Last week, George Osborne announced details of the long-awaited comprehensive spending review. Over the next four years, the government will make over £80 billion of spending cuts, and although this is a huge amount of money, it is important to put these figures into perspective.
Today the government spent £120 million to pay off the interest on its debts. This equates to over £43 billion a year. In September, the government borrowed £16.2 billion, simply to pay its bills. There is no doubt cuts have to be made, and councils across the country will have to make savings of over 7% every year for the next four years.
Many will think this is impossible and are dreading the worst, but there are councils in the UK who have achieved significant savings in recent years, and importantly, frontline services have not been affected. Necessity is the mother of invention, and these cuts bring both challenges and opportunities.
The Nobel prize-winning economist, Milton Friedman, once said, “If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand.” Or as Ronald Reagan once said, “Government always finds a need for whatever money it gets.” Government isn’t good at running things. It invariably makes a hash of anything it gets its hands on. Most capital projects come in way over time and way over budget, so my advice to council leaders is to ‘think outside the box.’
What they should do is come up with a list of services they currently provide and ask themselves if these services could be provided cheaper and more effectively by an outside organisation. For example, what do councils know about running arts centres? Not much, but arts charities do, and can run arts centres in a better and more cost effective way.
Windsor and Maidenhead Council recently installed smart meters in its buildings and the result was a 15% reduction in energy consumption. The London boroughs of Westminster, Hammersmith & Fulham, and Kensington & Chelsea have proposed to merge all their services, from schools and refuse collection to child protection, under the direction of a single chief executive. They estimate they can collectively save £100 million. Although there will be job losses, many workers will jump at the opportunity to retire early or take voluntary redundancy. Perhaps this is something Hull and East Riding councils should think about? Is there a reason why two neighbouring councils should have two chief executives, over a dozen directors, and management teams duplicating the work of each other? Wouldn’t it be more sensible to pool resources?
No doubt Carl Minns and Stephen Parnaby have their own ideas, but what they must do is preserve frontline services. I think they can do that, improve some services, and deliver a reduction in costs. Time will tell how successful they are.
I'm sure many readers will have ideas how their councils can save money. Council leaders are currently looking for ideas, before they start finalising their budgets. Why not contact your council and make your suggestions?