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The big four

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Since 2012 the National Audit Office has been getting to grips with its new responsibilities looking at the value-for-money challenges facing councils.

In January our report on the financial sustainability of local authorities found that councils and their partners were operating in a difficult financial climate as the twin pressures of cuts and rising demand for services made themselves felt. In March we reported on what could be an important part of meeting that challenge: whole place community budgets.

We are not local government’s auditors, and this was not a traditional after-the-event examination. We took an early look at the approach the four whole place areas - Essex, Greater Manchester, West Cheshire and the West London tri-borough - had taken to redesigning services that cross organisational and budgetary boundaries.

Our work was informed by insights we have gained from many years examining major government programmes. To be successful, reforms must be founded on firm evidence and a strong business case.

It was fascinating to spend time with the four areas. We found they were adopting a pragmatic approach to defining, developing and appraising their proposals. Instead of proposing a single budget, they analysed local spending patterns and focused on specific high-cost services that are often reactive, such as reducing reoffending and preventing avoidable hospital admissions.

Many aspects of their approach impressed us. In particular we cited the commitment, on the part of local areas and the central government officials working with them, to thoroughly appraise the cost benefit of proposals.

The emphasis on outcomes and working across organisational boundaries is consistent with a mature approach to managing change and cost reduction. We reported last year that central government needed better communication and engagement with local government as more services are devolved. So we were struck by the extent of collaborative working, including some senior central government staff working in the local teams.

All four areas took a realistic view of data and evidence, and in some proposals identified significant further work to address gaps and data quality. It is crucial that areas continue to develop their evidence base. Without information on the cost-effectiveness of current services there is a risk of over- or indeed underestimating the benefits of change.

It is early days. Achieving the full potential of ‘whole place’ will require sustained commitment from government departments to give moral and practical support to local bodies that want to pursue rigorously evidenced changes to public services.

The government should also examine the lessons from this collaboration and draw them into its own thinking around public service reform. We’re looking forward to reviewing progress on this agenda as it develops towards the spending review and beyond.

Lynda McMullan, assistant auditor general, National Audit Office

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