John Tizard 18 February 2013

Sharing capacity not services

Over the 30 or so years that I have been involved with local authorities I have never known such uncertainty and worry about the future.

The future looks no brighter. The last few years have been traumatic as the Government has cut its grant to authorities while at the same time it has not decreased their statutory duties. More cuts are expected from 2014. Other policies such as the imminent changes to council tax and housing benefits will hit local authorities administratively and financially. Demographic growth is adding to the pressures. Demand for services is increasing as a consequence of austerity. The public still has high expectations of their local authority services.

Local authority leaders and senior executives realise that there will be no short term and probably no long term return to days of increasing budgets and expanding services. They have to come to terms with a very different set of scenarios. The options available to them are not easy for many to accept and even more difficult to implement. Many of the traditional means of trying to control expenditure and cut costs are no longer available because local authorities are now much more efficient than they were a few decades ago. And anyway most of these approaches will not produce savings anywhere near the magnitude required.

Beach huts picture Should local authorities try and avoid traditional shared services arrangements?

Inevitably some services will have to be withdrawn, others radically changed and charges imposed for some services. Citizens and others will be expected to take on more responsibility for some of their own services and co-produce others. Local authorities will seek to manage demand to reduce the pressure on their limited resources. They will also often seek collaborative arrangements with other local public sector partners, the voluntary and community sector and local businesses.

Much effort has been made to explore - and in some cases to implement - shared service arrangements between local authorities. Others are still exploring traditional outsourcing models. But increasingly, local government seems to be recognising that such options are not going to offer what they are seeking.

They do not fit their time scales, offer insufficient savings, and often do not fit the political objectives and culture of the authority. So what can be done? Doing nothing is not an option. Simply withering on the local government vine is not very attractive for any but the least imaginative and committed leaders, politicians and senior executives and would do tremendous damage to communities and the people who live in them.

Of course, there is no one single simple answer to the question ‘so what can be done?’ If there was, every local authority surely would have adopted it and now be sitting and smiling towards the sunset.

Every local authority is different and has to decide what will be the best – or least worse – approach for it to adopt. It also needs to have a clear strategy and understand its own strengths and weaknesses. It has to know what resources it has available and its shortfalls in provision and expertise.

Above all a council needs to be clear about its ‘red lines’ beyond which it would not be prepared to go – e.g. compulsory redundancies; moving work to a remote site outside the authority area; working with the business sector; employment standards; and no doubt many others.

It also has to understand how it might be willing - or not - to trade between its objectives in order to minimise damage to services. These are political questions that should only be addressed by the politicians with officers providing evidence based analysis to support the decision-making.

At a time of severe financial restraint and cuts, local authorities need to be as effective and efficient as possible. This should include ensuring that their people and their assets are being used to maximise productivity, value (based on social, economic, environmental and political values rather than just simply financial value), and outcomes for local communities and citizens. Ideally, this means using the ideas and solutions that other authorities have developed rather than either spending resource on re-invention and/or consultancy support.

Local authorities may consider how they can share services, equipment, people and expertise without entering into lengthy and expensive exploration of traditional shared services arrangements. All too often, attempts to establish such arrangements have tended to be complicated and expensive with these costs proving disproportionate to the potential benefits.

Is there another way? I have been impressed by the interest in the CapacityGRID model that Liberata introduced in 2011. Over 75 local authorities that use it have focused on transactional services, which are based on data collection, processing and analysis. In theory, this work can be completed by anybody with the right skills, regardless of where they are located.

By moving work around virtually, it is possible to combine some of the advantages of shared services with local control and the avoidance of complex shared service arrangements. This has proved effective according to user local authorities in services such as council tax collection, benefit administration and financial administration. It is yet to be tested in services such as social care administration and assessment, planning, and children’s services administration.

Users say that the system provides them with performance data that has enhanced performance management. They also report savings and above all the ability to manage the peaks and troughs of workloads and increasingly to offer their expertise, knowledge and spare capacity to other local authorities – opening up inter-authority trading. There are no TUPE and related issues to address.

Of course, any number of technical and digital solutions cannot on their own address the financial challenge faced by local authorities. It may offer some immediate gains and allow senior officers time to focus with their politicians on addressing the greater, more strategic, challenges and options. Such approaches may not be right for every local authority and some will find their own solutions.

The reality is that sadly there are no ‘silver bullets’ and some hard decisions are unavoidable if local government is going to offer some hope and some shield to its communities.

John Tizard is an independent strategic adviser, and a commentator on public policy and public services.

This article first appeared in Local Government News magazine. Register here for your free copy.
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