Councils must prepare for 'lean years'

Following Gordon Brown's announcement that the country will go to the polls on the 6th of May, the economic reality is sinking in for Councils across the country. Irrespective of who wins the keys to number 10, Councils should be preparing for lean years ahead.

Although many local authorities have made progress over recent years in delivering efficiency savings, few have been prepared to take the "tough decisions", that translate these into real and tangible cash saving. For many the argument of efficiency being about doing ‘more for less’, has enabled them to avoid the unpopular decisions which deliver real cuts in the costs of delivering services, such as pay freezes for staff, to avoid job cuts in frontline services like schools, police and fire services; or redundancies and redeployment of staff made surplus to requirements as a result of efficiency improvements.

The Audit Commission’s report last month, entitled ‘Surviving the Crunch,’ highlights their opinion that councils have so far been cushioned from the worst impacts of the recession, as the Government kept to a three-year funding settlement ending in 2011. The Commission warned that, with two-thirds of their income coming from central grants, councils must be prepared for an abrupt reduction in resources when this period ends.

Audit Commission Chairman Michael O'Higgins said: "Cuts in public spending are coming. Councils that innovate and begin planning now for a tougher environment will stand the best chance of helping their local residents.

The clock is ticking, and everyone needs to face this new reality. Some Councils are using the last year of the 2008-11 planned funding levels to prepare for harder times ahead, but it is worrying that others are reluctant to look beyond next year.

Improving efficiency, providing the same services for less money, is no longer enough. Councils need more ambitious plans to transform and protect services. Local leaders must be prepared to take tough decisions."

Councils have already been hit by cuts in income from planning applications, investment interest and capital receipts and have faced increased demand for their services as a result of the recession, said the report.

The chairman of the Local Government Association, Dame Margaret Eaton, said: "The three-year funding settlement has helped cushion many councils from the worst of the recession, but whoever wins the next election, local authorities and other parts of the public sector know they face the prospect of having to do more with less.”

EiB Managing Partner Scott Brown said “the real challenge for the next five years will be for Councils to deliver significant savings in the cost of delivering services whilst protecting and even enhancing the quality of the services provided to local people. Achieving this will require Councils to seriously challenge their historical approach to service delivery. Every back office and support function will need to be examined to determine the value it actually adds for local people. Protecting key front line services will drive Councils to ensure that a much higher proportion of budgets are being spent at the front line, rather than in these back office and support functions.

Based on the experience of our public sector clients, it is clear that this will only be achieved through a planned, structured and systematic approach to improvement. Driving continuous improvement involves implementing a process of opportunity identification; business case development; waste identification, benefit realisation; and skill transfer. This needs to be underpinned by visionary strategy and robust programme and project management.” Although the next few years will be challenging and potentially uncomfortable for local government, it will also provide a real opportunity to redefine the nature of the relationship between local government and the people that they serve.