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Local authorities are under pressure. Demographics, cuts in central government funding, statutory services and public expectations combine to pose huge challenges to the financial sustainability of services. Has the limit to efficiencies been hit? We spoke to local authorities to find out if there’s still scope for improved value for money and to discover what […]

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Local service reform: is it all about the money?

Posted on October 20, 2016 by

Public servicesLocal authorities are under pressure. Demographics, cuts in central government funding, statutory services and public expectations combine to pose huge challenges to the financial sustainability of services. Has the limit to efficiencies been hit? We spoke to local authorities to find out if there’s still scope for improved value for money and to discover what works and what will prevent local public service reform.

Perhaps one of the surprises in our report, Financial sustainability of local authorities 2014 was that local bodies were holding up so well. Innovation, demand management and service reforms were all helping to deliver improved value for money.

And yet the suspicion has always been that there is a limit to such efficiencies and that the time for radical service changes and transformation may be approaching. We even highlighted how adult social care had achieved savings through both efficiencies and demand management, but that such savings were slowing markedly.

There are, however, signs that the scope for efficiencies is not yet exhausted:

ADASS (the association of directors of adult social services in England) has noted that there was no correlation between the size of local authority funding cuts and performance on delayed discharges of older people from hospitals

In our report Care leavers’ transitions to adulthood, we found no correlation between spending and quality of support for care leavers, even though the cost of supporting a care leaver ranged from £300 to £18,000; and

In Children in need of help or protection we found no correlation between the spending on, and quality of service for, children in need of help or protection, even though spending ranged from £340 to £4,950 per child in need.

All these examples run counter to the natural hypothesis that less money means poorer services. To our mind local authorities have demonstrated that this is too simplistic a narrative. It may be true in some cases, but as a generalisation it is not supported by the evidence. Our conclusion is that there is significant scope for improved value for money.

So the question is about how best to deliver services and service reform without more money. Most readers know well that there is more to the delivery of services than just the money: leadership, culture, organisation, skills and many other factors will come into play.

EnablersWe spoke to local authorities to understand better how they have been approaching the reform of local public services. Our Local public service reform report details five core enablers of reform which, if not in place, can become major barriers. For each enabler, it describes what local areas are doing and the learning points they have shared, the action central government is taking and other useful resources. In brief, these enablers and some of the support initiatives are as follows.

1 Knowing what works: An understanding of what does and does not work helps an organisation know where to concentrate its efforts and avoid repeating the mistakes of others and support such as the ‘What Works Centres’ are helping to share such knowledge.

2 Sharing information enables local areas to identify the people most in need of support and helps them deliver more coordinated and efficient services. But organisations can be reluctant to share information because of real or perceived legislative barriers, technical challenges or a belief that sharing is risky. A range of data-sharing hubs or platforms have been developed, such as the Centre of Excellence for Information Sharing.


Centre of Excellence for Information Sharing
Central government funds the Centre of Excellence for Information Sharing to help local areas find ways of overcoming the barriers to sharing information. The Centre’s resources include guidance on how barriers to sharing information can be overcome. It also has specific guidance covering common issues that local areas have experienced in developing Multi-Agency Safeguarding Hubs (MASHs) and sharing insights gained. In addition, Ending gang violence and exploitation explores the information-sharing benefits and challenges faced by local areas across the country that are working to tackle gang and youth violence.

3 Securing funding to enable investment in reform is crucial to achieve reform while maintaining existing services. Sources of funding include government grants for particular services and external sources such as the Big Lottery Fund and Social Finance.

4 Having the right incentives to work together. Focusing on a defined geographical area and local needs can incentivise local partners to work together, aligning their objectives, priorities, funding, accountability and inspection regimes.


West Cheshire partnership collaboration learning points

  • Collaborate where it makes sense – target efforts rather than trying to do everything
  • Be flexible on geography – issues should define appropriate footprints
  • Develop a compelling narrative for change to which all partners can commit
  • Invest in analysis – plans needs to make sense financially to ensure every partner is clear on its return on investment
  • Put users at the centre – co-design better ways of meeting their needs and consider the role of the wider community
  • Be opportunistic about funding and process
  • Keep up the momentum – manage as a programme, monitor progress and remain ambitious

5 Building strong, trusting relationships – with communities, central government and other local leaders is essential. The Greater Manchester Leadership Framework’s innovative approaches to sharing and collaboration include, for example, job swaps, shadowing, secondments and coaching.

Working togetherAlthough many transformational and innovative initiatives are making a real difference, all the areas we spoke to thought both central and local government could do more to remove the barriers to reform and create the right conditions for success. We therefore identify a number of issues for local partners and central government to consider.

  • Local partners should consider whether they are doing enough together to:
  • Analyse how well they are meeting the needs of service users, citizens and communities
  • Assess how current and future demand pressures can be reduced
  • Analyse local public money spending and whether it’s delivering value for money
  • Understand and manage funding and demand pressures on services
  • Work in partnership with service users, citizens and communities to redesign services around their needs
  • Develop the needed capacity, skills and relationships
  • Share and adopt learning.

Government departments should consider whether they are doing enough to:

  • Engage with local places to understand and address the barriers to reform
  • Target support on places struggling to maintain statutory services
  • Align and coordinate national programmes, funding mechanisms, incentives and benefit-sharing to support reform and adopt a cross-departmental approach to working with local areas
  • Evaluate whether their programmes are effective and achieving their objectives
  • Ensure an evidence base and the sharing of learning nationally and locally.

At the NAO we will continue to evaluate how well central government is supporting the delivery of efficient and effective local public services and the impact of funding pressures on service and financial sustainability. But to support local change we have also included links in Local public service reform to not only previous relevant NAO reports but also a host of other resources which support people looking to make money go further.

We welcome all comments and invite you to contact us with your input, especially where there is good practice that can be shared.

Ashley McDougall

About the author: Ashley McDougall is Director for Local Service Delivery studies at the NAO, and responsible for cross-cutting studies involving local and central government. He has worked at the NAO since 1987 on subjects as diverse as aircraft carriers, the BBC and Kids Company. His underlying interests include the best way to balance local delivery and innovation with system-wide accountability, and how the integration of health and social care can offer improved services and better value for money.


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3 Comments

3 responses to “Local service reform: is it all about the money?”

  1. David Walker says:

    Didn’t the Centre of Excellence for Information Sharing used to be called the Audit Commission?
    ..the serious question is how revealed differences in unit cost are translated into local level policy action: in principle, audit used to be a vehicle

  2. EJ says:

    Try investigating vast sums of public money being misspent by LAs on children’s social care conducting many wrongful investigations on child protection. Especially against autism families and families with other invisible disabilities (CFS/ME, EDS etc.). The issue is widespread. As it is the figures for unsubstantiated referrals are something like 85%.

    • Ashley McDougall says:

      We have looked at this area in our report on Children in need of help or protection. In that report we noted the local variations between local authorities. In 2014-15, local authorities recorded 635,600 referrals to children’s social care. Rates of referral vary widely across England from 226 referrals per 10,000 children in York to 1,863 referrals per 10,000 in Wakefield (Figure 5 on page 19). We also found in the year ending 31 March 2015 there was variation between local authorities in the rates of referrals accepted, from 226 to 1,863 per 10,000 children. It is important that referrals are looked at appropriately but it is not possible for us to identify wrongful referrals or investigations. Ashley McDougall, NAO Director

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