Headlines: November 10th, 2005

Local authorities could save as much as 140 million pounds a year by sharing administrative costs according to a report published today by the Audit Commission. It identifies a number of ways in which councils could make such savings, which far outweigh the government-set efficiency target of 75 million pounds a year over three years.Today’s report, “The Efficiency Challenge”, looks at the potential to make savings in the administration costs of revenue and benefits services. It highlights ways in which some councils are already using a range of initiatives, including partnership working,to improve efficiency.

Local councils in England spend a billion a year on collecting council tax and business rates and processing housing and council tax benefit claims. In drawing up the report, the Commission visited more than 30 councils and analysed data from the Chartered Institute of Public Finance and Accountancy and the Office of the Deputy Prime Minister. The study found the potential for savings of 140 million pounds a year or 4.2 per cent of the billion pound council spend. It gives examples of how the savings can be made, including two district councils that have each saved over 100,000 pounds a year since combining their council tax collection and housing benefit admin services. The report says that London councils, which have higher costs, could make considerable reductions by moving their back office functions outside the capital.

The report identifies factors contributing to higher costs, including high staff turnover, old IT systems, backlogs and using temporary staff. It also finds that councils prepared to be more innovative in service delivery can make considerable savings without lowering the quality of services.

The study says partnership working offers councils the greatest potential for making efficiency gains and case studies in the report highlight the benefits of sharing services with other councils, or through the private sector. It says there is no ‘one size fits all’ approach and councils need to consider what is best for them and their communities but councils sharing services can reduce fixed costs such as office accommodation and IT. It also recommends that London councils should work together to maximise efficiency in administration services. Up to 70 million pounds a year could be saved if all the London boroughs reduced their costs to the average level outside London.

Other case studies in the report show how initiatives, such as home working and modern IT systems, offer scope for efficiency improvements. In one council, absence through sickness was reduced by 29 per cent and productivity increased by 15 per cent following the introduction of home working for revenues and benefits staff.

Councils, the report says, need to be much clearer about the cost and benefits of new initiatives, not just to ensure they are making the right choices but also to make the most of the opportunity for other councils to learn about potential service improvements.