News

Civica statement on Government spending cuts announced on May 24

The government’s spending cuts announced yesterday (May 24) mark the first round of public sector spending cutbacks in the run up to the 2011 spending review.

The £1.16 billion reduction in local government grants, £780 million cut in Department for Communities and Local Government budget and housing funding reductions are likely to force local authorities and their partners to examine more radical and internal change approaches to deliver cost cutting while ensuring sustainable local services.

This may be counterbalanced to a degree by the ‘un-ringfencing’ of £1.7 billon of local government spending, which may enable chief executives greater freedom in directing strategic change and working with private sector providers.

Local authorities are likely to examine making internal changes, collaborations with other public sector organisations and outsourcing services to public sector outsourcing specialists, to help deliver step changes in efficiency such as:

• service redesign to reconcile local demand with restricted budgets
• organisation-wide improvement of core processes to massively reduce service delivery costs
• larger scale collaborations with public sector partner organisations and outsourcing specialists based on mutual outcomes
• strategic sharing of resources, facilitated or underpinned by expert service providers
• The cuts to areas such as welfare and the cap of £100 million on IT projects represents a move away from large scale IT programmes driven by a single supplier and could potentially encourage further competition from expert outsourced providers.

Local government and its partners have made successful and pragmatic efficiencies to meet all previous government efficiency targets. Civica believes these organisations have the management focus, capabilities and relationships with expert service providers to meet these latest challenges.