Three separate conversations in a week.
All with senior Local Government staff.
All decrying the ridiculous position they find themselves in – again.
The cause?
The great Local Government pyramid scheme.

The following takes a look at how it works and how we’re now starting to see the top of the pyramid crumble.

Driven by the need to save £££, Local Government directorates are asked to identify savings for the budget. Directorates struggle to find savings, by the way, as most of the ‘easy wins’ are long gone. The identified savings are then included in a long list of proposals (you can find them on every Local Government website around February time when their budgets are approved).

The identified savings aren’t enough though, and pressure is exerted to raise the savings target.

The next problem is that savings proposals are quickly developed, aren’t stress tested and the reality is that due consideration just isn’t given to how the savings are actually going to be delivered. It’s a fact that there is enormous, unfounded faith in the belief that if a savings proposal is included on a spreadsheet, it will be delivered. Spoiler… it probably won’t be.

So… the savings are approved during the budget process and they become baked into next year’s directorate budget. The savings targets are turned into dashboards and monitoring reports and, by about June, those dashboard starts to turn red. It becomes clear that the list of savings, developed to get through the budget process, aren’t being delivered (‘but they were on a spreadsheet, how can this be true?!?’).

What next? Recovery plans are developed. It’s now necessary to recover and deliver the savings that haven’t actually been delivered – ‘in year pressures’. And then, yes you’ve guessed it, the budget process starts all over again and directorates need to find even more savings.

But here’s the rub. The process does not change. The same merry dances starts again. The undelivered savings shift into the next year (because changing the year always makes them deliverable, right?) and new savings lists are developed on top. Throw in the challenge of rising demand in key areas of Local Government expenditure (children’s social care, adult social care) and it’s hardly a surprise that we’re starting to see the pyramid crumble.

Authorities have burnt through £billions of reserves to prop up undelivered savings. And we’re now seeing the consequences. Yes, Northamptonshire has been terribly run (see our previous commentary here on their false belief in silver bullets), but review the independent audit and you can see this writ large. Multiply this across almost all Local Authorities and you can begin to see the scale of the challenge.

The most infuriating part of this zero sum game is the money wasted on grand plans (often propagated by the Big Four) of structural change (lest we look at the fun being had on accountable care organisations…), ‘commissioning councils’, and the outsourcing of the problem (gifting the savings to outsourcers…).

But. Amidst this traversety we are starting to see some Authorities make some bold decisions… recognising that they have a problem that requires a different approach. They want an honest appraisal of how they can save and are prepared to invest in the medium-term to make those changes happen. This takes honesty. Pragmatic leadership. Creative procurement of partners. The ability to shake councillors into seeing the problem is now, not in the never never. Fighting over crossing patrols is not where their attention should be. There has to be a realistic sense that spending £20k on a report is not the way to address a £20m, £30m or £40m budget challenge.

For some Authorities, we are convinced that the pyramid scheme is collapsing. Direct control will increase. And those Authorities, rather than blaming austerity, should hang their heads in shame.

Get off the pyramid scheme, take control, and ask yourselves the difficult questions.