Tackling town hall misspending

I co-wrote this 2200-word feature for the Sunday Times’ Focus section, after writing a number of news stories on local government spending as the Coalition’s cuts came into effect.

(See: ‘Councils splash out on new HQs as staff numbers are slashed‘, ‘‘Slash and burn’ councils spare pet projects‘, ‘Britain in gloom as flowers axed‘, ‘Councils pile on tax by stealth’)

Full text on the Sunday Times website here, or after the fold.

How to tackle town hall excess

Town halls squeal that cuts to services are unavoidable, yet the proliferation of highly paid managers shows alternative savings could be made

Tim Rayment, Robin Henry and Cal Flyn
The Sunday Times, 13 February 2011

Britain has a secret that 2.9m people know and now Charlie is going to let you into it. He believes in public service and wishes to have some meaning in his life by working hard on your behalf. Unfortunately, there is not a lot for him to do.

“Cuts are long overdue and my authority is finally beginning to implement them,” said the council officer, who earns twice the national average but works on what he describes as pointless projects. However, the cuts are in the wrong place: “We appear to be pressing ahead with huge cuts to frontline services and minuscule cuts to support functions.”

Last week Charlie’s private world of frustration moved on to the public stage as councils across Britain announced their budgets. For a moment it seemed as though we were back in the 1980s.

Things that matter — care for disabled children, citizens’ advice services, libraries — were threatened as politicians argued. The coalition that had been so keen to devolve powers locally found its “big society” project at risk as councils used their new freedom to create maximum embarrassment.

Labour-run Manchester announced “the worst cuts since the austerity after the second world war”, but said it was not responsible. Then a Tory minister pointed to a more efficient authority next door.

The real story lies in the back offices, where a secretariat continued to grow in size and splendour even after the financial crisis hit in 2008. Now we face the redundancy bill. Extraordinary as it may seem, for some authorities the moment of truth has yet to arrive.

“We have plenty of fat to cut,” said Charlie, “especially in support areas — human resources, ICT, information collection and distribution, equalities and communications. Our intranet seems to sum up our priorities — we’re very pleased we’ve moved into the top 100 [out of 400] in the Stonewall index for lesbian, gay, bisexual and transgender support.”

Government sources say Eric Pickles, the pugnacious local government secretary, is “in a hurry” to bring the inefficiency to an end.

His resolve might relieve the guilt of another council officer, who transferred from a FTSE 100 company to a county council two years ago.

“On my first day I kept asking my boss if there was anything I could do. He was irritated. He took me aside and said there was nothing I could do and there probably wouldn’t be for months,” the officer said.

“He offered me a wager. We’d pick up the phone if it rang and respond to any email that requested one, but otherwise we would do no work that we generated ourselves. Two weeks later I was £20 poorer.”

You might think it is not that difficult to cut the cost of local government. Last week David Cameron claimed that all he seeks is for next year’s spending to be the same as in 2007. There was no need to close 500 libraries then, so why now?

Finance is complex, but the answer to this mystery is simple. Ageing electorates add 4% a year to the bill for looking after the elderly and this is a big part of council budgets. Flood defences and European Union waste-disposal rules are new and expensive burdens. Meanwhile, the prime minister is telling the truth: compared with 2006-7, the money is unchanged.

Extra pensioners do not shut libraries, however. The real reason is cultural: insiders admit that many councils cut services before bureaucracies, until they are forced.

Manchester has just been forced. The city’s budget, published last week, proposes giving 820 managers severance packages or early retirement over the next three years.

“All councils are heavy on middle management,” said Andrew Allison, the national co-ordinator of the TaxPayers’ Alliance. “And because they’ve allowed pay to rise to £200,000 for a chief executive, it pushes the directors to well over £100,000, which then pushes up the middle managers.”

At Liverpool city council nobody was paid more than £200,000 in April 2006. Four years later there were three — the chief executive and two directors shared £633,178 — while the council’s £100,000-plus club had swelled from 11 to 24. The trio then left in an efficiency drive.

Manchester has accused the government of “ideological” cuts that hit the poor as it unveils its £279m savings plan. Funding for childcare, voluntary groups, libraries and leisure centres are being cut.

“A responsible government would never have done this,” said Sir Richard Leese, the Labour council’s leader. “We would not have cut as fast or as deep as we have been forced to.”

The city’s accounts show an explosion in pay, however. In 2005-6 the authority paid 268 staff more than £50,000, with eight on six-figure salaries. Four years later there were 445 above £50,000, with 17 on more than £100,000. At Birmingham city council the number on more than £80,000 nearly trebled, from 34 to 92. In Sheffield it more than quintupled, from 10 to 55.

Then there are the job titles. Bristol has one European officer, six diversity officers and five officers dealing with climate change, at an estimated cost of £434,000. Yet £139,000 is being cut from music lessons in its schools, £200,000 from libraries and £1.5m from adult social care.

In Bedfordshire, Terry and Sherry Nicholls celebrated when they were awarded three days a month of care for William, their profoundly disabled son. Now, after hearing the news of spending cuts at Central Bedfordshire council, they are in fear again.

William cannot eat, walk or speak, but the respite care has saved his parents’ marriage. “It’s been bad to the point of us nearly breaking up. When it’s at its worst I threaten to go to the council offices and leave him there,” Terry said. “Every day we expect the letter saying they are withdrawing the little respite care we’ve got.”

Central Bedfordshire council has 238 staff earning more than £50,000. It has spent £56,905 on a diversity officer and £50,666 on a climate change officer. It is proposing to turn off street lighting at midnight, halt the mobile library and stop subsidising school music services.

It does not have to be like this. Hull city council was so badly run it was in special measures five years ago. It was the worst authority in the country. Then a new young leader took over.

Under Carl Minns, a Liberal Democrat, chief executive pay was cut by 20% and the number of senior managers fell to 20, from 29 in 2007. Staff were relocated so unnecessary buildings could be rented out or sold.

Hull did not wait for a world recession to do this. Now it has the lowest council tax in Yorkshire and the 14th-lowest in the country, despite the costs that arise from areas of deprivation.

Minns was inspired by his father, who ran small businesses. “We haven’t done anything special,” he said. “A lot of it is common sense. It’s having the political will.”

In London, Kensington and Chelsea council has been guilty of racking up the high earners (including a five-fold increase in those paid £80,000 to £99,000 in just four years) but it is prepared to be radical to deal with the problem. Last week it announced plans to team up with neighbouring Hammersmith and Fulham and Westminster councils, saving £10m- £15m each by sharing back-office and management costs. By centralising some services — education, libraries, adult social care and human resources — they hope to halve overheads. Two of them will share a chief executive.

More could be done. But first a culture needs to be broken.

Last week this newspaper reported that an American company had approached 50 councils offering to keep libraries open, spend more on books and extend opening hours at the same time as cutting costs by up to a third. Oxfordshire county council, which has threatened nearly half its libraries, ignored the offer for nine months. It took a public outcry for the company to be approached. The majority of authorities showed the same lack of interest.

Innovation Unit, a not-for-profit organisation that suggests ways to improve what councils do while cutting costs, says commissioning services from charities, voluntary groups and “social enterprises” can generate savings of up to 60%.

The system obstructs outsiders, however. Councils prefer to use their own staff or existing providers, locking out those who are trying to work from the community up and not from the council down.

Only a few schemes have broken through the barrier, allowing savings to be measured. The results are stunning. In one programme, vulnerable adults who want to stay in their own homes give a spare room to those with the skills and desire to care for them. Carers are paid a flat rate, which leads to better care than hourly rates.

To set this up for 85 people costs £620,000 over five years. The savings may be as high as £12,988,000 during the same period, while people with physical or mental disabilities keep their independence and avoid residential care.

Equally promising ideas are not being heard. “Looking inwards for solutions has been the culture for decades,” said John Craig, a managing partner of Innovation Unit.

A white paper on public services reform, due out this year, suggests legislation so that “big society” organisations win council contracts.

Councils have already been ordered to publish details of any spending over £500. “People say that isn’t localism,” said the government source. “Well, find me one person who objects to councils being transparent. There’s this mindset that a £1 cut to local government equals a £1 cut in service level. Quite frankly, that’s ludicrous.”

One authority unwilling to put its spending online is Nottingham city council, which has spent £3.7m in a year on advertising and marketing and now plans to save on citizens’ advice and homelessness projects. “There are officers on salaries between £50,000 and £70,000 who don’t do anything useful,” said Andrew Price, the council’s opposition Conservative leader. “They just produce endless reports.”

To return to the authority that is proudly improving its transgender support, Charlie is worried. He thinks that his bosses are playing politics with the cuts, hitting high-profile services while keeping alive their pet projects. “I don’t know if it’s possible,” he said, “but it’s a shame there’s no government list of mandatory services that all councils must provide, and any money left over could be used for ‘nice-to-have’ services.”

That is not going to happen. The whole point of localism is that councils make their own decisions and it is our job to police them. We have every incentive and not just because of our council tax.

The Nichollses have contemplated dumping their son on the council’s doorstep. There are thousands like them needing home helps, respite care and all the services that councils are supposed to offer. But they will only get them if we convince the bureaucrats that it is they who work for us.

Additional reporting: Robert Watts

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