Ensuring holistic value in a finance-driven process - A case study of Kingston’s budget-setting process

Ensuring holistic value in a finance-driven process - A case study of Kingston’s budget-setting process
posted 12 November 2019 in category General

Validating savings

Every year, local authorities go through a budget-setting process aiming to allocate funds across their various directorates. In recent times, this has meant having to make savings by sharing services, changing operating models, generating additional income and in some cases, given the financial pressures the country faces, cutting back on delivery. When a budget-setting process is financially-driven, the conversation can quickly become primarily aligned to what will bring the best balance on a spreadsheet.

PPL has been working with the transformation team in Kingston helping to validate the savings proposals for next year’s budget.

The joint team has embraced the opportunity to ensure that the non-financial impacts and values formed a key part of the conversation. The aim was to create a series of validated savings with delivery plans/costs, but also a non-financial assessment, recognising the value of the outcomes from each investment. We developed a framework through which to evaluate each of the savings, as per figure 1 below.

Figure 1 – The non-financial validation framework used in mind-map format

The framework was positively received throughout the directorates, as it enabled a systematic way for decision-makers to understand the non-financial impacts of changes, which are often overlooked.

We know that, in an ideal world, all savings proposals would be driven by positive outcomes, rather than financial necessity and with social value as an after-thought. In Kingston, the team has taken exactly that approach, as they worked together to shape the longer-term strategic plan.

Longer term planning

The longer-term strategic workstreams (which involved multiple directorates collaborating) provided an opportunity to structure thinking and decision making around positive social outcomes.

The team approached the challenge with an outcomes-based accountability framework [1]. This overall process mapped out as shown in figure 2 below.

Figure 2 – Outline of the outcomes-based accountability approach taken

Taking this approach allowed us to change the course of direction into one which puts social value at the heart of the analysis, whilst ensuring alignment with financial stability.

Why is it important to include the social value of these savings initiatives? Because we can see that ensuring a high level of positive social impact could have a positive financial roll-on effect in two ways:

  1. Lack of exacerbation: An engaged and healthy society will make the most use of services which align with their interests and needs, impacting the wider determinants of health which can reduce costly acute exacerbations. [2] Cost in this sense can come from both the opportunity cost of low productivity but also the cost to the public sector of handling the exacerbation itself.
  2. Initiatives driven by public sector/private sector with a public purpose and clear set outcomes can help shape/create new markets and add value in innovative ways. [3]

The overall key learning from this piece of work is that it very difficult to shift conversations away from immediate ‘fire-fighting’ in the public sector and the best way to approach this is with:

  • A clear framework providing a direction
  • Putting outcomes at the heart of any changes
  • Significant engagement with directorates

 

References

  1. https://www.yor-ok.org.uk/downloads/CYPP%20and%20Early%20Help/Commissioning/Outcomes%20Based%20Accountability.pdf
  2. https://fingertips.phe.org.uk/profile/wider-determinants
  3. https://www.ucl.ac.uk/bartlett/public-purpose/sites/public-purpose/files/public_value_final_30_may_2019_web_0.pdf