Managing risk in Whole Place Community Budgets

  • Whole Place Community Budgets are being adopted by an increasing number of councils
  • They are intended to integrate services and provide greater local autonomy
  • It's a massive shake-up, and authorities need to manage new risks effectively

Spurred on by the Scottish Referendum on independence, and the growth of feeling for more regional autonomy, politicians are tapping in to discontent from their voters and discussing more power being devolved to local authorities.

“What we are seeing now in local government is akin to the debate about Scottish independence, but on a regional scale,” says David Forster, Head of Risk Proposition at Zurich Municipal.

“The big discussion across local government is around devolving powers away from Westminster to the regions. There is a whole agenda around localism and Whole Place Community Budgets (WPCB) are a reflection of this. They are a pilot scheme for greater local decision making.”

The development of WPCB began towards the end of the last Labour Government, as local authorities became more and more aware of how sophisticated service delivery was in many areas.

Multiple agencies were delivering services, often overlapping, all with their own pot of money coming from different silos in central government.

“This is clearly inefficient,” says David. “The idea behind Community Budgets was to join up these services and bring them together to provide a more efficient, more democratic, more focused and more responsive level of services.”

Councils explore

After successful pilot schemes in four areas, including Greater Manchester, WPCB are now being explored by more councils, as new, more efficient models of public service, reducing duplication and developing more coherent provision.

In addition to providing new ways of working, the schemes also aim to give people more power over their neighbourhood services and budgets.

“Linked to community budgets are “combined authorities”, where large cities that are covered by more than one local authority can join together to create an umbrella organisation to manage budgets,” says David.

Whole Place Community Budgets …are a pilot scheme for greater local decision making

David Forster, Head of Risk Proposition, Zurich Municipal

The ten local councils that make up Greater Manchester recently agreed [September 2014] to produce a single jobs and housing plan, in what is thought to be a UK first, although more cities are expected to follow this lead.

As part of the £1bn agreement with Chancellor George Osborne, Greater Manchester will now elect a mayor with powers over transport, housing, planning and policing.

Tameside council leader Kieran Quinn said: “This is an historic agreement. It takes no powers from Tameside but devolves significant power and resources from central government to an elected mayor and combined Greater Manchester councils.”

Manchester’s collaboration on the sensitive issue of planning, is seen as a particularly bold move that will demonstrate the city’s ability to manage greater autonomy.

“At the moment, the responsibilities being devolved are limited,” says David. “But where these ideas are being taken up, we are starting to see community budgets come to life.”

Shift in attitude

How this develops will depend to an extent on who wins the General Election in 2015. But whichever party is returned to power, the idea of more local autonomy is already well established, and the direction of travel seems assured.

Localism represents a fundamental shift in the way local government is organised.

But, while the benefits seem clear and popular, the risks cannot be ignored, and David Forster is not convinced that councils are taking proper precautions.

“Make no mistake, this is really big,” he says. “Local authorities are taking the pack of cards and throwing them in the air. Years and years of established risk management and ways of doing things are being completely shattered and rebuilt.

“Our concern is, when the risk profile is completely changed, how can we insure it? We want to, of course we do. But we need to understand what is going on.

“I don’t think authorities are taking into account their new risk profile. I have spoken to directors of finance and directors of governance in local authorities and clearly people are not comfortable with the process.”

Advice available

Obviously this situation is unnerving, but Zurich Municipal can help advise authorities on their risk management, and how to manage the benefits of new funding opportunities with good governance.

“In the end, we’re here to help pick up the pieces when things go wrong. We’re on the frontline to give you support. When something goes wrong in a care home or in a children’s home, you can depend on us to deal with the costs and the legal bills,“ says David.

“My advice is that with all these new opportunities, local authorities need to make sure they do not lose sight of what it is that they are supposed to be doing.

“There is plenty of business evidence that when organisations go through a lot of change people look inwards, they worry about their jobs and service levels go down. Leaders need to make sure this isn’t happening.”

David advises that throughout the changes, authorities should keep business resilience in mind. “They need to be thinking constantly about their business continuity plans, their supply chain management,” he says.

“They need to do everything they can to make their authority resilient. Key to doing this is understanding the changing risk exposure of new relationships and looking outwards beyond the council itself to contractors and sub-contractors, “ says David.

“Make sure you have the governance in place – especially as there is now no Audit Commission to provide external scrutiny, and self-regulation is fraught with problems.”

“Everyone needs to ask – who is managing the risks on the ground if we are not?”