A series of small cuts in each of the next four years
Cuts are coming. Chief Execs have made high level plans to cut 25% in real terms over the next four years of this parliament.
Few, if any, of the plans will have details of exactly how they will be executed. Everyone is awaiting the autumn announcement and most countries around the world will be doing the same thing. Without knowledge of how cuts will be implemented, rumours have started. In response, some have taken action whilst others are in denial or ignoring rumours.
Amongst the rumours and actions, are groups of people whose actions are based on the belief that 25% immediate cuts are being asked for. So, lets look at the maths. Most plans are based 2011/12 being the same cash amount for their Local Authority as this year – hence a small decrease in real terms. That leaves 3 more years to achieve a 25% reduction.
Create your own rumour. The same is happening throughout the world.
Simple maths shows that it is necessary to make between 5.5% and 6.75% cuts in each of the next three years after 2011/12, if inflation is between 2% and 3%.
That doen’t sound quite so bad, but certain services will be ring fenced, needing increased funding in line with inflation whilst others will be judged “non-core” and be asked to work with huge cuts or become optional. Who knows what we will pay to get into the Swimming Baths in future and do we really believe that potholes will be fixed so quickly and efficiently as they are today?
And what about compliance with legislation? What about new or changed Codes of Practice? What about Citizen increased expectations and those adverts on TV about “if it wasn’t your fault you may be entitled to compensation: no fee”.
My rumour is that we will evolve into the new state: lower services in some respects and possibly some services and jobs transferred to the Private sector. But the big point is that people will get creative and achieve these cuts using peer level collaborations of the most ingenious sort.
Most Local Authority Chief Executives have prepared plans at a certain level of detail to cut costs by 25% within the life of this parliament – 4 year ahead.
These will consist very roughly of the next FY being a standstill or slight reduction on this year and thus contributing around 5% reduction in real terms. The remaining 20% will need to be made in the following three financial years and each set of plans will profile such cuts according to local politics and local leadership. It almost seem “not so bad” when they are described in this way..sort of 5-8% per year for four years then we should be out of the recession and growing.
Brushing over or faltering at the hurdles
Watching the see-saw of the financial markets in the last fortnight it has been hard to make a prediction about whether we are teetering on the brink of the second dip of a W-shaped recession or simply stuttering as we slightly “brush the hurdles”. I am a big fan of the Andy Turner school of hurdles and like to see brushing over rather than faltering because hurdles were attacked too enthusiastically.
Will the execution phase of Public sector cuts be “not as bad” as we might think, but simply bad in some specific areas where Local Authorities do not have Legislation forcing to provide a Public Service? In such areas job cuts seem certain. Outsourcing might be a solution. The cost of Government WILL reduce and individuals will be unfortunate casualties. We might hope that the phasing of cuts, possible profiled more like a Hockey Stick, will allow the Private Sector to expand and thus reduce the effect on individuals and the overall economy.
We “Confirm” people can focus our efforts on making sure that our software and services focus hard on assisting Local Authorities reduce costs whether they remain Contracted, in-house or external or whether they adopt to total outsourcing model. That focus will need to remain for 3-5 years, it looks like now that the runners are in their blocks and their training has finished.
The starter’s gun goes in October and we wait with baited breath.