Oh No! Not Surrey! Budget and Spend Management Problems for “Affluent” Council

We wrote last week about the crisis in Northamptonshire, and the suggestions that their shared services organisation was implicated in the poor financial and spend management that may be one of the causes of the shire’s financial crisis.

Last week The Times reported that Surrey, the most affluent county in the UK, was facing some financial issues of its own. This is remarkable; Surrey is the most affluent county in the UK, as well as being the headquarters of the Spend Matters UK/Europe empire. (It’s where I live).

Surrey has had a very good procurement function for some years, from Andy Davies (who got promoted to a top-level role), then Andrew Forzani, then Laura Langstaff. Their shared services operation which we have written about a couple of times has seemed to be founded  on a more professional basis than the Northampton equivalent, LGSS.

But Surrey’s usable reserves have fallen from £170m to £63m over the past six years, and the council will overspend by £11 million this year.  The grant from central government has fallen by £200 million since 2010, but again the message is also about an ever-increasing demand for services. And this was what caught out attention. According to The Times, the “number of people demanding help for learning disabilities has risen by 46% - the highest of any local authority”.

Well, this is clearly ridiculous. Let’s put it in procurement terms; this is a problem of demand management. There is no epidemic of some terrible learning-related affliction in this wealthy county. This is unmanaged demand and needs sorting out.

Interestingly, and we assume coincidentally, the same issue of The Times featured an interview with Dr Mike Shooter, one of the country’s most distinguished child psychiatrists. He believes that the medial profession is at fault for vastly over-diagnosing children with “learning difficulties”.

“Autism in all its degrees has been much more recognised today than it used to be and there is a lot of work being done with kids day to day, but it is vastly over-diagnosed. In some cases it’s a sort of middle-class parents’ way out of having to accept any of the responsibility for what their kid is like. It’s almost a badge of honour, people carry it around like a handbag.”

We won’t pretend to be experts on this topic, but one of the most basic rules of procurement is that you will have problems if you don’t manage demand. It doesn’t matter how great a procurement job you do, if demand is not managed and controlled, you will end up spending a whole lot of additional money.

It’s not easy for councils facing demand in these very sensitive areas, but somehow it is going to have to be done. The same probably applies to adult social care, particularly age-related services, which runs the risk of bankrupting many councils if it isn’t addressed more creatively and intelligently than currently.  So, there you have it  - perhaps demand management will be the major spend management issue for government in the next few years?

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First Voice

  1. Mr Grumpy:

    Hi Peter,

    The demand management element can only really be contained as so much of it is driven by governance and legislation. Department of Health, NHS England, NICE. All have an input to how such services are run and thus the clinical professionals and commissioners who run and enforce it are literally handcuffed. Procurement would struggle to have a voice at that table (especially if you are not clinically qualified which I can say I heard many times in my NHS days as many who still work there could testify to hearing that line too).

    Now Dr Shooter has a point and has nailed the culture around diagnosis of such conditions and disorders and it’s ‘appeal’ however, there are so many factors he overlooks. Because the question is Peter, how would one stimulate and control demand without having implications elsewhere? I would imagine an options appraisal would be:

    Option 1 – Do nothing. Demand increases and Services become unsustainable.

    Option 2 – Look to change the diagnosis model thus looking to reduce Services usage, however no doubt this will have an impact on schools who would bear the burden of additional teaching requirements on already a huge workload (bearing in mind the low pay argument for teachers!) and could even effect the schools performance tables too for undiagnosed children which in turn has an effect on funding and it could also impact on charities who support children with learning difficulties and put them under even more intense financial pressure.

    Option 3 – Move to a more medical based model for treatment of learning difficulties (which is more or less in place for mental health illnesses) which sees a reduction in work load for psychiatrists, CPN’s, support workers and moves us towards 1950’s America utilising a more chemical lobotomy approach. Now the drawbacks with this approach, is you would see the drugs budget for the NHS swell beyond breaking point and creating an even greater dependency on pharmaceutical companies, which isn’t that what the Department of Health trying to move away from?

    I know you love a good BATNA, however in this instance I would say a TBL approach would actually be beneficial as there is a huge bearing on the social impact any of those options would have.

    What can one do though? Services that are delivered by people only reduce in cost when the headcount does. I struggle to see any solution that doesn’t have a big cost implication involved which the government wants to avoid. However, I do agree that throwing more money at the problem doesn’t solve any of it’s ills.

    It would take a brave and very courageous MP to encourage the public to take more ownership for it’s health and well-being.

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