Inefficiency in Local Authorities

Tony Travers’ presentation at Socitm09 set the likely financial scene for local authorities over the future years:

* Increased demand for services due to the recession
* the need for increased support for NGOs
* the need to assist more in economic development
* at best, 0% grant increases for all councils
* a tighter cap on Council Tax

Speaking to several attendees from the supplier community at the conference, there was widespread belief that – perhaps – this much increased pressure on LA’s will at long last force many laggard councils into the significant changes in processes that can not only reduce costs significantly but also, potentially, provide a better service to citizens.

Anecdotal evidence from several suppliers who supply self-service solutions, supported the view that currently several authorities are unprepared to adopt self-service and/or abandon traditional high cost channels of service delivery, as they cannot stomach the implied loss of staff. Procurement decisions are, in many cases, still being left to the departments and staff likely to be affected by the adoption of self-service, i.e. “Turkeys voting for Xmas” – unsurprisingly resulting in no, or slow, adoption of such cost-saving initiatives.

It’s disappointing to note that these laggard authorities give local government a bad name in the efficiency stakes, even though the top quartile of LA’s have already moved to high levels of self-service, taking the pain of staff cuts in their drive to reduce costs. I just hope that this top quartile will not be penalised in the future as it becomes easier for laggard authorities (who currently have plenty of slack) to reduce costs, whilst top quartile authorities who have already reduced costs significantly find it more difficult to reduce costs even further.

Looking forward, for suppliers, it’s clear that my forecast for 2010 onwards remains valid – indeed, I now definitely believe that, for public sector software suppliers, poor revenues will undoubtedly continue into 2012 and possibly beyond....