18 April 2008
Councils have made efficiency gains well over target in the past three years, according to the government, but say the challenge to make further savings will be tougher.
Local government minister John Healey said local authorities were on track to achieve £4.2bn-worth of efficiency savings, well over the £3bn target set for the past three years under the National Procurement Strategy.
Publishing the final report from the strategy on April 9, Healey said: 'This gives me confidence that over the next three years, councils can do even better. As with all public services, councils should be looking to make 3% efficiency gains each year for the next three years.'
The government believes this could release almost £5bn in savings that councils could use to reduce pressure on council tax or for investment.
Ellie Greenwood, senior policy consultant at the Local Government Association, said: 'You can certainly say the sector as a whole has risen to the challenge of making efficiency gains. Local government has been rewarded with an even tougher target.'
She said there was scope to improve procurement, a key area identified by the government. 'It's a difficult challenge, but councils will do their best to try to hit it, not least because they need the money to reinvest in services,' she added.
Chris Wilson, executive director at local government procurement support agency 4Ps, said the challenge to deliver first-class services while making significant savings had never been greater.
'However, local authorities are successfully rising to this challenge by using innovative approaches to making efficiency gains, which enable more money to be directed into delivering services for local residents,' he said.
Healey said 'smarter procurement' would help deliver a large part of the target savings to be made by 2011.
The report found almost half of councils were working with Regional Centres of Excellence, now part of Regional Improvement and Efficiency Partnerships, while 54% were involved in joint commissioning and more than a third were using shared procurement to provide services.
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