What is it?
In last year's
comprehensive spending review, the government set Whitehall
departments and local authorities an ambitious target to improve
value for money across the public sector.
This was to collectively make savings of £30bn a year by 2010-11
on 2007-8 spending levels, through improved use of resources, smf
to make all of this money available for frontline services.
This amounts to a target saving of 3% a year from 2008-11,
higher than the 2.5% set for councils and their public sector
counterparts from 2005-8.
In practice the target is tougher still, as the entirety of the
saving must be "cashable" - that is to say it must actually save
money. This rules out achieving greater value for money for
existing levels of spending.
In 2005-8, public bodies were only required to make half of
their saving "cashable". (For more on this, see What is
efficiency?)
History
While all governments have periodically sought to improve value
for money for public expenditure, the current administration has
put a particular focus on efficiency, at least since 2003 when it
commissioned Sir Peter Gershon to carry out a review into public
sector efficiency.
Prior to the review, all government departments had been set
value-for-money targets, while the Best Value regime, introduced in
2000, set a target of 2% annual savings for local government.
However, the significant investment of the 2002 spending review,
which included a 7.3% real terms rise for health and a 6% increase
for education between 2003-4 and 2005-6, increased the premium on
demonstrating money was being well spent.
The
Gershon review reported in 2004 and was released to coincide
with that year's spending review, which set out government
expenditure plans for 2005-8.
As part of this, public bodies were collectively ordered to make
£21.5bn of annual efficiency gains by 2007-8 on a 2004-5 baseline.
For local government, the total annual saving required was £6.45bn,
though 40% of this total would apply to schools and 15% to fire
authorities, leaving 45% to councils (around £3bn).
In November 2004, councils received an information pack
detailing how the efficiency programme would work.
They were asked to provide an annual efficiency statement
detailing how much they had saved the previous year across each
service area and their corporate activity, and how much they
expected to save in the coming year.
The Audit Commission would assess these statements as part of
the use-of-resources section of the
comprehensive performance assessment.
What is efficiency?
Public sector efficiency can be seen as the ability to translate
a given level of resource into the best possible outcomes for
service users, with the least possible waste.
Gershon divided efficiencies into two types: cashable and
non-cashable savings. The former involve reducing the level of
resources required to achieve a given outcome; the latter means
improving outcomes for a given level of resource.
Gershon calculated that over 60% of his £21.5 billion target was
cashable, releasing resources that could be ploughed into frontline
services, while non-cashable savings should also benefit users by
improving outcomes.
Gershon saw a variety of areas in which public service bodies
could make efficiencies.
These included:
1. Back office services such
as finance, human resources, facilities and IT support:
· Gains could be made by standardising processes and sharing
services across and between organisations.
2. Procurement, including the purchasing of social care
· Gershon argued public sector procurement was in need of
improvement and could provide savings in various ways, for instance
by public bodies pooling their procurement functions on a regional
basis.
3. Transactional services such as dispensing benefits
· Savings could be made through one-stop shops enabling people to
have face-to-face contact with a variety of service providers under
one roof, and making services available online.
4. The impact of government policy, funding and regulation on
bodies delivering public services
· Efficiency gains could be made reducing the burden of regulation
on providers and cutting the number of civil servants involved in
regulatory activities. In total, Gershon identified scope to cut
84,000 civil service posts.
5. The productive time of frontline staff
· Frontline workers could be freed from administrative work through
What has been achieved?
According to the government, this has been successful. In
October 2007, when it published the comprehensive spending review,
the government said that annual efficiency gains had already topped
£20bn putting the state on target to surpass the £21.5bn
figure.
Councils achieved their efficiency target a year early - by
the end of 2006-7, they were reporting cumulative efficiency gains
since 2005 of over £3bn, and in 2007-8, they were forecasting
further efficiency gains of almost £1.2bn.
Social care
In adult social care,
councils recorded £111m of efficiency savings in 2004-5 (£81m of
which was cashable), £203m in 2005-6 (£132m cashable) and
£212m (£175m cashable) in 2006-7. They
predicted making £232m (£204m cashable) in 2007-8.
In children's services,
councils recorded £51m (£38m cashable) in 2004-5, £76m in
2005-6 (£60m cashable) and
£94m (£74m cashable) in 2006-7. They predicted making £99m
(£89m cashable) in 2007-8.
In adult social care, council efforts to secure efficiencies has
been supported by the
Department of Health's Care
Services Efficiency Delivery team.
This was originally treated with some suspicion in the sector
because it was based in the DH's commercial directorate. This meant
civil servants, mainly from private sector backgrounds, were
advising directors with lengthy careers in social work on how they
should be making savings in social care.
A much more co-operative arrangement ensued after
CSED was transferred in 2005 to the DH's Care Services Improvement
Partnership, which is responsible for promoting improvement in
social care.
CSED has launched a number of programmes to support councils
drive efficiency in adult social care:-
-
Home care reablement - reablement is designed to ensure people
who enter the care system - for instance after a hospital discharge
- regain as much independence as possible as quickly as possible.
It is based on short-term interventions - which tend to combine
intensive home care with occupational therapy - which should limit
people's need for ongoing care services. Reablement is becoming
increasingly prominent across all English councils, and
CSED's research shows it has been successful in reducing demand for
care.
-
Assessment and care management - this has examined ways for
councils to streamline their assessment and care management
processes, including having a single point of contact for all
incoming referrals.
-
Demand forecasting and capacity planning - this is designed to
help councils predict future demand for adult care services and
ensure there is sufficient supply of services to match this.
-
Better buying - this is designed to help councils achieve
efficiencies in the commissioning of home care services by
providing councils with tools to cost services and procure services
in the most efficient manner, for instance by "zoning" - where
providers cover particular local areas.
-
Effective monitoring and modernisation of home care - this is
designed to help councils monitor their contracts with home care
providers, through an automated system for monitoring the time
spent by home care workers in delivery services, backed by
automated invoices, scheduling, payment and payroll.
-
Transforming community equipment and wheelchair services
programme - this promotes a "retail" model for delivering
community equipment services and wheelchairs under which service
users deemed eligible are given a prescription which they can take
to accredited providers. The idea is that removing councils'
provider role will release resources, and that a market model will
provide users with more choice, incentivising service improvements.
However, concerns have been raised by the Association of Directors
of Adult Social Services over the level of efficiency savings that
can be conceivably accrued, with
councils still responsible for carrying out
assessments.
Links
· The Office of Government
Commerce is responsible for supporting and monitoring the
efficiency programme.
· The Audit Commission
is responsible for assessing efficiency in local government.
· The Improvement and
Development Agency supports councils in making
efficiencies.
Archive pieces:
Adass: Less paperwork behind reduced spend on adult care
Sharing services 'unlikely to save much money'
The call centre staff who assess clients
'Re-ablement shown to reduce demand for care'
Spending review puts squeeze on social care
Local authorities told to cut down on consultants
Cost worries mar support for equipment market plan
TUC calls for Treasury to stall Gershon plan
Re-ablement the new theme in home care: special report
Care directors 'will hit efficiency goals'
The balance between efficiency and users' needs
Social care sector disappointed by Brown's plans for efficiency
savings
Health department efficiency shake up
Adult services top choice for savings
Training chief blasts lack of social care expertise in
health
Efficiency gains fail to fill in black hole
Directors call for cuts to be realistic
Gershon requirements puts voluntary sector at risk
Cut sickies to meet efficiency targets
Hunter questions capacity for efficiency savings
Efficiency teams swoop on councils
Echoes of past as departments try to balance savings and
delivery