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Every penny counts

15/05/2023 minute read Mark Dewell

Local authority budgets were being squeezed even before the pandemic, but now the cost-of-living crisis and anticipated £3.2bn budget shortfall in 2023 is forcing councils to reduce frontline services. Other pressures on already stretched services include a skills shortage, plus there are security issues around protecting sensitive data and remote working.

There are very real concerns about how local government leaders will be able to maintain the minimum level of service for residents across multiple departments and more than ever, they need to find ways to make every penny they spend work harder for the public they serve.

Joining forces

One emerging trend to reduce outgoings and optimise service provision is for local authorities to merge, centralising some services and reducing administration costs, with a single set of strategic aims and outcomes.

April 2023 sees this happening in a number of regions around the UK. For example, Cumbria County Council and six district councils will become two new unitary authorities. Its vision is intended to ‘create conditions for the new organisations to transform and improve outcomes for residents, businesses, partners and the environment’ with a ‘governance structure that enables the two councils to raise ambitions and become more successful.’

Somerset County Council is merging with five district councils to form a new single Somerset Council, bringing together all council services under one governance and a new North Yorkshire Council will replace the existing county council and seven district and borough councils.

Merging is a model that has been proved to work well in the private sector - centralising some services, particularly admin functions, means fewer employees and reduces costs. There is shared central leadership and management, and shared internal support services. In many cases, there may be a reduced estate with lower running costs and the economies of scale may drive down the purchase costs of some goods and services.

People before profits

Public sector governance is of course different than in the private sector, with specific challenges that include:

  • Local government bodies exist to serve people as a non-profit organisation and do not have the same culture of entrepreneurship.
  • Additional financial governance regulations mean financial directors in local government can take fewer risks and must provide full transparency around their activities.
  • Funding comes from central government and local council taxpayers, who require full transparency about how their money is spent. Residents have the power to vote councillors and leaders out of post, so they are fully answerable to the people.
  • Unlike private businesses that usually have a limited type of output, local authorities are responsible for managing and delivering a vast range of services, for example schools, social services and social care, road maintenance and repairs, waste and recycling, trees and parks management, local authority housing, cemeteries, and local planning, to name just a few. Each department has own set of objectives but all experience similar challenges around making reducing budgets go further.
  • Many local authorities are still struggling with outdated IT infrastructure, that limits efficiency and makes it difficult to extract useful data. There is pressure to invest wisely and implement effective adoption of new technologies.
  • Cybersecurity is an on-going issue, particularly for remote workers, as criminals target the highly tempting target of data held by local government, using phishing and other techniques to target weak spots.

Innovative governance

Digital transformation is key to helping all local government bodies achieve more for less. Digital solutions can automate many processes, reducing the time staff spend on repetitive tasks, while also reducing the likelihood of time-consuming errors.

Advanced’s Public Sector Finance Report 2023 shows 44% of finance professionals were manually matching at least 500 invoices in the past year – an unrewarding, time-consuming task that could be transformed with an effective automated solution. Digital tools promote faster communication too, helping teams to collaborate more effectively and enhancing interactions with service users to ensure a higher quality of service.

Cloud-based digital solutions also provide real time actionable data that can help councils make better decisions at every level of management. Our report reveals that 43% of finance professionals in the public sector want to provide a higher quality of data to leadership to guide business decisions.

Finance teams can also use data for more thorough procurement processes that aren’t just based on the cheapest supplier – expectations around transparency require that they need to demonstrate best value for money too, delivering real savings in time and resources as well as meeting ESG objectives.

Where local government bodies are merging, it is crucially important that they identify and implement digital solutions that can transform the management and service delivery of the new unitary body.

New technology will need to help bring previously separate teams together, providing the ‘glue’ that helps them collaborate and work together effectively, so they can find other innovative ways to increase efficiencies in all of their processes. Unlike on-premise systems, Cloud-based technology can provide far greater flexibility for organisations to scale and add on technology and applications when required.

Merging may create more spending power, but decisions will need to meet all requirements around transparency and procurement decisions and accuracy is key. 42% of the public sector finance professionals in our report do not believe the data in their current FMS to be accurate.

One way to ensure that digital transformation is a success is to partner with an experienced and reputable digital software and services provider to provide best return on investment for the public purse.

Technology for tough times

Delivering frontline services remains the number one priority for local authorities, requiring mechanisms put in place to ensure greater efficiency. Budgets must be protected as far as possible to provide these crucial day-to-day services.

As more and more frontline services now rely on technology, digital transformation across the organisation must ensure all sectors can integrate their digital solutions, with a unified approach. Access to actionable data has never been more important, to help local government drive better service delivery and ensure that residents’ needs are met.

Whether they are merging with others or continuing as a separate entity, leaders must commit to making new technology work for them. When every penny counts, partnering with an experienced software and services provider creates new opportunities for higher productivity and efficiency, while ensuring enhanced levels of cybersecurity.

Although some local authority teams have previously been cautious around the Cloud for security reasons, there is a growing recognition that it provides greater security than on-premise systems. They can also provide the real time data required for up to the minute data and continuous accounting at any time during the monthly accounting cycle.

A partner with a proven track record in digital financial solutions and specific in-depth experience in the public sector can help ensure that the investment is a success, for optimum return on investment, more financial agility, and increased spending efficiency.