Challenges Facing the Public Sector

By 9th October 2015News and Events
Issues facing local councils and housing associations

Below is an excerpt from our latest white paper Key Issues Facing Local Government. Download it by clicking here.

With the words of George Osborne still ringing in our ears, the first conservative budget for 18 years delivered the manifesto cuts we have been awaiting with apprehension. Maintaining defence budgets at the NATO target of 2% means that non-protected department cuts will probably exceed 15% over the next three years*. The continued pay freeze at 1% for the next 4 years means that public sector recruitment and retention will be increasingly challenging.

In order to understand the impact on day to day working life, 3Sixty Systems recently commissioned some research into the issues facing the public sector.

All statistics quoted which are not referenced are from 3Sixty Systems research

The people sampled came from a variety of different areas of local government, from county and metropolitan borough to district councils. All told, the public sector is under increasing pressure from all angles, from government austerity to the devolution bill and environmental factors.

Government Austerity

The impact of austerity measures over the past five years’ is well documented and set to continue. A further 500,000 jobs are predicted to be cut over the next five years, placing greater strain on all areas of the public sector*. ‘Doing more with less’ will continue to be the local government mantra.

City Devolution bill

The City Devolution Bill sees powers devolved from central government to county and city councils. Decentralisation offers a great opportunity to take a ‘whole systems approach’ to redefine public service and growth offerings based on the outcomes they want to achieve. Although potentially a huge opportunity, there are issues around local capacity and capability to deliver the dividends of decentralisation.

Ministry of Justice (MoJ) Reforms

The reforms represent the largest overhaul to the personal injuries legal framework in England and Wales for over a decade. Reduced response times mean an increase in the number of settlements as councils have to consider the potential legal costs verses cost of settling.

Over half of the respondents to our survey stated that they have had to adjust the way they work as a result of the new MoJ regulations.

Poor Weather

On a more practical level, two poor winters in a row have depleted road and pavement surfaces which has led to increased insurance claims for motoring (tyre damage from potholes) and personal injury (trips, slips and falls). As a result, there has been a dramatic increase in claims against councils. This was cited as a key reason for the increase in claims in our research.

A recent Which? Report discovered that 70% of drivers have hit potholes in the past two years, of which 25% sustained damage**. According to the RAC, nearly 50,000 motorists made claims for pothole damage in 2014§. The majority of these claims were refused, but a whopping £3.2 million was still paid in compensation. This is a significant sum of money even if all the claims were legitimate. Anglesey council alone has seen nearly £800,000 worth of insurance claims in the past 5 years, most of which was due to pothole damage.

Fraudulent Insurance claims

As well as genuine claims, respondents stated that there has been a dramatic increase in fraudulent claims due to the economic climate. This is backed up by the National Audit Office findings that non benefit fraud has risen to a 25 year high of £188 million in 2014, an increase of £59 million on the previous year. Far from just the preserve of opportunists, organised criminal gangs have built fraudulent claims into a criminal industry in itself.

Insurance fraud has more than tripled in just 4 years (2010-2014) and its value has risen by more than 60% to £4.8 million per year††. This highlights the growing problem with fraud which translates into greater demands on claims handlers.

Processing claims

Irrespective of the financial implications of higher premiums adding extra pressure on budgets, there is a significant impact on already stretched claims teams. The effect of increased fraud is that each claim, whether fraudulent or not, requires more screening to ensure its authenticity.  This further impacts on time and resource.

Our research revealed that increasing amounts of claims handlers’ day is taken up with laborious data entry and information gathering, with 77% of responders stating that it takes up most of their time. This is compounded by a constant struggle to get full information from solicitors who purposefully withhold or delay responding so that claims fall outside MoJ deadlines and force councils to settle. The people we spoke to advised us that it’s not just solicitors who are slowing the process down, third parties such as the NHS are regularly sluggish to respond.

All told, with all the pressures on time, budget and resource, local government need to become smarter about how they use resource and ensure they utilise modern technology to its best effect.


Sources:*PWC June 2015,  **Which? March 2015,  BBC News August 2015,  ††Audit Commission “Protecting the public purse 2014: Fighting fraud against local government”,  §The RAC Foundation March 2015