Council savings target is optimistic

22 April 2010

More than 84 percent of senior council employees surveyed by Interserve think making £5.5bn of savings is 'optimistic'

The efficiency target set by government for local authorities will require radical changes within local government, according to senior council employees1. The Government expects councils to deliver £5.5bn of efficiency savings by 2011, but 84 percent of decision-makers think that this target is optimistic.
The survey of 152 council decision-makers by support services and efficiency expert Interserve underlines the significant financial challenge that local authorities face. With 91 per cent of respondents expecting a reduction in their government-allocated budget, they are under growing pressure to come up with new and innovative ways to achieve these savings.
Interserve’s research also reveals the challenge that local authorities must meet in cutting their overall spend, through efficiencies or otherwise. A recent Local Government Association/Solace study calculated that councils will have to cut total spend by over 10 per cent or £11bn a year2, but today’s research reveals that fewer than one in ten senior council employees (8 per cent) expect to reduce costs by this amount over the next two years.
Outsourcing is widely expected to be the answer to this problem. While total local government spend is expected to decrease, councils anticipate that spend on outsourced services will rise. Almost three quarters (72 percent) of decision-makers predict that outgoings to external service providers will increase as lower budgets and efficiency targets encourage councils to find economies of scale, specialist expertise and innovation from the private sector.
However, opinion is split on other measures to increase local government efficiency. The ‘Total Place’ initiative has been seen as a way to improve or protect services while cutting costs, but half (48 percent) of respondents think that the programme will make no difference to services or will make them worse.
Adrian Ringrose, Interserve Chief Executive, commented, “Local authorities are under huge pressure to cut costs while protecting or improving services. Outsourcing can be a major component in helping to achieve these aims. Savings can be made by taking a more strategic approach to outsourcing, where greater consideration is given to the co-ordination of services, the end user and the whole life of assets, and the current trend towards bundling a wider range of services into single contracts can cut costs and improve and standardise service quality. Local authorities are increasingly concluding that outsourcing needs to be a key element in their plans to achieve the required cost savings and service improvements.”

1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 152 decision-makers for specific areas (HR, IT, Procurement/Purchasing, E-Commerce / Internet Services, Line of Production / Operations, Finance/Accounting or Facilities / Premises / Health and Safety) in local government. Fieldwork was undertaken between 8th to 11th December 2009. The survey was carried out online. The figures have not been weighted.
2. Financial Times, December 2009