Tough words on the delayed Spending Review

The Housing, Communities and Local Government Committee (a House of Commons Select Committee) had tough words for central government this week in relation to the impact of the delayed Spending Review on local government finance.

In a statement accompanying its latest report, ‘Local government finance and the 2019 Spending Review ’, the committee accused the government of being ‘derelict in their duties’ towards the sector, and called for quick action to meet the £5 billion gap in local authority budgets.

The committee’s report also says that is difficult to understand whether savings to council budgets are being achieved through efficiency gains or through a decline in the standards of services provided.

IMPOWER has worked with many clients to support them in bringing together their finance and performance data. This has enabled staff – from Finance Directors to frontline social workers – to better understand how decisions made to increase an individual’s independence (for example) can also have a real impact on a council’s bottom line.

However, despite the weight of evidence proving that achieving better outcomes for people actually ends up costing taxpayers less overall, national data returns do not currently show the relationship between performance and expenditure. Furthermore, central government views local government data in siloes (with individual data returns going to different ministries and departments) instead of capturing the whole picture.

We know that it is possible to bring these data sets together, because we have done this ourselves through the IMPOWER INDEX. The level of interest from the sector in this tool also suggests that there is appetite to understand performance and spend – both at an individual council level and in comparison to others. This desire to understand ‘what good looks like’ and to have an agreed version of this across the sector comes up in numerous conversations with clients. As the Select Committee’s report suggests, the expectations for the sector need to be more clearly defined – although our belief is that the sector should define this for themselves.

The report recommends that government invests in councils, rather than continuing to follow a model which requires bids for pots of ring-fenced funding. However, with demand for key services growing year on year, any investment risks being unsustainable unless it is accompanied by a change in approach. It is time to establish what good looks like, so that local authorities know what they are aiming for, and so they can use this vision to make decisions about how best to spend the money that is available.