23 March 2007
Councils have warned that central government aspirations for a 100% increase in town hall cashable efficiency savings are unachievable without cuts in local services.
The warning is given in the Local Government Association's submission to the Comprehensive Spending Review.
It responds to indications that the Department for Communities and Local Government will seek to make local government's entire 3% efficiency target for 2008/09 to 2010/11 cashable.
Corin Thomson, senior policy consultant at the LGA, told Public Finance: 'The Pre-Budget Report set 3% as the efficiency target for the next CSR period, up from 2.5% under Gershon.
'But the reality for local government is looking like a 100% increase in the cashable savings that treasurers will have to find.'
Only half of the 2.5% Gershon target was 'cashable' in the sense that it had to release funds for use elsewhere, as opposed to 'uncashable' efficiencies, which simply do more for the same amount of money.
But now the DCLG has told the LGA it will be looking to make the entire 3% cashable and save £5bn by 2010/11.
The LGA is also concerned that by floating a £5bn target, the DCLG is indicating that efficiencies will be sought across too wide a base of spending.
They claim that up to 30% of non-school council spending is tied up in external contracts that cannot be easily changed and so should not be subject to the target.
Furthermore, following the last round of efficiency targets, many services have already been made as efficient as possible.
'Simply redefining the base to which a percentage target will be applied does not increase the potential for efficiency savings, and could actually result in authorities taking a short-term approach to savings,' the LGA submission warns.
Thomson added: 'If this unscientific increase in the target is not deliverable, authorities will face real trouble. Treasurers say they cannot achieve those types of savings without cuts to services.'
Some 22 councils were prepared to put their objections 'on record'; stating them clearly in the LGA's submission.
They include Worcestershire council, which described the target as 'so unrealistic that service offerings will have to be reduced', and Tonbridge and Malling, which said it was 'simply not achievable, unless, of course, cutting services completely counts as efficiency'.
PFmar2007
