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Crisis: Michael O'Higgins' view

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You could forgive England’s councils, and those of us who inspect them, for sensing the ground moving under their feet at present.

With continuing post-Gershon and Comprehensive Spending Review efficiency drives combined with the credit crunch, this is not, one might think, the most auspicious time to introduce Comprehensive Area Assessment (CAA).

But in my view there could not be a better time. An economic downturn is exactly the kind of challenge that makes partnership working a necessity. And while those involved with CAA will be on a sharp learning curve, the new performance regime is designed to be flexible and focus on improving outcomes for local people.

The idea that the partnership approach underpinning CAA can solve real problems is not wishful thinking. The Audit Commission recently published A Mine of Opportunities, a report into regenerating mining towns.

Research found the best outcomes were achieved by those who understood that renewal challenges extended beyond single organisations. It is through local partnerships that the huge test of this recession will be met.

CAA, with its focus on the long-term rather than immediate problems, isn’t a ‘one size fits all’ inspection regime. The six partner inspectorates leading CAA will work with councils for the long haul. And, though the process is born in the most challenging financial circumstances, it should be forged all the stronger.

These conditions create a brand new landscape for local government - more responsibility for regeneration, demographic pressure driven by an ageing population and rising demand for state schooling, more scrutiny of how public funds are invested, more council tax defaulters, more benefit claims. Yet less (or a perception of less) income. And from this April under CAA, less focus on organisations and more on places and people.

Last year, the commission examined councils’ responses to the efficiency agenda in Back to Front, published in October, which credited them with saving£4.3bn in the last three years. But the report also warned that councils face an uphill struggle to find a further£4.9bn of savings before 2010-11.

In November, John Healey, minister for local government, confirmed a finance settlement of£78.1bn for 2009/10, a 4.2% funding increase from 2008-09. With inflation for 2009/10 now projected to be 1.5%, this will be worth more in real terms.

Crunch Time?, a survey of English council finance directors, found 78% reporting a decrease in their council’s income for this financial year. However, 60% said they had taken account of the slowing economy when setting budgets. But the report, published last month, did not show that councils are standing still.

Most are rising to the challenges and 45% have taken, or plan to take, significant actions to tackle increased financial pressures - such as recruitment freezes, increases in fees and charges as well as dipping into ‘rainy day’ reserves.

Seven percent of councils have grasped the nettle of mandatory redundancies, with a further 20% also offering voluntary redundancies. And 16% of councils have, or plan to, cut services.

So what else can councils do to get a foothold on the slide into recession? It seems it is time for councils to do some plate-shifting of their own, as this new financial climate requires new models of service delivery.

This is not a time for councils to become less aspirational - they should be more resourceful, innovative and determined, committed to long-term sustainability of areas and services. When the economic downturn recedes, the underlying challenges that local areas face will still be there in bold relief.

Although some areas may consider revisiting local priorities, it is necessary to be committed to the principles in their Sustainable Community Strategies and local area agreements.

In an uncertain future, one thing is sure: less will have to be more. Less duplication would mean more time and resources available to target the customer. Less money needs to be the catalyst for efficiency and innovation.

Fewer silos must mean more shared responsibility in effective partnerships. And as CPA takes its curtain call, and CAA makes its debut, there must be less focus on input, and more on outcomes. Exactly what most people say they want from good community services and their regulators - a little less conversation, a little more action.

Two speakers at next week’s LGC/New Local Government Network annual conference outline how councils can cope with a tough 2009.

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