George Osborne has announced that a Summer Budget will be published on 8 July 2015. The LGA is reportedly united in calling for 'no more cuts' to Local Government, but the chances of the sector avoiding the next phase of austerity measures are slim to none. Part of the reason might be how well the sector has managed budget cuts so far, generating efficiencies and transforming service delivery whilst maintaining - or in some cases even improving - satisfaction and trust. However, the rising financial reserve levels and signs of local authority cuts impacting on the NHS indicate that the sector isn't confident that it can continue to deliver in the face of further cuts.
Although the commitment to devolution has been confirmed in the Queen's speech, there are still significant questions about how further change will be rolled out. If the Chancellor wants another significant contribution to his deficit promises without risking rubbish piling up on the pavements, annual budget cuts and a hands off approach from central government won't cut it.
The government must firstly use its budget setting powers to create an environment which allows local authorities to innovate and invest to create long term sustainable savings. Rolling out annual budget reductions has created uncertainty in local government, causing financial reserves to be squirrelled away rather than invested in service transformation.
Future of health and social care report
Instead, budget reductions need to be rolled out in a way that fosters innovation. For example, multi-year settlements requiring "savings by 20XX", rather than "savings in 20XX" would provide the time and short term financial certainty to allow the service redesign, prototyping and learning that is required to confidently make big changes to service delivery. Wolverhampton City Council is delivering a 50% reduction in customer service operating costs and providing a better service to residents and businesses by centralising customer contact and putting services online, but implementation of this type of service transformation initiative will take up to three years to realise the full benefits.
Secondly, central government must take a more collaborative approach to its relationship with local authorities. In the name of reducing red tape, DCLG has stepped back from the sector. Since 2011 it has monitored changes in spending power rather than the impact of budget reductions on local public services. This has meant that the DCLG has only intervened after things have gone seriously wrong, as it did with Rotherham Metropolitan Borough Council.
In response to this and to the threat of more cuts, the LGA has offered an alternative approach. This is based around knowledge sharing and peer review, a rich source of support for those that take it up. While this is a worthy and practical idea, the government needs to ensure this amounts to more than an attractive PR opportunity for high performing councils to share their success stories; the challenge is getting the councils that are really struggling actively involved through support rather than punishment.
This can be done by working with the sector to identify the frontline service changes - such as increasing social worker caseloads - that indicate councils are struggling to protect the public from budget reductions. Service transformation funds that the top performing councils successfully bid for time and time again should be diverted to councils with the greatest risk of service failure. Whether it is offered in the form of direct investment funds or LGA commissioned support, the important thing is that it is positive help rather than inspection after a collapse.
Time to innovate and a new, constructive relationship between central and local government? We'll see.
Emily George is a local government expert at PA Consulting Group
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