Saving money in local government – 10 tips for thriving in unprecedented austerity

21st February 2024

Mark Gannon

by Mark Gannon

For nearly 15 years local authorities have had to face and manage the twin challenges of decreased funding, while demand for statutory services increases (the services they are legally required to provide). These services include adults and children’s social care and the provision of temporary accommodation and homelessness support. As a result, this has led to many local authorities now facing a significant risk of entering a financial crisis, at an unprecedented scale. Download the top 10 tips.

The fallout of the pandemic and the cost of living crisis has significantly increased pressure on local authorities when it comes to statutory services, as funding from central government lessens. First up is social care. The number of over-65s in England increased by more than 400,000 in the past five years, and the older people get, the more likely they are to need care. There has also been a surge in the need for children’s services, with more than 20,000 extra referrals between 2020-22, compared with a decrease of 1,400 year-on-year between 2018-19.

Lastly, there is housing. The number of households living in temporary accommodation – a cost incurred by local councils – reached a record high of nearly 100,000 as of 2023. The cocktail of hardships local authorities are facing is sure to result in more councils struggling to meet financial budgets and potentially declaring bankruptcy.

For some local councils, it is too little, too late

There has been an increasing number of local authorities declaring effective bankruptcy – known as section 114 notices – in the past few years. In fact, according to the Institute of Government there were more in 2023 than in the 30 years before 2018.

The Local Government Association also stated around 90 per cent of councils were using dwindling financial reserves to keep themselves running over the past few years. And a quarter of councillors have expressed that it is likely their local council will go bankrupt in the next five years, unless funding and support from the UK Government increases.

Recently, cross-party MPs on the levelling up, housing and communities committee called out the UK government to act now if they want to avoid a severe crisis and financial distress. This follows the publication of a recent report outlining that funding available to local authorities has not kept pace with pressures, which has led to a funding gap of £4bn.

So how do local councils avoid bankruptcy, all while receiving significantly less funding and needing to continue serving their constituency? Overcome budget constraints with Citizen Hub.

Utilising technology where possible can provide some help. In an era dominated by technology, digitising internal operations allows for streamlining bureaucratic bottlenecks, improving overall workflows and saving costs.

Ten tips to ensure successful digital adoption

1. Unleash the power of data

Many local councils are still using legacy systems, with a vast amount of data trapped in silos. This is leading to local councils falling behind in their ability to understand the needs of their citizens and local places. Unlocking data within their processes will allow local government to create new insights, drive service improvements and identify early intervention to reduce costs.

2. Collaborate and share

The majority of local authorities are responsible for the same types of services. So, utilising this opportunity to collaborate and share ideas to help other councils meet targets and produce results will benefit the local community and save costs.

3. Reshape the procurement of digital solutions

Today a lot of local councils are still procuring for the non-digital age and there needs to be a radical overhaul of how councils specify and procures digital solutions and platforms. Digital transformation and innovative technologies, like low-code, can also make purchasing significantly more efficient and less resource-intensive by moving these processes online, saving local councils valuable time and money.

4. Use digital tools to transform internal operations

Many councils are still incredibly inefficient in how they organise and run their internal processes and systems. Local authorities need to utilise the technology available to improve and automate workflows, reduce wasted resources and save costs.

5. Focus on early intervention and prevention

Local authorities spend a lot of money responding to problems once they have happened, instead of being proactive in preventing possible problems. Investing in tools such as artificial intelligence and IoT to help prevent issues from occurring in the first place, will save local councils significant amounts of money which can be reinvested elsewhere to improve outcomes.

6. Design services with citizens in mind

Too many local authorities invest significant amounts of money into building digital services without really understanding good service design or involving their citizens in the design of those services. This leads to issues with customer service and unhappy citizens, which can lead to financial issues if councils then have to re-develop these services. Include users when designing new services, which they will be using, to ensure the customer needs are met the first time. And get out of discovery into delivery more quickly!

7. Rationalise application estates

Local authorities are spending far too much money maintaining legacy applications that are expensive and not particularly effective for today’s digital-first world. This leads to poor citizen and employee experiences and costs local authorities a lot of money when they are currently suffering from funding cuts. By rationalising applications, councils can streamline processes, cut licence costs, reduce maintenance costs, and enhance overall quality and efficiency.

8. Use technology to attract and retain talent

Across many industries, it is becoming hard to attract and keep talent, especially in local government. However, by using efficient tools that make it easier for employees to be successful within their roles, councils can massively improve employee satisfaction and retention rates. This will subsequently save costs and improve productivity.

9. Map, improve and control processes

Complex organisations, in particular local authorities, need to understand their processes and ensure they have the right technology and tools to help them map the processes, identify waste, and ensure a streamlined system of efficiency.

10. Continue to digitise services

Today there are still too many services within local authorities that are not digitised end-to-end, which leads to waste and failure demand. The technology available to us today provides no excuse for councils to have not already developed modern digital services to benefit their communities.

Revolutionising the public sector with digital technology

The public sector, especially local government, has been slow to adapt to modern digital technologies. A cultural shift is needed to realise the advantages of digital technologies and the potential improvements they can bring to local communities when implemented correctly.

Taking a proactive approach to implementing digital technologies is essential to the effective delivery of services focused on citizen needs. This starts with tackling technical debt, skill shortages, financial limitations and embedded legacy systems within councils. Collaboration is the key to achieving this. Implementing a first-class IT infrastructure, paired with a data management strategy empowers local authorities to focus on improving outcomes for their people and places. Simultaneously, a good digital strategy should strive to support vulnerable citizens who are unable to engage with digital technologies.

The promise of digital transformation can create impactful and lasting change, which is why it is essential to invest in technology where possible to support local communities. With collaboration and a good digital transformation roadmap, councils can provide the best services and support to the citizens they serve.

This article also featured in Open Access Government: Digital adoption: Ten tips for local government to save money through unprecedented austerity.

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