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Funding crisis... a traditional solution

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Local government is challenged like never before. Some councils are considering extensive outsourcing, joint ventures or other major initiatives as a fix to their efficiency challenge and doubtless there are many providers ready to enter into attractive long-term deals, particularly for the delivery of the support service functions.

However, I can’t help but think this may set local authorities into long-term contracts for the next decade or more where they may be less able to respond to future efficiency challenges and the loss of sovereignty over key decisions may feel like a price too high to pay.

Shared services has been around, featuring on service plans and even built into budgets, for nearly a decade. Why are there very few success stories? Because from what I have seen many councils, struggle to get past their own sovereignty. Suspicion about their neighbours gets in the way as it does in any street in suburbia. Human nature always wins out. Doubtless sharing of some services will work, but it’s not going to save the day this time around.

Councils are now considering which services they need to cut. Libraries, street lighting times, pothole filling and reducing school crossing patrols, the list is endless.
But what life is left for the finance directors’ favourite, the efficiency plan? There is nothing quicker and easier to fill a budget gap than one of these, and all councils have them.

Perhaps it’s a bit grey and boring in the midst of more exciting and public impacting ideas. However, I have seen executive teams breathe a collective sigh of relief when the efficiency plan matches the deficit, full of hope that their managers will deliver their plans. The problem is the challenge is greater than ever and there is a real risk that these plans will not be fully delivered.

Please don’t get me wrong. There have been many millions saved from efficiency plans over the last few years. But for every pound saved I will show you another that was not secured corporately and “put in the pot”, but wriggled off the line and was spent elsewhere within the directorate.

Budgets in some local authorities have evolved over time in each independent service area. Sometimes these are out of kilter with the priorities of the council or the modern day needs of its citizens. A council can spend millions on retaining its green flag parks, a service in which its community could arguably help itself but its roads are such a state that they are wrecking cars and causing accidents. This mismatch on spend versus priority is driven by the legacy of how the budgets were set up in the first place and then evolved over the years. Some councils with cohesive and corporately minded teams are tackling this well, others are not.

The real knowledge of the services and the key to unlocking real savings sits with the front-line manager, supervisors and staff. I go to meetings with directors of regeneration or directors of environment who need to bring a ‘head of’ who needs to bring their ‘manager of’ who needs to bring their ‘charge hand’ to talk about the service as each level doesn’t have sufficient knowledge. Little wonder councils have impressive procurement teams with comprehensive category management, life costing approaches and benchmarked value, but you or I could hail a cab in the street and go from A to B at half the price of a council contract cab, an area where they could easily spend £5m per year.

My point is that many senior managers have large scope and spans of control, but very often this leads them to become the “blockers” to “mining out” the real knowledge that exists within the teams below them. The people who hold the key to the future are at the lower level of management.

I hear councils talk about cutting services, outsourcing or other major initiatives when I know that there are significant efficiencies sitting under their direct control. It’s sometimes not easy to get at these efficiencies as they need to unlock their people to find it and deliver it but it is there for sure. It doesn’t take sophisticated process redesign, new IT systems, and LEAN methodologies to find and deliver these efficiencies. It takes service-orientated and operational people who have a reason, the drive and the time to find and deliver the opportunities.

The best people are the people who are already there in heads of service roles, in supervisor roles, in admin clerk roles. The only problem is that these are the layers which have often been cut in previous “salami slicing” efficiency regimes. With focus and a bit of guidance they will lead the path to where the treasure is, and believe me the treasure is still there.

So my message to chief executives planning outsourcing, joint ventures and sharing services is by all means develop these ideas, but please dust off those efficiency plans and inject belief in your teams. Reserves could be used to pump-prime initiatives to deliver long-term benefits.

To those considering cutting services, I would ask if you are sure that you have delivered reached the last resort and have delivered all of your efficiency opportunities before embarking on this route?

Jim Aspin, chief executive, Edge Public Solutions

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