The Localis survey of local authority finance directors showed an amazing insight into local authority management if it is accurate. Can it be accurate? Surely not.
It beggars belief that there was any surprise that cuts in central grant were announced in the Comprehensive Spending Review. To some extent the degree – if not the detail – of the cuts too could have been anticipated given the earlier signs. Former chancellor Alistair Darling had announced Labour’s public expenditure plans in his Budget in March this year and George Osborne could not have been clearer in his Emergency Budget in June.
Indeed, many commentators and experts such as Steve Bundred, then chief executive of the Audit Commission, were writing and speaking about the impending Armageddon much earlier. CIPFA and Solace issued documents and held conferences on the subject.
My experience of talking to, working with and advising local authorities would suggest that many have been expecting and planning for major cuts for some long time. They may have, not unreasonably, initially underestimated the ambition and ideological drive that the government is displaying. The rhetoric about decentralisation and local government is not being translated into grant allocations.
Senior managers and indeed their politicians might prefer that the government had adopted a different macro-economic policy and had delayed the degree and the speed of the cuts. However, there is no benefit to citizens –and in particular those who benefit from local authority funded services – for managerial and political leaders of the authorities to be in denial about the government’s intended assault on local services.
Personally, I would have preferred an economic strategy based on a public expenditure-led recovery with cuts minimised and delayed until the economy was stronger and for the balance between cuts and tax increases to be tilted more towards the latter. However, I am a realist and can readily see what the government has been planning for some time.
This is a government that ideologically wants to reduce the role and size of the state, including local government, so even if and when there is serious economic growth there should be no expectation that public expenditure will be increased. I expect and would support some resistance from local government but I would also expect leaders and especially finance directors to be well into the implementation of a long ago prepared strategic plan to respond to considerably less expenditure by redefining the role of the authority. I know those that are and some that are not.
In particular, that re-definition of the role of the local authority should have included:
- deciding which services it will commission, procure or deliver, redesigning these services and determining the outcomes being sought
- creating partnerships with the wider local public sector (Total Place style strategic commissioning and resource pooling)
- identifying what could/should be done differently
- co-ordinating budget planning across the local public sector
- expanding the role and capacity of the local community and voluntary sectors
- engaging in a serious dialogue about options with citizens, local businesses, the community and voluntary sectors, staff (and their trade unions) and alternative providers
- and adopting a prudent approach to financial, treasury and fiscal management.
To be fair to finance directors and others in local authorities, the government has delivered them four unexpected and damaging blows: in-year cuts for 2010/11; the front-loading of cuts in 2011/12; the ending of most specific grants which although requested by local government will adversely hurt those authorities with the greatest social needs; and not delivering on the promise of Total Place.
Local government has been disproportionately hit with severe cuts. The delay in announcing the grant settlement as well as the cuts in the NHS and other public agencies has only further compounded the problems and challenges.
However, every day wasted before a strategy for addressing the cuts has been designed, agreed and implemented means, in effect, deeper cuts and more hardship. It means less time to put in place strategies to mitigate the impact of the cuts in central grants. It probably means more adverse unintended consequences and mistaken actions. Therefore, if local authorities have failed to start both the planning and implementation processes – whatever the pain – they have failed their local communities.
No one should underestimate the challenge confronting local government but it has to show its mettle; its resolve; its creativity; and its ability to manage difficult choices – or it will play into the hands of those, including ministers, who wish it a diminished role.
In my experience, many chief executives, finance directors and politicians are aware of the challenge and are already addressing them but the truth is that not all are. The Localis survey, if accurate, paints a very sad and dismal tale. It suggests that the number of a very important group of senior officers not addressing them may be greater than I and many others had realised. If this is the case it does not do their reputation and the cause of local government any good whatsoever.
The next few months will be critical – there is no merit in setting budgets that are not sound and robust, and finance directors will be well aware of their Section 151 and 144 duties. There is little value in setting budgets that are not strategic and which prejudice the longer term. Finance directors have a key role to advise, challenge and support their chief executives and political leaders.
I very much hope that the Localis survey has got it wrong. If not then many, many people – local government staff, third sector organisations, businesses, communities and citizens will have been badly served.
John Tizard is director of the Centre for Public Service Partnerships (CPSP@LGIU)
