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Recession 'will lead to radically different services'

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Long-term financial pressures from the current economic downturn could prompt a wave of drastic service redesigns, a new report has predicted.

A joint work by Deloitte and the Public Sector People Managers’ Association (PPMA), launched at the latter’s annual conference in Manchester last week, said councils would not be able to meet the harsh funding cuts expected from 2011 without radically reshaping their operations.

One senior local government personnel source told LGC that while some councils were unprepared for upcoming pressures, he knew of one authority that was “modelling” looming budget cuts of 30-40%.

The Deloitte report said “double-digit” budget cuts could only be delivered by fundamentally changing the size of the workforce and the way it was organised.

“Given the scale of the challenge, it is clear that a key pillar of success will be critically reviewing and redesigning traditional service delivery models and organisation structures,” it said.

“In the current climate it is unlikely that leaders will merely be able to ‘tinker’ with small changes to staffing levels. Instead it is more likely that radical changes are going to be needed — and the more likely it is that changes in shape will be needed too.”

According to Deloitte, annual revenue savings of £30m-£50m were possible through effective service redesigns, with around half of those savings down to staff reductions.

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