Case Study: Using Employee Engagement to Address Financial Challenges in the Public Sector: Lancashire County Council (1) 

This content is part of the Vision for the Public Sector Zone 


These are challenging times for local government. The huge pressure on Council budgets has demanded significant change and put the workforce under severe pressure.

Following the Comprehensive Spending Review, Lancashire County Council was faced with the challenge of having to make cuts of up to 25% of their budget over a three year period.

The council leadership realised that just dictating these cuts could damage morale and lead to a lasting negative impact on service delivery. Accordingly a plan was drawn up to address the challenges through a process of employee engagement which became known as The Lancashire Way. Instead of dictating the cuts that would be made, the council simply outlined the financial challenge and sought to involve each area in finding their own solutions. All employees were meant to contribute.


The results were exceptional. More than meeting their savings target of £179m, the Lancashire Way approach and the focus on engagement helped the Council realise savings of £220m. This represents 25% of total costs; a phenomenal achievement for which the entire organisation must take huge credit.

Perhaps surprisingly, all this has been achieved with a positive not negative impact on service delivery. A similarly impressive picture was seen in staff morale which actually went up during the process. Other metrics like absence also improved.

The public sector is facing unprecedented challenges as a result of spending cuts. But Lancashire County Council is a shining example of how, through focusing on employee engagement, services can be made both more effective and more efficient.

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The case study was written for IPA by Professor John J Oliver OBE. You can follow the IPA at @IPA_Involve

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