The budget cuts experienced so far have been painful but councils have striven to minimise their impact on services. However, respondents to the survey by LGC and Capita’s local government services business are expecting even harsher cuts, as Alex Blyth found.
The end of local government as we know it,” was how Birmingham City Council leader Sir Albert Bore described the impending cuts to adult social care and children’s services.
These areas have suffered severe cuts in recent years. According to the NSPCC, local authorities are cutting children’s social care budgets by as much as 40%. This means that in 2013, outside of education, local authorities will spend £150 less per child than they did in 2010 – putting expenditure per head at £478, the lowest since 2005.
Adult Social Care Cuts
Almost £2bn has been cut from adult social care in real terms, according to surveys by the Association of Directors of Adult Social Services. The Health and Social Care Information Centre found that between 2011 and 2012 the total adult social care workforce employed by local authorities fell by 5%.
Clearly, then, these are tough times for anyone working in children’s services or adult social care. Many of their jobs have either become part-time or disappeared altogether. Yet there are signs this may not be enough. As Sir Albert implied, the worst is yet to come.
LGC, in association with Capita’s local government services business, surveyed 80 senior executives at local authorities about the current state of adult and children’s services and what will happen to them in the coming years. The first finding was that only half – 51% – are confident they will meet their 2013-14 efficiency targets and budget savings. But that turned out to be among the least worrying of our findings. Of far greater concern is the scale of the cuts ahead, cuts so severe that frontline services can no longer be protected.
The survey made it clear local authorities need help dealing with these cuts. The big question remains: where will they look for this help?
The Survey Questions
- How confident are you that you will be able to achieve your 2013-14 efficiency targets and budgeted savings when it comes to adult and children’s services?
- Do you expect you will need to make further efficiencies and savings to adult social care and children’s services after the next spending review?
- And, if so, to what extent?
- How much leaner, in percentage terms, do you think your adult social care and children’s service workforce will be by 2014?
- Within this tough environment, do you see scope for making efficiencies/savings within ‘middle office’ business administration and support services?
- Do you think the move to universal credit from April will have a positive or negative effect on demand for, or provision of, children’s services and adult social care?
- Do you think local authorities will be under the same, less or more efficiency pressure in the context of adult social care and children’s services post-2014?
Click on the pictures at the top and running down the side to find out the results
Local authorities have been working hard to implement the 26% overall budget cuts demanded in the 2010 spending review. Our survey highlighted the range of tactics they are deploying to meet these challenging targets.
The most popular was sharing, changing or outsourcing delivery of frontline services, with 78% of respondents saying it is one of the three most significant steps they have taken. For example, following an Ofsted inspection that criticised its child protection arrangements, Isle of Wight Council recently entered into a strategic partnership with Hampshire CC.
Isle of Wight leader David Pugh (Con) says: “By sharing a director of children’s services with a neighbouring local authority which has considerable expertise in this area, we would have the opportunity to achieve the step-change in performance Isle of Wight Council urgently needs. This represents a model of joint working in children’s services which is already operating to good effect in other parts of the country.”
Three-quarters (75%) of respondents said they have been working more in partnership with voluntary sector, social enterprise, co-ops or mutuals. A good example of this is Newcastle City Council, which is planning to save more than £1.5m over three years by setting up a care co-operative to run its remaining in-house adult social care services.
Ian Taylor, director of public sector procurement consortium NEPO and the Pro5 Group (of which NEPO is a member), says: “Collaboration over procurement and commissioning is becoming better established in social care as both commissioners and procurement teams learn each other’s language and understand what works.”
He offers an example: “In the north-east, six local authorities have collaborated to create a new approach to commissioning and procuring residential placements for children. Traditional ‘spot buying’ wasn’t addressing the need to reduce costs and increase the number of quality placements needed in the region. A team of commissioners, procurers and lawyers arrived at a solution that will allow new entrants to the market in the north-east and give them an opportunity to join an approved list that will increase competition and choice – if they can meet stringent quality requirements.
“This system allows providers to see where there might be gaps in provision into which they could invest. It also gives commissioners much better visibility of costs and capability,” Mr Taylor adds.
The third most popular solution to budget cuts is reducing demand or shifting it to less expensive channels, with 74% of respondents citing this as an important measure.
Recent research indicates that moving 30% of government service delivery contracts to digital channels could save the public purse more than £1.3bn a year, and moving 50% to digital could save £2.2bn a year. Therefore local authority officers are casting about for viable opportunities.
More Cuts to Come
Local authorities have evidently been working hard, but the survey revealed just how pessimistic they are about the future. An overwhelming 96% expect they will need to make further savings in adult social care and children’s services after June’s comprehensive spending review.
Looking at what might be in store for the year ahead, respondents expect to see more major cuts. While 78% think these departments’ budgets will be less than 10% leaner by 2014, 20% expect to see them fall by 11-20% and 2.5% by even more than that.
Taken in isolation these cuts would be severe. Coming on top of what has taken place since 2010, they could be savage. Only 4% of respondents believe these cuts will be manageable; 44% are resigned to perpetual cuts.
One of the most striking findings from our survey is that more than half (51%) of our respondents now admit that cutting frontline services is one of the measures that will be driving efficiencies. Similarly, when it comes to efficiencies within back and middle office services, more than half – 52% – see scope for making further cuts here, but a full 48% think they will need to come from frontline services. This is when the cuts really start to bite.
Many observers believe that not only could this be highly damaging for service users, it will also prove more expensive in the longer term.
NSPCC chief executive Andrew Flanagan says: “We believe such unprecedented cuts in children’s services may be a false economy. Well- resourced support services prevent family situations from deteriorating. They reduce the need for costly child protection plans and care placements at a later stage and actually save money.”
It is also important to recognise these cuts to frontline services are not happening in isolation. They are being compounded by cuts to benefit spending and to other support services, notably the NHS. It is clearly a concern that only 8% of respondents believe the introduction of universal credit will have a positive effect on the provision of children’s services and adult social care.
Furthermore, many of our respondents believe the NHS has an important role to play in helping local authorities meet their budget cut targets. Primarily this will come in the form of formal partnerships and collaboration. In fact, 90% expect to see this happening more and more.
As one respondent put it: “This needs to happen in as seamless a way and as efficiently as possible. We need to remove process and red tape and focus on outcomes and delivery.”
Another highlighted the potential issues, saying: “The elephant in the room is the transfer of funds from the acute sector to the community sector; this is not happening and is limiting the capacity of the community sector to make changes which would produce savings.”
Support Service Possibilities
One possible ray of light that emerged from our survey was the potential for savings to be made in middle office business administration and support services, including the potential for partnering with the private sector. Respondents indicated there remains significant enthusiasm for making further efficiencies in this area; 86% believe it is still possible.
Giles Reid, sales director at Capita’s local government services business, says: “As councils continue to face extreme pressure to cut costs, while delivering more, many have traditionally turned to front office services as a way to make savings. However, our work with local authorities is proving that reliable, effective and productive middle and back office services are key to successful service delivery.
“Having worked with a number of local authorities to provide business support services, we can find that up to 70% of a social worker’s time is spent doing administration.
“Not all of this paperwork needs to be carried out by a social worker, meaning some of it can be delegated. In adult social care alone, by helping councils move away from resource-intensive processes we can typically generate up to 15-20% worth of annual savings.”
Reshaping administration services can help local authorities to consolidate common processes; technology, too, can often be used more effectively and efficiently, he argues. The result is not only financial savings but improved productivity and, just as importantly, the freeing of frontline social workers to do what they should be doing best – serving the needs of vulnerable people in their local communities.
Our survey largely echoes this, with many respondents agreeing there are potential benefits above and beyond the cost savings that could accrue from outsourcing administration and support services to the private sector.
For example, 55% believe it could lead to technological innovation which improves service delivery, 52% predict it could provide them with the ability to shape service delivery to free frontline resources, and the same percentage see it as a route to increased productivity and outputs.
Mr Reid agrees. “Councils are realising a range of additional benefits,” he says. “Consolidation of common processes brings greater service resilience; multi- skilling employees working in recognised administration teams improves morale; and centralising services reduces accommodation space and the associated costs.”
But if there is so much potential in this area, why is it not already happening?
Our survey showed it may not be so much that officers don’t want to outsource, more that they doubt it could ever happen.
Nearly two-thirds (62%) see the greatest obstacle as a lack of political will to make it happen, while 41% predict opposition from unions and staff.
These are significant obstacles which if they are to be moved will require sustained effort from local officers.
Crucially, those officers will need to recognise the full potential for savings in this area, and one of the challenges our survey revealed is a degree of scepticism among respondents, indicating the opposition may not be entirely from politicians and union leaders.
More than half (51%) see the sensitive nature of services involved as a problem, while more than a quarter (28%) are concerned about the lack of suitable private sector candidates.
Mr Reid at Capita, for one, argues such scepticism can be overcome, not least because of the high stakes involved and the challenges that need to be met by local government in the years to come. And rethinking the middle office is something that has potential beyond adult social care and children’s services, he contends.
“There is no reason why business support is just limited just to social care,” he says.
“For many of our customers we are taking a holistic, cross-council approach to reshaping middle office services, and we are introducing technology across multiple or all council services.
“Where business support is widened to rescoping other services, councils can realise additional savings of up to 25% per year.”
Sponsored by Capita’s local government services business. The survey was devised by LGC with input from Capita. LGC independently commissioned and edited the report. For more information, see LGCplus.com/Guidelines