Rocky road to area-based budgeting

26 Jul 11
Although the previous government's Total Place scheme looks set to continue, albeit in a watered-down form, the route ahead is a challenging one. Lucy Phillips examines the obstacles that are emerging in a radically changed public service scenario

By Lucy Phillips | 27 July 2011

Although the previous government’s Total Place scheme looks set to continue, albeit in a watered-down form, the route ahead is a challenging one. Public Finance examines the obstacles that are emerging in a radically changed public service scenario.


Run-down estate

After a slow start, the latest incarnation of place-based budgeting is gathering pace. Following pilots in 16 areas, the first phase of Community Budgets, focused on bringing public services together to help families with multiple problems, is being rolled out to another 110 English councils over the next two years.

Meanwhile, ministers are set to announce four areas that will pilot another style of Community Budget. This will involve two ‘neighbourhoods’ testing out how communities can help design a whole-area approach to public services and two councils experimenting with pooling funding for local services into one pot.

Deputy Prime Minister Nick Clegg first trumpeted the plans – to much applause – at the Local Government Association’s annual conference in June and they were further endorsed by Communities Secretary Eric Pickles at the CIPFA conference in July. Pickles told delegates: ‘Though we are starting on a small scale with these pilots, make no mistake – this is the shape of things to come.’

Such rhetoric has gone some way to relieving concern that momentum from the previous government’s Total Place pilots had been lost. However, new obstacles are emerging in a very different public service landscape. Cuts aside, the shift from being a Treasury-led initiative to a Department for Communities and Local Government-led one is making  buy-in from some departments, particularly Health and Work & Pensions, especially troublesome.    

John Tizard, director of the Centre for Public Service Partnerships and a former programme director for the national Total Place pilot in Worcestershire, tells PF: ‘Not all government departments have been as enthusiastic in their support for Community Budgets and therefore it has been more challenging.

‘One of the reasons Total Place had the potential to be so successful was because it was clearly seen as sponsored and co-led by the Treasury. The Treasury has a lever and influence across Whitehall in a way no other department does.’

Massive changes in the NHS and the transfer of commissioning powers from primary care trusts to GPs have also wreaked havoc on the agenda, he suggests. And there are other issues too. ‘[Community budgeting] is not as comprehensive as Total Place – it’s much more narrow in focus and in many respects is looking for long-term prevention as opposed to more effective use of resources in the immediate short term,’ Tizard says.

‘If you look back at the Total Place pilots, savings were identified that could be released relatively quickly without having to have additional expenditure to liberate the longer-term savings.’

Former CIPFA president Jaki Meekings Davis, who is director of MD Associates, also has concerns. She says: ‘Unless you get buy-in from all central departments, it could be perceived as the Department for Communities and Local Government just trying to spread its pain.’

She says Pickles ‘has not squared the circle’ when he says Community Budgets are the future of local government finance but not of other public service finance. She observes that, while Community Budgets are one way of tackling the problem that public services can’t be afforded at present levels, they do little to rationalise public sector data, assessments and office locations from which real savings could be reaped. ‘Neighbourhood projects are fine, but they are finite.’

Kent County Council took part in the previous government’s Total Place pilots and is currently trialling two Community Budget projects in Swale and Thanet. Targeting a few families with drug and alcohol problems, the aim is two-fold – to help individuals become less reliant on public services and reduce costs to the taxpayer.

But the council’s Conservative leader, Paul Carter, is more enthusiastic about Total Place. He says the pilots resulted in a drive to rationalise real estate across all public agencies, which he expects ‘to release substantial capital receipts’. He describes the ‘specificity’ of the Community Budget pilots as ‘a bit too restrictive’, adding: ‘The Community Budget pilots have no inducements to try and make things happen. You are named as a pilot, but nothing comes with it.’

Moreover, finding the space and capacity to do it at the same time as slashing the council’s budget is difficult. ‘There’s quite a lot of instability in local government and the health service at the moment. It’s not an environment that is desperately conducive to activity around Community Budgets, although I accept there is massive potential there.’

Carter is also frustrated by the ‘unwilling engagement’ of some government departments. ‘When we have the Department for Work and Pensions not divulging the necessary information, that makes it quite difficult.’

Another of the pilot areas, Blackburn and Darwen Borough Council, has clearly demonstrated the case for this new style of Community Budget, which focuses on the huge amounts of cash spent on problem families. But, again, implementation has been a problem. The local authority estimates it can spend up to £1m a year on interventions ‘in the most extreme examples’, which usually involve children being taken into care. A more joined-up approach to services is releasing savings as well as proving ‘less bewildering’ for the individuals involved.

But Tom Stannard, director of policy and communications at the council, tells PF: ‘It has been quite frustrating as departments have been working in silos and not talking to each other about what they want to see from us.’

Rob Whiteman, outgoing managing director of the Local Government Improvement and Development agency, outlines similar resistance. ‘It has been a painstaking process to get the government departments to be fully involved... not all of Whitehall is bringing their budgets to the table willingly.’

He takes greatest issue with the government’s new Work Programme. Its aim – to help people back into work through a package of support – is ‘at the heart of Community Budgets’, he says, yet the money for the centrally administered programme sits completely separately. ‘We find their very centralised approach to contacts that bypass local agencies like councils immensely disappointing and frustrating,’ adds Whiteman.

Despite the problems, there is an appetite to get on with pooling budgets – and patience for more pilots is running out. Tizard says: ‘It seems very timid to be looking at four new pilots to prove the concept. Total Place and Community Budget pilots have proved the concept and there are many places that want to get on and do it.’

Whiteman also feels that it is time to move beyond the pilot stage. Reiterating the financial pressures that councils are facing, he adds: ‘What councils have not got the time to do is to invest in reviews if they do not lead to something.’

But Meekings Davis wants a wholesale reform of government resource allocation  with one formula that is consistent across all sectors. She adds: ‘There are some interesting pilots at work, but I don’t think the big picture has yet emerged and there will be an awful lot of individuals threatened by that – in Whitehall and local government.’

So while the government’s movements and objectives are generally welcome, the route to area-based budgeting remains anything but smooth.  

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