‘Zero-based’ thinking: a more radical way for local authorities to set sustainable budgets?

by John Knight

Following on from his blog on outcome-based budgeting, John Knight explores a sustainable, but radical, option when it comes to setting budgets.

How will a local authority of the future operate successfully? What will the budgeting landscape look like?

Some time ago I was invited to provide an alternative ‘minimal spend’ option to a proposed merger between two councils.

I produced a strategy and an outline budget for the smaller of the two, taking a ‘zero-based budget’ approach. This involved a complete re-design of the council. I took out some activities of the ‘we’ve always done it like that’ variety, and where there was no link to the strategy, and, where logical, suggested re-assigning them to other organisations. Services that remained were stripped back, but based on good practice examples to ensure they would still deliver a minimum service of what customers needed. Of course, it wasn’t all about taking away. I also allowed for new services to be built, if there was evidence that they were required, and valued by local residents.

Crucially, I did not try to replicate what had gone before or to commercialise activities. I kept the scope limited to delivering services that truly added value for residents. It turned out that my desktop exercise showed how the budget of the smaller council could be halved. In the event, the results were actually used to scare any doubters as to the wisdom of the proposed merger, rather than as a jumping off point for a grown-up conversation about future funding options. Instead of taking a radical approach, it allowed members and officers to make minimal change to the way things had been before.

Zero-based thinking will be necessary for future sustainability

At the time, the two councils could get away with this. However, we are now entering an economic era where zero-based thinking will be necessary for future sustainability, where the ‘unthinkable’ decisions of the past become the norm, where sacred cows can be sacrificed. A key principle will be knowing when and what to quit, and if necessary, actually quitting.

As it transpires, my reflections are timely. In the next two weeks these two councils will cease to exist. Why? Because they were seen as too expensive.