Efficiency savings

Efficiency savings during the CSR07 period (2008/09 to 2010/11)

Since 2008 local authorities have been required to submit data on cumulative value for money gains for National Indicator 179. In October 2010 Communities and Local Government (CLG) confirmed that local authorities will not be required to submit efficiency savings data through National Indicator 179 (value for money gains) again, in order to reduce the burden of reporting requirements on local government.

The Government's Comprehensive Spending Review 2007 (CSR07) has set all public sector services a target of achieving at least 3% net cash-releasing value for money (VfM) gains in their non-schools expenditure each year for 2008/09, 2009/10 and 2010/11. However, whereas in Spending Review 2004 (SR04) the 2.5% per annum public sector target was additional (ie 2.5%, 5% and 7.5%) in CSR07, the target is multiplicative (ie 3%, 6.1% and 9.3%).

As part of the Budget announcement in April 2009, the Chancellor announced increased targets for efficiency savings in 2010/11 across the public sector. Councils in England will now be expected to deliver 4% savings in 2010/11 – an additional 1% on top of the 3% originally envisaged in the 2007 CSR. This means that the targets over the CSR07 period are: 3%, 6.1% and 10.3%.

In order to contribute its share of the Government’s target for 2008/09, 2009/10 and 2010/11 the County Council will need to make cumulative efficiency saving of £20 million, £40 million and £68 million respectively.

The main change in CSR07 is that not only has the target increased but non-cashable gains do not count toward the total efficiency target. The Government no longer requires each council to submit an Annual Efficiency Statement (AES) at the beginning and the end of the financial year.

The County Council is required instead to submit a figure for the VfM indicator twice in each calendar year to the Communities and Local Government (CLG). On the first occasion, starting from October 2008, councils will report their forecast for the position at the end of that financial year. This is akin to the output of the AES Forward Look that used to be submitted to the Government, though looking at the whole period since March 2008 rather than only the particular year in question, and will help bodies working with councils to identify any emerging issues early.

On the second occasion, starting from July 2009, councils will report the actual position as at the end of the financial year that ended on the previous 31 March. This is akin to the output of the former AES Backward Look.

Relabelling of activities, cuts resulting in poorer service and increasing charges to give a decrease in net spend, are not allowable as efficiency improvements in the AES.

In October 2008 the County Council reported £23.1 million of Forecasted VfM cash-releasing gains from 1 April 2008 to 31 March 2009 against a target of around £20 million. This includes £8.2 million which the County Council was able to carry forward from the SR04 period (2004/05 to 2007/08). This represents £47 for each Band D council taxpayer compared with a county average of £53.

In July 2009 the County Council reported £26.480 million of Actual VfM cash-releasing gains from 1 April 2008 to 31 March 2009 against a target of £20 million. This includes £8.3 million which the County Council was able to carry forward from the SR04 period (2004/05 to 2007/08).

In October 2009 the County Council reported £48.135 million of forecasted cumulative gains from 1 April 2008 to 31 March 2010 against a cumulative target of £40 million. This includes £8.4 million which the County Council was able to carry forward from the SR04 period (2004/05 to 2007/08).

In July 2010 the County Council reported £48.131 million of Actual cumulative gains from 1 April 2008 to 31 March 2010 against a target of £40.4 million. This includes £8.5 million which the County Council was able to carry forward from the SR04 period (2004/05 to 2007/08).