Headlines: August 10th, 2005

Figures published by the Office of the Deputy Prime Minister show that councils are on course to exceed the target set by the Government of achieving efficiency gains of 6.45 billion pounds by 2007-08. The prediction of success is based on the actual efficiency gains of more than 750 million pounds achieved in 2004-05 which provide confidence that savings in 2005-06 will exceed 1.0 billion pounds. The figures exclude schools, fire and police which are subject to separate monitoring arrangements.To qualify as an efficiency gain it must be demonstrated that the same outputs was delivered with a reduced input or a cost reduction. In a similar way, greater outputs or improved quality produced by the same input also qualify as a gain. The savings will release money and other resources that councils can reinvest in local services or use to hold down Council Tax.

The largest savings in 2004-05 came from adult social services, 112.6million pounds and corporate services 102.8 million pounds. Procurement and productive time produced much more modest savings at 56.7 and 55.3 million pounds.

Procurement is expected to be a most fruitful area for savings in the future with projected benefits put at 1.1 billion pounds reduction in the costs of goods and services across local government. E-tendering efficiencies in processing are estimated at 725 staff with a further reduction of 8 million pounds savings in e-tendering overheads, such as accreditation of suppliers. e-Purchasing and the use of procurement cards are predicted to deliver a reduction of 2,560 staff.

Another major area of increased efficiency in the future is improving the productivity of people actually doing their jobs. Reducing the time people spend servicing the organisation and increasing the time they spend on core activities has the potential to produce substantial savings. Ensuring an improvement in productive time is not solely a public service problem, it is an issue in every field of human endeavour, but bureaucracy leaves less time available for core activities. The Treasury is leading a series of Productive Time initiatives and has published guidance which sets out a framework for measuring productive time.

Cllr Sir Jeremy Beecham, vice-chair of the LGA said: “The savings offer no `get out of jail card` on cost pressures or council tax. Even without the extra possible impact of pension scheme pressures, local government currently faces a 1.5 billion pounds black hole in its budget for 2006-07, and that already takes account of the efficiency savings.”