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With the spending guidelines now laid out in the CSR, how should local authority managers and members plan for the next four years? Dan Corry and John Tizard offer some advice. Local authorities have managed the in-year cuts required by the June Budget, and have started thinking about the longer-term shape of their services, ahead of the Spending Review this week, setting out the size of the cuts they will need to make over the next few years. This is a big, ‘discontinuous' moment – not just shaving off bits here or there, but making major decisions with profound consequences for their communities in the short term, and shaping localities for decades. How can politicians make these decisions in the best-possible ways? They will be wish to guided by their values and manifesto commitments, or by their coalition agreements. But that will only take most so far. The Centre for Public Service Partnerships is working with local authorities and their partners to test and encourage the wider development of cost-benefit analysis approaches which are robust but practical within the timeframe of planning for 2011-15 budgets. Politicians require frameworks for their decision-making that can also help them judge their spending and activity, and that of their local partnerships. Other agencies will be taking decisions about spending which will affect the same local people. Total Place showed the benefit of co-ordination and joining up. The risk now is of individual organisations going their own way on budget cuts, whether overall costs are cut or simply shunted off to a different agency. All this will take place against a shifting architecture of local services, especially health and policing – and their governance. New arrangements will need to reflect these changes. Councils have suddenly been given a form of localism, bringing more freedom with less money. But the coalition's clear enthusiasm for localism still leaves councils and other services unsure of their true freedom to cut. Will the national government sit tight if the new health system decides to close hospital wards or community maternity services? The forthcoming Localism Bill will include a ‘right to save community assets from closure', and ministers have criticised fortnightly bin collections, although they are legal and gained some local acceptance as a trade-off in previous budgets. Meanwhile, the desire to support the Big Society and decentralise power to individuals and communities puts pressure on councils to support civic action. All this will be very much in the public eye. New transparency requirements have led to more public information on public costs and spend. This drives the need to explain the overall aims of policies, and defend hard decisions which will affect the quality of individuals' lives. Inevitably, sometimes, councillors will be personally very uncomfortable, and they will lack room for ambiguity. So what to do and how? If total cuts average 30% over the next four years, it will be necessary to decide each year which services are to be cut more, which protected, which redesigned, rationed, or charged for. And there will be a need to explain clearly and transparently why and how these decisions were arrived at. Some councils have adapted chancellor George Osborne's Spending Review questions for a local ‘star chamber' option appraisal, as councillors and officers seek some kind of cost-benefit analysis of the options, so that they can cut where least value is added. Ideally, this should consider not just the financial costs and benefits but also social and long-term issues, to get at what some call, social value or productivity. There are various approaches already being used which can help provide an objective basis for decisions that measure costs against outcomes delivered – even across agencies. Examples include techniques in children's services in the UK, and on crime and health in the US by the Washington State Institute for Public Policy. All approaches face problems of resources, timing, limited information and the near impossibility of putting monetary values on many service outcomes. But an approximation is possible, and should be attempted. So, what does that involve? First, it means knowing what you are aiming for, otherwise you can't get close to measuring the relative value for money of different cuts. This will be hard, and will require trade-offs between long-term and short-term aims and, as such, reinforces the importance of having priorities owned by the council's political leadership and rooted in some consultation and analysis of community needs and aspirations. Commissioning has a key role to play in this process. It also means better working together between different public agencies and private and third sector partners where they recognise they share the same aims – such as increasing local jobs and economic regeneration, or improving health and wellbeing, or targeting the same neighbourhood to improve its environment. Often, they are concentrating resources on the same households. This should build on the techniques and alliances formed through Total Place pilots, shared services and joint commissioning. Councils and their partners must discuss their draft plans so that they avoid cuts which are in total sub-optimal and contrary to a shared goal – for instance, avoiding the council cutting youth services, health reducing mental health services for young people, and the police reducing visits to schools and evening patrols – without realising the total combined impact will increase youth crime. A credit system could help show where one agency maintains spending, which is clearly to the wider local benefit, or enables another agency to reduce spending. This happens in children's services, where the benefits of both early intervention and cross-agency working are proven to both help individuals and save public funds, while acknowledging not all benefits or future costs will accrue to the agency investing. Each council should apply CBA-style thinking to see the longer-term consequences of any cuts, and consider the potential for local sharing of publicly-owned capital assets. They will also need to consider the capacity and ability of the community groups, the voluntary sector and new mutuals, to fulfil local needs and the Big Society agenda. Councils have always been making hard decisions and innovating. Some may be able to soften early cuts through use of reserves, and many will be planning bigger changes and redesign along with partners, to generate larger savings after 2012. This is an ongoing exercise, but there is still a need for some simple but effective ways of assessing the impacts. Cutting spending is never pleasant. Councils have to focus on the key outcomes for their communities and eliminate spend due to custom and practice, rather than proven value. Simple but open use should be made of consultation and scrutiny mechanisms – to increase understanding and participation of what is acceptable and what matters to local people. Full disclosure is essential. The next few years will be challenging for local government and local politicians will need every tool available. Above all, they must understand the impact of their decisions. Dan Corry is associate for the Centre for Public Service Partnerships, and former head of the Number 10 policy unit under Gordon Brown. John Tizard is director at the Centre for Public Service Partnerships Response to the Spending Review framework 2010: Maximising social value – The Centre for Social Justice, July 2010. From social security to social productivity: A vision for 2020 public services – 20:20 Trust RSA, September 2010. A family savings calculator tool has been developed with Department for Education support, setting out unit costs to different agencies of various activities provided to the same families and households with multiple issues, calculating the negative outcomes for families and individuals over their lifetime, and building up potential savings of interventions. Log on to www.registration.livegroup.co.uk

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WHITEHALL

Preparing for the new CSR era

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