Greater devolvement to local authorities combined with earlier interventions would save £1.6bn in London alone, says PwC

A major study into public expenditure in London has estimated that £1.6bn could be saved by re-channelling funding to local bodies and ensuring earlier intervention with the most chaotic families.

The report by PricewaterhouseCoopers mapped the total amount spent in the capital (an estimated £73.6bn in 2008/9) and considered how a Total Place approach would improve services.

It found that less than half of the expenditure went through London’s boroughs and the Greater London Authority. The report – commissioned by London Councils – also revealed that local government had no control over the £5.6bn spent by 156 different quangos, or the £25bn spent by central government departments.

The PwC report examined how a Total Place approach might work for three specific areas of expenditure: chronic care, worklessness and youth anti-social behaviour. It said a more devolved system could provide almost £1.6bn in savings, with closer working between the NHS and social services alone delivering more than £800m.

PwC claimed the existing system, with its overcrowding of agencies, could lead to confusion in delivery, while national goals often conflicted with each other.

“A significant weakness is that insufficient attention is given to early interventions that avoid greater and more expensive problems occurring later. The consequence of this is less effective, and more costly, reactive responses by London’s public services,” it said.

“We believe that a greater focus on earlier intervention and prevention is at the core of helping to address the particular demands placed on local public services by what are frequently termed ‘the most chaotic families’.”

The report suggested there was a key leadership role for local government in London to play in pursuing change, “if only because London boroughs stand to benefit disproportionately from the changes we are advocating”.

PwC warned that local government’s ability to deliver efficiencies would in part be dependent on reform in other parts of the public sector, and that councils would struggle to secure their share of the gains without a commitment to change from other bodies.

The report called for individuals to be provided with the ability to choose how and when they use public services. “Self direction/self service is a theme that resonates across much of the public service beyond the three areas we have examined,” it said. “It has a role to play in education, cultural provision, housing and some areas of the criminal justice system.”

A third strand of reform would see more effective and integrated case management as an integral part of emergent strategies to deal with those individuals and households with multiple needs and who access services from a range of different organisations.

PwC cited youth anti-social behaviour as one area where local authorities should be given an enhanced role, in particular to ensure youth offending teams are deployed more effectively.

London Councils’ chairman Merrick Cockell said: “We have long been aware that councils do not operate within a perfect system. The way public bodies are funded, and the number of different organisations working for similar or overlapping aims, unfortunately make waste inevitable.

“However, PWC’s research has shown us a way to radically reduce London’s burden on the public purse – while still improving the services we offer Londoners.”