New research reveals the future for efficiencies in local government

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15 December 2008

New research reveals the future for efficiencies in local government

Majority of local authorities view the Gershon efficiency gains as successful
Local authorities call for less red tape, fewer targets and greater incentives
Shared services and waste management offer the greatest opportunities for efficiencies

Local authorities have accepted the principles of Gershon and embraced the efficiency agenda, but now want less red tape, fewer central government targets and greater incentives to ensure future, sustainable efficiencies, according to new research from law firm Nabarro.

The research, based on in depth interviews with 100 senior decision makers in local authorities across England and Wales, considers the success of central government initiatives and where local authorities believe future savings can be made, how they can be sustained, and what barriers remain.

More than half of respondents (52 per cent) are positive about the overall success of the central government’s efficiency agenda and only 4 per cent view the initiatives as unsuccessful. The majority believe that the Gershon Review has affected a behavioural change throughout their organisation.

Elizabeth Cooper, partner at Nabarro, comments: “The research reveals that while the majority of local authorities have taken on board the efficiency mantle and are actively seeking ways to achieve future savings, there is a strong desire for them to now be left alone to get on with it. They would prefer the freedom to develop their own strategies for future efficiencies rather than having to follow central government targets or be bound by overly prescriptive national objectives.”

One respondent calls for “the removal of central government bureaucracy and the freedom for local authorities to innovate”, while another argues that “the increasing amount of unnecessary legislation is diverting attention from improving services and reducing costs”.

The area where efficiencies have been most effective is in shared services with 60 per cent considering government measures in this area as helpful. However, enthusiasm drops sharply in other sectors, with 75 per cent reporting little or no support in the PPP/PFI area and similar criticism regarding housing (73 per cent). Almost two-thirds (63 per cent) are critical of the lack of help from central government in waste management.

Shared services with other local authorities are seen as offering the greatest scope for efficiency gains, with 33 per cent of local authorities in favour. The services which offer the greatest opportunity for collaboration with other local authorities are: combining payroll services (96 per cent), waste management (93 per cent), databasing of residents records (93 per cent) and healthcare (80 per cent).

Elizabeth Cooper adds: “Some local authority services lend themselves more easily to the shared services agenda and economies of scale than others. In particular, back-office services that are IT-led such as, HR, payroll, and pensions administration, or council tax and housing benefit administration.”

While local authorities are more positive about government initiatives in relation to shared services than in any other sector, the research also reveals barriers to partnering. Obstacles include: different governance structures; the political agendas of local authorities; and the difficulty in finding willing partners.

One senior director says: “The short answer is politics…Overall, local authorities do not always have the best interest of their residents in mind. They allow differences with other local authorities to get in the way of delivering better services”. Another respondent explains: “We are in collaboration with three other districts…But there is a wide variation in existing service levels which makes it difficult, as do customer expectations and member priorities”.

Elizabeth Cooper says: “Our research highlights not only the scope for, but also the challenges inherent in partnering. These barriers or concerns flag up the importance of carefully constructing appropriate governance arrangements and ensuring stakeholder engagement. Willingness, drive and commitment are common factors in delivering shared services. Barriers can, and are, being overcome where there are common aspirations, for example the Anglia Revenues Partnership.”

Waste management and environmental services are seen as the second most likely source of efficiencies with 14 per cent support. The least likely sectors identified for efficiency gains were education – ranked difficult by 80 per cent mainly due to schools now controlling their own budgets, housing – ranked difficult by 69 per cent as most housing stock is no longer managed by local authorities, and working with the private sector (PPP/PFI) – ranked difficult by 68 per cent due to complex and long-term nature of contrast and some distrust of private sector companies.

The research points to necessary actions from both local and central government to ensure successful and lasting efficiency gains. These include: more funding from central government; better dialogue between central and local government; less red tape and fewer targets; and government incentives to encourage savings and to ensure that efficiencies are sustainable.

Elizabeth Cooper concludes: “Local authorities recognise that future success will depend on a two way process and that they must harness their own actions as well as receiving the right assistance from central government. First steps towards making further efficiencies a reality include: maximising existing opportunities to share knowledge and experience on common issues such as shared services, and in particular “lessons learned” and best practice. Communication between central and local government also needs to be improve, with clear guidance on where responsibilities sit.”

For a copy of the report ‘Savings potential: Future efficiency in local government’ please contact Corrie Stirling-Aird at corriesa@lansons.com or 020 7566 9719.

For further information, please contact:

Elizabeth Cooper
Partner at Nabarro
0114 279 4029
e.cooper@nabarro.com

or

Corrie Stirling-Aird / Amy Butler
Lansons Communications
020 7566 9719 / 020 7566 9709
corriesa@lansons.com / amyb@lansons.com