While further reductions to local government budgets should come as no surprise, last week’s announcements and further spending cuts means that local authorities are looking into a financial black hole, of around £15bn in the next five years according to SOLACE.

Without doubt many organisations have already made big strides to achieve savings and to bring new ideas into action, yet the combination of additional financial pressures, welfare reform and increasing demand means we have to continue to change the way organisations operate.

There is no doubt that local authorities face a period of massive change and risk, working with communities and partners to extract the most out of every public pound while re-designing services (or ceasing them) and creating new partnerships in order to shape the future of local government.

Innovation is now a fundamental priority in order to deliver the essential services which safeguard people and places, and never before has IT-based transformation been so clearly important to the success of the Government’s spending programme.

Partnerships, shared services and new ways of working including ‘digital by default’ approaches featured throughout the Chancellor’s announcement. However, the savings targets to be achieved through the adoption of new commercial models for service delivery and sharing data to improve outcomes remain steep. What this means is that the emphasis will increasingly shift towards more radical transformation options and new operating models that enable better demand management and focus on outcomes.

Further pooled funding was also announced to facilitate secure sharing of patient data between the NHS and local authorities – encouraging health and social care services to work more closely together.

Osborne also discussed setting up a centre of excellence to reduce the complexity of sharing data between education services that will encourage the public sector to include improved benchmarking data on schools’ spending in order to help education providers to be as efficient as possible.

Frameworks, investment and guidance take the public sector one step of the way. However, with the ability to improve and innovate left in the hands of authorities, significant sharing of best practice and lessons learned remains imperative, to ensure that all public services can benefit from the combined experience of the sector in order to maintain and improve services while spending less.

71% of delegates at the Civica’s annual conference earlier this year said that more local authorities will be operating with a stronger business mindset by the time cuts are expected to be achieved in 2015. The role that technology can play over this period will be a sustained force. 20% of local authorities are already sharing technology resources with authorities, while 46% are looking to make ‘next stage’ savings in back-office areas with new technology and technology-enhanced outsourcing.

To better understand the implications of these revised budget cuts, and how prepared local authorities are for this transformation, we’re working with independent local government think-tank Localis to speak directly to those at the local level. By doing so, we hope to reveal the capacity and capability challenges at the heart of the problem and to identify practical solutions. Further information will be announced later this year.

Paul Bradbury is group business development director at Civica.