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At a time when local authorities across the country are facing major funding shortfall amid rising demand – a new report from Impower claims managing demand by helping people make the right lifestyle choices could potentially save around £5 Billion each year.

The report based on iMPOWER’s analysis of authorities’ spending and performance data and opinion research among 100 senior council decision-makers reveals that 63% of local authorities who are seeing their demand rise while funding is squeezed believe changing behaviour has the potential to unleash cost savings.   However, the study also reveals the hurdles councils need to overcome to change behaviours – including a lack of trust between councils and their communities.

Majority of local authorities (57%) have agreed with the assessment that traditional ways of generating efficiency savings are inadequate to ensure councils have the resources to meet community demand of public services.  When asked about behaviour change within this context, almost all (98%) believe they can reduce demand by changing behaviour.

In addition, Impower’s analysis of the council spending data across seven key service areas have shown that by managing demand through a proactive approach in behaviour change of citizens could deliver 14% annual savings or about £2.94 Billion each year.

Extrapolated across all services where demand can realistically be managed, this would amount to a possible £4.9 billion annual saving on total council spend. But the main challenge remain in the form of lack of trust and “dysfunctional” relationship between local councils and their communities.

“One of the greatest barriers to change is a mutual lack of trust between local government and citizens. Actions are misinterpreted and treated with suspicion on both sides,” Jon Ainger, Director at Impower said. “But we have found that with the right tools and language, local councils can break the vicious cycle, to tremendous effect. In our experience, 20% savings can be achieved in some services, without cutting them.”

But there are internal barriers to change as well local authorities admit. Only a quarter (25%) of executives perceive any significant appetite to address demand management at board level. Half (48%) report internal scepticism over behaviour change, the same number citing cost concerns.

Only a fifth (21%) of respondents claim their authority has a sophisticated understanding of actual levels of demand. Less than a quarter (24%) have clarity over citizens’ motivations, while only 30% understand how motivations drive service demand.

As a result, less than a third (31%) are able to tailor service provision to demand with a significant degree of precision. Unsurprisingly in this context, two fifths (38%) believe that customer expectations exceed their needs.

Close to half (44%) fear that implementing behaviour change is beyond their authority’s current capabilities.

Jon Ainger comments: “There is an urgent need for authorities to transform the relationship with their citizens. Behaviour change represents a game-changing opportunity for local government to readdress relationships with their communities and save taxpayers money.

“More constructive relationships offer the potential to generate savings by managing expectations in the short term, tapping into innovations driven by citizens in the medium term, and reducing need in the long run.

“What’s needed is much more than a simple ‘nudge’. This will only happen if councils are prepared to lead the way and have the confidence to sustain the change over the long term.”