Paul Bradbury says research shows council chiefs and leaders are thinking the unthinkable as they grapple with the budget downturn

We’ve heard about some of the intended cuts – and the timeframe. So, can the Government balance the public finances in one parliament without decimating services? Insights from senior managers and supply side experts recognise the difficulties ahead, but also highlight the innovative thinking now addressing this situation.

CIPFA has voiced early concerns over the 22 June Budget, suggesting that balancing the books in one five-year term is ‘very ambitious’.

Its warning draws in part on responses to its sector-wide survey of finance directors in April*.

Among the difficult choices for rebalancing public finances identified by respondents were – reorganising national public bodies (chosen by 64% of interviewees), closer collaboration between public bodies (61%), reorganising local bodies (54%), and reducing the range of state funded services (43%).

The survey suggested a tough time for frontline management and workforces. Asked to name the most likely practical cuts or efficiency measures, redesign of services (63% of respondents) was narrowly ahead of cuts in back-office/support staff (62%).

However, no service area or function seems safe – almost half of respondents (49%) expected reductions in management/senior staff and almost as many foresaw cuts in lower-priority services (47%).

Steve Freer, CIPFA’s chief executive, says: ‘Many of the ideas favoured by finance directors are structural. They require significant re-engineering of organisations, systems and processes. A key challenge will be to make these kinds of changes happen to tight timescales, despite reduced capacity.’

CIPFA’s research also highlighted differences over strategic moves such as Total Place and shared services. Asked about the outcomes for integration of public services, 62% of respondents said they promoted better co-ordination and collaboration, and 51% felt it would cut waste and duplication in local services. However, only 25% said this would improve working between central government and local bodies.

Mr Freer says: ‘Finance directors get the imperative of protecting frontline services, and can see the high potential role of significant collaboration initiatives. But, there is understandable concern about the complexity which so often comes with working across organisational boundaries. The challenge, frankly, is to use the urgency of the current situation to cut through some of the usual problems and resistance.’

Survey sponsor Civica’s ongoing engagement with senior executives revealed a similar picture. It said that senior management was contemplating the impacts of large-scale operational changes and innovations, having anticipated and begun serious planning for budget cuts – as high as 25% – from last year.

The company observed chief executives’ commitment to connecting with the policies determined by their elected members, through their delivery and commissioning. Many chief executives were concerned both by the prospect of providing statutory services with greatly-reduced money and managing their workforce to accept new priorities and ways of working. Chief executives were also worried that the Government’s drive for efficiencies could lead to reactive decisions without aligning with local priorities.

The company saw strategic responses that were similar in some ways to those identified by CIPFA’s survey. These included:
understanding demand for services in the downturn and better aligning resources around core services

extending outsourcing as part of a pragmatic service delivery mix, and using managed IT and related business services to provide service assurance and lower cost of ownership

re-engineering entire frontline to back-office processes at the corporate or departmental level and driving towards online self service

mobilising the workforce – co-ordinated corporate-wide adoption of mobile and flexible working.

However, there was also further thinking, with new ideas surrounding administrative structures and pooling resources or practitioners. There were examples of horizontally-focused, cross-organisational delivery models – instead of vertically-focused examples – where departments drew on automated administrative systems. These approaches are now enabling practitioners to better focus on providing added value and boosting productivity.

The lines between insourcing and outsourcing would seem to be blurring and there are ‘turnkey’ projects or secondment of experts from one authority to another. This pragmatic ‘sharing’ of council resources is supporting service and process restructure from within, while the swapping of senior-level staff between different councils’ departments is also inspiring change.

A further development in the shared services debate is the joining-up of interventions for the personalisation of departmental services, such as adult social care.

Could driving system efficiencies through these ‘intelligent’ approaches have the potential to remove layers of expenditure on ‘paid for’ services, such as domiciliary care? Most of all, could they harness public organisations’ buying power to transform cost of local services?

The line between in-house or outsourcing services to balance efficiency and services has gone. Chief executives are looking more closely at the interplay of policy, practitioners and business support. The same arguments could be applied to shared services, where organisations recognise that large-scale programmes might not be appropriate, but they know local government and different partners will be forced to collaborate more closely to maintain local service resilience, let alone deliver savings.

Senior management will clearly have to fight to maintain services and balance budgets, but there is evidence of innovation and re-evaluation of public bodies’ resources that could make a difference in squaring the budgetary circle.

Paul Bradbury is Civica’s director of business development * Survey of 435 public sector finance directors conducted in March/April 2010 – 38% of respondents came from local government, 18% from health/NHS, 13% from housing, 11% higher education, 10% central/devolved government, and 7% from police/fire services