As the small print of the Spending Review emerges, The MJ and Enterprise hosted a round table discussion recently with leading chief executives to discuss how they are planning for 2011 and beyond. Phil Cooper reports on the discussion

Although there were some nuanced differences in opinion as to whether the results of the Comprehensive Spending Review were largely predictable or had caught some people on the hop, there was a constant thread running through The MJ/Enterprise round table discussion.

It was summed when an Enterprise senior representative suggested that we had perhaps misjudged what government was trying to do. ‘This was not just an exercise in saving money. It was a change in the way local government operates, ‘ he said.

Indeed, during the course of more than an hour nobody uttered the words ‘cutting the deficit.’ There was a clear consensus that the rules of the game had now changed.

One chief executive commented: ‘Transformation must go deeper and wider if I am to take £50 million out of the budget next year. There needs to be a seismic shift.’ The removal of specific, ring-fenced grants that had previously assisted in deprived areas now meant that a significant downsizing would be required.

Although the fine details of the consequences of the CSR had yet to be plotted what was becoming clear was that local government’s footprint would reduce. ‘We will be doing less for less,’ said one participant.

And he went on to offer a radical prescription. He said: ‘Local government can no longer be seen as a crutch psychologically or practically. We need to adopt a grown-up attitude. We must stop talking about partnerships, mutuals and so on, it’s a brave new world out there and we need to first ask what does a local authority do and with what raison d’etre?’ He added that once this has been answered, one worked out how to deliver it’ One key shift would need to see councils changing from being providers to becoming commissioners of services.

Discussing the situations in their respective authorities, the chief executives taking part admitted variously that the CSR would cause problems because of the degree of front-loading and the effect this would have on next year’s budget process; the sheer numbers of staff that would have to be reduced and the pace at which efficiencies would need to be sought.

There was agreement that salami slicing of services would take place in year 1 with more fundamental changes, involving actual ways of working, feeding through in years 2 and 3.

One chief of a large authority said: ‘CSR is a small proportion of the pain. It’s demographic change that is the issue.’ His authority had to find £69 million, or 40%, cuts in the next year despite the pressure on budgets caused by an ageing population sucking up money. ‘It’s a sponge which unless the government tackles this, will cripple us,’ he said. A specific problem was that 74% of his authority’s costs in this area were fixed for the next two or three years. He added: ‘we have done a lot of what you’d expect a modern organisation to do. We have shared services, we have outsourced.

Our reserves are low. To get social care in our county you must be pretty critical.’

The discussion then turned to what the private sector could offer. A senior Enterprise director said that the company had been successful in outsourcing where there had been the political will and the need to be radical was recognised. In the case of the highways budget at one major client a pre-contract expenditure of £25 million had been reduced to £18 million post contract and at the same time the service had moved from the bottom quartile for performance to the top quartile. ‘You can reduce budgets and maintain and improve services,’ he told those present.

One chief said that his authority was only half way through a major strategic services contract which encompassed all back office services and the council was looking to the contractor to deliver 10% savings on their costs. ‘This is an interesting challenge for the private sector because they will say to us: “But we have a contract …”’

A colleague chief executive took up this point. He felt the private sector had to rethink its model as much as local government. ‘It’s no good just making a model to fit your products. In Europe it is much more of a menu approach from the private sector. You count costs and make your choices rather than get locked into, say, a 15-year contract,’ he commented.

An Enterprise representative responded: ‘We have a model that there isn’t a model. You have to get away from the all-embracing contract. You must be able to say that, strategically, it must alter every year.’ And he went on: ‘If we fail to deliver we don’t get paid.’ We would encourage local authorities to set more demanding targets.

The discussion then moved to the concept of the Big Society and potential pitfalls in this approach. ‘My worry,’ acknowledged one chief executive, ‘is that I’m not sure about the capacity of the Big Society. I can’t think of many third sector organisations that can deliver on a wide scale. I’m worried that things simply won’t happen.’ It was agreed around the table that the Big Society would have to be seen as a fundamental, long-term philosophical change. One that was generational in its implementation.

An issue thrown up by a move to greater localism in a time of cutbacks was the clash between cost savings and supporting local suppliers. ‘There is a need for a local-national debate on this. Do we save money for the council on the one hand or source locally because if we don’t we put people out of work?’ said one chief.

There was general agreement that the distinction between public and private sectors would become ever more blurred and the test would be merely what was the best way in which to deliver a service. This encouraged a range of views on the roles, and perceptions, of elected members in the future. Would traditionally held views inhibit them from taking the decisions necessary in the brave new world post-CSR?

One chief said: ‘A lot of local politicians believe they are running companies so they are reluctant to outsource to a “competitor”. But who delivers the service is irrelevant.’ Another added: ‘There is no way to go for members to say that they are keeping the status quo.’ Asked if this attitude cut across the political spectrum one chief said that even his Labour members were beginning to accept the bigger picture although, he added: ‘…they will probably drag their feet for as long as possible.’

There was a discussion about how companies coped with the transparency agenda in relation to market intelligence, competitive bids and so forth. One response was that FOI legislation allowed competitors to ask councils for such information. In any event, the published figure was incomplete without an actual specification as to what that figure was buying.

There was agreement that shared services would now be moving from the back-office to front line and would encompass the widest array of public services. There was now no ‘wiggle room’ between local authorities, the police and the NHS because of cuts affecting all.

Those present felt that councils should be free to recoup real costs and charges and that a power of general competence should enable trading of services without restriction. It was also necessary to look more closely at existing partnerships and scrap many of them. There was, suggested one chief, ‘an addiction to governance’ with too many meetings when it was only necessary to have the right people round the table at a given time.

One participant’s statement seemed to sum up the general tenor of the discussion. He said: ‘there is a lot more national blurring of public services. The demand side is changing radically and we have never had so many parallel policy shifts at the same time. A genuine dialogue is needed about what it means to deliver public services in 2010 and beyond.’