WIREDGOV

A new Audit Commission report on the efficiency of English councils' back office activities finds that they face an uphill struggle to contribute to a further £4.9 billion of savings before 2010.

The report, Back to Front, focuses on savings from back office council operations, such as finance, human resources, IT, procurement, legal services, facilities management, marketing and communications. These areas were originally highlighted in Sir Peter Gershon's 2004 review, and have contributed £1.2 billion, over a quarter, of the £4.3 billion efficiency savings made by English councils in the last three years (equivalent to £240 a year off the average Band D Council Tax bill*).

Despite this successful efficiency drive, the Audit Commission warns councils against complacency. Making more savings behind the scenes will need a strategic and long term 'transformational' back to front approach, delivered in a tighter economic climate. The report also says there is no 'one size fits all' formula for achieving further savings, though examples include reviewing ICT, improving delivery processes and addressing compartmentalised 'silo' working.

Audit Commission Chairman Michael O'Higgins said:
'Back office efficiencies aren't exactly headline-grabbing, but they are essential if councils are going to deliver quality services in a climate of cut-backs. Councils must take a long hard look at what they are doing. £4.9 billion is a lot of money, but it has to be saved, and services mustn't suffer.'

'Despite their undoubted achievements so far, the harsh reality is that there will have to be further belt-tightening over the next three years. Councils must become more and more creative at trimming their back office costs, while maintaining and improving front line services.'

Among the case studies in the report is Northumberland County Council, which, following consultation with councillors and heads of service, chose a large private company to provide internal management and finance systems to the authority. The new system created £4 million of efficiencies for the council over the last three years, and a reduction of fifty full time posts in the finance department, with staff being redeployed into positions in front line services.

Back to Front offers councils a checklist of questions in each chapter to help identify where they are on the road towards sustainable back office efficiencies, and there is a toolkit of other practical assistance. There will also be a special summary version of the report to help elected members challenge their own council's performance.

Click here to read the full report

* Many councils used these savings to boost service budgets rather than defray council tax. This calculation assumes that all savings were realised in the last year of SR04, that efficiencies were spread equally across the country and councils, and that all households in band D paid their council tax.

Notes to editors

1. The drive for greater efficiency in local councils began in 2004, when Sir Peter Gershon's report reviewed how the public sector could make savings and release resources for front line services - paraphrased at the time as 'Doing the same for less, or more for the same'.
2. The Government Spending Review of 2004 then imposed efficiency goals, and in response councils found £4.3 billion of savings between 2005 and 2008 - equivalent to over £240 a year off the average (Band D) Council Tax*.
3. Back office efficiencies provided £1.2 billion of this. £1 billion was in the form of 'cashable' savings, which could be used to reduce council tax or improve services.
4. Now, the 2007 Comprehensive Spending Review has built 3 per cent annual efficiency savings into the next three local government financial settlements, requiring a further £4.9 billion savings.