Locals allocate money – an example of Zero-base budgeting?

Michael Portillo (a British MP) currently hosts a BBC documentary called “Power to the People”, which looks at ways more democracy can empower people . In a recent episode (March 20th, BBC2, 21:00), Portillo describes what is in effect an example of Zero-base budgeting (ZBB). What is ZBB? ZBB is often associated the the public sector. It is a technique used to create budgets which starts off with a figure of zero,and is often cited as being useful for discretionary type expenditure. From this, each item of expenditure must be analysed, discussed and ranked. Then, out of a limited pool of money, the highest ranking items get priority until all funds are used up. Sounds simple, but a lot of work is needed to discuss and rank expenditure items.

In the BBC documentary, Portillo visits a “You Decide” session organised by the local council in Tower Hamlets, London. At this session, local people decide what is to be done with £250,000 of council money. They are given fully costed options under headings like health-care, the elderly and local policing. The options in each category can be debated for a time, then all present “vote” for their preferred option using an electronic voting system. This continues until all funds are used up. What in effect is happened here is that the local residents are undertaking the ranking and deciding part of ZBB. This, it could be argued, saves the council a bit of time and allocates resources to where residents want them most. Of course £250,000 is a long way off a council’s full budget, but this is ZBB in action.

By the way, if you’re in the UK you can get this programme on BBC IPlayer.

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About martinjquinn

I am an accounting academic, accountant and author based near Dublin, Ireland.

2 responses to “Locals allocate money – an example of Zero-base budgeting?”

  1. João Oliveira says :

    Good point, Martin. I’m just wondering about the “time saving” argument. “Democracy” and “devolving power to the people” may have many positive aspects… I’m just not too sure “time saving” is one of them, even when compared to a decision taken by a circle of politicians and technocrats. This scepticism does not, of course, invalidate the positive aspects of the technique/democracy… Did they suggest / show in the program that it DID save them time?

  2. martinjquinn says :

    Thanks for the comment João. It does save some time in that the council can have one event where all interested parties can come along. This may be better than dealing separately with many local organisations.

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