How Local Authorities can approach spending decisions post-coronavirus

The coronavirus crisis has put unprecedented pressure on local authorities, who were already facing a rising demand, uncertainties around Brexit and the upcoming 2020 Spending Review. Without considerable central government support local authorities will have to make up a substantial budget shortfall.

Doing this requires a two-pronged approach: minimising the damage caused by cutting spending and focusing on areas of spend that can improve outcomes at the same or a lower cost. This requires prioritisation at a broad level across all areas of spend and at a more technical level between programmes.

High-level planning

At the highest level, across the whole local authority budget or the whole budget of a particular department, such as public health, budget decisions need to be made in a systematic way with an understanding of the consequences. This also needs to happen quickly with allowance for the multiple demands of people’s time.

In practical terms this means establishing a value for money steering group with the remit to explore and recommend spending options. The steering group needs to agree on the scope of their assessments (ie what spending can be changed) and then to put in place a process for coming up with recommendations.

A method that is likely to work well is a set of workshops interspersed with evidence gathering, in order to combine academic and policy evidence on what works, data on current spend and performance, information on what’s changed since the coronavirus crisis started, and institutional knowledge from those involved in planning and delivery.

A useful method for these workshops is the use of Multi-Criteria Decision Analysis (MCDA). By scoring options against weighted criteria, MCDA provides a systematic and transparent route to making decisions. The criteria can be diverse, including factors such as cost, inequalities impact, prevention level, risk, and alignment with priorities and allows the consideration of all of them in decision making.

Tools such as Public Health England’s Prioritisation Framework, designed for making these kinds of decisions in public health but broadly generalisable to a local authority may be useful both for methodological guidance and as a source of evidence. External facilitation may also be helpful.

Detailed planning

At the more detailed level it may also be important to compare specific investment options for their cost and expected outcomes. This can be difficult as there may be multiple links in the chain from the initial spend (eg targeted support to vulnerable groups) to the outcomes of interest (eg reduced costs associated with anti-social behaviour or improved health outcomes) and these relationships can be complex. A value for money steering group may help identify the more significant decisions that require scrutiny, either because they have a significant impact on outcomes for residents or because they could lead to significant cost savings.

More detailed analysis could then be commissioned for those specific decisions, bringing together different sources of evidence into an economic analysis of costs and benefits. Combined with internal knowledge of the local context, this can help outline the rationale for a choice between spending options by giving an understanding of both predicted cost-effectiveness and the level of robustness around those predictions.

We can help

When external support is required, RSM’s Economic Consulting Team can help you prioritise your spending. Through workshop facilitation and/or pragmatic economic analysis we can help you identify your options, assess their relative strengths and dive deeper into difficult trade-offs. Our team includes include analysts, economists, statisticians, policy and strategy development specialists, evaluators, and transformation specialists, and our past clients include the LGA, NHS England and local authorities including Surrey and Essex County Councils.

For more information on how we can help, please contact Jenny Irwin or Rory Tierney

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