Public service cuts will come: but how and where?

Nearly every day someone declares that the UK's finances are even worse than we thought, and that it is time to think the unthinkable about what we spend on public services and how we deliver them. While trade unions predict that frontline care services will suffer, politicians are promising that schools, rubbish collection and Surestart will be protected from cuts. Instead there will be a bonfire of the quangos, although some think this may, in reality, mean many organisations are slimmed down rather than scrapped. The government is also exhorting a major rethink of who provides "public" services, encouraging charities and the not-for-profit sector to come up with radical, and cheaper, local solutions to anything from training and employment to care of the elderly. Behind the scenes, the apparatus of local government such as IT systems, payroll and contracts for rubbish collection and recycling are also undergoing a radical shake-up that will see many jobs lost. £1.2bn question Local government has been told that it must contribute nearly £1.2bn to the £6.2bn cross-government savings this financial year. This means local authorities must make 5% budget cuts a quarter of the way through the financial year and may lead to anxious renegotiation with sub-contractors including voluntary, notfor- profit and commercial organisations. The Department for Communities and Local Government has been asked to find £780m of savings, which means departmental and quango running costs will be reduced by 10%. Insiders feel councils are being punished for their own success in meeting existing efficiency targets. In September last year, government figures revealed that in surpassing existing targets local government recorded £1.76bn worth of value-for-money savings. The Local Government Association (LGA) has put forward a plan, entitled Delivering More For Less: Maximising Value in the Public Sector, which it believes will help councils save a total of £4.5bn without too much pain for council taxpayers. It would mean cutting central government inspectorates, quangos and heavily bureaucratic organisations that rubber stamp council grants and fees. Of course, this will mean job losses, which the LGA argue can be achieved by natural wastage. At the same time councils are introducing long-term ways of eliminating expenditure. For instance, the Vale of White Horse and South Oxfordshire councils share a common chief executive, senior management team and some backoffice services. And by sharing back-office services including recruitment, payroll, criminal records checks for school and social services, and on-the-job training and learning, the boroughs of Sutton and Merton are expected to save over £500,000 this year. They hope that over the next five years they will save another £1.5m – a total saving of 20% on each borough's back-office budget, which would meet government spending targets. Other councils are sharing IT systems, removing the need for two expensive sets of computer systems and the experts to run them. In Kent, many district and town councils, as well as the fire and police service and the county council, are part of a consortium that brings big savings by negotiating bulk deals with suppliers. Health and social care Even bigger savings could come from more radical thinking about ways of looking at patient care. That may mean diverting hospital budgets or finding ways of protecting local authority cash. While there are promises that NHS budgets will be ringfenced, some observers worry that this could be a false economy. It costs something like £40 a day for the sort of domiciliary care to allow an elderly person to be cared for at home. In the NHS an elderly care bed costs around £400 a day. Cutting local authority care budgets could have the knock-on effect of trapping more people in hospital at 10 times the cost. Jonathan Lewis, the chief executive of The Social Investment Business, which provides loans, grants and professional support to charities and third-sector organisations, wants to give what he describes as "flotillas" of small organisations the clout to compete for public sector work by bringing them together into consortia. That way, says Lewis, they can tackle complex social issues with more creativity. "Give us an open-ended brief – for instance, to work with the most challenging families – and we will do it more efficiently and with more innovation," he says. He gives examples of community-led projects that have revived decaying local assets such as disused railway stations and derelict churches . Savings are being sought in other ways too. London councils spend over £9 billion a year on buying goods and services. In the past they would often negotiate individual contracts but now, through Capital Ambition, they frequently collaborate to secure a better deal which helps to cut costs and deliver better services. Tangible results Paul Martin, the chief executive of Sutton council, who is chair of Capital Ambition, says councils are making changes that are producing tangible improvements such as healthier and happier people living in care. One scheme has identified savings of £3m by introducing new rubbish bins for flats and other multi-occupancy homes, as well as fewer rubbish collections, leading to a reduction of nearly 528,000kg of carbon dioxide emissions – the equivalent to 345 return flights to New York. Councils are also setting up "e-auctions" – scheduled events where companies can bid against each other to win the council's business. The result is that managers are having to handle large cuts, while looking for innovative answers – and the tension is beginning to show. While the LGA wants the forthcoming cuts to be less obtrusive, many councils admit that frontline services will go. Up to 200 council staff in Blackpool who help unemployed people are set to lose their own jobs and, in Leeds, the council says cuts could have an effect on all services, including schools and support for families living in deprived areas. In North Yorkshire councils say transport schemes and education budgets are going to be hit the hardest. Public sector union Unison, which has more than 1.3 million members, says the latest round of cuts would hit "nitty-gritty services", such as home social care, day centres, libraries, and education. A spokeswoman says: "These cuts and new legislation could take us back to the pre-1997 days where compulsory competitive tendering brought in privatisation and services such as refuse collection and hospital cleaning sold to the cheapest bidder – we all know the problems that caused." Weblink LGA report on savings: tinyurl.com/34glsdv Return to the home page for more on public services