Interview with Richard Lloyd-Bithell, Service Director for Finance and Procurement, the City of Edinburgh Council

This is the latest interview for our Future Local Lab, where we’re joined by guests from around the world to discuss what the future holds for local government, with the emphasis firmly on what the sector can do now to start preparing for the future.

In this interview, we spoke with Richard Lloyd-Bithell, service director for finance and procurement at the City of Edinburgh Council. Richard is a chartered public finance accountant with over 10 years of public and private sector experience at a senior level. We spoke to Richard about Edinburgh City Council’s recent budget and the council’s shift towards preventative spending to address long-term challenges.

Watch the full conversation on Youtube here.

00:00 Introduction to local government and budgeting
04:19 Edinburgh City Council’s budget approach
10:56 Transitioning to zero-based budgeting
16:12 Key prevention services and community empowerment
21:17 Partnerships and public communication
24:39 Linking prevention to financial strategy
29:43 Balancing reactive and preventative spending
33:26 The importance of data in budgeting
37:29 Lessons for local governments worldwide

A written version of the interview has been edited down into a Q&A format, which you can read below.

This interview has been edited for clarity and conciseness. 

Firstly, can you tell us a bit about your background and journey into local government?

I started in local government when I was 17 as a modern apprentice in Flintshire, North Wales, where I originally come from. I was probably one of those people who stumbled into local government after leaving school, not really knowing what to do. But I instantly developed a passion for local government, politics, helping people, and public service.

I was very lucky really to have great mentors in work. Local government is an absolutely fantastic place to grow as a professional and grow your career. I was incredibly lucky to have great mentors in Gareth and Liz, who have gone on to be Section 151 officers in North Wales as well. And I think that approach that local government takes in, lots of councils have an amazing track record in supporting young people coming through into the profession, whether it be finance or any other discipline, it’s absolutely a great place to start your career not just because of the skills that you pick up and the diversity of local government and the different things that councils do and you get involved in, but absolutely also that sense of public service that gets ingrained in you, that really stays with you for the rest of your career and how it forms your values as a person as well as a professional as well. And then after that, I’ve had a bit of time at CIPFA, the Chartered Institute of Public Finance, working in various policy roles and some time at Birmingham as well, before coming to the City of Edinburgh over the last 18 months.

There’s a huge amount of work that goes into drafting and setting a council budget. Can you tell us a bit about Edinburgh City Council’s approach to this budget and what are the key priorities of this budget?

So this year, with the budget and the Medium Term Financial Plan, the council wanted to do something to really challenge ourselves to have a look at a more long-term view on the council’s finances. I think at the moment, with the challenges that every public body is facing with finances and the various demands on services, it’s really important to take a long-term view in the way that we’re approaching public finances in all centres of the public sector. So, at the core of the Medium Term Financial Plan is what we’ve named the sustain and reform strategy. Key priorities within that are really looking at stabilising core services. We’re looking to try and identify those really core services that the council have. People know what those are in terms of schools, place-based investments, roads, waste, all of those really core services that people value on a day-to-day basis. Making sure that those were in as fit a financial state as they could be, and not just looking at including more money into those, but also looking at increasing grip and control in financial management and the way that the council approach those areas.

The second part of that is the reform element. This is a long-term strategy with prevention absolutely at the core of the way that the council do things. Essentially, finances are only one aspect of it. The strategy and the framework are an enabler for us to look at the finances differently, to look at not just within the period of the Medium Term Financial Plan. Most organisations cover five years, but the council want to be looking at next 10, 15, 20 years, because demand and changes in demography and all of these quite critical risks in terms of public finances is not something that’s generally readily able to be planned for, but the council want to attempt to move into that space by looking at needs assessments, looking at long-term strategic aims of the council and making sure that the council put the organisation to finance as in a fit state as possible.

Within that are, of course, the council’s business plan priorities, which are eradicating poverty, making sure that the city is a good place to live and work, and, of course, looking at net zero and climate change. Translating that into financial strategy and into financial action is absolutely fundamental in this. The council have a number of initiatives on this.

Firstly, looking at moving from incremental budgeting to zero-based budgeting. Generally, councils’ finances and most organisations’ finances in public service are done on an incremental basis. Every year the council have that long period of 12 months of setting the budget, looking at inflationary pressures, new demands, all of these kinds of things. And essentially, what the downside of that can lead to as an unintended consequence is that you end up looking at what you’re adding or taking away from the budget, and you end up discussing maybe 10% of the budget rather than taking an absolute fundamental challenge to your core expenditure.

Edinburgh spends £1.2 billion per year, so changing the culture and changing the approach around that from looking at what the incremental element to a fundamental look at the council’s finances on an annual basis and over the period of the Medium Term Financial Plan is not an easy thing to do of course. And this is a multi-year program; no organisation will ever get to a fully mature approach to it in year one. But essentially, it’s us taking that fundamental look through a number of lenses, whether that be looking at how the council benchmark against other organisations, how the council are managing certain aspects of the enterprise. But fundamentally, that core is looking at prevention. So that’s one half of it.

The other half is how the council actually look at prevention through a financial lens. So one of the things the council are introducing this year and we’re developing is gathering that data and gathering that fundamental understanding of what is driving reactive service and prevention and early intervention across our cost base and the council. The team are doing an enormous amount of work looking at spend, from what are the council spending on preventative service, what is reducing demand, what is preventing future harm to people out there in the world, what is in the category of early intervention. So it might be mitigating rather than completely preventing, but certainly making things slightly better.

And then it’s about reactive spend. So how much are the council spending on core services? How much are the council spending on the results of market failure and demand failure? So, where are the council essentially picking up from those points? And the ultimate ambition, just to round this off, is that it’s about long-term strategic alignment of resources to these areas so that when the council come to agree the budget with the policy who are the ultimate decision makers, they’ve got a rich body of evidence to say over the long term of this of this organisation, the council know if the council invest, re-divert or re-look at resources from reactive into prevention and change the way that the council do practice and change the way the council deliver services and do process and reform those things, ultimately the council should be trying to taper off demand at the long-term edge of the plan and ultimately that’s where the council want to get to in terms of our operating model as an organisation and for the members to have that information to decide upon for the future.

What are the key steps involved when writing this budget and moving towards that prevention focus and that zero-based budgeting?

Probably the key steps are that there is an element of basic grip and control over the finances and data. the council always look at Section 95 officers to improve financial management across an organisation. But there are more fundamental strategic decisions that need to be captured. It is really a holistic process that covers everything from your workforce. And it’s not just a finance discipline for this to be truly successful. You need to involve colleagues from HR, the experts who are in the services, and of course IT and digital, because digital enablement is such a key fundamental factor in whether it be transforming or redesigning services, that’s absolutely a critical underpinning of the way the council do things. So a multidisciplinary approach is absolutely essential in this context.

But in terms of how the council are approaching our remedial priorities. Some of the things I was very pleased about in this year’s budget is the council have some absolutely critical immediate things that the council need to address. I’ll just give an example, homelessness within the city is something that’s absolutely been an exponential level of demand increase over the last number of years, homelessness caused by various different reasons. Along with actual child poverty and ingrained poverty in different parts of cities across the UK, homelessness is one of the most critical and impactful negative things about in the UK at the moment. So what are the council doing to address that? One of the things that the council are setting out to do is the council are looking at taking an absolutely preventative approach, that of course that involves money and reallocating what is already a scarce resource into preventative service.

So, making sure that we’ve got the right facilities, making sure that we’ve got the right identification and data and support networks for people to ensure that they don’t go into the situation of homelessness, but also making sure that we’ve got the right tools and assets to do that. So I was very pleased when the council agreed to £50 million of capital investment to look at temporary accommodation. And that will make a real difference in how the council can ensure that people have suitable, safe accommodation so that they can be supported and back into the place they want to be as people as well, which is fundamentally the most important thing.

One of the fundamental things about this is not just about our day-to-day spending, it’s about our long-term capital ambitions as well. The council have done an enormous amount of work on this budget in looking at capital investment, looking at prioritising that, and really having a block of capital investment that the council can invest into preventative service. So as I say, the 50 million pounds into temporary accommodation was absolutely one of those, but going more into core services, trying to look at roads, look at our asset base as well, and seeing what preventative measures that the council can take so that there’s a reduction in demand on reactive spend, such as roads repairs, maintenance, potholes, and all of those things, and making sure that we’ve got the money to innovate and look at preventing those spaces as well.

But I think with two very polar opposite examples of homelessness and roads, for example, what this lends itself to in terms of articulating the strategy is that prevention can be really applied in any context in terms of whether you’re actually looking at finances, whether you’re doing roads or you’re doing homelessness, taking that approach of ensuring that you’ve got targeted strategies around preventing demand and preventing market failure or any context that you’re trying to achieve, is always better than picking up the pieces afterwards and reacting to it and being on the back foot. It’s not something that happens very easily. It’s something that takes years to ingrain into not just the way that the council do operations, but the way that the council think about a mindset. But us setting that target out and setting that strategy out was absolutely a fundamental first step.

Could you outline any key prevention services that Edinburgh is investing in? You’ve mentioned temporary accommodation and roads. Are there any other areas that you might want to flag?

I think obviously in the space of adult social care, there’s a huge amount of work undertaken on prevention. But I think one of the things that is really key on this, and I think I’ll just draw this out of this example, is that prevention and looking at all of these kinds of things, it’s not something that the council or any council or public body should try and do in isolation. So within the adult social care space, with our integrated joint board with the NHS, there is absolutely a emerging refocus on prevention and the way that the council want to do things and whether that is how the council look at services, how the council look at our relationship with partner bodies and how the council realign those activities to a preventive model is absolutely fundamental and our colleagues working with both partners have been really really pushing that forward. But I think just going back to the partnership approach, us as a local authority working with the NHS as our really key fundamental partner and having that established partnership is absolutely fundamental to this.

But also working with our relationship with the third sector is incredibly important. The work that charities do across the city is absolutely essential to taking a preventative approach to this. So the council are looking at that. The council are looking at how the council can maximise the potential and benefit to absolutely create a great relationship and leverage the benefits that come with that and capture those. And then also other places like the police and other key public authorities. It’s got to be a whole system approach through a partnership model to make sure you get the maximum community benefit and the maximum individual benefit for people as well.

But just to kind of give more examples, the council are also looking at our special school estate so I was very pleased that the council allocated some money for those and ASN is absolutely fundamentally important that the council get that offering right because the best experience that young people with additional support needs get from the council at the earliest opportunity so that when people are going through their life and the more support they have the right support as well and also the right environment and the right context for those young people to go through their lives and when they reach adulthood and they’re the most prepared and equipped as they can be to move forward and have as much enriched experience from their interaction with the council. That’s absolutely fundamental. And just one final example is that some parts of the strategy can be about letting go of control in a certain sense and empowering communities to look at a real grassroots level approach to issues like poverty. So one of the things that the council have established through the budget is the regent regenerative futures fund, which is really looking at grassroots organisations who are looking at poverty prevention and our policy colleagues were absolutely working on that for a long, long time so I’m very pleased that that was formed part of the budget as well.

You mentioned Edinburgh City Council’s approach to working with partners to deliver a prevention-led approach. How have you communicated this shift with the public, partners, and members?

So just in terms of the partnership approach, there is the Edinburgh Partnership, where there’s representation across the whole of various public bodies I’ve mentioned. But also a very prominent example is probably the Edinburgh Poverty Commission (EPC), and also there’s a legacy group called End Poverty Edinburgh. So the EPC set a target to end poverty by 2030, and there’s the poverty delivery plan that the council was built around, so looking at six particular areas around fair work, housing, income security, skills, community and health. The council measure progress on these annually and with recent budgets, we’ve tried to accelerate the EPC’s call to action and obviously going back to the core around the business plan, and also looking at the overall strategy around poverty prevention. The council want to continue to rise to that challenge and keep looking as officers about how the council can put the right decisions in front of the politicians to try and accelerate in the right action around that and support everyone in the organisation to take that forward. So that there is a real sense of joint working around those things and the Edinburgh Partnership is key to all of that.

In our budget consultation this year, the council went out to members of the public to ask them about the budget itself and the strategy and of course which was really helpful, really good engagement around that, thousands of respondents that helped us not just inform the budget process itself but also things like integrated impact assessments and really important things that the council need to do as part of making any changes through the budget. It’s absolutely fundamental that the council get views from those it does impact when the council are making changes. There are, and just going outside of the partnership point, there are many partners that the council do work with the NHS being an absolutely fundamental partner but there’s probably ones that are less thought of you know the council work with Audit Scotland and the Accounts Commission who are obviously have brought out a number of high profile issues over the last couple of years which are helpful in their regard around getting public focus around those challenges. So the council have a good relationship in how the council work forward with them. But also just on housing as well, and all of the networks around that housing being absolutely key priority for the city. It’s really essential that the council keep working with those and, ultimately, community groups at every level to inform where the councils are going.

Prevention can sit in many places in a council. Why was it important to link it specifically to the Medium Term Financial Strategy?

That’s a great question. I think one of the things that in my experience of developing the Medium Term Financial Strategy is that it often is a vehicle for just articulating what the challenges are from a purely financial sense and often doesn’t have that alignment to wider business objectives or strategy or what you want to achieve as an organisation. So the council felt when the council were sitting down to develop it that it was really, really fundamentally important that it wasn’t just something that was articulating our challenges financially for the next five years. I absolutely needed to do that. But that there was a direction and a real framework for decision making, what parameters and criteria that the council want to achieve, all through that poverty lens and that operating model where the council really wanted to fundamentally set out not just the challenges but almost that roadmap and actions that the organisation needs to take to first and foremost get itself on a sustainable financial footing as possible but then also radically change the operating model of the way that the council approach prevention and set out that enabling framework to do that because short-term decision-making and cuts and tactical savings something that is in the the realms of the incremental realm, realms of the long-term and strategic. So that was ultimately the motivation behind doing that. It’s not just a numbers game in this regard, it’s a culture and a mindset in how the council approach that.

How’s that experience been of balancing both reactive and preventative spending?

We’re still really getting the groundwork on that. The council want to make sure we’ve got a complete story and picture on those two elements of things, but what I can say for sure is that a budget necessarily does have to fund both because the council still need to do our core service. The council still need to make sure that we’re giving everybody a fair and equitable service across the city. But one of the things that is going back to that point about redirecting and making sure that the council can take that preventative approach is to create headroom for a better core service as well as enhancing some of our more specific and targeted services.

the council still need to absolutely continue with the funding of core schools and ensure that we’ve got great frontline adult social care and making sure that the council continue to work on roads and maintenance but essentially making sure that the council can take that preventative approach is about protecting those services and protecting those core services as well as trying to enhance the way that the council approach and enhance outcomes across the city rather than just the outputs of core service. want people to have better outcomes, make it a better place to live, and make people have a better life experience when they interact with the council and when they need services. I think whilst it is a rebalancing over time it is still very much about protecting that core offering that the council have as a council, and with that strategy, making sure that it’s clear that that demand is tapering off and the council prevent it or it’s not as acute when it does come to us.

What are you hoping for in terms of the outcomes and deliverables from this investment?

From a financial sense, there’s the objective that the council want to be sustainable, the council want to create headroom from a prevention so the council can reinvest in the services that we’re delivering and mitigate the needs for us to generate income from. The sources that the council can generate income from, but ultimately the objective is people’s experience and how they interact with the council, how they feel about the council as well. There is that relationship element, we’ve got to be an organisation that’s easy to work with and people trust and people want to come to for those purposes but essentially ultimately from people’s real lived experience is where the council want to see the benefit from this and the finances are just one key, one section of the strategy.

How important has data and analytics been in all of this?

It’s been absolutely fundamental in this. With any of these approaches and any of these actions that we’re trying to take forward, data is central to how the council do these things. So the council have invested more in data and understanding data. If I just go back to some of the fundamentals that are within the budget strategy from the Christie Commission. This really aligns with what some of the key recommendations that Christie was talking about, that governments must monitor and evaluate initiatives, track outcomes, and use data to refine and improve preventative strategies over time. So fundamentally, data is at the core of that recommendation. So the council have invested more in it. We’ve spent an awful lot of work looking at our data sources, our data sets, collecting new data where the council have legacy data. And for actions like or programs like zero-based budgeting, you need to absolutely delve deeply into the data, challenge every line and challenge yourselves. That’s not just also a data thing. That’s a culture and delivery part of it. But you need to absolutely make sure you’ve got those robust data sets to do it, which is not always not always the easiest thing to do. But moving on from that, it is like those changes or things you want to shift in the operating model to measuring the outcomes on people. Is this going to have a tangible deliverable impact on homelessness in the city. Is this going to improve attainment? Is this going to improve various parts of people’s lived experience? That’s absolutely fundamental to all this. So that linking of what the council put in, what the council get out and what is the outcome is absolutely fundamental and data is at the core of all of that. You know, data in terms of the public sector is absolutely rich, but often it is dispersed and quite hard to bring together into a meaningful way. So we’re working very hard to try and get that. And our performance team are working incredibly hard on that as well. So it’s really been a pull together from the whole organisation to look at our strategy around that.

Why do you think it’s important for local government to invest in preventative measures?

I think it’s been 10 years since Christie’s report and that shift that the council are looking at through the budget strategy is very much in keeping with Christie’s vision of public service reform. That report stressed that tackling problems early on not only yields better outcomes but reduces the overall cost of public services through avoiding severe problems and higher costs further down the line. The City of Edinburgh strategy around the finances echoes this by investing in homeless prevention, poverty action, early learning support. And as I say, we’re seeking that Christie-style long-term payoff to reduce demand. But also it isn’t just about the money. Of course, the council know Christie urged integrated working and local accountability. And that’s reflected in what I’ve said about partnership working and looking at community-based and local solutions. So this really dovetails with the council’s priorities, which are about that business and community plans and sustainable development goals. All of these kinds of very important pieces of work that have gone over the last 10-20 years to really inform the core business plan and the strategy. So, ultimately, aiming to try and get to that point of ending poverty in Edinburgh by 2030, which is going back to the Poverty Commission’s challenge to Edinburgh.

What impact do you think that this investment will have now and in the future for the communities served by Edinburgh City Council?

Well, the council always aim to have a positive impact. So I think there will be different degrees of impact that the council need to track and measure, and always make sure that we’re monitoring and evaluating that. Again, that was a key point of the Christie report was monitoring and evaluation because I think one of the things that is quite easy to do is when you set a budget, you can go and deliver it but you can sometimes walk away from the original intent and strategy so it’s keeping that focus and keeping things measurable as much as the council possibly can, because not everything is of course measurable in the number sense. It’s about looking at things qualitatively as well as quantitatively but making sure that we’re co-designing some of those outcomes as well. Obviously, we’ve measured on a huge range of things, but making sure that through the consultation process, through the number of partnerships that we’ve got, that we’ve got a good alignment on what we’re trying to achieve as a system not just as a council as well.

Local government around the world is facing shared challenges, including financial sustainability, housing pressures, and the need to adapt to changing climates. What lessons or advice can other councils take from Edinburgh’s approach to prevention-led budgeting? Secondly, how can this approach strengthen local government and support communities in the long term?

While our approach is still early days in the way that we’re doing it, one of the things I would probably share with people is that first and foremost, taking a step back and looking at how financial strategy enables organisational objectives is really, really important.

I think it’s very easy as a CFO or a finance director or anyone in the finance professional to be very focused on the numbers. Naturally, you are and you have to be because you’re accountable for them and making sure you’re financially prudent and sustainable. But I think taking a holistic and long-term view in the way that the council approach the finances and linking up the different elements of strategy and using the financial framework as almost a window into the rest of the organisation’s strategy is really, important. I’m not saying we’ve cracked that, but it’s the council want to continue to enhance and build on. And I think the points around changing the way that we’re approaching the budget and fundamentally looking at the expenditure of the council and not just the portion that we’re talking about traditionally in a budget process is really, really fundamentally important. And it’s about trying to break down those silos of departmental working, not just try and look at the way that the council where we’re spending what and where we’re putting our resources. It is trying to shift that culture and take a full enterprise approach to the finances and to delivery rather than incrementally looking at things and things growing over time.

Thirdly, it is about the data as well and making sure that you have got a really strong data taxonomy, understanding where the data is coming from, understanding what it is telling you, to really articulate a strong story where the finances can tie in with the organisation’s ambitions. And that is not just looking at the financial information, that is looking at how things are impacting and the outcomes it has on people and weaving that together into a compelling story for decision-makers to make the right calls for not just the immediate time but into the future. And that’s not just about inward looking at data, that is about engaging community groups, looking at your partners and really building those relationships because the council can’t really change the system unless we’ve got those strong relationships with our partners. Those are probably the things that we’re working on, those are things I would share with people and it is really a call for openness and openness to the idea of working together for shared objectives and shared outcomes.

Related briefings

• Future challenges to local government funding – Doing less with less
• How are Scottish council finances faring in 2025 and beyond?
• All you need to know about reserves and provisions