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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