Full council has set the budget for 2024/25 after six months of hard work so now what?

The decision to agree the budget is an in-principle decision setting the budget envelope for the next financial year. How to deliver that budget should now be the subject of a detailed review and in this article, we set out key considerations for local authorities when commencing those reviews.

Service reviews

Traditionally, service reviews were undertaken under Best Value (s3 of the Local Government Act 1999 Act)
which requires a council to show that it has arrangements to secure continuous improvement in how it carries out its work.

More recently, the unprecedented budget pressures being faced and the now more recognisable S114 (Local Government and Finance Act 1988) reporting duty where expenditure exceeds resources, mean that service reviews are now used to effectively identify where required savings can be achieved.

The process a local authority uses to examine the services it provides to determine where (and, increasingly, whether) there are opportunities to make cashable and efficiency savings will differ, but they should all start with a scoping stage to understand what is permissible. This requires an understanding of the legal basis upon which the service is provided.

Functions and the service

As creatures of statute, local authorities can only do those things that they are empowered to do by statute, or those that are reasonably ancillary or incidental to those powers.

A local authority’s functions will either be:

• a power – usually expressed in permissive language and as such are discretionary – i.e. a local authority may do something (but does not have to); or
• a duty – mandatory – i.e. a local authority must or shall do something.

The too many to number statutes which provide for a local authority’s myriad of functions are varied and wide ranging in scope. For example:

• s7 Public Libraries and Museums Act 1964 – a duty to provide a comprehensive and efficient library service;
• s41 Highways Act 1980 – a duty to maintain the highway;
• s9 Housing Act 1985 – the power to provide housing accommodation; and
• s193 Housing Act 1996 – a duty to secure that accommodation is available for occupation by an applicant who is homeless.

This is the legal basis – the statutory minimum of what the local authority function is. But what a comprehensive and efficient library service is and whether the maintenance schedule of the highway is sufficient is a matter of assessment which is further stipulated in guidance, statutory instruments and case law.

The service in question might involve several separate duties that merge together (and are not necessarily in the same statute) as well as a duty combined with one or more specific or general powers that provide additional services to the core delivery.

Knowing the legal basis upon which a service operates is crucial to identify its parameters. Missing this first part of the scoping exercise will cause difficulties later in the process, when considering whether the service could be redesigned, provided in an alternative way (e.g. outsourcing or partnership arrangements) or decommissioned in whole or part.

Without this solid foundation, the role of the decision maker in ensuring that the right questions have been asked, correct information gathered and all relevant factors have been taken into account will be flawed, no matter how good the public consultation or equality impact assessment on the proposals may be. Where service redesign proposals are likely to be under scrutiny, potential judicial review challenges need to be considered.

Taking the time to understand and map the extent of a local authority’s responsibility is important. Identifying the statutory basis for the service, whether it is a mandatory or discretionary (or a mix) and whether any provision is prescribed in secondary legislation, guidance, case law or contract also needs to be mapped and understood. Upon this foundation options for the redesign of the service can then be built.

Officers tasked with exploring the redesign of the scope of a service and/or the means of its delivery are likely to benefit from engaging their legal colleagues at the outset, thereby ensuring that options put forward for consideration are lawful.

This is the first in a series of articles on service redesign that will be released in the coming months.

For further information on service re-design or on any governance issue, contact Claire Ward.