Why tough choices need tough responses
Author: James Morris, The MJ |
It is beyond doubt that the UK public sector is facing a period of austerity that will last for several years – possibly as long as a decade. Indeed, the Institute of Fiscal Studies estimates cuts in the order of £26bn will need to be made by 2013.
Given this backdrop, Localis and KPMG have this week released a new report, called The Bottom Line: A vision for local government. This encourages councils to completely reassess their spending and investment priorities, and analyse these in the context of net benefit or value to the local area, in order to make cuts in the region of 20% of total expenditure in the next two years.
Councils currently run substantially-more services than are required under statute. All of these must be looked at and prioritised, allowing councils to determine where their resources should be targeted.
Many services are costly and could be run more effectively by businesses, charities, social enterprises or a combination of providers. Examples of these include public amenities, such as swimming pools and libraries.
Running services unnecessarily in-house undermines savings and adds a needless burden on to council tax and local residents. Therefore, councils should always be seeking to look further than having a role as simply a ‘service provider’ and instead, move towards becoming a commissioning and procurement hub. Some progress has been made on this in recent years, but there is a need to go further.
Like spending, investment, particularly high risk, should be aligned with the core priorities of councils. Authorities should consider which investments are likely to encourage new business and make a financial return to the council in light of current economic circumstances, and focus on these. This should help local areas become more economically resilient.
However, councils need to use existing financial powers more extensively to achieve this new investment strategy. Many top-performing councils are already using their prudential borrowing powers to provide business and mortgage support, and others to develop infrastructure.
Trading powers, currently valued at £1bn, similarly have a huge potential to stimulate new business and lever in more receipts.
Councils should also look to initiate new PFI deals with the private sector, involve the third sector further to capitalise on its expertise, and risk pool with other local authorities.
Finally, councils should seek out opportunities, such as through TIFs, to achieve a return on local investment.
Councils are also sitting on substantial assets – the local authority property portfolio alone is estimated to be worth £80 billion. A corporate approach to asset management strategy should also be embedded in order to maximise revenues.
Currently, local performance is characterised by a desire to improve ‘performance’ based on stars or flags rather than on adding real value to the local area. The move to the Comprehensive Area Assessment has resulted in studies based on locally-determined priorities – however, the data itself is inaccessible to local residents, thereby risking undermining local accountability.
If councils are to offer genuine improvements in services, they must utilise performance data effectively, and engage local residents directly. A recent poll from Ipsos-MORI has shown that satisfaction levels are dropping, in addition to a growing belief among residents that they are unable to influence decision-making. Councils should, therefore, provide understandable, real-time information to local people, and actively seek opinions from the public on what the data shows them.
A strategy for incorporating responses into the political decision-making process should be established.
Similar to public accountability, service provision also needs to be seamless and move away from the obsession with structures and organisations. Instead, there should be a focus on emergent organisations and groupings, based on mutual interest over specific priorities or projects.
The aim should be to encourage a focus on meaningful outcomes, such as early intervention schemes for young children, or dealing with problems at the level of the family.
This should also lead to a greater personalisation of services, tailored around the requirements of the end-user.
Councils are perfectly placed to facilitate this process, through the use of contracts and commissioning.
For example, they could attempt to create a pooled fund by encouraging existing public bodies to allocate a proportion of their budget to achieving shared desirable outcomes.
Furthermore, following initiatives such as Total Place, there is the potential for funding to be targeted at specific projects, rather than specific organisations. This opens up the market for service delivery and makes accountability much clearer.
Our report is not a panacea for the problems which lie ahead for councils, but it is unequivocal in the need for councils to tackle these difficulties head on. They must reassess their priorities and innovate, in order to deliver high-quality services to local residents.