There are almost 400 local authorities in England. In total they employ around 1 million Full Time Equivalents (FTE) in delivery of core and support functions and a further 500,000 as teachers. Whilst the number of teachers in local authority employment will reduce with the take-up of academies this of itself will present significant market opportunity. Within individual councils staffing levels vary from a few hundred staff for small district councils to over twenty five thousand for the largest single tier authorities.
The Comprehensive Spending Review (CRS) of 2010 signaled a 28% reduction in funding from Central Government over 4 years; a significant challenge when demand is rising for services such as social care for older people and child protection. Given that the majority of council funding is derived from central government, combined with the freeze in council tax and high levels of unemployment impacting on revenue collection, many councils face severe financial conditions. Bearing in mind that front line services are to be protected wherever possible the response has typically been to freeze / reduce pay levels and implement a programme of delayering that has already led to a loss of 230,000 jobs and non-essential service cuts. The announcement in the Autumn Statement (5th December 2012) that a further 2% cut in funding would be applied in 2014/15 and that austerity would last until 2018 will only exacerbate this position.
As indicated above, the current programme of public sector debt reduction means that councils across the country are facing stringent financial challenges which are increasingly leading them to become commissioning agents. In respect of back-office services local authorities of all sizes have a strong track record in adopting outsourcing or shared service as a means to reducing costs and improving performance and it is reasonable to expect that a new wave of councils will seek innovative ways to make their budgets go further.
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