2015 savings targets out of reach for most local councils

  •  Majority lack confidence in hitting their savings targets for built environment projects
  • School and college building work is the biggest source of pressure on council finances

A majority of local councils fear they will fall short of hitting their savings targets for a wide range of construction projects, from schools to hospitals, in 2015 – adding to the strain on public services according to research from Scape Group, the UK’s leading built environment procurement company.

Four in five local authorities (80%) have a savings target set out for their revenue spend on built environment projects for 2015, with the average target being a 15% saving. But just 31% of local authorities are confident about hitting this financial goal, leaving 69% fearful that they will fall short.

Concerns are even greater over capital spending targets: 62% of councils have set a 2015 target and are aiming for an average saving of 17%. But more than three quarters (77%) lack confidence in achieving this.

Schools and colleges are expected to place the most pressure on local authorities’ financial resources for built environment projects in 2015, followed by health and social care services and highways and infrastructure.

Public building projects have already been hit hard by spending cuts in the last twelve months. Urban councils saw their revenue budgets for built environment projects fall by 15% in 2014 compared with an average 13% loss of finance in rural areas. Capital spending on council construction also fell by 10% on average in urban areas and 4% in rural areas.

These growing financial pressures have taken a significant toll on councils’ ability to progress built environment work. Nearly three in four (73%) have had to cancel or postpone a planned building project in the last two years. Suppliers’ inability to work within their available budgets is the most common reason that has caused projects to be axed, with 46% of councils affected.

Mark Robinson, Group Chief Executive, comments: “Councils are faced with the unenviable task of using a shrinking pot of money to maintain and improve the buildings that house vital public services. A failure to progress with planned construction projects will leave many areas desperately short of school places and healthcare capacity while their existing infrastructure decays.

“There is no ‘rabbit out of the hat’ solution; the answer has to come from smart financial planning and innovative ways of working within these constraints. Individual councils can often be disadvantaged in supplier negotiations, but the collective strength of procurement frameworks can push for better deals and still benefit local communities by prioritising spend with neighbouring businesses and supporting apprenticeships.

“Despite councils’ concerns, there are ways to beat the inevitable financial hardships coming over the next twelve months. It is about time that local authorities brought capital and revenue budgets together and started pushing the market for guarantees on building performance to improve sustainability. A willingness to be bold and adopt smart thinking for planning and procurement can ensure local construction projects are not left to suffer the wrath of austerity.” 

A full copy of the Value Added Spending Monitor is available online http://scapegroup.co.uk/scapevaluespendmonitor.pdf