The government spending review highlighted the need for a further £11.5bn to be cut from the budget, continuing the pressure on local and central government to reduce spending while increasing efficiency. Councils have seen a funding decrease in the region of 40% over the course of this parliament, with savings of over £10bn secured by local government since 2010. Between March 2014 and the end of 2015/16 the funding gap for local government will stand at £5.8bn*. There is growing realisation that the challenges ahead present a real threat to statutory services, not accounting for any discretionary interventions.
Devolution and decentralisation
The largely held view is that more than £200bn should be devolved to local governments across England over the next 10 years as councils are on a “cliff edge” due to government cuts. “The urgent need for reform is going to be one of the biggest and most important challenges facing the next government. Without it, many of the key services which have been part of everyday life for generations may not be there for much longer.”**
ICT Transformation – a possible area to reduce costs
One area of particular focus is ICT transformation. All departments and public bodies are under pressure to drive down cost, while increasing efficiency without compromising security, accessibility and performance. Councils are exploring a number of ways to reduce their costs of ICT, some of these include collaborative procurement, more efficient contract management, and ‘Bring your own device’ (BYOD) and cloud technology.
A cloud-based strategy allows councils the opportunity to buy and consume ICT services as required, hugely reducing reliance on fixed infrastructure hardware and software that has a heavy cost burden.
The Cloud First policy is one of the ways the government is pushing through reform in this space, inviting local and central government to consider cloud solutions for their IT requirements. Moving to the cloud offers significant improvements in flexibility and efficiency, as well as reductions in cost whilst maintaining security.
The key questions emerging are:
1. How to drive down unit cost per head.
2. Whether cloud based systems will reduce overall ICT costs?
Councils employing large numbers of people are right to question whether buying ICT on a unit cost offers significant savings. The advantage of this model is that it flexes with the workforce allowing for leavers, retirement, maternity leave, sickness or short term contractors. Organisations only pay for what they consume, so there is no wastage.
Many public bodies are turning to organisations that can provide a fully flexible subscription service that delivers hosting, device and desktop management, identity and access management and support as a service.
Core’s Aurora portal in conjunction with Microsoft Azure offers all of these solutions and much more. Being RMAD approved to Official level, we can ensure security whether in the office or on the road. Organisations only pay for the time and capacity they require and this can be scaled up or down depending on current requirements.
Although there is uncertainty surrounding policy after the general election, the one thing that is certain is the funding issue is not going away and will continue into the next parliament regardless of who gets into power.
“The cuts in this spending review are just the next phase of an on-going process – there’s a lot more fiscal pain to come in the years to 2018. Whoever wins the 2015 election will face deeply unpalatable choices over public finances including tax rises, yet deeper spending cuts or extending the timetable for deficit reduction.”***
With this in mind, cost reduction is as important as ever if not more so. Embracing new technologies and work practices is just one way organisations can make an impact on cost to help budgets for key services such as adult social care which is currently estimated to be under funded by £1.9bn****
Decentralisation needs to be taken seriously and requires genuine transfer of powers giving local governments the opportunity to truly control budgets and make savings where they identify them. Transformative change in how local and central government delivers services requires buy in and commitment from all parties involved.
* LGA & ADASS Joint Submission to Consultation on 2015/16 Care Regulations and Guidance (2014)
** Darra Singh, Chair, ICLGF
*** Gavin Kelly, Chief Executive, Resolution Foundation
**** DOH. Consultation on funding formulae for implementation of the Care Act in 2015/16