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Necessity proves the mother of invention

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It might seem counterintuitive in the current economic climate, but there is notable optimism about. Mark Smulian reports

When a group of chief executives start talking about optimism and opportunities in the current financial climate, some might think the strains of the past three years have finally got to them.

A period of austerity with no end in sight - indeed, that is likely to get worse for local government - does not engender optimism in most people. Yet when Capita and LGC convened a roundtable on “Re-imagining local government - creating opportunities from an uncertain future”, the mood was largely positive, with some important caveats.

Skillsets may not be right for the tasks now facing councils. Preventative work and demand management - in particular for adult social care - is in its infancy and no one really knows its effectiveness, and vital relationships with partners in health, the police and voluntary sector are variable in quality.

It is now almost certain that spending cuts will continue well into the next parliament whoever is in power, and councils must work on that assumption, the panellists agreed; those who think pre-2009 ‘normal service’ in council finances will soon resume are in for a distressing shock.

But chiefs now at least have some stability in which to plan the next four years and can be confident in the ability already shown by their councils to come through the post-crash period in relatively good shape.

Participants

  • Carl Brooks, consulting local government director, Capita
  • Ben Eggleston, consulting local government director, Capita
  • Tricia Haines, chief executive, Worcestershire CC
  • Sean Harriss, chief executive, Bolton MBC
  • Ruth Keeling, chief reporter, Local Government Chronicle (chair)
  • Joanna Killian, chief executive, Essex CC
  • Mary Ney, chief executive, Greenwich RBC
  • Will Tuckley, chief executive, Bexley LBC
  • John Wood, chief executive, Hertfordshire CC

Ben Eggleston, consulting local government director of Capita, set the scene saying that despite the challenges of austerity “we think there are big opportunities the sector can take advantage of, though it must be done in partnership.

“Everyone has to think bigger and bolder and find the bandwidth to re-imagine what the future of local government will look like while it continues to deliver statutory services but also do a whole lot more too.”

Responses from chief executives showed the diversity of local government.

Some councils prioritised maintaining statutory services, while some thought this focus unhelpful. Some had restructured, while others could see little purpose in this.

Mary Ney, chief executive of Greenwich RBC, said a straight reductionist approach “does not tick any boxes for us”. She explained: “I don’t buy all this Armageddon stuff, we’ve still got billions of resources.

“In Greenwich we have two key strategies - growth and anti-poverty - which are all about jobs and skills and the key driver is not statutory services. Our opportunities are in regeneration and tourism, so we have to invest in culture, for example, which is not statutory.”

Bexley LBC chief executive Will Tuckley said his council had compared statutory commitments to its projected budget and found it had about £40m of ‘headroom’ now to meet politicians’ priorities, though this would evaporate by 2017-18.

Worcestershire CC had based its forward planning on “really extensive public and business engagement on what needs to be protected, and the very clear messages were about vulnerable adults and children and mending the roads”, chief executive Tricia Haines said.

“We’ve invested heavily in early help in people services so there is a focus on demand management by changing how services are provided.”

Worcestershire could do little for other services but would help communities pick them up through “a huge investment in localism and the role of the local member”.

Both Ms Ney and Sean Harriss, chief executive of Bolton MBC, declared themselves largely uninterested in council structures and saw little need to pursue the restructuring exercises that had preoccupied many authorities in recent years.

But Joanna Killian, chief executive of Essex CC, said her county’s sheer size had made this inevitable if it was to invest in preventative work. Essex was about to impose £250m of cuts, which “will be really hard but we wanted to agree that now because by pulling that money out we will be more able to co-invest with some of our partners”, she said.

Getting fit

“I do have to change the operating model of the council because it is just not fit for purpose.

“My members were really challenging about ‘why lead an organisation that was the wrong shape and size’. Ten years ago resources flowed in, and this is partly resizing to reflect different ways of doing business now that model is unaffordable.”

Carl Brooks, consulting local government director of Capita, said disinvestment in one area to invest somewhere else “has to be very cleverly and appropriately done”.

Better use of capital assets was “a good example of how it works but that will not solve all of it, and waste is probably broadly gone”.

Whichever model they followed, those present agreed that the future lay in developing partnership working and that their focus must be on growth and jobs - both as desirable ends in themselves and because people in employment were less likely to make demands on costly council services.

Ms Ney said: “Now we’re funded in a different way we’ve got to invest in growth to generate business rates to reinvest in a virtuous circle, and no one else is going to grow my business rate.”

The shift from government grants to raising money by council tax, business rates and the New Homes Bonus might have unintended consequences for the government, Ms Haines suggested: “The proportion of our money that comes from direct government grant is now down to a third and getting to the point where our politicians say ‘a few more per cent and we can stick our fingers up at them’.

“It means what local people and businesses think becomes hugely more influential than what Eric Pickles says, and that really begins to shift what the local politicians think.”

But the 80/20 split in business rate resources between districts and counties left the latter excluded from the growth-driven approach.

John Wood, chief executive of Hertfordshire CC, said: “Business rate does not sway my politicians at all.

“They are interested in jobs, but the so-called incentive in the system doesn’t wash for us.”

Ms Killian said the split was wrong as some districts were “not interested in growth, but we have resources to do it, and there is something drastically wrong when the New Homes Bonus is just stacking up in the accounts of some districts”.

Mr Harriss said that while the growth-led agenda might work in the south, in his area, “we have to devise ways to get our own investment and take more risks than we ever have done, particularly where the market, certainly in the north, is very flat.

“We have to play more of a market-making role around development and regeneration and put our own resources in.”

The skills needed to engage with the development market have been “knocking around local authorities, but not necessarily been at the forefront,” he said.

“I’m interested in the skills both of those we employ and those we get other people to do.”

Mr Harriss saw this leading to a wider change in local government skills as the traditional route to the top through specific professions became less important.

“The old model was people got to the top through a professional route, and we’re probably operating with a majority of people who have come into the sector through that route,” he said. “We will be de-professionalising at the top, by having broader leaders and managers responsible for broader spans of services, and changing the skills mix.

“That old local authority model of services that come through professions I’m not sure was fit for purpose five years ago and certainly won’t be in five years’ time.”

Ms Haines said Worcestershire had found a serious lack of skills in economic development and commissioning.

“Before 2009 the council did not see economy as its business, it worked well and we just got out of its way,” she said. “A financial crisis and new leader changed that, but we had no economic development skills.”

The skills shortage in commissioning was about an inability to grow markets, for example in children’s services. There were ample procurement skills but in commercial areas “we have a real chronic skills shortage”, she added.

Mr Eggleston advised councils to “be really clear which skillsets you need to do customer insight and demand management”.

Another essential skill will be working with partners. The chief executives had varying experiences of working with clinical commissioning groups, police and crime commissioners and academy schools - some fruitful, others not - but all agreed such relationships were vital to spending public money productively.

This was particularly true of adult social care - a service used by relatively few people but which consumes an ever-growing share of budgets.

Mr Harriss said this challenge could be met “only by integration with health”, while Ms Ney had “been amazed at how an integrated health and social care delivery approach can save money”.

She said: “Sixty per cent of people discharged from hospitals through our re-ablement service do not have any care package, and that’s saved £1m.”

Mr Wood said he had been through “a honeymoon period” in health integration when clinical commissioning groups were being set up, and developed “a really good relationship with enthusiastic GPs, but the system has been populated since April by the same sharp-elbowed people who were in our primary care trust”.

Gap-filling

Bexley had looked at where gaps in its social care prevention could be filled to provide better value, Mr Tuckley said.

“We did lots of re-ablement in physical health but not mental health, so we’ve invested there. Another is investment in working with GPs. People would rather listen to GPs than social workers when thinking of going into residential care, so the more we equip GPs to give sensible advice the better.”

Ms Killian noted that Essex’s biggest success had been a sharp fall in the number of looked-after children, which had drawn support from a social impact bond, and said: “There are financiers out there and the market is really moving and for some of us will be a really important source of funding.”

The rigour demanded to satisfy investors and “satisfy yourself that you’re not going to be paying out for stuff that would have happened anyway” was useful, Ms Haines said, and she argued that the bonds opened the possibility that pockets of best practice could gain critical mass where there was otherwise no resource available to do this.

New partners were emerging from the voluntary sector, and more were likely as cash-strapped councils handed services such as libraries to local groups.

Mr Tuckley said “one of the real triumphs” of recent years had been “quite a mixed economy of service provision, which I’d thought might go in a singular direction about scale but there’s been a greater pluralism in service delivery from a whole range of social enterprises that have grown and prospered in this adversity and uncertainty”.

Others had noted the same but Ms Killian warned that managing a plethora of such bodies could see “overall management costs going higher than what we’ve got”.

The discussion showed a variety of paths forward, but were there really grounds for optimism, or merely pleasure at the prospect of survival?

Mr Wood explained his optimism: “I now have a police and crime commissioner who is coterminous with the county, who is interested in the things we are interested in, a new health and wellbeing board that brings together people who spend a lot on health and social care, and a local enterprise partnership that is looking at the same kind of issues, so it’s quite an optimistic outlook knowing what the pieces of the jigsaw are and knowing the scale of the problem.”

Mr Tuckley agreed: “I am optimistic even though a lot more money will be taken out of the system. I think local government will be very resilient, very adaptable and very flexible.”

Ms Ney urged the sector: “Do not get into victim mode; there are huge opportunities still and we are good at it, we do understand our communities and how to work with other people and the health agenda is a fantastic opportunity.”

Ms Killian paid tribute to councils having “some of the best staff in the public sector”. She said: “They’ve done incredible things, been so resilient even though they’ve not had a pay rise and are not incredibly well paid, so be optimistic as our staff do a great job.”

The financial climate to come will not exactly see chief executives turning cartwheels, but their optimism may filter through their organisations.

This roundtable discussion was sponsored by Capita. The topic was agreed by LGC and Capita. The report was commissioned and edited by LGC. For more information, see LGCplus.com/Guidelines

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Necessity proves the mother of invention

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