The modest timetable for extending Community Budgets has been scrapped and there is to be a rapid extension with new pilot projects to explore innovative ways for further development. Community Budgets open the way for creating new forms of service delivery and it is clear that innovation will play the central role in reform plans rather then privatisation.

Community Budgets turn the traditional top down model of service delivery on its head. Decisions on how to spend the single pot of money are taken at local level in the light of local conditions. Whitehall officials no longer issue guidance about how to respond to issues and policy making is carried out locally. This new approach allows multi skilled teams to work across organisational boundaries and to find innovative solutions to the issues they are tackling.

Sixteen Community Budget pilot projects were launched in April 2011 to recast the services provided to some 10,000 families with multiple problems. The new plan will extend Community Budgets to around fifty more councils this year and then at least a further sixty in 2012-13. This will increase the coverage to some 120 thousand families facing real social challenges.

These families are less than one per cent of the population, but are seen by as many as 20 different public and voluntary sector professionals at a cost of £4billion a year. A Salford family required 250 interventions in one year including 58 police call-outs and five arrests; five 999 visits to Accident and Emergency; two injunctions; and a Council Tax arrears summons. Their Community Budget led to the £200,000 cost being cut by two thirds.

Community Budgets have evolved from the Total Place pilot projects launched in 2009 and the original Total Place concept is to be developed in two new pilot schemes which will bring all funding on local public services from the area into a single pot to test how to create the right local financial set up to deliver better services that people want.

There will also be two pilot schemes which will explore how Community Budgets might operate at neighbourhood level. The budgets at this level will give residents the opportunity to say what services they want, how they should work and whether they want to run them.

Each Community Budget area will be offered support from voluntary and private sector experts in redesigning local services and using new and more effective ways to help families as well as deliver savings in local service costs.

Nine centres or ‘Dissemination Hubs’ based within local authorities around the country will provide practical support to neighbouring areas in developing services for these families. Whitehall officials will be assigned to help areas ‘bust’ financial and legal barriers to achieving local ambitions by pooling budgets, changing working practices and investing in service reorganisation.

The Government has backed away from its original plan to make the public sector a level playing field for private companies, but there will be scope in the new plans for some privatisation and for bringing in third sector organisations and mutuals set up by former public sector employees.