Headlines: June 9th, 2011

Councils are expecting to make spending cuts of 20 to 30 percent by 2014, but many have no strategy in place to achieve these targets.

A survey of over 100 top managers by YouGovStone, commissioned by Interserve, the support services and construction group, found that 40 per cent do not yet have strategies in place to achieve the spending cuts required. Overall, 25 per cent of councils don’t expect to meet their savings targets fully by 2014.

For many councils, outsourcing is seen as the likely route to make savings with average outsourcing levels rising from 20 per cent in 2011 to 34 per cent in 2014.

Adrian Ringrose, Interserve’s Chief Executive, believes that delivering savings to the extent necessary will require more radical change than simply increasing outsourcing levels. He said: “Councils clearly indicate that they are interested in procuring best-value solutions rather than adopting a purely cost-based approach, yet they don’t appear willing to undertake a full review of their service delivery. The opportunity exists for them to make fundamental reforms for the benefit of their communities; ultimately, the future is going to be defined by partnerships between the public, private and third sectors working together to help redefine delivery and instigate a positive change.”

A Chief Executive of a metropolitan borough council interviewed in the survey said: “Outsourcing is not always an efficient tool if the objective is solely to make cost savings. The greater benefits lie in a combination of cost savings, risk transfer from the public sector to the external provider, and budget certainty within the framework provided by a contract. This combination is what best rewards and protects public services provided by private or voluntary sector providers.”

One explanation for the failure or so many councils to devise budget cutting strategies for the period up to 2014 is a reluctance to go ahead before the White Paper ‘Open Public Services’ is published. At the time the survey was carried out the White Paper was being trailed by the Prime Minister as opening up a level playing field for the private sector to compete with any public body. Last month it was ‘announced that widespread privatisation would not be acceptable and that publication of that the White Paper would be delayed. Devising strategies in a policy vacuum is probably not a good idea.