Appendix 1

Hampshire County Council

Annual Efficiency Statement 2005/06 - Efficiency gains forward look

1. Strategy for securing efficiency gains

1.1 Efficiency improvements are a mainstream component of the County Council's established planning processes. Each department produces regular service plans which feed into workforce and financial planning. The framework for these plans incorporates the need to produce efficiency measures and to identify areas for efficiency review. This fits in with the review mechanisms which the Council already has in place and which typically pick up efficiency issues: best value reviews (mainly in cross-cutting areas) which complement the service planning processes; business plans for trading parts of the organisation; and consultancy reviews. Executive Members and Chief Officers as appropriate are given targets which they are expected to meet through such "normal processes".

1.2 The Council has given a strong emphasis to value for money which is built into budget, procurement and routine decision making by Cabinet and Executive Members. Business plans are required for all new service developments demonstrating how performance will be improved and value for money achieved.

1.3 In addition there are several overall themes and approaches which inform service plans and may also provide scope to generate additional cross-cutting efficiency gains:

· "good housekeeping" rules built into the budget process, principally the requirements that the net cost of increments will be absorbed and that where inflation in specific areas exceeds the corporate inflation allocation, this too will be absorbed so far as possible.

· exploiting the potential offered by the continuing phased implementation of an enterprise resource management system (SAP). This leads to significant efficiency improvement opportunities in finance (by reducing double handling of data, automating processes and re-engineering procedures in-line with the new system), human resources (achieving economies of scale by electronically based centralisation of processes, especially recruitment), procurement (by better capture of all purchasing power to feed into corporate contracts) and IT (by ending the use of the mainframe and adopting a "thin client" technology). The costs and benefits of introducing a contact centre are also being considered.

· exploiting opportunities for corporate working and partnership, in particular with Health (through existing work focusing on adults and older persons and increasingly in children's services with progress from the Children Act), Police and Probation (eg crime and disorder partnerships and youth offending teams), District Councils (joint provision of services, with particular opportunities from extending the current waste disposal partnership arrangements to cover waste collection) and with all public bodies across the County through local strategic partnerships and the second generation of local public service agreements.

· movement to a new pay framework which will seek to provide stronger links between contribution and pay in the expectation that by better targeting rewards, it will be possible to achieve efficiencies.

· a business-driven approach to capital spending, emphasising the opportunities for "invest to save".

· `bottom up' processes such as suggestion schemes and cross-cutting working groups to complement the `top-down' style of analysis stemming from the Gershon Report.

1.4 The results of this activity will be assessed through the budget monitoring process, and verified by internal audit. Eventual efficiencies achieved will be reported on following the year end and incorporated into the Council's performance plan.

2. Key Actions to be taken during the year

2.1 In addition to taking forward the cross-cutting approaches set out in the strategy above, in particular the emphasis on purchasing and electronic transactions, various specific areas for examination have been identified at service level.

Non-School Education Services

2.2 A number of budget holder reviews are proposed, as it is believed that there is scope for small percentage reductions across all budgets.

Environmental Services and Local Transport

2.3 A thoroughgoing administrative review has taken place from which savings are now expected. Volume discounts are being pursued for road maintenance work. It is hoped to achieve more recycling output from the existing waste management investment. More efficient means of dealing with waste management capital assets are being examined, and savings are anticipated from the abandoned vehicles budget. Reviews are under way on the split between area and headquarters functions, on traffic speed management and on discretionary services with a view to delivering efficiencies. New ways of resurfacing roads are being examined which it is hoped will extend the life achieved without increasing cost. A comprehensive review of community (Cango) and quality bus partnerships is being undertaken in order to identify the scope for reducing bus subsidies. Given that local transport major capital spend is ring-fenced, efficiency efforts will be directed towards achieving more than the targets prescribed for the given spending and from increased developer contributions.

Culture and Sport

2.4 A programme of efficiency reviews is being developed, with initial concentration on procurement (especially of books) in libraries, reducing staff travel, pooling support functions, better use of operational transport and generation of increased trading income.

Social Care and Supporting People

2.5 The biggest savings potential comes from ensuring that placements are targeted as tightly as possible, reducing the number of placements but increasing the impact of placements made (eg to reduce bed-blocking and consequent fines) and reducing the costs of placements. Key factors for this are adequate social work staffing (it is hoped to improve this through market supplements and a revised recruitment strategy), tight negotiation of prices and maximising the availability of lower cost care options. The biggest potential is to shift children looked after from residential or independent sector placements to in-house foster care. To improve the chances of this a package of foster care recruitment, retention and support measures is being piloted in the first half of the year. The Social Care budget also contains efficiency measures based around replacing more expensive agency staff, streamlining administration, reducing unit costs through re-provision of uneconomic services and achieving significant net reductions in the supporting people programme, by reducing those budgets through contract renegotiation by more than any compensating amounts picked up in the core Social Care budget.

Cross-cutting

2.6 Improved efficiency in construction and contractor procurement, for example through how construction waste is managed and through e-tendering. There is thought to be scope to reduce staff absence and travel costs and to improve productivity in inspection and laboratory processes. There is also scope for more efficient use of office accommodation including more flexible working approaches. The buildings' capital programme will be managed to achieve cost savings and there will be an emphasis on revenue savings as a result of capital investment. There are already substantial benefit realisation proposals from the introduction of the enterprise resource management system which will secure savings in finance, human resources, IT and procurement from the elimination of duplicate and manual transactions, and re-designed business processes. In addition, there is further improvement anticipated in meeting
e-government targets and from IT networking, and consultant utilisation.

3. Expected efficiency gains