Funding isn’t keeping up with demand pressures, but neither is national policy
The recent LGC article (‘Divisions over resilience index but officers open to new approach’) raises some interesting questions about how performance should be measured. Rob Whiteman’s comment that CIPFA’s index has received a “mixed response” reflects the general mood music that I picked up at this year’s CIPFA conference.
It is clearly important to have some visibility over when an authority is likely to run out of road financially, at both a local level and within wider local government. However, the varying levels of resilience amongst councils are largely a reflection of circumstance and history.
What is the local economy like? Did the authority sell their housing stock? Did they raise council tax? Did they outsource services?
Whatever their local circumstances, and whatever the council did or didn’t do, there is no going back. The reserves they have are the reserves they have.
The more important question for councils is what are they going to do about their financial situation now and in the future?
In the situation where the level of central government funding for local government at best stabilises and at worst disappears, what mindset should local authorities adopt to ensure that they avoid falling over a financial cliff edge?
The search for efficiency should of course continue, but the sector must guard against driving costs so low that it actually begins to increase demand through service failure. Some councils that we are working with at iMPOWER have already experienced this, with inappropriate procurement and commissioning techniques designed for commodities being applied to service provision. Without effective supply chains, organisations will simply start to collapse.
However, we would argue that local government needs to reframe the problem away from a focus on efficiency. The sector needs to be able to compare the quality of outcomes they get for the investment they make. That would enable informed and proactive choices about how scarce resources are to be allocated. In short, what is needed is a productivity mindset.
Last year, we launched our iMPOWER iNDEX in response to a number of Chief Executives asking for new insight into how to deliver sustainable budgets. Many of them were simply fed up with academic business cases that drive optimum, lean processes that may be world renowned, but which ignore the complex reality of local public service delivery.
The iNDEX shows which authorities who are getting better outcomes at less cost, and who is getting poorer outcomes at a higher cost. It also allows councils to track movements in productivity over the last two years.
Obviously, the rankings are not an absolute science. They do reflect local choices, and are reliant on the quality of information provided by local authorities. Nonetheless, they ask profound questions about local productivity and highlight areas where authorities are being more or less productive. If we know which councils are more productive, others can learn from what they are doing – and maybe quickly turn left or right to avoid the cliff edge.