(Looming budget cuts now prescribed by all parties spell more bad news for local government CIOs, who are doubtful about their ability to deliver the necessary services in the future, according to a report from local government association Socitm.

Council IT departments are already under heavy pressure to reduce costs. The latest Socitm IT Trends Report forecasts that capital spending will fall by 20 per cent in 2010, with central IT spend falling by eight per cent and staff numbers dropping 10 per cent over the coming year – the largest decrease since Socitm began producing the report in 1986.

Services are already affected as strategic transformational programmes are being reined in through lack of money, according to John Serle, editor of the report.

“Our respondents are suffering from the perennial pressures of funding cuts alongside increased demand, and are under greater pressure than ever,” he said.

Departments have already cut out the slack in their operations, and CIOs now believe cutting another 20 per cent from their IT budgets over the next three years, as prescribed by the Operational Effi­ciency Programme, is unrealistic.

The survey indicates that savings that can be achieved by efficiency programmes are already in decline, workforces are already at their most productive, and any further cuts would impact frontline services.

The “salami slicing” approach to budget cuts is undermining the potential of IT to deliver services in a more efficient way that could save costs and transform operations in the long run.

“We believe investment in IT is necessary for efficiencies,” said Serle. “In the political hurly-burly of heavy cuts this [potential] could be lost.”

As departments saw cuts coming they began to invest in transformational initiatives also aimed at cutting cost. These included flexible working programmes, business process improvement, and putting more public services online to make them “self service”.

But many of these schemes have stalled as departments no longer have the capital to carry them through – despite the fact they could start saving costs in a relatively short time.

“ICT managers say that being asked to do more with less is now the major challenge they face,” says the report.

Overall purchases of equipment dropped 20 per cent between 2008/9 and 2009/10 as departments postponed hardware refreshes. But even this will have an impact down the line, as organisations need more cash to support an ageing IT infrastructure.

The report says that departments should look to take a number of basic steps.

Where they own large parts of their own infrastructure they should think about outsourcing to reduce costs. Local authorities buying commercial off-the-shelf software should look to software-as-a-service solutions to meet business requirements.

Additionally, increased use of shared procurement and e-auctions is essential to reducing capital expenditure, while shared services schemes should be adopted wherever possible.

Although services sharing is still in its infancy, the survey found that political rather than practical constraints were preventing uptake – people still wanted to be in control of their own infrastructure.

The upcoming Carbon Reduction Commitment legislation is also likely to make IT departments the focus of carbon cutting initiatives, and hardware virtualisation and print reduction plans can help save costs in this area.

Government CIO John Suffolk said that public sector cloud computing could also save costs in the future – though this is not likely to be for some years to come.

“There has to be more efficiency across the public sector,” he said. “Currently, we’ve got hundreds of systems doing exactly the same thing."

Local authority IT spending facts and figures

The forecast for overall IT spending in 2010 is £2.8bn, £400m less than in 2008; the biggest annual fall for many years.

On average, IT spend is around 2.5 per cent of total budgets in councils – lower than most private sector organisations.

Staff costs account for 42 per cent of overall spending – two per cent less than last year.

HP remains the biggest supplier of servers with Dell in second place. Between them they have 78 per cent of the market.

Geographical information systems, content management and e-forms are the top three technologies for delivering efficiency.