Local authorities forced to innovate by funding crisis

Topics: Alternative business structures,Local Government

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  • Geoff Wild

The local government funding crisis will spur a new wave of transformation and innovation in legal departments, local authorities told the Gazette this week.

They were responding to a National Audit Office report which revealed that councils’ government funding has fallen by 28% in real terms since 2010, a figure that will reach 37% by 2016.

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Legal teams’ responses include shared services arrangements and revenue-earning alternative business structures.

The first local authority ABS, Buckinghamshire Law Plus – a collaboration between Buckinghamshire County Council and the Buckinghamshire & Milton Keynes Fire Authority – was formally launched last week after being granted a licence by the Solicitors Regulation Authority in August.

Kent County Council, which is seeking a commercial partner to form a joint venture ABS, into which Kent Legal Services staff would transfer, held a ‘supplier day’ last week with four shortlisted bidders. Geoff Wild (pictured), Kent’s director of governance and law, would not disclose the bidders’ identities but said the list ‘is not what you might expect’.

He added that the council hoped to enter into a contract with the preferred partner by June.

Councils played down concerns in the NAO’s report that initiatives involving substantial redesign and transforming services were ‘inherently risky’.

‘Service transformation is only inherently risky insofar as it involves change,’ said Frank Wilson, strategic director for resources at West Oxfordshire District Council. The council’s legal team became a fully shared service with Cotswold District Council in April.

It also has a ’2020 Vision for Joint Working’, which proposes further shared working with Forest of Dean District Council and Cheltenham Borough Council in addition to Cotswold District Council. The councils are working to establish a jointly-owned local authority company to provide services required by each individual council. The move is expected to save more than £55m over 10 years. The four already share a number of ‘back office’ functions including finance, HR and payroll.

‘In the current situation local government finds itself, the riskier approach is to do nothing or delay a response to the situation,’ Wilson said.

Meanwhile David Tatlow, director of legal and democratic services at Birmingham City Council, revealed that demand for legal services is now rising, after a 5% fall in 2012/13 and a further 10% decline in 2013/14. The council is in the process of incorporating LSBLaw, the trading brand of the council’s legal services, ‘in case we need to trade externally to a greater extent than at present’, Tatlow said.

Readers' comments (1)

  • If that's correct, it's distinctly worrying. If 'local government funding has fallen by 28% in real terms since 2010, a figure that will reach 37% by 2016', I'm sure that's not true of central government funding. I've not heard any suggestion that central government spending has fallen by any comparable amount. It means that for all the talk at the moment of devolution and subsidiarity, proportionally less money is being spent at the sharp end and more in the bloated centre than was the case four years ago.

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