Local authorities must do more for less

In the start of a major new series, LTT surveys the lay of the land for the difficult journey facing councils. How to respond to rising expectations from the travelling public, with far less money?

There are times when organisations face major change in the way they work. Sometimes, it is an external policy change, or else a new technological development; at other times, it is simply harsh reality.

Senior local authority leaders are preparing themselves for a major change of approach, in large part due to impending cuts to their budgets they liken to “the tsunami that is to come”.

Council transport departments are bracing themselves for reductions in ongoing revenue funding of perhaps 25%, and even a 50% drop in the money available for capital projects. Their income from developers and parking has already fallen.

Against this backdrop, LTT believes an urgent debate is now needed on how to minimise the impact of a shrinking public purse on frontline transport and highways services. This is the aim of our new series that we are launching in this issue, The Future of Local Transport Delivery.

Over the last five years, ministers have already been demanding that councils re-think how they deliver services: to find new ways of delivering the same service for less money.

Local government has already met annual efficiency savings targets issued by the Treasury by challenging how services were delivered. But the savings called for since the 2004 spending review have been relatively small fry: councils have had to trim their revenue budgets by three per cent each year without cutting services.

Budget reductions of this order – around £1-£2m for a county transport department – have largely been achieved without fundamental change. But delivering more for less is going to be much harder in what Conservative leader David Cameron describes as an “age of austerity”.

Especially since, as the UK economy starts to grow again, there will be a rise in travel demand, not least from the new homes that councils have identified a need for – 654,000 in South East England alone over the next two decades. Whilst the public is aware of the constrained funding environment, its expectations of transport networks show no sign of falling, and ministers are doing nothing to dampen them.

For instance, before Christmas, Prime Minister Gordon Brown ordered that the public be given “hitherto inaccessible” data on public transport performance, declaring that “an informed citizen is a powerful citizen”. Releasing the national public transport data repository for free will better enable real-time travel times by mode and route to be compared.

The challenge, then, will be to respond to the needs of a demanding public, which knows how much more reliable bus and car journeys are in neighbouring areas, but with far fewer resources. The Association of Directors of Environment, Planning and Transport (formerly the County Surveyors’ Society) has warned that some cuts will be unavoidable.

They are aware, however, just how difficult it is to remove a service that has previously been provided. The resistance to Powys County Council’s plan to switch off two-thirds of its streetlights prompted the authority to keep the lights on until 12.30am.

Cumbria County Council increased previously agreed contract payments to bus operators to reflect the soaring price of fuel in autumn 2008, rather than see them handing back their contracts. The rationing of rock salt this winter to highest-priority areas that left some grit bins empty and B and C roads untreated has not been popular.

Councils are aware that every £1 they can save by spending less on the process of transport delivery will mean that a £1 cut to frontline services is avoided. This is why forward-thinking council leaders are already scoping out how to establish “the leanest possible operation” that communities secretary John Denham called for last week.

Outsourcing has the potential to offer transport services from highways maintenance to transport planning at lower cost. Not, as Denham said, by offering “the most bog-standard, lowest cost service contracted out in bulk to the lowest bidder,” but “focusing more, not less, on the needs of individual users”.

Companies in the supply and support services sector have already begun to shape up new offers to help local authorities rise to this challenge. This includes more closely integrating the delivery of different services, for example in ‘fence-to-fence’ private finance initiative contracts that entail far more than repairing worn-out roads: the Birmingham PFI demands a traffic management strategy for Birmingham.

Reducing duplication by bringing together the client, contractor and consultant into one team – so-called ‘horizontal integration’ – as in the case of the Gloucestershire/Atkins and Buckinghamshire/Jacobs partnerships – and vertically integrated, collaborative contracts as in the Midlands are both seen as “a strong suit” by ADEPT president Alison Quant.

In the Midlands, three counties came together to commission a top-up design service from Scott Wilson. Another idea for ‘behind-the-scenes integration’ that is getting serious attention is that of shared services, sharing the back-office part of parking, street works and other services requiring large administrative operations.

The Confederation of British Industry has the cost of procurement itself in its sights, urging greater standardisation in contracts. The think-tank 2020 Public Services Trust, meanwhile, has called for contracts where clients do not try to micro-manage operations or give detailed specifications, but give contractors greater freedom.

LTT this week questions senior figures from ADEPT about how savage cuts can possibly be avoided, and whether outsourcing is the answer. In future weeks, we will ask the private sector how it is rising to this challenge.