by John Knight
Operating in an uncertain economic climate and faced with a cost-of-living crisis, local authorities are under huge pressure to make the best funding decisions possible.
Budgeting in the traditional way
Traditionally, budgets are based on incremental thinking – taking what you received last year, adjusting it where you have to, ensuring you can deliver your statutory and universal services, then finally, making sure you spend it all by the end of the year.
There is absolutely no rationale to doing it this way apart from it usually being ‘that’s how we do things around here’; with time and resources in short supply, and the non-stop merry-go-round of the financial cycle, the easiest thing to do is to continue to do what you’ve always done. You would never run a household budget like this. Times change, families evolve, income and priorities alter and so you amend your saving, spending and allocation of household funds accordingly.
One critical issue with the traditional budgeting approach is that no one sees the big picture. No one is looking at the results and what is actually being achieved with the money is being spent. No one is taking a step back to see what the best possible outcomes for customers would be and how these can best be achieved.
It is very hard to re-think the way budgets are planned. It’s not quick and it’s certainly not easy as it needs a total re-set and to achieve that requires a complete culture shift. Potentially, changing the way budgets are set could save a local authority millions of pounds. By thinking differently, you could really revolutionise your entire budgetary system.
Why not develop an outcome-based budgeting approach? By these means, budgets are focused around achieving the best possible outcomes for customers , not focused on the individual outputs of local authority departments. Put another way, rather than basing your budget on what you spent last year, it would be based on what you want to achieve within the next year. Rather than choosing what to cut, the emphasis would be on what to keep and what to grow. Instead of proposing how the budget will be spent, propose instead what results must be achieved.
A bold approach to deliver evidence-based solutions
It’s a bold Local Authority that sets out to do things differently but focusing on results creates opportunities to innovate and drive efficiencies. It’s a collaborative approach, which requires different departments to work together, rather than in silos, to deliver on what matters most to customers. And while it will take commitment to fully embed an outcomes based approach, you can be pretty sure that you will also find some quick wins of areas of spend without any alignment to council priorities, as well as historically underspent budgets.
Outcome-budgeting: aligning resources with results
C.Co can help develop a process for moving towards an outcome-based approach to meet your priority needs and work with you to achieve a genuine transformation via results-driven and evidence-based solutions. We are public sector change experts. Speak to us to find out how we can help you.