Welsh Public Services and the Efficiency Savings Tipping Point

This week, we are featuring three specially commissioned blogs from leading figures in local government that discuss the financial challenges facing councils in England and Wales.
In the final blog of our series, Mohammed Mehmet (Chief Executive of Denbighshire County Council) discusses how the public sector in Wales should respond to the cuts in funding.


All councils in England and Wales are trying to safeguard key services while reducing expenditure. The scale and pace is greater in England than it is in Wales, but the challenge, journey and probably the destination is broadly the same. It should, therefore, be possible for Wales to learn from the English experience.

Like English councils, Welsh councils started with efficiency programmes. Between 2009-10 and 2013-14 my own council reduced its expenditure by over £20m without cutting or even reducing services to the public. But we haven’t been able to set the council’s budget for 2014-15 and 2015-16 simply my relying on efficiencies and modernisation programmes. There is still scope for efficiencies and there always will be in a multi-million pounds organisation, but we have reached the ‘tipping point’ as far as being able to set balanced budgets by solely or mainly relying on them.

money-scalesIn the last two years we have reduced reserves or used them on invest to change programmes, divested services, engaged in limited transformation approaches and also cut services. In 2015-16 we transferred £1m of direct service delivery to others and saved that amount for the council. These have included CCTV, grounds maintenance, Revenues and Benefits services and music outside school. We underestimated the leadership skills required to broker such alternative arrangements. Many of our officers are brilliant at using their budgets to best effect, but delivering alternative service models, with no or a fraction of the budget, requires skills that we don’t readily possess and have had to learn from first principles. We also underestimated the pace of change. Putting in place new governance arrangements is not straight forward and, again, not learning from first principles would have been helpful.

Wales has been talking about collaboration for years and there have been some successes, but it is yet to deliver transformational financial savings. There are many reasons, but fundamentally we haven’t truly embraced it because we haven’t been prepared to give up our spheres of control and because we haven’t had to. Perhaps collaboration was pushed too early – at a time when we all knew there were enormous efficiencies that could be made instead (2009-2013) and Welsh Government was protecting local government budgets from serious cuts.

But our appetite for collaboration and other transformational approaches is now changing. Most recently the driver for effective collaboration between the Police and the six local authorities in North Wales has been the discovery of the extent of ‘waste demand’. An analysis of the calls received by the Police control centre identified 27% of calls as not police business. An alignment of websites and a public education campaign have eliminated this problem without shifting demand from the police to local government, saved thousands and improved the service to the public. We know there is enormous potential for demand management in our Ambulance services, health and social care services and digital delivery, but we are yet to learn how to fully realise these.

Welsh councils desperately need some of the flexibilities of English councils. There are over 50 direct grants to local government in Wales, compared to fewer than 10 in England. The millions spent on administering these individual silos is becoming a moral as well as a waste issue. Close to 30% of Denbighshire’s revenue budget is made up from these grants. We could achieve the desired outcomes at a fraction of the back office costs for both Welsh Government and local government.

We haven’t reached the efficiencies ‘tipping point’ if you take a wider view of public service. A very big risk for us in Wales is that, over the next few years, individual organisations will be making deep cuts to services while in the public sector as a whole there is still enormous scope for efficiencies. Learning how to avoid this would be very helpful.

I think the public expect us to reach the efficiencies ‘tipping point’, certainly before we contemplate cutting direct, valued services. Any lessons we can learn about how to reach this point, not simply as individual organisations, but as the public service, should be welcomed with open arms.


About the author: Dr Mohammed Mehmet is the Chief Executive of Denbighshire County Council, a role he assumed in 2009. Dr Mehmet, a former lecturer in mathematics, has served as a former director of children’s services at Peterborough City Council and as director of education and regeneration with the London Borough of Islington.

 

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