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Managing cuts at the LDA

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The scenario of budget cuts and managing services with fewer resources is one the London Development Agency has managed over the past three years.

Through a combination of planned budget reductions and surprise budget ‘raids’, our funding fell by almost 60% - from £640m in 2007-08 to £462m in 2009-10, and to £274m last year. We went from running over 600 projects to under 300 projects by 2010-11.

Yet in that three years¸ we have transformed what we do and how we work, and emerged with a better reputation with our stakeholders and partners – even getting to be shortlisted under the “most improved” category at this year’s LGC Awards.

We believe this experience holds four major lessons for other public sector bodies:

Decide what you want to achieve. The LDA was clear about what it wanted to achieve and clear about its core mission. We made value for money a priority and dropped activities that were not making a cost-effective contribution toward that vision. We decided to aim for economies of scale and chose to fund fewer, larger-scale projects. We reviewed every single project and if it wasn’t helping achieve our core purpose, we either stopped it altogether or decided to see it through and not renew its contract. Projects not providing value for money were stopped.

Don’t try to achieve major efficiencies by salami-slicing budgets, however tempting. Trying to trim everything by the same amount won’t work and no-one will thank you. We have focused on driving up performance, putting measures in place to know that we are getting what we wanted. We have adopted a commissioning model and our contracts now include performance-related pay – so if contractors are not getting the planned results, their income is hit, and we can invest that money in projects that are working. We have also linked senior managers pay to improvements in corporate performance, both individually and collectively – focussing their minds on shared achievements.

Build relationships with major stakeholders and create a bank of advocates. This is a prerequisite. Our cuts have not been easy to make or implement, and we have benefited hugely from having champions who have spoken out in favour of our decisions.

People matter: While we have lost a lot of staff, those who have remained have been absolutely central to our ability to perform and build our reputation. We have made sure they know what changes are coming up, why they are happening, how they will affect them and talk to them about the way forward. They have shared in the vision, shared in the accountability for progress, and taken pride in helping to change the LDA into an organisation that is fit for purpose, knows it is getting value for money and making an impact.

The LDA has managed to deal with sharply falling budgets by making thorough-going changes, making it a very different organisation today – and where our functions are now being absorbed into the Greater London Authority. Other public sector organisations will have to look at similarly dramatic changes if they are to emerge with the same kind of credit.

Lurene Joseph, deputy chief executive, London Development Agency

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