Delivering Efficiency in Local Services

The Gershon Report, published in July 2004, highlighted a number of areas where efficiency gains could be achieved in local government. Each council was given efficiency targets by ODPM (now CLG) based on 2.5% of their 2004/05 expenditure. These targets were annual figures but councils also had to meet a cumulative three-year target figure, which was the initial life of the exercise. At least half of the target efficiency gains had to be cashable; that is they must provide money that can be spent elsewhere or used to reduce Council Tax. Two Annual Efficiency Statements (AESs) were submitted to the CLG each year, a forward-look for the year ahead (submitted by mid April) and a backward-look after the year end (submitted by early July). Each council’s achievements against its efficiency targets are evaluated as part of the CPA Use of Resources assessment.

Leicestershire had to meet a cumulative target over three years based on our actual expenditure in 2004/05 as shown below.

As an initial concession the ODPM also permitted ongoing efficiency gains made in 2004/05 to be carried over and counted as part of the achievement against the target for 2005/06.

Leicestershire’s achievement of efficiency gains up to the end of 2007/08 is shown below.

Our cumulative efficiency gains for the first two years of the Gershon efficiency period were £23.6m (including gains achieved in 2004/05). This means that we met our overall three-year cumulative target of £22.024m one year early. We have over achieved the three year target by £10.3m with savings of £32.3m achieved by the end of 2007/08.

The split between cashable and non-cashable efficiency gains up to the end of 2007/08 is as follows.

These are our final figures and have been scrutinised by CLG and no queries or concerns were raised.

The 2007/08 backward-look statement has been “signed off” by the Leader, the Chief Executive, and the Director of Corporate Resources.

The 2007 Comprehensive Spending Review (CSR07) outlines the efficiency agenda for the next three years. Under CSR07 the target is to achieve at least 3% cashable savings per annum over 2008/09 to 2010/11.

Linked to the CSR07 there is a new performance cashable efficiency savings indicator (NI179). The Authority has agreed with partners that efficiency is important enough to warrant the inclusion of the indicator in the LAA. As such, Leicestershire along with all LAA partners have a cashable efficiency saving target of 9.4% over the period 2008/09 to 2010/11.

For the County Council this equated to an efficiency target of c£30m over the next three years.

As an initial concession CLG has permitted ongoing efficiency gains made in 2007/08 to be carried over and counted as part of the achievement against the target for 2008/09.

Leicestershire achieved efficiency savings of £32.3m over the last 3 years of which 78% was cashable. This compares with a Gershon target of £22.0m.

The achievement of the new efficiency targets will be challenging but necessary to balance the budget positions over the next couple of years. Continuing focus on efficiency and value for money should help mitigate some of the impact the difficult economic conditions will have on public sector costs.