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Damping problem

Source: Public Sector Executive Jan/Feb 12

We’re entering budget setting season again for local authorities – the second since the bombshells contained in the 2010 Emergency Budget, the in-year cuts, the Comprehensive Spending Review and subsequent grant settlements.

Councils have had to make incredibly difficult decisions, while facing the hostility of the public and unions on one hand, and ministers on the other, who have been known to claim that some decisions were taken for political reasons: councils cutting more than they had to, rather than making efficiency savings and structural reforms, in other words.

There has also been plenty of claim and counter-claim about the impact of the cuts, with the Government always saying it was a fair deal, but poorer authorities feeling disproportionately targeted. Research by the Joseph Rowntree Foundation published in January 2012 suggested the latter view has merit. It says bluntly that “the most deprived authorities will be hardest hit”, after in-depth studies, and finds a reduction in grant of around 40%, and in spending power of 25%, over the four-year spending review period.

The report found interesting distinctions between local authorities’ strategies on dealing with the cuts, such as a move from universal to targeted support in some areas versus attempts at maintaining service equity at others, which might result in other services having to be cut in their entirety. The researchers also contrasted areas using neighbourhood management approaches to those whose thinking was more ‘a-spatial’.

The report is long and detailed and well worth a read, especially for the anonymised comments from senior executives across a range of authorities explaining how they reached certain decisions and the calculations involved in choosing to be client-focused or servicefocused, universal or targeted, and so on.

It also makes clear just how much work was going on to make efficiencies and reconfigure services ahead of the 2010 Emergency Budget – of the 25 councils studied, all were already embarked on some sort of transformation programme as of 2009, mostly for back office operations but some for service delivery too. This work meant that about a quarter of the authorities managed the 2010 in-year cuts through efficiencies alone, and were in a better position for the 2011/12 budget year.

Local government finance is famously complicated and understood by very few people who do not directly deal with it, meaning anyone with an agenda can use selected statistics about it to prove almost anything.

Serious research like this, by people who know their formula grants from their Working Neighbourhood Funds, and a thing or two about damping, is much-needed.

The question is whether this year’s exercise will be easier because of the experiences of the in-year cuts and 2011 budget-setting, and the lessons learned – or, more likely, harder because there is no slack left to cut anywhere, and virtually all the cuts will hit frontline service provision.

The aim for many authorities now is a wider and deeper rethink of the services they offer, aimed at reducing demand, so that the impact of budget cuts are easier to accommodate. We examine some of the best of these ideas and trials in this edition of Public Sector Executive.

Adam Hewitt - Editor

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