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News - 26 June 2009

Tough times ahead for Councils?

According to a survey by KPMG, over half of UK councils are planning major staff cuts over the next 18 months. And almost half of them are planning major cuts in services.

The economic crises is continuing to have a drastic effect on the lives of ordinary people even though some banks and politicians are talking up the recovery. The big challenge ahead for local authorities is to maintain the current level of public services on a reduced budget with a smaller workforce.

The problem is not helped by a recent survey which suggests that there is some slack in the system. While private sector productivity has increased substantially over the past decade, public sector productivity has actually declined although the survey admits it is norotiously hard to measure public sector productivity. 

In a speech to the CIPFA conference in Manchester, John Denham told councils he will oversee a slowdown in spending. He acknowledged that although overall government spending should rise in real terms there will be a need to make each pound work harder than ever.

Highlighting the estimated £43bn spent on procuring goods and services each year, and the desire for continuing public service reform, Mr Denham urged councils to move beyond mere efficiency savings to look ‘fundamentally’ at how services are delivered in future. He said, ‘This money can just buy a standard service at the lowest-possible cost – or it can be used to encourage innovative businesses, including local businesses, to provide innovative solutions which deliver better value for money.'

BUSINESS FORUM COMMENT

The contraction in spending on public services is likely to be far higher than the government’s predicted (and promised) 0.75%. The Institute for Fiscal Studies has estimated that a cut of 11% across all government department’s will be needed to balance the UK’s books. Local authorities will bear their share of any cuts but be expected to maintain services at pre-recession levels or, in some cases, better.

Brighton & Hove City Council is already one step ahead of the game in this respect as it is working with city centre businesses through the BID (Business Improvement District) to deliver additional business activities that support council services such as added security and the provision of Christmas lights.

The Council was also recently awarded beacon status for handling the night-time economy in partnership with the the Business Forum's Business Crime Reduction Partnership and other agencies. The City Council has a good reputation for partnership working that enhances the public spend and levers in additional private sector funding.


Read related items on:
Productivity
Recession
Employment
Business Crime Reduction Partnership
Government, Central
Denham, John


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