Local Authority Cost Savings:

Data-Driven Decisions vs. Short-Term Cuts

4th November 2024

by Mark Gannon

Citizen services are suffering from local authorities’ attempts to save money in the short-term. A lack of quality data and insight into their services is impacting how local authorities deliver outcomes to citizens.

Our Director of Client Solutions, Mark Gannon, explains that this is the case at a council-wide level, but even within individual services such as housing, social care and planning.

“Data and insight is generally poor, and more often than not very siloed. It is little wonder that savings choices are often tactical, not based in reality and very often lead to poor outcomes and/or unintended consequences.”

Mark Gannon

Director of Client Solutions, Netcall

Indeed, authorities can suffer in several ways from their efforts to save money, instead of adopting a ‘good savings’ approach.

• When internal functions are pitted against each other: The process becomes tactical, really not very strategic and entirely disconnected from reality. You often have a corporate plan that says one thing and a set of budget and savings choices that do not support it.
• ‘Shroud waving’ from some services such as social care: This is the ‘children will die if…’ argument. They will just overspend whatever is decided anyway, as they know that savings are undeliverable without structural changes.
• Short-term thinking: This sees authorities try to save money today, which stores up costs for future years. Often those in charge will make those decisions because they are being measured on what they achieve today, not in the future.

There is a real cost to the efforts of managing bad savings decisions. This is because of their nature, they rarely lead to the outcomes expected so there is always more cost in managing the fall out.

The difference between good and bad savings

So, what is the distinction between good and bad savings? In public services, it often hinges on the long-term impact and sustainability of the savings measures.

“Bad savings are those that are general short-termist, not sustainable, lead to additional longer-term costs and are often worse for citizens.”

Mark Gannon

Director of Client Solutions, Netcall

Good savings

• Preventative measures: Investing in early intervention programmes to prevent issues from escalating. For example, providing support to families at risk of breakdown can reduce the need for more expensive social services later.
• Efficient resource allocation: Ensuring that resources are used where they are most needed. For instance, placing children in care in the most suitable and cost-effective settings are crucial. Here, mapping processes can really help in understanding data points within those processes.
• Technology and innovation: Implementing technology to streamline processes and reduce costs. One example is where a council, like Newcastle County Council, uses a platform like Citizen Hub to rationalise its application estate, improving integration, reducing duplication, improving security and saving cash.
• Digital transformation: Implementing digital solutions for services such as online payments, online reporting, virtual assistants and automation can streamline operations and reduce administrative costs.
• Collaborative approaches: Working with other organisations to share and reuse can reduce overall costs significantly. However, ‘shared services’ might not be the answer. These are often bad savings as there is significant cost to set them up and they often fail to deliver expectations and are then decommissioned at great expense. There are not very many good examples of local government shared services. But there are good examples of collaboration, sharing and reuse.

Netcall’s AppShare is a free resource where councils come together and share problems and solutions without having to develop the same thing over and over. Another example is LocalGov Drupal, of which Netcall is a supporting partner.

Bad savings

• Short-term cuts: Reducing funding for essential services without considering long-term consequences. For example, cutting youth services can lead to higher costs in social care and criminal justice later.
• Staff reductions: Cutting staff numbers to save money can lead to decreased service quality and increased workload for remaining staff, which can ultimately cost more due to inefficiencies and higher turnover.
• Deferred maintenance: Postponing maintenance of infrastructure can lead to higher repair costs in the future. For example, not maintaining roads properly can result in more expensive repairs and increased vehicle damage costs. The same applies to allowing your application estate to ‘bloat’ rather than invest in a platform like Liberty. You might save a little money today but you will be spending considerably more over and over into the future just to maintain a legacy infrastructure.
• Isolated decision-making: Making savings decisions without considering the broader impact. For instance, increasing police numbers without addressing the capacity of the criminal justice system can lead to bottlenecks and higher costs elsewhere.

Recommendations to authorities

Authorities should have a mid- to long-term strategy and align budgets and the budget planning cycle to it. Additionally, it’s recommended that authorities:

• Get political support to be able to develop an approach that drives sustainable long-term savings but not deliver immediate ones.
• Build up your network of peer organisations to share, collaborate and reuse where you can. There is too much reinventing the wheel in the public sector.
• Procure FASTER, procure solutions that give you digital autonomy and remove reliance on expensive third parties.
• Make sure you procure solutions that are flexible, cost-effective and deliver a positive ROI.
• Understand your data. But first, ensure you can get at your data. Then use it to overlay against your processes, to understand opportunities, dependencies and potential impacts of savings decisions.
• Make sure savings decisions are made collectively and in the open. This flushes out unintended consequences.

“Balancing the need for savings with the need to maintain quality and efficiency in public services is crucial. It’s important to consider both immediate and long-term impacts when making these decisions. ”

Mark Gannon

Director of Client Solutions, Netcall