The rational thing to do

Property rationalisation is an obvious win for councils but sovereignty struggles can get in the way argues Steve Bishop, strategic director for South Oxfordshire and Vale of White Horse District Councils

I was a big fan of the Gershon Efficiency Review. I still am. Sir Peter Gershon’s basic point, that fixed overheads replicated time and again across central and local government waste billions every year in inefficiencies, is difficult to argue against. Perhaps we needed all these different councils once upon a time but with developments in technology and business process engineering, you can no longer make the case that we need 430-odd councils, not to mention all the towns and parishes.

Back-office services, for example, can be done from anywhere in the country and you don’t need a bank of people sat in every council processing the same types of transactions. Even where you have a super efficient council performing all its services in the most efficient way it can within its own boundaries, that
council is still contributing to a massive waste of resources year on year, at the national level.

One of the areas that Gershon highlighted was property and facilities management. To my mind, this remains something of an elephant in the room for local authorities. In the main, managers have found it easier to weed out human inefficiency and automate previous manual activities, despite the obvious discomfort that comes with dealing with colleagues and making redundancies. Building a case for reducing staff count, though, is generally much easier than rationalising your physical assets and looking for savings there. Here’s the stuff you can automate, here’s the IT cost or the outsourcing cost and here’s what we save in salaries. Brutal but simple. But when you sit down and say ’well, we’ve got five buildings we own and three we lease and we’ve got public sector neighbours with their own property portfolios and we’re all kind of speaking to the same customers at similar times, what can we do about this?’ the solutions are by no means straightforward. But the potential savings are massive.

There are still some councils who haven’t yet looked at shared services or business processes but it’s my view that far fewer have had a go at creating efficiency through strategic reviews of public sector property. There are some examples of larger authorities doing good stuff by looking at their own property, Oxfordshire and Birmingham spring to mind, but not enough is happening across public sector organisations and across sovereign borders.

The biggest single challenge to doing this is of course the politics; something we’ve had experience of. Vale of White Horse DC (Vale) and South Oxfordshire DC (SODC) are about as well integrated, I would argue, as any other two district  councils in the country. Over 75% of the staff work on both Vale and SODC business. But even at that level of shared service, property rationalisation was a mine field. When we put forward a proposal to bring all staff and council functions into one of the two councils’ headquarters, we realised how deeply the sovereignty issue ran. Ultimately, members saw their council offices as a physical manifestation of their unique brand and to lose it was the last line of defence before you become the junior partner in the relationship or, worse still, lose your sovereign status altogether.

Once members found themselves with a shared work force, in a shared building, it would surely be only a matter of time before someone would make the case that there were more savings to made by merging the two councils altogether. So for both sets of councillors, that was a step too far. Interestingly both
councils would have been happy to have housed the other (and both business cases were explored) but neither was ready to move. The third option, a quite sensible and cost effective one albeit to a lesser
extent, was to build a new development on the closest land we could find to ‘neutral territory’ and sell off the two buildings we’d moved from. The problem with that was that neither council felt it was something they could sell to the public. Councils building themselves a nice shiny new headquarters, during recession and austerity, however  compelling the business case, was not going to fly with voters.

Of course the big shame of it all is what we missed out on. We put together a 20 year business plan for housing the two councils together and we estimated, prudently, that there would have been £1m per year savings. Consider that fairly modest saving between just two district councils (equivalent to approximately
4% annual net budget requirement) and extrapolating it across all districts, factor in even more cost effective 3-way district deals, 4-way deals, add in counties, town councils – imagine the potential saving
across local government, or the whole public sector.

All is not lost though at Vale and South. We’ve moved on from that encounter and now we’re working on a new community hub which will hopefully see one of Oxfordshire County’s service centres, currently situated on the outskirts of Abingdon, move to Vale’s town centre offices along with a prominent third
sector organisation whose lease is about to expire. Not only are there some attractive savings potentially to come out of that for all three parties but the move will offer customers, who may need to speak to all three of us, a one-stop-shop. This, we hope, could be the pilot that prompts us at a regional level to look
across our properties and rethink the management of physical assets in the way Gershon originally envisaged. Of course, if the current government wanted to use its big stick and tackle local government reorganisation then property rationalisation would automatically follow. Whenever unitaries are created out of two-tier areas one of the big savings is always found in property consolidation. That isn’t going to happen though as this government has made clear it would rather groups of councils voluntarily came banging on its door to make the case for merger and unitary status. It remains to be seen how much consolidation driven by councils themselves, and the property rationalisation that would certainly follow and save the public billions of pounds, is actually going to happen.

This article was first published in Room151 Quarterly magazine. Didn’t receive a copy? Local authority heads of finance, resources, procurement and chief execs can email subscriptions@room151.co.uk for a complimentary subscription.