L.A.M.A. (Local Authorities Members Association) Submission to The Local Government Efficiency Review Group. 2010

Terms of Reference:-

To review the cost base, expenditure of and numbers employed in local authorities with a view to reporting on

•     specific recommendations to reduce costs;
•     the effectiveness of particular programmes;
•     optimal efficiency in the way programmes are delivered; and,
•     any other proposals to enhance value for money in the delivery of services at local level.

At the outset L.A.M.A. would like the Review body to keep in mind the interconnectedness between efficiency over democracy and efficiency with democracy.

The first priority in ensuring efficiency is that local government is sufficiently resourced to carry out its functions efficiently and effectively. Funding of local government has been the subject of debate frequently, the most recent being the Report of the Special Group on Public Service numbers and expenditure programmes (The McCarthy Report) which recommended the following

“The Group considers that local authorities should be self-financing in the longer term and that Exchequer support should be replaced with increased revenue generation from local sources, including such measures as may be suggested by the Commission on Taxation in its forthcoming Report, and increased cost recovery levels for appropriate services”..  L.A.M.A. has found there is resistance to providing for new local revenue raising mechanisms for local government and until such time as this changes – and L.A.M.A. have not detected any subsidence in this resistance to change – therefore we would stress the need for strong central financial support for local government to ensure efficient delivery of services at local level.

There is no sense either that the general public would wish to see greater local taxation or the introduction of a property tax. The question of National equity also is a major determent to the introduction of local taxation as the richer local authorities would benefit in the absence of an equitable equalization fund.

L.A.M.A. does recognizes that Autonomy in fund raising increases local discretion and accountability but for the reasons stated  above serious consideration must  to be given to the methodology of funding local government.

L.A.M.A. is aware that at present 44% of local government’s revenue comes from central government and Ireland’s local Government revenue at 7.7% of GDP is one of the lowest rates in Europe.  In Ireland only 2.2% of taxation goes directly to local government. It is very difficult to ask local authorities to raise funding when the  transfer of powers has been all in one direction with a growing tendency towards centralization of power at national level or with National Authorities and into the hands of non elected bodies and executives. The Principle of Subsidiarity is not evident. This does not incentivize local authority members to take bold actions on funding.

Local Authorities relied heavily on the development contributions which contributed a significant income prior to the economic downturn, this loss has not been compensated therefore new initiatives are lacking. L.A.M.A. is concerned that any gain in efficiency and productivity that has been made may be totally undermined.  The Strategic Infrastructure Act 2006 also provides that conditions regarding community facilities can be attached to consent for strategic infrastructure granted under the Act, but as this source of provision has now also almost totally dried up this puts further strain on Local Government own finances and efficiencies. We can strive for efficiencies but if there is no funding to introduce new programmes we will find ourselves efficient doing nothing and our effectiveness totally undermined.

The current system of putting the burden on the local business community through continuous increases in commercial rates is not sustainable and most local authorities have decided this year not to raise further revenue from this source in the current economic climate thus putting  further strain on available resources.  Furthermore all local authorities are under considerable strain in dealing with the increasing costs be it requirements under EU legislation and every growing and demanding needs of the population. Central government has ignored this.

 L.A.M.A. recommends the update of the Needs and Resources model of funding local government and to introduce greater transparency regarding how it works.

Specific Recommendations to Reduce Costs

Local Government spends around 11bn. annually. The biggest expenditure of local governments is capital investments, followed by salaries of employees.

L.A.M.A. recognizes that increasing service delivery performance while keeping appropriate control of public service numbers will continue to be a challenge but should not be insurmountable. L.A.M.A. suggests that the recruitment policies of local government should be examined to ensure
(a) recruitment is fully opened up to outside candidates particularly at middle management level to meet the organizational needs of the local authority
(b) Organizational flexibility is necessary for efficiency and
(c) staffing numbers; performance management – benchmarking of local authorities performances should reviewed regularly as recommended in BLG
(d) Bonus payments should be re-examined and evaluated on merit.
(e) The numbers of Directors of Services should be re-examined. –population ration to Directors evaluated.
(f) The service indicators in operation for the past 4 years, while advantageous, should be independently compiled and also include follow up action and reports with penalties for falling below a certain level of service delivery and rewards for achieving targets. The Audit committee of the council could play a role here also.
(g) L.A.M.A. understands that customer feedback on the outcome of their request and their rating of service provided is recorded by some local Authorities but not all, this should be facilitated in all Authorities. The same applies for the provision of electronic availability of various application forms.

L.A.M.A. supports:-

(a) The use of Shared Services for efficiencies –this aspect is elaborated on later in this document.
(b) Bulk purchasing where possible.
(c) Public Private Partnerships
(d) The potential for the Planning service to recover more of their actual costs for large developments without burdening the one off house or small extensions.
(e) L.A.M.A. questions the remit of the Government’s Value for Money Unit i.e. if still in operation it should be abolished if not fulfilling the role.

The Effectiveness of Particular programmes

As well as the traditional role of Local authorities they now provide new non-traditional services, which fit with the authority’s community development role – social programmes;- promoting arts; culture and awareness of the built and natural environment. Local authorities are also key in providing for the needs of minority groups, those new programmes are very necessary very effective but poorly financed.

Optimal efficiency in the way programmes are delivered

The provision of services is probably the most visible function of local government. Notwithstanding the localized nature of services these should be delivered as efficiently as possible, best practice nationally should be recorded and rolled out.  LAMA recognizes the need for a review on service delivery while also recognizing that Local democracy and efficient delivery of services may sometimes conflict. Efficient delivery of services and consistency and fairness can sometimes require larger or combined inter or infra-municipal cooperation and or geographic groupings, whereas local democracy requires smaller units which facilitate citizen participation.

The balance between the two must be carefully managed.  To attain the size required to carry out certain responsibilities yet also maintain separate municipal structure to reinforce local democracy and delivery of community services.

L.A.M.A. would like to comment on how the current Waste Strategy is delivered-  the equality in delivery of this service should be examined nationally with a view to bringing equity and balance to the service nationwide. 

L.A.M.A. would like to draw attention to the views of Dr Aodh Quinlivan, Department of Government, University College Cork when presenting a paper at the Winter Seminar of L.A.M.A. – Local Authority Members Association in Dundalk 2004) who stated “We have totally bought into new public management (NPM) philosophies with an emphasis on efficiency over effectiveness and individualism over communitarianism. Experiences from other countries indicate that the pursuit of greater productive efficiency in service delivery through the quest for economies of scale will lead to a territorial reorganization of local government, the amalgamation or abolition of rural communities and the establishment of metropolitan forms of government in large conurbations”

Ireland has signed up to the Council of Europe’s Charter of Local Self-Government which is predicated on the principle of subsidiarity. This principle argues that decisions should be devolved and services provided at the lowest appropriate level closest to the citizen. L.A.M.A. notes that what Ireland says and signs up to on subsidiarity and what Ireland does ‘in the name of efficiency’ are two different things.

The potential for local authorities to influence and shape economic and social development locally is very significant and should not be underestimated in the efficiency review programme.

Other proposals to enhance value for money in the delivery of services at local level.

In addition to financial constraints, local government faces a challenge in delivering required service enhancements due to constraints on staffing numbers which are subject to Government policy on public sector employment levels. While L.A.M.A. recognizes the need to review local Government staffing and provision, the number has remained static for a number of years now, despite increased demands for services due to economic and demographic developments, as well as the demands in environmental services and EU legislation mentioned above.

Budgeting: – Multi-annual budgeting across all sectors would facilitate efficiencies.  Our councils are hampered by system flaws such as the outmoded model of annual budgeting. On the one hand local authorities are being told to think strategically through Corporate Plans, Strategic Policy Committees, Corporate Policy Groups, City & County Development Boards. On the other hand, they are not certain on a year-to-year basis how much funding will be at their disposal. This is an intolerable situation.

Many local authorities try to spend money before the end of year as if they do not use up their budget allocations they will not receive the same level of funding the following year. Modernisation, efficiency, financial management and performance indicators are all fine but as long as we have these operational flaws in the system little progress will be made. If serious consideration is being given to strategic management then it is imperative that a move towards multi-annual budgeting based on long-term planning at both local government and central government level is implemented.

Consideration could be given to providing further discretion to councillors on day-to-day matters of expenditure– for example, allowing discretion for expenditure on minor works without undermining the impartial function of the manager.

Philanthropy is a methodology of funding that is not utilized in Ireland as much as it could and is considerably less developed in Ireland than abroad.

L.A.M.A. believes there are opportunities to increase the philanthropic role in the funding of local government with strict guidelines set down by Department of Environment should be considered.

The Government itself should pay commercial rates to local Authorities for the properties it has waived its responsibility to pay e.g. Dublin City alone looses more than 26m annually in this way.

There have been at least 16 reviews of local government since the 1962.

L.A.M.A. is hopeful that this ‘review Group’ will come forward with recommendations for better local democracy and devolution of functions to local government as a provider of local services efficiently and effectively. The review group should acknowledge that “The strengths of local government as a democratic instrument are its closeness to the population, its elected status, its accessibility and the opportunity it provides for public participation in the democratic process (Callanan & Keogan, 2003).  L.A.M.A. is aware of the of the commitment to reform local government in the Revised Programme for Government 2009,

Other Proposals:-

(a) Better use of ICT –LAMA acknowledges that Local government has put in place modern, financial management, accounting and audit systems, some service indicators, and modern ICT systems. Technology has given some local authorities the capability to measure work and its outputs and enabled them to provide a more responsive and flexible staff resource but this is not uniform.
There is work to be done to ensure that all local authorities are engaging with their citizens efficiently with modern technology.
(b) The use of local customer charters should be further encouraged, adhered to and monitored.
(c) Benchmarking of local authority performance overall  – penalties for non compliance and rewards when standards reached. 
(d) Sharing services between local authorities for improved efficiency – particularly backroom services such as payroll etc.
(e) Ensure transaction efficiencies – implementation nationwide of the National Public Policy Procurement Unit’s requirements for modern, effective and efficient procurement – the expansion of e-procurement.
(f) Monitoring of issues like vacant houses – Housing turnabout from vacancy to second occupancy.
(g) Responsibility; accountability and reporting – follow up on issues, more transparency and responsive to its customers.
(h) Better connectivity between all local services and bodies;
(i) Examine the disconnection between local authorities and some local development agencies /state agencies, and possible duplication of services.
(j) Review of the number of quangos and agencies.
(k) The Balance of functions between councillors and manager to be examined.
(l) Connection between local/borough/town councils and regional government to be examined.
(m) Examine the output – effectiveness of every programme provided annually.
(n) Evaluate the cost of in-house works with those available on the open market ensuring that any investigations on out-sourcing of functions is balanced by the need to employ sufficient in-house expertise, and also to ensure that any comparison on service delivery takes into account that external operators may not be the best option when a multifunctional and flexible response is required.

Monitoring and the reduction of the use of consultants was initiated recently L.A.M.A. welcomes this initiative.