Could airlines be a model for government savings?

Braced to cut costs when Britain is facing the biggest government deficit in its history, a London council is trying the budget airline approach.

Calling the scheme EasyCouncil after airlines like orange-liveried EasyJet or Ireland's Ryanair, Conservative-run Barnet wants to allow residents to pay less local tax for basic services, making top-up payments for services such as more regular rubbish collections or fast-tracked planning.

The experiment, in the affluent suburban area which broke new ground in 1976 with the opening of the country's first American-style mall Brent Cross, will be closely watched by other councils and could offer pointers if the Conservative party wins a general election next year.

Reducing a budget deficit forecast to exceed 12 percent of GDP will be a priority for whoever wins the election: moves to make local services more efficient -- and cheaper -- are being studied by both the Conservatives and ruling Labour.

Finance Minister Alistair Darling on Wednesday set a 1 percent cap on payrises for all public sector workers from 2011.

Local councils are going to come under massive public spending pressure in the next few years. This is the beginning of a process -- if any of them can make reforms like this stick, other councils will follow, said Tony Travers, of the London School of Economics.

Barnet council leader Mike Freer told Reuters he wanted to copy the budget airlines by wringing out millions of pounds in cost savings, and simplify administration by developing a joint database that government departments could share.

Freer says the EasyCouncil label is a useful shorthand.

We already charge for services but what we'd like to explore is... can you do something different and pay less? It's about being transparent about what we do and don't do.

Pioneered by Southwest Airlines in the United States, the budget airline model means making tickets as cheap as possible to boost passenger numbers. To compensate, airlines charge for extras such as priority boarding and in-flight food and drinks.

The council in the north of the capital is still trying to recover 27.4 million pounds ($44.7 million) lost after it was deposited in the Icelandic banks Glitnir and Landsbanki that collapsed in the financial crisis in October 2008.

It said it expected to recoup most of that money.

The council has 'preferred depositor' status and information received to date indicates the Council will regain 100 per cent of the monies deposited with Glitnir and between 83 and 95 percent of the principal amount deposited with Landsbanki, plus interest, it said in a statement.

We expect to have a clearer picture in the new year.

MIXED RESPONSE

In the Spires shopping center in Barnet, little more than five miles from Brent Cross and lacking its designer name outlets, Christmas shoppers were wary about the plans.

It's worth exploring. So much money is wasted, said Chris Cooper, 68, a pensioner, shopping with his wife in the small, partly uncovered center, home to upmarket supermarket Waitrose and bookseller WHSmith.

But nothing is free, so will it end up costing more or less? he added.

Some locals feared the scheme would encourage illegal dumping of rubbish, rather than boosting recycling.

The Labour government, in power nationally since 1997 but trailing the center-right Conservatives in opinion polls ahead of an election due by June, has dismissed the plan as unfair and an attempt to justify punishing the poor.

Local government minister John Denham said people would have to pay twice -- once in tax and once in an extra tax -- to get a decent service.

Labour points to its plans to map how public money is being spent across local authorities and cut out waste and duplication, saying 600 million pounds could be saved in 2010/2011 by shaving one percent off costs.

THATCHER COUNTRY

The EasyCouncil idea may reinforce an image of the Conservatives as the party of smaller government made memorable by former Prime Minister Margaret Thatcher, but today both main parties say they want to devolve more power to local groups, said Bobby Duffy, managing director of the Social Research Institute at pollsters Ipsos MORI.

In terms of rhetoric on localism, you can't put a cigarette paper between them, he said. In how it's implemented, however, it's definitely the Conservative councils that have pushed that further.

Barnet's plan does chime with calls from the current Conservative leader, David Cameron, to reduce the role of the state and encourage grassroots groups to work together to solve problems.

Eager to portray the Conservatives as a more sympathetic party than under Thatcher -- who famously declared There is no such thing as society -- Cameron, a former public relations executive, instead says too much state intervention is stifling initiatives in which local people could work together.

The EasyCouncil backer Freer is himself a prospective Conservative candidate for the parliamentary seat once held by Thatcher: Finchley and Golders Green in north London has been held by Labour for the past 12 years.

In practical terms, he proposes offering residents a discount on council taxes if they have a smaller rubbish bin -- a move he says will cut landfill costs and encourage recycling.

Local traders would be granted their wish for free parking outside their stores -- but in return would be expected to take over responsibility for tasks such as street sweeping to compensate for the lost revenue.

Freer envisages a system where local residents decide where they want to spend their money through online polls or meetings.

We can't allow the priorities to be changed by those who shout the loudest so we would build in some checks and balances in terms of response rates, he said.

PAIN TO COME

Whatever becomes of the EasyCouncil idea, Duffy of Ipsos MORI said Britons face a real shock to when cuts start to bite after the general election.

People want to believe it can all be done by efficiency savings but the scale of cuts needed is not going to be covered by that, he said.

With cost-cutting ahead, some commentators say it is time for a more fundamental debate on the role of local authorities in Britain, where central government has a tight grip.

The Local Government Association (LGA), a cross-party group representing councils in England and Wales, says its members have limited control over how cash is spent.

Roughly three-quarters of what they spend comes from central government and has strings attached.

They have fund-raising powers through local tax -- levied on all households and based on property values from 1991. Households in Barnet, for example, pay between around 950 and 2,850 pounds annually in the tax, known also as council tax.

They can raise additional funds through such services as leisure centres. But funding for schools, for example, is ring-fenced, leaving the local council the power to decide how to distribute it. They cannot spend it on other services.

Every single local authority has at least one hand tied behind its back, said Matt Nicholls, of the LGA.

Under such circumstances, the EasyCouncil idea may struggle to get airborne.

(Editing by Sara Ledwith)