Community budgets should be rolled out nationally and given greater priority if we really want to transform the delivery of public services, says Elizabeth Fells.

Every day, we all benefit from the wide range of public services that are provided in our local communities. From keeping our streets clean and safe to enabling individuals to lead healthy, productive lives, many organisations play a part in delivering the multitude of services that help create strong, stable communities.

Elizabeth Fells is head of public services reform at the CBI

In this era of fiscal austerity, it is essential to ensure that the public funds used to provide these services are spent in the most cost-effective way, and make a long-term positive difference to people’s lives. By pooling distinct funding streams and integrating service delivery, community budgets are an effective way to meet this challenge.

The Total Place pilots showed that a community budgets approach results in better services for individuals and communities, by encouraging organisations to combine their resources and expertise to tackle public services challenges more effectively.

Importantly, community budgets enable smarter interventions to solve increasingly complex social problems. Addressing issues such as intergenerational worklessness, drug-addiction in ex-offenders and disability-related unemployment cannot be done by a single government agency. Instead, there needs to be partnership working across public sector boundaries, with agencies collaborating together and working with private and voluntary sector providers to determine the best way to improve results as well as to design and deliver services in a coordinated way.

For example, Lincolnshire’s ‘Excellent Ageing’ programme is looking to improve care for elderly residents by ensuring people have holistic support that helps them stay healthy, safe and independent in their homes. The council estimates that, on average, it spends around £500,000 to support an elderly couple over 20 years, with around 30 separate interventions in each case. The programme aims to ensure that services are delivered in a simpler, more cost-effective way, working across organisational boundaries in genuine partnership approaches.

Community budgets can also contribute to the critical task of reducing public spending, which will help rebuild the fiscal health of the nation. With large budgets cuts a reality for many public organisations, we can no longer afford to have multiple agencies spending multiple funding streams trying to address the same problems. In fact, evidence from trials in London suggests that by cutting waste and duplication, a community budgets approach can save up to 15% of an area’s total spend.

In addition, community budgets lower total spending by encouraging organisations to pool funding to tackle the causes of problems, rather than just their impacts. This results in more effective programmes, and long-term savings. For example, the Total Place pilot in Birmingham found that each £1 spent up front on drug treatment yields £9.50 in savings to the criminal justice system and wider public sector.

At the CBI, we are calling for community budgets to be rolled out as a priority, as an essential part of the much-needed transformation of public services. We welcomed the Government’s recent announcement that the community budgets pilots, focusing on families with complex needs, are to be extended to a further 50 local authorities.

The Government needs to continue to expand this programme so more families - in more communities - can benefit. It must also build on its plans for two pilots that will pool all local funding streams, and press ahead with introducing this right across the country.

For community budgets to be successful, there need to be genuine partnerships between the public sector organisations active in our communities - local authorities, health services, the police, schools and many more.

This can be seen in Croydon, where local agencies, including NHS Croydon and the police force, are working together to give young children the best possible start in life. By delivering holistic solutions rather than distinct services, community workers in Croydon can better support the youngest residents, while saving the borough £8.3 million between 2011/12 and 2013/14.

In some cases, partnership working may require a change in mindset, involving other organisations, and also the public, in determining what needs to be provided, and how. Often individual agencies seek to protect their patch, and keep tight control of their budgets. Overcoming this will not always be easy, but collaboration is essential if services are to improve, and local government has an important leadership role to help make it happen.

Central government can help break down silos and encourage agencies to work across organisational boundaries by ensuring that the financial benefits to the wider public sector which do not necessarily accrue to a single department are recognised, accounted for, and publicised.

In addition, the Government should consider introducing a right for local government to challenge central government agencies to release some of their budgets locally, unless there is compelling evidence to retain central control. A right to challenge would help identify which funds should be pooled, and enable organisations to make this happen.

Given the current financial constraints, and the need for high quality services, public sector agencies cannot afford to delay getting involved in community budgets. A full and rapid rollout of community budgets is central to the public services transformation we need.