Tuesday, 26 August 2014

Camden's cuts challenge - post 5 - why set a long-term budget?

To deal with the extremely challenging financial deficit, as in 2010 Camden is proposing a three year financial strategy.

This means that the three annual budgets set by Camden's Full Council will follow a long term plan outlined in December 2014. 

Long-term planning has numerous advantages over the year-on-year approach tradtionally used by some councils.

First, it means that council spend a significant portion of any year scrambling to find and agree the required spending cuts to balance to following year's budget. This is not an effective use of strategic resource and prevents leadership focusing on the things that matter most for residents.

Second, Annual budgeting can also mean that resources reduced in an ad hoc way across the board. Long term budgeting allows the organisation to consider the funding available for a service and make sure that decisions are made in a more informed way.

Third, long term budgeting provides much greater degree of certainty and allows the organisation to plan and implement changes in a logical and planned way. For example, in Camden we have focused 2015/16 savings on efficiencies so that we have more time to plan for the more radical or challenging savings required in the years beyond.

Fourth, it also matters to our public servants.  The level of austerity cuts mean that significant job losses are inevitable.  In the 2010-14 period we lost 970 posts and large numbers beckon again.  Long term budgeting means that most affected staff will only go through one significant change process in the period.  Under an annual approach they may be subject to the uncertainty of service reviews more often, possibly each year.  To maintain the our services with experienced and committed employees our approach will provide a better way of doing things.  

Fifth, It also fits with our new approach to budgeting, described in a previous post.  Our outcomes approach to budgeting links funding directly to evidence of what succeeds. This evidence-base means that there is a strong correlation between the resource allocated and the expectation of what outcomes will be achieved. Therefore if the funding changes the organisation can respond by varying the scale of investment in order to achieve more of an outcome or to achieve it quicker, or if required to scale back investment in outcomes that are of less high priority, and can do this with an understanding of what the effects will be. This just isn’t possible with the repeated use of a one-off approach to delivering savings.

Finally, a long term budget is a response to the length of austerity budget which, by 2017, will be in their 7th year.  Critics of the public sector often make comparisons with the private sector, but tell me how many private firms deal with the same amount of reductions without being taken over, merged or fail?  None of these options are open to councils charged with delivering services, often universally, often by law. 

Of course, the political pressure on Labour councils from the left will be to avoid setting long term budgets (a.k.a. implementing cuts) in the expectation that an incoming Labour government will 'turn the taps back on.' 

I've argued elsewhere that this is unlikely.  The Labour frontbench is looking at how we can spend money better - looking at all of the money available locally, rather than just by local government grant and how it can be better planned. 

This doesn't mean we can't make a strong case and protest about the cuts and their impact. Certainly a Labour government should reverse the unfair redistribution of funding away from poorer areas to richer ones, as highlighted by the Guardian yesterday.  

Fundamentally local council services compete with hospitals and schools for resource.  Sadly, it is likely that both Conservatives and Labour will maintain some sort of ring-fence protecting health and education funding within their deficit reduction strategies in the next few years.  

So if non-protected areas such as local government are likely to continue to bear the brunt of deficit reduction plans - then we need better long-term plans in place to spend the money we have and control other local funding as well. 

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