Treasury offers £150M to encourage £5bn efficiency savings

17 October 2007

Senior highways officials are hopeful that £150M in funding to assist in the delivery of £5bn in efficiency savings by 2010 will help councils to fundamentally redesign services.

The Treasury acknowledged the significant costs which councils could incur in re-engineering procurement and processes, announcing £150M in funding to provide, among other offerings, ‘significant investment’ for ‘smarter procurement’.

This came as MPs claimed there was ‘a question mark’ over the reliability of almost £10bn of £13.3bn of annual savings they examined.

The Treasury has pledged to include figures on the costs incurred in achieving savings in future calculations of efficiencies, after the House of Commons public accounts committee found that such costs were not always reported.

The ‘significant’ costs that the regional centres of excellence (RCEs) will help councils cover also include collaboration initiatives and better asset management.
In the current Comprehensive Spending Review period, the RCEs have received £30M of funding to assist local government in achieving £6.5bn in savings.

Matthew Lugg, environment director at Leicestershire County Council, welcomed the move. Collaborative procurement between three East Midlands counties ‘has required upfront investment’ in business cases and developing new types of contracts – £250,000 secured from the RCE, he said.

Another possible call on the fund would be to help councils develop transport asset management plans, said Lugg.

The Chartered Institute of Public Finance and Accountancy estimated that £15M in the resource-hungry process of compiling inventories of highway assets would help save £250M.

Mick Murphy, president of the Technical Advisers’ Group, also welcomed the £150M to pump-prime changes to contracts and processes.

But he agreed with the public accounts committee that there was ‘a real possibility that the reported Gershon savings represent genuine efficiency improvements’.
Murphy said: ‘The acid test will be whether the cashable savings can be focused on our deteriorating highway network.’

It was also unclear as Surveyor went to press how much of the £150M would be spent on efficiency savings for local environmental services.

A spokesman for the regional centres of excellence said that some of the £150M would be spent on national efficiency initiatives, and some would help councils to deliver performance improvements.

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Treasury offers £150M to encourage £5bn efficiency savings

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