A zero-based budgeting (ZBB) project has been launched as part of the Council of the Future programme.
ZBB aims to help us balance our budget by challenging services to analyse where and what they spend money on, starting with a clean slate – zero-base - each year.
That means, instead of carrying forward the previous year's budget, ZBB assumes there is no spend and services must justify how much money they need for the coming year.
Across the globe the approach had seen a recent resurgence in popularity, with companies including Unilever and Diageo successfully implementing ZBB to challenge longstanding budget assumptions, align spend to strategic objectives, and control costs.
Now the Council is looking to implement the tried and tested method to streamline budget setting and help ensure savings targets are met.
Bryan Smail, Chief Finance Officer, said:
"ZBB looks to embed a culture of cost-awareness, moving away from the 'we’ve always done it that way’ approach to one that uses facts to decide how to free up resources and where to allocate them. By scrutinising old and new expenses, ZBB we will shape council budgets based on expected activity with expenses justified and approved for each new period."
ZBB is one of 31 Council of the Future projects that aim to modernise and improve services and help deliver on our three corporate priorities – Communities, Enterprise, and Innovation.
Badged as an opportunity for the Council to revaluate service delivery and revenue budget savings as well as ensure efficient assets and resource management, an initial ZBB pilot aims to save c£0.85m in 2022/23.
Due to high revenue spend and the need to encourage more active travel as well as reduce our carbon footprint, the pilot focuses on the Council’s overall transport spend.
Working groups have been set up to drive the pilot forward, with representatives from Transport Planning, Fleet, and Children’s Services working together to make change happen.
Back to basics
Over the coming months, the working groups will:
- Begin at zero: create a new annual budget without using last year’s actuals as a baseline
- Evaluate: reduce or remove unnecessary activities or services
- Justify: identify areas that are cost-effective, relevant, and drive-cost savings
- Streamline: determine what activities should be performed and how, including potential to automise or standardise processes
- Impact assessment: review impact on service and communities
- Roll out: communicate clear plans, roles and responsibilities
Bryan, who is also the ZBB Project Sponsor, said:
“We know the process will not be plain sailing, as this approach requires a significant change in mindset, but we have the right people around the table who will help create a clear, compelling, and realistic budget for transport services that will meet service users’ needs as well as organisational objectives.”
Make it happen
Lessons learnt from the pilot will not only shape the Council’s approach to ZBB, but also help identify where further savings can be made using the approach, with a rolling programme of ZBB projects set to be reported to Elected Members later this year.