ACCA - The global body for professional accountants

If community budgeting can be made to work effectively, it could underpin a public service delivery model that is not only cheaper to fund, but also improves service quality

This article was first published in the April 2012 UK edition of Accounting and Business magazine.

Community budgeting has not hit the headlines, yet it could become one of the most important and far-reaching programmes in recent years. It aims not merely to save money and improve service delivery, but also to force public bodies to work together closely and cooperatively. The ambition is no less than a reshaping of local public services by putting community planning at their heart.

Four areas have been chosen for large-scale community budget pilot projects, in which major services will be pulled together across the public sector silos of local and central government, the NHS and other agencies.
In the borough of Cheshire West and Chester, a single budget will be created to handle the £3bn to £4bn allocated to some 150 local services by numerous statutory bodies.

Greater Manchester’s various councils will also work together to pool investment schemes to improve their effectiveness – generating 50,000 jobs, it is hoped.

The ‘tri-borough’ partnership of Westminster City Council, Kensington and Chelsea Council and Hammersmith & Fulham Council in west London will take their existing collaboration further by improving young adults’ life chances. This involves an enhanced programme for skills and training, accelerated use of the family courts, and more action against anti-social behaviour.

The fourth major pilot project is led by Essex County Council, which will harmonise the objectives for local services to improve efficiency and make savings. A council spokesman explains: ‘This is perhaps the greatest opportunity we’ve ever had, or are ever likely to get, supported by the government, to fundamentally rethink how best to design, fund, commission and deliver outstanding public services.

‘With major reforms under way in the public sector, such as with the NHS, more than ever we need to work collaboratively with partners to develop radical new ways of working to deliver sustainable, improved outcomes for our citizens, customers and patients.

‘Essex partners made clear they do not see the delivery of cashable savings as the key focus for the whole-place community budget pilot. Ultimately, local partners view a whole-Essex community budget as a way to better use existing resources to enhance outcomes for citizens and communities. Partners intend any savings they deliver to be channelled into preventative activity that, informed by cost-benefit analyses, will generate further savings.’

Detailed planning is now taking place on the project, involving officials from the council, nine central government departments, the police and fire services, primary care trusts and other public bodies. Full implementation of the Essex community budget is hoped to begin in April next year.

An end to idling investment

Communities and local government minister Eric Pickles believes the cost savings alone justify community budgets. ‘We can no longer afford the luxury which left public investment idling to no purpose,’ he says.
According to research conducted by the Department for Communities and Local Government, community budgets could save up to 20% of expenditure. Even if the saving is only a modest 2%, this equates to over £1bn. As part of the programme, central government will allow councils more flexibility in the spending of their grant.

Objectives go beyond improving the capacity of public agencies to work together. The public is to be engaged in deciding what services it wants and how they should be delivered. Government sees this as furthering its open services white paper by improving the diversity of service suppliers, including through the greater use of community groups and social enterprises in service provision.

The Local Government Association (LGA) is a keen supporter. It told a House of Commons committee that the scheme ‘represents no less than a fundamental transformation of the way public services operate’.

Radical imperative

It added that this radical approach was ‘necessary because the fragmented nature of provision with its myriad funding streams and bureaucracies had failed to deliver better outcomes… The stark financial climate has made the case for change ever more pressing.’

However, the LGA says the experience of 16 early pathfinder community budget projects designed to streamline support for vulnerable people illustrates the challenges. Government departments continue to be swayed by their own vested interests, and effective accountability mechanisms must be set up for the cross-silo delivery of public services, backed by what the LGA terms ‘a strong local vision of the public service transformation that partners can invest into’.

Merrick Cockell, chairman of the LGA and leader of community budgets pilot borough Kensington and Chelsea – told the committee that with councils forced to accept spending cuts of 28%, it was essential that the community budgeting process does not shield Whitehall from efficiency savings.

Community budgeting is not so much a new idea as an evolution. It can be traced back to the work of the Audit Commission in developing area profiles and comprehensive area assessments and then onto the last government’s Total Place programme. These initiatives were aimed at taking a coherent view of all services provided locally, encouraging the integration of local public service delivery.

The commission’s area profiles project was led by Davy Jones, who is now a local government consultant. Jones is a keen supporter of community budgeting, but he doubts that it will achieve its objectives. ‘It could be very positive,’ he says. ‘But I am very sceptical. Government departments are still very rooted in silos and uninterested in giving up money and control.’

Despite this, Jones believes community budgeting offers a chance to cut service delivery costs while improving service standards.

Austerity’s upside

‘This could be one of the few good things to come out from the austerity programme, [recognising] that you really need to start service planning with a blank sheet of paper, planning from the bottom to the top,’ he says. ‘I would hope it’s not just about saving money, but actually looking at how to improve services for people.’

Jones argues that community budgeting should operate alongside another government initiative, participatory budgeting, to improve the capacity of local people to engage with councils in planning spending and service provision.

The Institute for Government (IfG) has also been influential in the development of community budgeting, having strongly supported Total Place. Kate Blatchford, research analyst at IfG, says: ‘Collaborative working between public sector organisations can be made more challenging when organisations have separate funding streams and pots of money. Community budgets represent a positive move to overcome financial barriers to collaboration.

‘Yet there is much more to collaboration than aligning budgets to resource joint projects. Successful collaboration requires strong local leaders who create a sense of shared purpose, spend time building relationships and jointly hold partners to account for their collaborative efforts. Local public sector leaders should seize the opportunities created by community budgets while also recognising that community budgets will be what local leaders make of them.’

What community budgeting will mean in practice is unresolved. But if it achieves its goal, public services will become integrated, cheaper and better.

Paul Gosling, journalist

 

Last updated: 20 Mar 2014