Title

A 25% cut across four years in the annual £27.3bn spent by councils in England on employment costs would mean a loss of 272,000 jobs. Clearly, not only is this unpalatable, but it cannot be met through redundancies. However, a focus on re-skilling and redeployment could still meet the targets, says Jan Parkinson. There are two morsels of received wisdom being chewed over in the debate about the cuts local government needs to make as a contribution to the public deficit reduction. These are, first, that we need to ‘cut early, cut once and cut deep', and second, that ‘salami-slicing won't work. We need a fundamental change in what we do, as well as the way we do it.' Received wisdom can be overdone, but it does help in getting to the heart of the matter. Local Government Employers (LGEs) recently held a debate about how best to manage and transform the workforce in the coming period of tough budget reductions. All involved agreed that crude cuts would risk undermining many things which councils were seen as being responsible for in many places – not least, providing reasonablysecure jobs. LGEs' take on planning the way forward is based on the so-called ‘six Rs' – of which, more later. What emerged very quickly in the debate, though, was the need to be guided by at least one other R – realism. In the end, cuts come down to money. A 25% cut to the £27.3bn spent by councils in England each year on employment costs – including pensions – for the main groups of employees excluding teachers, would be about £6.8bn. Using the rule of thumb that, on average across the country, £1m buys about 40 jobs in local government, we can quickly work out that finding the cuts entirely through job losses would mean losing about 272,000 jobs in total – the best part of one-quarter of the workforce. This would put many services at high risk. Redundancy is, therefore, the least palatable of the LGEs' six Rs. Some job losses are inevitable, but we need to make full use of the other Rs to keep job losses as low as possible. These are: reorganisation, re-engineering, re-skilling, redeployment and reward, which are described briefly below... Reorganisation: This is about the development of new business units to manage services with pooled budgets in areas which have not been considered before, and perhaps with non-traditional partnerships. The case for wholesale restucturing within councils is not so strong at the moment, because this would cost money and reduce the focus on priorities. Re-engineering: We are thinking here of business processes which need looking at on a holistic basis – back-office and frontline services – and ways of working which will have major implications for actual jobs. Adopting an inclusive approach and empowering your workforce to re-design the services of the future means cutting the red tape and really doing things differently. Re-skilling: It follows from the fi rst two that many people will need new skills to thrive in a new environment, but what are these skills, and how do we develop them? To identify the right skills required, it is vital that workforce planning is embraced by the whole organisation, from members to line managers and beyond, and that talent is managed properly. Redeployment: Changing priorities will mean some jobs disappear, but do we need to lose the people? A skills gap analysis will be able to identify staff with transferable skills, who might otherwise have been overlooked or would not put themselves forward for other opportunities. Can we think bigger about redeployment across other councils, partner organisations and sectors? Reward: While it is clear that there cannot be any real growth in the overall pay bill over the next few years, we do need to make sure we develop the local government reward framework radically, so that it provides the fl exibility to help staff redeploy in different organisations. We also need to ensure the reward system helps drive productivity by emphasising pay for contribution and performance. There is nothing ground-breaking in any of these concepts, but what is new is that circumstances are driving us to use them in a different way. How can we make sure that this all adds up to a coherent plan? Received wisdom gives us an understanding of the tough decisions to come. Realism gives us a true sense of the potential costs involved. Outlining a scenario which relies entirely on redundancies to produce savings gives a sense of what might be at risk. Instead, we must use a wide range of organisational and HR policies to achieve necessary cost reductions. Making the changes this way gives us the best chance to preserve and develop services, as well as minimising the losses of important jobs in many areas. One optimistic point made during the LGE debate was that, in many councils, the necessary cuts would take the organisation back to the level seen in 2006. That's right – 2006, not 1996, which can make things seem a little less drastic. The Government has, itself, explained that 25% cuts over the four-year period highlighted in this autumn's Comprehensive Spending Review actually means 4.7% savings in each year, plus an allowance for infl ation. It has also said that money saved through pay freezes could count towards this figure. So, if we make full use of wider efficiency gains through procurement and so on, and apply the five good Rs rigorously to drive productivity, we can hope to find a way through the next few years that is not catastrophic. Nevertheless, the challenges are considerable, and it will take great efforts to achieve what we all hope will be the final R – namely, a renaissance of local government. Jan Parkinson is managing director of Local Government Employers

Title

How the six 'R's can help meet the job cut targets

SUBSCRIBE TO CONTINUE READING