Although a new Management Consultancies Association (MCA) report has found that Local Authorities are better prepared than other parts of the public sector for the challenge of reducing the deficit, the Association delivers a stark warning – many authorities are still in denial about what they need to do and a more radical approach is required. It says if Local Authorities continue with their present plans, crucial public services will be hit hard.
The new MCA report, Local and efficient – Meeting the challenge for local government, is based on the views and experience of a large number of experts from within MCA member companies.
A US approach offers a solution
MCA experts point to experience from the private sector, but also from abroad. Lakewood Authorities in the US is bigger than any local authority in the UK; it devolved decision-making so that local communities could define the services they wanted, but also separated this from the operational delivery of these services, which could be done centrally, ensuring back-office efficiency. Alan Leaman, CEO of the MCA said: “This combination of operational scale tailored to local needs will be critical in the UK, and we are already seeing this starting to happen.
One of our members has recently worked with three councils to combine their procurement and operations. This approach provides the combined benefits of a volume discount from the supplier with differentiated services for customers.”
Localism and cuts collide
The MCA report also says that the effectiveness and coherence of the Government’s localism agenda will help to determine whether these efficiency gains can be achieved. Plans for local referendums and elected mayor’s reverses centralised decision-making of recent years and creates more local autonomy. However, this sits uncomfortably alongside the cost-cutting agenda, much of which relies on efficiency gains from more standardised, centrally-run processes.
Local and efficient makes the following key recommendations:
Dealing with the pace of cuts – Cost reduction programmes work best when they are built on clear strategic thinking and astute planning; many local authorities will not have had time for either. The Government should keep this settlement under review and be prepared to show more leadership to local authorities in the interests of securing the long-term implementation of spending reductions.
Insufficient discussion to date – more required – A greater public debate about how the spending reductions demanded by central government are to be achieved is now required.
Local authorities should resist the temptation to secure across-the-board percentage reductions in spending – Such moves will have an unnecessarily detrimental effect on the quality of public services. They ignore the opportunities to improve efficiency and productivity.
Reductions in expenditure can only be sustainable if accompanied by changes in behaviour – Getting people to change the way they work and their attitudes can save the most. For instance, many people manage to a pre-set budget; tasking them with reducing spending can lead to a very different outcome.
Local authorities should review which services should be delivered by whom – Private sector organisations typically have a clear sense about what is core to their business; activities which they deliver particularly well and give them a competitive advantage. Local authorities would benefit from drawing a similarly clear division, particularly as they examine which services they may need to cut.
Councils should separate the design and commissioning of services from their delivery – Further separation between the design and commissioning of services on one side and their delivery on the other would deliver considerable benefits. It would allow local communities to play a greater role in deciding priorities and exactly what level of service they require and wish to pay for, while enabling the authority to manage its contracts with outside suppliers.
Alan Leaman concluded:
“Because the central reductions in support for local government spending are concentrated over the next two years, decisions taken in the next weeks and months will substantially determine the chances of success. There is a real danger that councils will realise too late that they need to take a radical approach – by then, the cost of action is likely to be greater still.”
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About the Management Consultancies Association
The Management Consultancies Association (MCA) is the representative body for management consultancy firms in the UK. Our sixty member companies comprise around 70% of the UK consulting industry, estimated to be worth £9bn in 2008, employ more than 40,000 consultants and work with over 90 of the top FTSE 100 companies and almost all parts of the public sector.
The MCA’s tough entry criteria and rigorous Code of Practice mean that MCA member companies are widely acknowledged to provide high quality services to their clients. Many of their achievements are recognised in the annual MCA Management Awards and the Consultant of the Year Awards.
The MCA informs and influences public debate on topical issues, and provides authoritative data on the industry. It commissions research and policy analysis and represents the industry in discussions with Government and other stakeholders. The MCA also facilitates networking and the sharing of best practice within the industry through events, publications and initiatives such as the Young MCA.