Local Government Cuts - A Savings Solution?

Local Government Finance Settlement for 2015 will mean councils across England will receive 8.8 per cent less funding from government to run local services from April 2015.

Additional savings of £2.6 billion will need to be found from council budgets for 2015/16. With existing total savings of £20 billion over the last 5 years these will now need to be repeated and increased.

According to the Local Government Association 60 per cent of councils said based on the expected cut for 2015/16 set out in last year's Local Government Finance Settlement they were considering stopping at least some services next year because efficiency savings are fast running out.

In response to this announcement Local Government Association Chair Cllr David Sparks said:

"Today's settlement confirms the huge financial challenge local services now face.

Councils have spent the past four years finding billions of pounds worth of savings, while working hard to protect the services upon which people rely.

But those same efficiency savings cannot be made again. The savings of more than £2.5 billion councils need to find before April will be the most difficult yet. We cannot pretend that this will not have an impact on local government's ability to improve people's quality of life and support local businesses.

It is individuals who have paid the price of funding reductions, whether it is through seeing their local library close, roads deteriorate or support for young people and families scaled back.”

Whilst agreeing with much of what Cllr Sparks says, is ‘robbing Peter to pay Paul’ the right approach? Or that ‘further devolution and selective funding based on local opinion’ is the only way forward?

We believe that Council organisations who can innovate and identify alternative solutions to the reductions will be those councils who can provide the most for their citizens in the future. In the longer term this approach will allow more time to focus on the provision of services that can be based on local decision making as Cllr Sparks suggests.

But that’s a long term challenge, and waiting for fundamental democratic change to ensure locally acceptable decisions are made and resultant cuts to services are acceptable, are indeed long term. Right now the responsibility for achieving cost reduction sits with the council and not with the average citizen.

During 2014 the Commons Select Committee on Communities and Local Government requested local government to step up to the mark, and get better value from the £45 billion it spends each year procuring goods and services.

Clive Betts MP, Chair of the Committee, said: “Procurement is too important to be viewed as a niche function conducted in back offices. It is central to delivering and managing the services that people rely on every day, from having their bins emptied to receiving social care. Without effective procurement local government will cease to operate.

We need investment now so that staff right across councils gain the skills needed for effective procurement. At times staff, unsure of the needs of local residents and business—especially small local businesses—fall back on wasteful bureaucracy. This has to stop.”

The Committee also recommended that: ‘£1.8 billion a year of additional savings could be made if councils improved their collaboration. The LGA should produce best practice guidance on the most effective means of joining up procurement to deliver savings .

Clive Betts MP again said: “Significant additional savings can be made if collaboration on procurement between authorities becomes the default for certain purchases.

An excellent solution, but hadn’t the committee had already stated:

‘staff right across councils need to gain the skills needed for effective procurement’. ?

Are you thinking that this is creating a dilemma for Councils? The question would surely be ‘Do I use much needed funds currently earmarked to deliver essential services right now, or, do I train and reskill staff across the council to provide those services in the future, and gain a potential return over a much longer time period’?

One innovative solution would be to take a leaf out of the public service ‘technology book’ where the approach to funding has changed. In the past the commitment to funding a major project (where the return was to be measured in years if not decades) now seems ridiculous.

The solution during times of limited budgets is to build solutions incrementally, taking a stepped approach to resolving the problem whilst also gaining the ‘benefits’ as you go along.

We suggest you should identify and start at the single point that will have the most immediate impact. Then use those saving to create a snowball effect to the next savings and reinvest to create more savings. The answer is to use the straightforward concept of buying fixed price procurement expertise, where the price paid for that expertise and most importantly the savings that it creates are self funding and directly reinvested in creating more expertise and securing increasing savings (the snowball).

Dave Cox is the Executive Director of InProc Ltd (www.inproc.co.uk), a consultancy that works with organisations turning challenges into opportunities. He has worked with, and in the public sector for over 15 years. His primary focus has been to work with organisations helping them maximise performance against a backdrop of, often decreasing, budgets.