Crouch told HR magazine that although the cuts would have a “significant impact on the operating models of local governments”, they also presented “an opportunity for HR and OD to work with community delivery”.
“It’s an opportunity for HR departments to be more community-led,” he said, adding that there was a “buzz” in his department about getting it right.
In Wednesday’s spending review, chancellor George Osborne announced local governments would have their funding slashed by £2.6 billion, which is 10%, in 2015-16.
He also announced an end to automatic incremental pay rises for public sector workers, and that public sector pay rises will be capped at 1%. However as local governments are independent bodies, they are not forced to comply.
Crouch said despite that there would be “huge pressure” for local governments to put an end to incremental pay rises. “It’s the one to watch,” he added.
Louise Tibbert, head of HR and OD at Hertfordshire County Council and vice president of the PPMA, said many councils had already begun the move towards performance-related pay. She added she expected more to consider it, but there was “no one size fits all solution”. “It depends on the local authority and what its priorities are,” she said.
Tibbert added the cuts would make the OD function in councils “even more important”. “We have to challenge ourselves to keep costs down but also build the right capabilities for our organisations,” she told HR. “As the cuts get deeper and public sector organisations are changing and flexing, talent and leadership are going to be even more important.”
She also said cuts have brought innovation to the fore in the public sector. “Necessity is the mother of invention,” she said. “[After these latest cuts] the direction of travel will remain broadly the same, but it’s about finding different ways of doing things, not just slashing and burning.”