Darra Singh on salami slicing, stress testing and service provision

Darra Singh worked in housing associations in London and the Audit Commission before becoming chief executive of Luton Borough Council, the London Borough of Ealing then Job Centre Plus. He recently chaired the Riots Panel which finished in March, and joined Ernst and Young’s government and public sector practice in January.

Room 151: What work do you do in local authority finance?

 

Darra Singh: We work on financial discipline, stress testing and budget plans, looking at where councils can go further or where they might have done enough.

It’s doing what the best councils are doing, which is moving away from the old fashioned salami slice approach towards resources to a more fundamental look at what is the council there to do and how can it adapt to the financial constraints that we are under and are likely to be under in the next spending review as well.

We do work to support procurement and look at how existing contracts are run. We have a whole set of disciplines around property and asset rationalisation looking at what is the design of services in localities and what does that mean in terms of how services are delivered and stripping away organisational boundaries, thinking about use of property across the public sector.

We do work with some authorities developing an approach for what we call a quality framework. It’s a framework which looks at cost and quality in the relationship between commissioners in local government and providers of residential care for example in the private sector – so establishing an appropriate relationship vis-à-vis what is to be procured and also getting more trust into that relationship.

Room 151: What do you mean by the old salami slice approach to finance?

DS: It’s the classic of, you get to the budget round and the approach that some used to adopt is to say lets take x% off each service, so you look at it in a silo-based way, taking 5% off one year, 3% off another year.

What that doesn’t get to are the fundamental questions. They are: what are we here to do with the council in this new environment? What are we expected to do in coming years? What does that mean for how we’re organised? What does it mean regarding what we provide directly and what others provide? What kind of business do we want to be in?

Those questions sometimes get lost in the approach of having X amount of pounds to spare and then just dividing that up between departments.

Room 151: How do you go about the stress testing and budget planning work you’re doing with local authorities?

DS: We have recently started work on those things. We take the existing plans and then rigourously examine them, collaborating with clients. The style here is to be very collaborative, we don’t want to come into an authority, soak up a lot of information, produce a report and then leave.

We work so that there is an honest skills transfer because we then get the best out of the information and are able to bring our experience of working with different clients in to that as well.

We look at previous savings plans and how they have been implemented, we’ll look at the cumulative impact of savings plans in the given area over a number of years and then see what we feel may be being missed or can be pushed a bit further.

We’ll do a risk analysis of what has been achieved so far and also think about the overall impact. Sometimes when you reduce costs, you do that in one area but it’ll pop up as an additional demand in another. It’s being alert and testing what the intended consequences will do.

Room 151: Do you deal mostly with the heads of finance and directors of finance?

DS: We’ll deal a lot with the FDs but they have a lot to cope with so on a more day to day basis we’ll be working with their finance colleagues or devolved finance functions within services.

Room 151: Do you think that most councils are now sensibly using asset rationalisation as a way to generate resources?

DS: I believe so. In my many meetings and discussions with councils better use of existing assets comes up everywhere. I think it is easy to do that within the boundaries of one organisation, but there are challenges when it comes to doing it across organisational boundaries. That’s where we do know more gains are to be had.

A lot of councils we talk to are divesting satellite offices, revamping existing offices, going more open plan, doing more hotdesking etc. When I was at Ealing we did a lot of that sort of thing, for example we built a new leisure centre and put a library on the ground floor and put a safer neighbourhood police station there too.

Room 151: So you help with putting organisations together?

DS: Even when relationships are great across organisations I think we can help facilitate. There are a lot of bright people working for councils and the other organisations, we don’t have a monopoly on wisdom but what we can do is move things forward. Particularly in terms of cross organisation working, it’s about agreeing what the size of the prize is and agreeing what then happens to realise that and share it amongst the partners.

Room 151: What sort of work is going on with procurement and contracts?

DS: Where it is required we work with looking at how procurement is handled now, processes, dealing with maverick purchasing. In addition to that we have a team that can reduce waste in existing contracts. We look at organisation and how the central procurement team relates to different service areas.

Room 151: How open do you think councils are to mutuals and different ways of delivering services?

DS: They want to look at all the options. There is a growing recognition that there is going to be more of a plurality in service provision in the future and that particularly where you have staff keen to set up a mutual and there is energy, why not harness that? Especially if it meets the objective of the authority.

The areas where interesting stuff is being done is in community budgets and public service reform as a part of that, which is still an open question.

Room 151: You’re working on community budgets with a number of pilot councils at the moment aren’t you?

DS: Yes, and finance directors are critical in this, for the development of the business case in community budgets there will be an investment requirement and a need to deliver some savings. What we’re doing is working on budgets for councils who are doing pilots in four different areas. The LGA is supporting as well.

Room 151: How do you think councils feel going forward about budgets and service provision? Are people worried about the medium term?

DS: Very much so. I’ve spoke to around 40 councils since January and more and more of them are getting concerned for the medium to longer term. These people are professionals – they’re able to be inventive and have confidence that they have plans which are deliverable to achieve their financial targets in the near term but the medium to longer term is a different issue.

They’re particularly concerned for how they will respond to a similar level of financial challenge if that is going to be the case as part of the next spending review.