Echoes of past as departments try to balance savings and delivery

In the foreword to the 2004 three-year spending review, Tony
Blair declares that the government is “extending devolution,
increasing choice, supporting flexibility and ensuring greater
personalisation in public services”.

This translates as a push for two things:first, more flexibility so
that professionals and communities can decide how best to deliver
services, and second, for services built around individual users’
needs and circumstances “rather than relying on the expectation
that people will fit in with the system”.

How that will be achieved is less clear given the review’s other
main thrust: efficiency savings, delivered largely as a result of
bulk-buying services at a regional level.

The scale of these savings is based on the recommendations of the
former chief executive of the Office of Government Commerce (OGC),
Sir Peter Gershon, who was asked to lead a cross-cutting review of
efficiency in the public sector. Chancellor Gordon Brown has
concluded that annual savings of £20bn can be made across all
government departments by 2007-8, of which at least £6.45bn a
year can be found within local government spending.

For local government, this means that, although its grant will rise
by an average 2.6 per cent a year between 2005-6 and 2007-8, it
will simultaneously be expected to achieve annual efficiency
savings of 2.5 per cent.

Gershon’s efficiency review, published last week alongside the
spending review, recommends that all departments agree with the OGC
by December 2004 how to improve value when buying, providing and
arranging services.

The spending review claims there is scope for “significant
additional savings” through joint commissioning by local
authorities through new regional centres of excellence, led and
managed by local authorities.

Thirty-five per cent of the £6.45bn annual savings in local
government is expected to be made through negotiating better
contracts for services, including adult social care, social housing
and children’s services.

Of the Department for Education and Skills’ £4.3bn annual
efficiency gains by 2007-8, 35 per cent is supposed to come from
strengthening the way services are bought in the education and
children’s services sectors, with the help of a new procurement
centre of excellence to be established by April 2005.

The DoH, meanwhile, has agreed a target of £6.5bn annual
efficiency gains by 2007-8, of which 10 per cent will be generated
through improved commissioning of social care, including new ways
of working with service providers.

Community care minister Stephen Ladyman has confirmed that work is
under way to assess commissioning of social care services and to
set out best practice for a more strategic approach.

However, no doubt with his personal drive to increase the uptake of
direct payments and levels of independent living among older people
in mind, he insists that “local demands and the need to provide
people with a spectrum of choice is an important principle that
will be built into any future changes”.

But Association of Directors of Social Services president Andrew
Cozens says an approach that is based on economies of scale on the
one hand and the minister’s pursuit of personalised services on the
other hand is a dilemma for social care.

“There is a dichotomy between the idea of collections of local
authorities commissioning jointly and the notion the minister is
pursuing around personalised or tailored services,” Cozens

He accepts there is scope for further joint working in social care
commissioning, however, particularly in children’s services and
where authorities individually commission expensive packages of
care for people with very specific needs. “We want to be able to
commission services that suit the needs of the local population,”
he says. “We don’t want huge, one-size-fits-all contracts. But once
we have worked out the needs, it will make sense to work

“I’m worried if there are attempts to set regional contracts for
domiciliary care and so on. But, say we needed lifts installed in
homes for older people, it might make sense for the contract to be
sorted out at a regional level.”

Nigel Druce, strategic adviser for the Improvement and Development
Agency and former director of social services at Cornwall Council,
insists there are “no easy savings in social services through
regional procurement”. He says there is a clear conflict between
personalised services and regional procurement, with social
services having a greater duty to provide choice.

“We have been here before,” Druce says. “In the 1970s and early
1980s, there were regional procurement systems, particularly around
child care. And they all failed. The councils found it difficult to
agree to the contracts with the providers and the whole thing

This point seems to have been taken on board by the emerging
regional centres of excellence.

Caroline Highwood, assistant director (resources) at Kent Council,
which is leading the centre for the South East, says those involved
have already identified that social care is “not something that we
would do in quite the same way as furniture or pencils or ordinary
items of stock”.

“The idea was more about sharing good practice among authorities in
the region rather than all getting together and doing a contract.
We are not planning a cross-authority contract for residential
care, for example. But we will be sharing in more detail what

“I don’t think we would support big contracts. We are clear about
the importance of service user choice.”

Druce believes areas where social services could make gains are
around joint services with health, such as services for adults at
the high end of the autistic spectrum. Currently, although
commissioning tends to be organised regionally, there are still
separate contracts for health and social services. “Providers have
to negotiate contracts twice in these areas and sometimes trade us
off against each other,” Druce says.

He encourages local authorities to look for these types of
efficiencies now rather than waiting to be told what to do by

Social services directors should also think about clubbing together
at a regional level to fund an adviser on procurement in social
care for the region, Druce says. He emphasises the importance of
taking the initiative, such as setting up standard framework
contracts for standard services which can be tailored to
individuals’ needs.

Druce argues that social services departments also have a
responsibility to encourage independent providers to invest in
their staff – thereby offering a higher quality service and better
value – by offering them longer-term contracts.

Keith Beaumont, programme manager responsible for national
procurement strategy at the Local Government Association, works on
the premise that the bigger the contract, the better the deal you
should be able to get. However, he admits that the social care area
is “slightly more complicated”.

Social services departments and their new regional centres of
excellence are now faced with a delicate balancing act: deliver the
efficiency savings required in order to free up the money promised
for investment, while at the same time delivering the prime
minister’s promise of more personalised services. It is to be hoped
they are more successful than their counterparts 25 years ago.

Other key implications for councils

  • Three-year revenue and capital settlements for local
    authorities, expected to be agreed in 2005 after a full
  • Real-term average annual increase of 2.6 per cent a year in
    formula grant to local authorities between 2005-6 and 2007-8.
  • Efficiency gains of 2.5 per cent a year, equivalent to
    £6.45bn by 2007-8, releasing resources for front-line
  • Increased freedoms and flexibilities for fair, good and
    excellent local authorities from September 2004, allowing
    authorities to trade in their efficient services.
  • Greater freedom to set local priorities alongside national
    targets through a reformed local public service agreement
  • Development of local area agreements to strengthen conversation
    between central and local government, and bring together additional
    funding streams and merge them where appropriate. This will be
    tested in one authority in each region in 2005-6.

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