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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 05/04/2005
EFFICIENCY REVIEW - GERSHON



Summary & Purpose
This report informs Members of the requirements of the Government’s Efficiency Review and proposes a strategy for achieving Waverley’s efficiency target in 2005/06 in accordance with the review framework.

Quality of Life Implications
Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe Communities
Local Economy
Natural
Resource Use
Pollution
Prevention and Control
Biodiversity
and Nature
Local
Environment
Social
Inclusion
Safe, Healthy
and Active
Communities
Local
Economy
N/A
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APPENDIX G

WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 5th April 2005
________________________________________________________________________
Title:
EFFICIENCY REVIEW - GERSHON
[Wards Affected: N/A ]
______________________________________________________________________
Summary and Purpose

This report informs Members of the requirements of the Government’s Efficiency Review and proposes a strategy for achieving Waverley’s efficiency target in 2005/06 in accordance with the review framework.
________________________________________________________________________
Quality of life implications – social, environmental & economic (sustainable development):

Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe, Healthy and Active Communities
Local Economy
N/A
N/A
N/A
N/A
N/A
N/A
N/A

E-Government implications:

Developing Waverley’s e-government programme forms a major part of the Council’s approach to achieving its efficiency target, particularly in the areas of procurement and electronic processing of transactions. The strategy will be developed during the year and Waverley’s Implementing Electronic Government Group will feature heavily in this process. Waverley has already reported to the ODPM on efficiency gains in the IEG Statement.

Resource and legal implications:

There are potentially significant resource implications arising from the Government’s efficiency review and these are explained within the report.
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Introduction

1. At the Finance Seminar in October 2004, Members were made aware of the outline of the Government’s efficiency review, commonly referred to as the Gershon Review. In February 2005, the Government issued guidance which set out the framework of how each local authority’s target is set and how efficiencies must be identified and recorded.

2. This report is Waverley’s Annual Efficiency Statement (AES) which is required under the efficiency review and forms the primary source of information for the Government to assess Waverley’s achievement of its efficiency target. The AES is Waverley’s self-assessed strategy for securing efficiency gains in the coming year and it must be signed by the Leader of the Council, the Chief Executive and the Director of Finance. The Statement is a corporate strategy that integrates with Waverley’s Financial Strategy and Procurement Strategy and links with other corporate strategies.

Background

3. Waverley has a long record of prudent financial management, effective budgetary control and good asset management planning. In recent years Waverley has further developed its medium-term Financial Strategy to incorporate the impact of the following key factors:

o Capital receipt pooling
o Budget capping
o Housing options appraisal
o Consistent below inflation grant settlements
o Additional Government service requirements
o Local service demands and cost pressures

4. These factors have contributed to Waverley having to, each year, achieve a difficult balance between agreeing a prudent and sustainable budget and setting a council tax level that is considered to be reasonable and not excessive. To achieve this balance, Waverley has had to make significant reductions each year in its revenue and capital budget. These reductions have been a combination of cost cuts, efficiency savings, additional income and changes to the use of balances. Currently, the budget projection for 2006/07 and beyond shows a deficit of around 650,000.

5. This Efficiency Statement is a new development with limited good practice and consequently, the results may change throughout the year. The Government will be issuing more guidance throughout the year. In future years, Waverley’s efficiency strategy will need to be considered alongside the budget process and have regard to the Council’s priorities, aims and objectives.

The Efficiency Target

6. The Government requires local authorities to achieve a 2.5% per annum improvement on their 2004/05 baseline, of which at least half should be “cashable”. By 2007/08, efficiency gains equivalent to 7.5% of the 2004/05 baseline should be achieved. The baseline includes Waverley’s capital and revenue budgets for 2004/05. On 14th March, the Government notified Waverley of its 2005/06 efficiency target. This has been calculated as being 540,000 although officers are currently challenging this and expect this figure to reduce.

How is an efficiency gain defined?


7. Efficiency is not about making cuts, but about raising productivity and enhancing value for money. Cashable efficiency gains are those that enable a release of resources for reallocation elsewhere i.e. from back-office to frontline services. In other words, getting the more or the same for less money. Non-cashable gains are those which do not produce a saving but improve the quality of service for the same cost. In other words, getting more for the same money. Where we gain in efficiency, we must be able to demonstrate that there is no loss in quality of service. Guidance on how this should be achieved is expected later in the year.

8. Efficiencies can be made from capital and revenue expenditure and must be identified and reported under the following headings:

o Culture and sport
o Environmental Services
o LA Social Housing
o Corporate services
o Procurement
o Transactions
o Miscellaneous efficiencies

Strategy for securing efficiency gains in 2005-06


o Waverley’s strategy must be to both identify savings to balance its budget and to identify efficiency gains to achieve its target. The annual review of Waverley’s Financial Strategy will have regard to these two objectives.
o In the 2005/06 budget setting process, whilst the main focus was on closing the budget gap, many areas were examined where services could be provided differently or at less cost. Portfolio holders and chief officers reviewed budgets and services in detail prior to the Overview and Scrutiny Committees’ consideration, including an assessment of the impact on services. This work will be built upon during the year.
o In considering Waverley’s approach to the next round of service reviews, the need to identify efficiencies will be included in any framework that is developed.
o Waverley’s Implementing Electronic Government (IEG) Group prepared the ICT capital programme in line with the Government’s requirements and Waverley’s investment needs. This work will continue throughout 2005/06 with a focus on potential efficiency gains and exploring new opportunities.
o All contracts, capital and revenue, that are due to be procured or renewed during 2005/06 will be identified and considered against the efficiency target criteria. In the medium to long term, this will include consideration of partnerships or joint procurement with other organisations.
o Waverley’s current procurement of new contracts for waste management and grounds maintenance will consider any potential procurement efficiencies that can be achieved.

Key actions to be taken during the year


o Undertake awareness training for budget managers and key Members.
o Incorporate the monitoring of Waverley’s efficiency target within the budget monitoring process and timetable.
o Establish a system for the identification and reporting of planned or achieved efficiencies within all service areas, including an assessment of risk and impact on service delivery.
o IEG Group to focus on the potential for cashable and non-cashable savings from the current capital programme, particularly in the areas of procurement and transactions.
o The officer group considering procurement will explore opportunities to enter into contracts with other public organisations in order to benefit from economies of scale.
o The Financial Strategy review to consider Waverley’s achievement of its efficiency target in the medium-term.
o The Chief Executive, working with chief officers, will have regard to Waverley’s efficiency targets when giving consideration to the post-transfer structure and organisation of the Council.
o Service managers to identify all contracts that will be procured or renewed in the next 3 years and develop into a programme that the Procurement Group can use.
o Consider any potential procurement efficiencies that can be achieved as part of the current procurement of new contracts for waste management and grounds maintenance.

Expected efficiency gains in 2005/06


9. The table set out in Annexe 1 shows the format of the forward-looking statement that must be reported to the ODPM by 15th April 2005. Officers are currently compiling the detail, mainly from those efficiencies identified in the 2005/06 budget which can be counted under the Government’s framework towards Waverley’s 2005/06 efficiency target.

10. For 2005/06 only, Waverley can also count efficiencies achieved in 2004/05 towards its 2005/06 target, provided that these efficiencies will continue through to 2007/08. This return has to be sent to the ODPM by 16th June. Both statements and the robustness of the system implemented to record efficiencies are subject to annual audit by the Audit Commission.

Conclusion


10. It is important that Waverley has a robust strategy for meeting the Government’s efficiency targets in 2005/06 and beyond, and this report sets the framework for achieving this. Now that the detailed framework is known, officers will be firstly working to agree Waverley’s target and to identify qualifying efficiencies for 2005/06. More guidance is expected from the Government during the year and Members will be kept informed of any significant changes.

Recommendation


The Executive is recommended to:
1. note the requirements of the Government’s Efficiency Review;
2. agree the Strategy for securing efficiency gains in 2005/06 and the key actions to be taken in the year as set out in this report;
3. request officers to complete the detailed returns within the timescale and in accordance with the Government’s requirement; and
4. request officers to monitor progress against the target during the year and report back to the Executive as appropriate.
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Background Papers (DoF)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
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CONTACT OFFICER:

Name: Graeme Clark Telephone: 01483 523236
e-mail: grclark@waverley.gov.uk





comms/executive/2004-05/463


Annexe 1

Forward-look on the 2005/06 efficiency gains

Expected annual of which cashable…
Efficiency gains


LA Social Housing

Environmental Services

Culture and Sport

Corporate Services

Procurement

Transactions

Miscellaneous Efficiencies

Total






comms/executive/2004-05/463
42660