By Daniel Hunter

The reality of the financial challenges that local authorities face in 2013/14 have become clear.

The Communities Secretary Eric Pickles has announced that some of the worst off councils face cuts of 3%, whereas the wealthiest councils will be cut by up to 8.7% in 2013/14.

Commenting on this year’s Local Government Finance Settlement, Oxygen’s European Chief Executive Roberto Moretti says it is "D Day, not Doomsday" and has urged councils to consider fresh alternatives that will provide a vital new income stream for public sector bodies.

Mr Moretti said: “Today’s settlement has intensified the pressure on Local Government, which has already discovered so many ways to tighten its belt, such as partnership working and outsourcing. It is now being placed in a position where it needs to go further and find more.

Through the Oxygen Early Payment programme — already adopted successfully by Oldham Council — a new source of income for councils can be provided in terms of a rebate for early payments to contractors and suppliers.

Mr Moretti added: “This is money that will help protect frontline jobs and services and spark growth in local areas.”

Oldham will generate £2m additional income by putting £73m through the Oxygen programme, which shortens and simplifies the invoice process and injects liquidity into the local economy.

Nationally this can be extrapolated into £1.5bn — but fresh income of £2m for individual councils is crucial when negotiations regarding services frequently come down to the very last half a million.

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