Councils across the country are now working out exactly how to make the most of last week’s spending review. They have unprecedented freedom, new control over their budgets, billions more for social care, and the ability to freeze council tax next year. For the first time in decades, they are in charge of their own financial destiny. But of course, they also have some very difficult decisions ahead.
There's a choice for councils now. They can panic; they can slash and burn services regardless of the impact that will have. Or they can take the opportunity to completely rethink everything they are doing, creating a modern, flexible and innovative council. What do they do best? What services should they directly be running from the town hall? And conversely – what are they doing that makes very little difference to people’s lives? What could the voluntary sector take over and run more effectively? Where is money being wasted or frittered away?
Over the past week, we’ve seen examples of both mindsets. Some councils have come out and immediately announced job cuts, saying that their frontline services will inevitably suffer. But others are really taking this opportunity to think differently – with striking results.
Many councils are already looking at sharing back office functions in order to save money – services like IT, finance or HR. Now we’ve seen three London councils – Hammersmith and Fulham, Westminster, and Kensington and Chelsea come up with a much more comprehensive proposal – potentially sharing services like adult social care, children’s services and environmental services too.
As the council leaders said, while this looks radical today, they could ‘soon become the norm for local authorities looking for innovative ways to keep costs down while delivering high quality front line services.’ These councils are showing true leadership: and it proves what I’ve always known. Give councils freedom to decide for themselves and they’ll roll up their sleeves and get on with the job.
Of course, sharing services by itself isn’t going to balance the books. But there’s a long list of ways councils can save money without consequences for services:
- They’ve got to get better at procurement – using their clout and buying power to drive down the prices they are charged by suppliers;
- They should be looking again at every contract they have, and look to aggressively renegotiate and get the best possible price;
- They can bring excessive senior pay under control;
- They can become more transparent – so the public can draw their own conclusions about where the money’s going;
- They can make the most of new technologies – putting council services online drives transaction costs down as well as saving people down;
- They can save money by freezing recruitment, managing natural wastage and redeploying people;
- And most importantly of all, they can eliminate all traces of waste.
Voters will not stand for job cuts that impact on the services they rely on if they don’t believe their council has exhausted all these possibilities first. The vast majority of councils get this – and are rising to the challenge.
Councils have a big job on their hands – and I don’t underestimate that. But councils who are prepared to tackle this head on – who really go back to the drawing board, who are genuinely innovative, who bring in the voluntary sector and the community – are going to be in a much better place than those who simply let the spending review wash over them.