Monday, April 02, 2007

Efficiency, annual savings and the CSR07

Tucked away on the Treasury website among the pages about the 2007 Comprehensive Spending review (CSR07) there is the comment that:

Through this work the Government has identified scope to deliver annual savings of 3 per cent across departments over the CSR07 period, together with cuts to administration budgets of 5 per cent per year in real terms, thereby releasing resources for reallocation to frontline services.

Is that really possible?

I have my doubts. There is work throughout public services on leaner processes, smarter procurement, cost reduction, etc. But is there enough?

In February the National Audit Office cast doubt on the robustness of some of the existing efficiency claimed against current targets of 2.5% annual savings. The NAO could be certain of about a quarter (£3.5bn) of the savings claimed by the government. But queried the rest.

The Local Government Association has just issued various documents on the CSR07 including a factsheet on efficiency issues. It points out that the easy savings have been made and not all spending can be made more efficient due to long-term contracts. The LGA conclude that the 3% annual savings are “undeliverable”.

The new annual savings in the CSR07 will be vital for maintaining and improving public services in a more bracing environment for public finances. Unless public services can deliver on these savings and work a lot smarter, we could be faced with cuts rather than efficiencies over the rest of the decade.


Ryderman said...

I think it is possible, though I do accept that it is really going to bite - unlike the Gershon 2.5% pa savings in the current spending period, which Local Authorities found particularly easy to achieve. In 2004 Gershon had to water down his proposed percentage to get it approved.

Government Departments and Local Authorities have been aware of the new targets for some time, and have had ample opportunity to put plans in place. The LGA's comment is no doubt influenced by the tighter CSR07 settlement that Local Authorities are receiving than most Government Departments. So yes it will be tough in some areas, but -hey - welcome to the real world.

Changing tack, let's hear from you on how quickly Phil Woolas kicked Michael Lyons's 3 years hard work into touch. Blink and you missed it. Phil might have had the decency to wait a week or so while "carefully considering Sir Michael's recommendations". But at least Michael has got a consolation prize of the BBC. Tough at the top?

Bob Deed said...

I treat the claimed performance of local and central government with a pinch of skepticism. I suspect there is a fair amount of confusion as well as mis-reporting. That was certainly the NAO's conclusion.

I think the LGA's concerns amount to more than special pleading.