Community Budgets

Written evidence from the District Councils’ Network (CB 04)

Executive Summary

· The District Councils’ Network (DCN) welcomes this opportunity to respond to the CLG committee call for evidence into Community Budgets and provide evidence on behalf of district participants. The DCN is a Special Interest Group of the Local Government Association (LGA) representing 194 district councils in England.

· Amongst participating district councils there has been and remains a strong commitment to the ambitions and principles of Community Budgets, and a united recognition of the need for public services to be reformed to improve outcomes and reduce overall costs.

· District councils believe that, on the whole, Community Budgets processes have been able to establish inclusive and effective governance and delivery structures. We can offer the Committee a number of insights on improving these mechanisms in two-tier areas, including greater internal devolution, local cultural change and freedoms from Whitehall requirements.

· Whilst districts believe CBs will lead to improved public services and better outcomes for local residents, through more effective local coordination and integration, there remains less clarity on whether the districts (in the short-term) would be net contributors or net beneficiaries; particularly in relation to cashable savings. The DCN recognises that other parts of the public sector will be better enabled to secure their efficiencies and savings because of district involvement (especially from Housing) and that collective savings will be achieved; but this will be at the districts’ expense. This is not a plea for more resource to be channelled to districts, but for a recognition from Government of the specific contribution from districts in its deliberations on future funding decisions, especially for 2015/16. It is imperative that Public Sector partners work closely with Whitehall to develop a robust formula that can take these factors into consideration in relation to both the local distribution and reallocation of total and individual agency savings.

· The DCN believes there is potential to positively change the relationship between Whitehall, local government and public sector bodies. A number of Central Government ‘asks’ are provided, including on better cross-departmental co-ordination in Whitehall and the devolution of funding and powers.

· We argue also that Community Budgets offer a real opportunity for a fundamental shift and remoulding of service design and delivery, with enhanced levels of joint-commissioning and cross-agency integration. We provide a number of policy suggestions on integration and delivery, including the incorporation of existing expertise, devolving the co-ordination of delivery and co-location of staff, resources and assets at the relevant (strategic or operational delivery) level.

· We believe that Community Budgets can reset relationships between local democratic institutions, agencies and the public, and empower local communities.

· Participating districts feel that Community Budgets offer a particularly effective approach to tackling issues such as troubled families. To embed this, we argue for the localisation of service delivery and oversight, and policy consistency from Central Government.

1. Introduction

1.1 Although the DCN has not been directly involved in the Community Budget pilots, district participants in the pilots have requested the DCN submit evidence to the Select Committee on their specific experiences. To inform our submission, we undertook a roundtable discussion with the 12 districts involved in the Whole Essex Community Budget (WECB), along with discussions with those districts participating in the Neighbourhood Community Budget (NCB) pilots.

2. Policy Overview

2.1 The split in local authority service provision and a larger and more diverse provider landscape means Community Budgets will operate differently in two-tier local authority areas. Despite the challenges and opportunities this presents, we support the view that Community Budgets will remain a vital policy tool in improving user outcomes and meeting the fiscal challenges facing the public sector. Districts need to be proactive in engaging with this reform agenda, whether prompted by Government pilots or independently with local partners.

2.2 District and county councils provide services to almost 40% of the English population – more than any other local authority type. Whilst the totality of public expenditure of districts may be small in comparison with Central Government, the NHS, counties and the Police, the pilots have demonstrated very clearly that districts are indispensable in delivering the important policy objectives of Community Budgets.

2.3 In the WECB pilot, the 12 districts account for just over 1/12th of total public sector expenditure, but their economic growth, planning, benefits, community safety and housing services have proven to be essential in enabling the reinvention of services across the five work-streams and the ‘Deal for Growth’. In the NCBs, districts are one of the lead local partners, working directly with communities and residents to reshape services. Districts, therefore, are at the heart of achieving the core principles of Community Budgeting: namely; prevention & early intervention, enhanced integration, reduced duplication and improved personalisation of public services.

2.4 Amongst participating district councils in both the WECB and NCBs, there was a strong commitment to the ambitions of Community Budgts and a united recognition of the need for public services to progressively move towards public service delivery modules shaped by these principles. Before providing answers to some of the Committee’s specific areas of inquiry, we expand on two cross-cutting issues raised by participating districts;

2.5 Governance

2.5.1 Participating districts in the Community Budget pilots wanted to convey their thoughts and recommendations on programme governance, structure and delivery.

2.5.2 Districts involved in the WECB praised the efforts and co-ordination of Essex County Council (ECC), recognising the complexities of implementing effective engagement, governance and delivery structures, in an area comprising 12 districts, 2 unitaries, 7 Clinical Commissioning Groups (CCGs) and many other public sector partners. They stressed that ECC had an inclusive approach to district and partner engagement, building on a well-established ‘One-Essex’ partnership model. Districts were also keen to highlight that issues of organisational sovereignty and decision making were respected throughout. Whilst less complex, participants in NCBs also stressed that, overall, they had work productively with partners on local governance issues.

2.5.3 However, moving on from the pilots there are lessons which we wish to highlight:

1) At times districts felt the process was top-down and hierarchical. Whilst recognising that the county council level provides a single point of contact for the ‘strategic’ aspects of Whole Place pilots, districts felt there was more scope for a ‘bottom-up’ approach to engagement by both counties and Whitehall. For instance, county or Whitehall departments could approach districts over particular local issues within a Whole Place Community Budget, asking a district (or sub-region of districts) within the county to lead on a particular policy area. This could draw directly on their more acute understanding of local needs, specific expertise and existing localised partnerships.

2) A separation of ‘strategic oversight’ and ‘localised delivery’ between county and district tiers. While counties are well placed to act as the high-level strategic leader of Whole Place Community Budgets, districts consider that our closeness and understanding of local communities, and well established partnerships with public sector providers, means we would be better placed to act as the local body to oversee and co-ordinate delivery (see point 4.3.3). It is important that ‘Whole Place’ relates to real communities characterised by a sense of belonging and place. In diverse geographical counties, with different socioeconomic profiles and needs, there is not a single place or community but a series of places and communities. Service design and delivery needs to acknowledge and reflect this.

3) A greater focus on delivery rather than processes and structures. Robust accountability mechanisms are always required to account for public sector expenditure and outcomes, and accountability should be as close as possible to the communities to which they relate. However, districts stressed that Community Budgets should focus less on formal structures and more on the practical implications of delivery and long-term sustainability. An over emphasis on process and structure could lead to partners being ‘over-governed’, potentially stifling the development of innovative solutions at the local level.

4) Seismic cultural change is needed across public sector agencies to ensure successful governance and longevity of public sector improvements. Whilst partnership working between local government and other public sector agencies has improved considerably over the years, there remain real cultural differences in approaches to process, governance and decision making. Whilst issues of organisational sovereignty will need to be navigated sensitively, silo structures and process-driven mentalities will need to be broken down to ensure long-term and fundamental improvements in service delivery and outcomes. Districts and local government more widely recognise that specific challenges relate to their own organisations and are committed to addressing these.

5) Freedom from Whitehall to develop Community Budget models based on local issues and existing structures. Districts felt particularly strongly that Whitehall should allow freedom for public sector partners within a locality to develop their own approach to governance and accountability. There should not be a one size fits all approach, particularly in two-tier areas, and Officials in Whitehall should not seek to design from the centre. NCBs emphasised the bespoke nature of their pilots, increasing the importance of localised freedoms. The recent LGA & HM Government guide on Whole Place Community Budgets [1] endorsed and advocated this approach, and the DCN welcomes this development.

6) Transformational rather than incremental change takes investment, but also significant time and compromise. The cost to change services needs to be clearly factored into Community Budgets (see below points). But it is also important to recognise that significant service redesign and collaboration could take significant time to achieve. Understanding, and being sensitive to, influencing factors such as the local political environment of two-tier areas and differing approaches to service delivery and administration, will be vital in reaching common objectives and improvements in outcomes.

2.6 Net Benefits & Improved Outcomes

2.6.1 Participating districts were unequivocal in their conclusion that Community Budgets, if implemented in full collaboration, would lead to improved public services and better outcomes for local residents. We believe that without full district participation, Community Budgets would not achieve the potential improvements in outcomes, or the considerable public sector savings this would reap.

2.6.2 However, district participants felt that whilst they had a major role in delivering Community Budgets, the size of their budgets and nature of their services and interventions left them unclear as to whether the sector, in the short-term, would be net contributors or net beneficiaries; particularly in relation to cashable savings. As one Chief Executive put it, ‘a fundamental issue for districts is that Community Budgets are not about savings, we won’t see savings in our budgets over the next 3 or 4 years’.

2.6.3 Participating districts supported the WECB businesses plans submitted to Central Government, but raised concerns over the real terms cashable savings their organisations were likely to see from the £11m worth of anticipated net benefits for districts by 2019-20. [2] District comments broadly correlate with the National Audit Office (NAO) conclusion that pilots demonstrated a ‘reasonably consistent’ approach to the cost and benefit analysis, [3] but that ‘business cases could be clearer about the basis on which they present values [and] whether values are given in real or nominal (cash) terms’. In addition, they would also agree with the NAO conclusion that analytical approaches to estimating the proportion of cashable savings are ‘largely preliminary’. [4]

2.6.4 Districts believe that our value and considerable service impact ultimately lies in helping the public sector as a whole achieve improved user outcomes and broader savings across the public sector. District participants felt, therefore, that other parts of the public sector would benefit more financially from district involvement (particularly in the short term) compared to districts themselves. By way of example, improved integration of housing services with health and adult social care providers would obtain substantial reductions in public sector expenditure, particularly in relation to acute care costs. Districts are unclear as to whether they would necessarily recoup the original upfront cash investment and resource dedication through reduced demand, or be equitably rewarded for their contribution to the savings secured for Adult Social Care services and the NHS. We emphasise that districts are not making this point for ‘territorial’ reasons, but simply to ensure that successive spending rounds and reviews do not doubly penalise districts for making a positive contribution to overall reductions in spend for the public sector locally.

2.6.5 Over the longer-term districts do recognise there is scope for savings for their organisations, for instance through reduced service demand and acute needs, as well as reduced service duplication, joint-commissioning and service integration.

2.6.6 Although improved public services and outcomes rightly remain the primary objective of public service reform programmes, it is important that they correctly incentivise all public sector agencies and engender organisational commitment in the short, medium and long-term. At a time of considerable financial retrenchment, fiscal incentives - particularly in the short-term - will inevitably be an important consideration in resource allocation to Community Budget programmes.

2.6.7 Nationally there needs to be recognition that public sector savings as a result of Community Budgets will be disproportionately spread across agencies. This isn’t necessarily because the totality of expenditure, or resource dedication, of one part of the public sector is larger than another; but that the integrated, preventive and upstream services of one sector (such as districts) considerably reduce demand and expenditure in others, whilst creating limited (short-term) savings internally.

2.6.8 To address this, public sector partners need to work closely with Whitehall to develop a robust formula which can take these factors into consideration in relation to the recycling of cashable savings. This would help determine a fair approach to the distribution and reallocation of total and individual agency savings, both locally and nationally. In addition, Government must acknowledge that Whitehall overall stands to be the largest net-beneficiary of a successful implementation of Community Budgets. Whitehall must continue to commit additional resources locally and must take into consideration local government’s contribution to achieving cross-agency savings in the upcoming Comprehensive Spending Review (CSR).

2.6.9 If local government is to be expected to lead on innovative programmes aimed at reducing public sector expenditure, we must be sufficiently resourced to do so. If public sector cuts are once again disproportionately distributed across departments, local government capacity to help deliver savings across the public sector will be significantly reduced.

3. As a result of Community Budgets how are, and will, Whitehall’s relationship with localities operate and be changed?

3.1 One of the most important aspects of Community Budgets for district councils is the potential to positively change the relationship between Whitehall, local government and public sector bodies. This includes the way public agencies work together locally, but also the manner in which Central Government operates and interacts with localities.

3.2 Districts believe there are a number of general asks of Whitehall which would aid the implementation of Community Budgets at both a Whole Place and Neighbourhood levels.

3.2.1 Whitehall departments need to be more holistic, demonstrating better cross-departmental co-ordination in policy development and implementation. At times engagement and policy development by Whitehall departments can be contradictory and confusing, adversely affecting the implementation of programmes or creating perverse incentives. There continues to be a general lack of co-ordination and joined-up thinking across Government which hinders partners’ ability to improve local services and outcomes. For instance, in the WECB, districts noted the conflicting messages and actions on City Deals and the WECB ‘Deal for Growth’ from both the Cabinet Office and Treasury. In both the WECB and Neighbourhood pilots there were considerable concerns over conflicting and overlapping troubled families initiatives (see section 6).

3.2.2 Greater clarity over local government finance. It is important that local government has better clarity over funding in the short, medium and long-term. The situation that arose with the late Local Government Settlement in December 2012 was extremely unhelpful.

3.2.3 Continued commitment of Whitehall resources to support Community Budget development. It must be remembered that ultimately Central Government stands to save most through Community Budget implementation. Therefore, building on the point raised in 2.6.8, Whitehall must continue to dedicate central resources to the development of Community Budgets in other areas. District participants in NCBs expressed concerns that, without the initial DCLG funding, they would not have been able to undertake the extensive additional work to support Community Budget development. In addition, districts within the WECB believed Whitehall resources could be devolved directly to localities to support the essential elements of delivery.

3.2.4 Increased devolution of funding streams to localities to underpin Community Budget objectives. In line with the Heseltine Review proposals and the Coalition’s City Deals initiative, Community Budgets require a much greater commitment to devolve funding streams from Whitehall to localities. The WECB set out a number of areas of funding which should be devolved to localities to promote economic growth. Local partners, particularly in the context of a Community Budget structure, are much better placed than Whitehall to decide how best to allocate growth and employment-related public expenditure in their respective localities. Delivering localised economic growth strategies will be the central pillar in tackling the wider socio-economic drivers of public service demand.

3.2.5 Proactive response from Whitehall and continuing activity. Districts expressed concerns that, in the past, organisations and localities had committed considerable resources and time to national projects only for Government to subsequently go ‘silent’. It is encouraging that the Government have welcomed the findings of Whole Place Community Budgets, setting up the Learning Network and producing a guide with the LGA. [5] However, there were particular concerns that, despite the favourable response to Whole Place Pilots, there had been less attention given to the future of neighbourhood level Community Budgets, which could be essential building blocks within whole place initiatives.

4. How can Community Budgets maximise the use of resources through co-design and co-production of integrated services in the face of reducing resource and outdated modes of service provision?

4.1 District participants in the Community Budget pilots believe that, unlike previous similar policies, such as Total Place, Community Budgets offer a real opportunity for a fundamental shift and remoulding of service design and delivery. This stems from the ability of Community Budgets to improve services, but also from the prevailing expenditure climate and a need for long-term acclimatisation to reduced funding levels.

4.2 The DCN believes that activity such as collaborative commissioning and service integration should become the norm, rather than the exception. Community Budgets offer a platform from which to extend this well beyond tiers of local government into agencies such as CCGs, offices of Police & Crime Commissioners and Probation.

4.3 In achieving co-design and co-production, districts believe that the following lessons are evident from the pilots:

4.3.1 Ensuring existing initiatives, activities and expertise are fully incorporated into Community Budget approaches. Districts believe that in many areas, such as troubled families, they were either already providing specific services or there were existing partnerships, expertise and skill sets which they have been able to exploit and develop. It is vital that the expertise and outcomes of existing provision are systematically evaluated and correctly integrated into Community Budgets. Integration of services should not simply seek to impose new, top-down systems of joint-commissioning and integration. Such an approach can potentially stifle existing or emerging innovation.

4.3.2 Seismic cultural change is needed across the public sector which faces up-to, rather than enforces, silo thinking. This will be crucial in achieving enhanced integration and joint-commissioning across local agencies. In particular, to replace outdated modes of service provision, there will need to be a cultural shift where ‘grown up’ cross-agency discussions on duplication, decommissioning and reallocation of local resources can take place. Districts expressed a commitment to engage fully in this process.

4.3.3 Devolving the co-ordination of delivery to a local level, potentially through co-location of staff and resources. Building on point 2.5.3 (2), districts believe that in two-tier areas there should be a ‘general rule of devolution’ in co-ordinating the delivery of Community Budget services. Districts believe that they are better placed within localities (either as individual districts or at sub-county region) to co-ordinate/deliver jointly commissioned or integrated Community Budget services with local public sector partners. Given their size, programmes designed at county level do not always reflect or respond to very local needs, whilst districts are widely acknowledged to be focused on both people and place. Districts within the WECB suggested that elements of devolution were developing under their pilot, but this could be expanded further. We believe that co-location of cross-discipline staff, resources and assets from across agencies at a district level should be explored in all two-tier Community Budget areas.

5. How can community placed based budgeting strengthen participatory democracy by empowering individuals and communities especially addressing processes of exclusion for specific groups? Is it possible to use Community Budgets to reset relationships between local democratic institutions, agencies and the public?

5.1 If Community Budgets are able to achieve their core aims, they will strengthen the capacity and resilience of local communities, reducing demand on public sector agencies. This should empower individuals, particularly those who are socially or economically excluded, and fundamentally alter their relationship with public institutions.

5.2 In addition to the above, Community Budgets have the potential to reset the relationship between local democratic institutions, agencies and the public by providing democratic accountability for public expenditure and outcomes through Elected Members. It is extremely important that Elected Members at both county and district level feel they are equipped by Officers to play a full and active part in the development and operation of Community Budgets.

5.3 District participants emphasised a fundamental difference between Whole Place and Neighbourhood level Community Budgets. Whilst Whole Place Community Budgets are designed on the premise of large-scale savings through cross-sector, co-designing of services, NCBs look to redesign smaller scale local services in direct collaboration with communities and residents. NCBs’ co-production with residents means that this more localised, bespoke module is more likely to strengthen participatory democracy.

6. Are Community Budgets an effective approach to working with troubled families?

6.1 Districts felt that the focus on troubled families and those with complex needs within Community Budgets was a particularly important issue. District authorities can see the long-term financial benefits and improved outcomes which incorporating a multi-agency approach to troubled families could create. However, districts did raise a number of points on ensuring that Community Budgets were an effective approach to working with troubled families;

6.2.1 Districts have a major collaborative role to play in tackling troubled families. Districts are normally the first place of contact for these families, and experience multiple interactions through their housing, consumer services, benefits administration, as well as wide-ranging discretionary interventions. Districts within the WECB highlighted the fact there are now currently four pilot areas developing local approaches to families with complex needs, but the business case focused on one single county model. Whilst it is important that localised pilots seek to achieve common outcomes, districts believe that it is important that Whitehall and counties developed flexible local solutions, rather than impose a uniform programme that is not necessarily personalised and sensitive to local needs. In line with views raised under point 4.3.3, districts feel there is real scope for their organisations to work with partners on sub-county localised and devolved models to co-ordinate troubled families initiatives.

6.2.2 Real concerns were raised on the policy approach to troubled families and families with complex needs developed by Central Government. Both NCB and Whole Place participants felt the change in focus from complex families to troubled families left local areas confused over target families and did not always harness the positive outcomes emanating from earlier initiatives.

6.2.3 In line with points raised in 2.6, districts felt that in the short-term it was difficult to identify short-term savings for their organisations, despite their sufficient input into local initiatives and business cases. District felt that savings would accrue disproportionately across other local agencies. There was a disjoint between accepting that a Community Budget approach to troubled families can sufficiently improve outcomes and the upfront resource needed at district level to achieve this.

April 2013