (82%) of district authorities. It’s hard to see how unaligned and therefore unsupported initiatives would be delivered and it clearly would make savings difficult to achieve.

And too many councils are still relying on piecemeal change. According to our survey centrally-driven big transformation programmes account for 31% of existing cost saving approaches. Slightly less than this (28%) are engaged in department or directorate-wide initiatives and the biggest proportion – 39% - are trying to drive down costs via a number of more disparate and tactical individual projects. This is a key limitation to councils’ cost saving ambitions. Only radical transformation is likely to deliver the scale of savings needed and make them sustainable.  But less than one in three councils are focused in this. I’d also question the resource costs of having lots of council staff involved in lots of small, incremental projects.

Last year we reported that, with the scope to manage further cuts through efficiency savings shrinking, councils are increasingly looking at alternative delivery models (ADMs) to fundamentally redesign the services they provide. This year more than three quarters of councils (76%) agreed that alternative delivery models were a key part of their service delivery strategy. Again, though there was a noticeable difference between the attitudes of metropolitan authorities where only 60% had embraced ADMs and other types of council – such as unitary authorities where nearly 9 in 10 (89%) were using them.

Contracts and partnerships with other public bodies are becoming more popular and councils are embracing shared management teams; shared service centres, joint service provision; joint commissioning of social care and joint transport and economic regeneration strategies. These arrangements are being encouraged by mechanisms like the Integration Transformation Fund/Better Care Fund and it’s clear that further partnership working and joint arrangements will play a significant role in helping local government move towards achieving financial security.

So, with mind open to alternative delivery models its surprising that existing council staff continue to dominate in the ‘workable ideas’ category, contributing 90% of the ideas that councils have been able to implement. I would expect existing staff to always do well in this category – last year they contributed 70% of workable, cost saving ideas, but it does beg the question of the role of the third/voluntary sector – particularly given the importance of adult social care as part of a council’s obligations. Is there a better way of gathering ideas from, or partnering with, the third and private sectors? Can other councils learn from those that are doing it successfully? Because public attitudes are clear: summer 2012 surveys by both the CBI and Populus found that 75% of those surveyed agreed that a diversity of service providers could lead to new ways of doing things, and did not mind diversity among providers of public services.

And, even if staff continue to provide the most workable cost saving ideas how do councils implement them without the requisite skills and resources?

Aspirations around becoming ’commissioning councils’ are well worn amongst public sector service providers, and commissioning is another aspect of alternative service delivery that our survey looked at. But, although the default option in non-clinical services provided by the NHS, commissioning is viewed with more suspicion in local authorities. Eight out of ten (79%) of the councils we spoke to saw themselves, primarily, as direct providers of services while less than one in 5 (18%) described themselves as primarily service commissioners. So why the resistance?

Outcomes based commissioning, which focuses less on – often wasted – effort and more on achieving positive results for citizens has been a major step forward.  However, our experience of working with councils across the country is that the insight needed to really drive commissioning success is not present.  This is a combination of not always having access to relevant datasets, lacking the specialist skills to produce the highest quality analytics and not yet having the organisational culture that sees analytical outputs as being sufficiently valuable to act as the counterbalance to professional judgement.  I would expect to see councils improving in all of these areas in the future as the need to commission in a more targeted way increases.

I’d also argue that, alongside alternative delivery models, commissioning is something that councils need to embrace as a key to genuine, deep and sustainable  transformational change. It doesn’t mean giving up power or control – in contrast the council – both its officers and its elected members - remains, and should remain the accountable entity. It is the council which sets the agenda, which chooses how to commission services, which services to commission and to whom. It is the council which sets, or agrees, outcome targets and ensures that the public or private sector deliverer of those services meet time, cost and quality objectives.

Small, iterative change, as we know, is not enough. Council resources, both financial and people, need to be used to their best possible effect.  Austerity continues to challenge local political leaders to make difficult decisions and ensure that they are successful in the long term. The councils that do that will be the ones that close the budget gap and continue to deliver quality services to citizens long into the future.

This article was first published in the Municipal Journal

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Andy Theedom

Local government market director, Capita

Andy is a believer in the power of local government to improve the lives of individuals and communities; he works with clients to design and implement the transformational change that can unlock and enhance this. Andy brings experiences from working in and with a wide variety of local and national authorities on topics such as demand management, digital futures and adult social care

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