Almost as soon as Manchester announced its spending cuts, ministers swung into action, heaping the blame on cynical councillors and inefficient managers. “This is a cynical move by a Labour council, which is intentionally cutting front-line services,” said local government minister Grant Shapps, “You only have to look next door to Trafford to see how more innovative councils are taking steps to protect the front line.”
His boss, Eric Pickles, insisted, “It’s possible to do more for less and protect frontline services.”
This was to be expected. As Patrick Butler noted last year, “The government has effectively outsourced responsibility for spending cuts to town halls.” It can therefore cut their grants, attack them for not making savings, and then blame them for any cuts to services. Not our fault, guv, it’s these profligate loony left councils.
Even a cursory glance at the data blows the ministers’ claims clean out of the water. Compare Manchester’s funding cuts to Trafford’s. Manchester must cut 8.9 percent of its budget this year and 6.97 percent next year. Trafford only needs to cut 3.79 percent this year and 3.43 percent next year. Hardly comparing like with like is it?
The Local Government Chronicle’s Allister Hayman wrote a piece yesterday debunking the myth that cuts to frontline services can be avoided. The sharing of services by three London boroughs, held up by Mr Shapps as a fine example of efficiency, will save, at most, 16 percent of the cuts the councils need to make. A significant contribution, certainly, but hardly the panacea that government ministers are claiming. In fact, one of the three boroughs has already announced cuts to frontline services and the other two will surely follow suit. Shared services will take councils so far but they come anywhere near to solving the problem.
All the claims by politicians and journalists that local councils could avoid frontline cuts have one feature in common – they are almost completely data-free. Usually, no figures are quoted at all. When big numbers are thrown around it is usually without any context or comparison.
You only have to look at the overall figures to see the size of the problem. Local government will be expected to save around 14 percent over the next four years – roughly 3.5 percent per year. Some councils will have to save considerably more than that. Manchester, as we have seen, needs to lose around 15 percent in two years. Easy, say the politicians and armchair pundits. Just apply some private sector discipline to local authorities..
So if it’s that easy, what sort of efficiency improvements have private sector service organisations made in recent years? Using ONS figures, KPMG calculated that, on average the private sector has done twenty percent over ten years – that’s about 2 percent per year. Much less than average annual saving expected from local authorities and nowhere near the amounts places like Manchester are expected to save. Even the manufacturing sector, which is really good at efficiency savings, only did an average of 4 percent per year according to the CBI. A good result but still short of what many councils will need to do.
Next time you get into a discussion with someone who insists that efficiency savings in local government are easy, ask him or her for an example of a service organisation that has cut its running costs, without affecting its customer service, by 15 percent over two years. Or even, to make it easy, one closer to the average local authority cut – 7 percent over two years. You will probably find that they struggle to come up with an example. There is a good reason for this; such organisations are few and far between. Very few, especially in the service sector, have cut so much so quickly. As Robert Peston pointed out, even the hard-headed capitalists at RBS are giving themselves four years to cut 15 percent off their running costs. That’s twice as long as the council bosses at Manchester have.
So all this stuff about efficiency savings, back-office cuts and shared services is just noise, as are the silly stories about fat-cat councillors forcing spending cuts so they can preserve their perks. You could put all local authority back offices into shared-services, or even sack the lot of them, and it still wouldn’t get you your 14 percent savings over four years. You could replace your epicurean councillors with ascetic monks and it would barely touch your budget shortfall. Whatever government ministers and their cheerleaders in the media might say, a budget squeeze on this scale will lead to massive cuts to frontline services. Anyone who says that it won’t is talking utter nonsense.
Hat Tip: 24 Dash for this excellent cartoon.