COUNCIL MEETING, 16 MAY 2005

REPORT OF THE

Cabinet / Leader

PART II

ANNUAL EFFICIENCY STATEMENT: FORWARD LOOK 2005/06

1. The Government has introduced a new statutory requirement on all local authorities to prepare and submit an Annual Efficiency Statement (AES) which is based on indicative targets against services and cross-cutting themes; these can be amended at a later stage when specific savings have been identified. The AES has to set out the strategy for securing efficiency gains, key actions to be taken during the year and expected efficiency gains. The guidance issued by the Government states that efficiency gains are not about cuts, but about raising productivity and enhancing value for money.

2. Efficiency gains can be achieved by reduced inputs (people, assets, money) for the same outputs; greater outputs (extra service or productivity) for the same inputs; and by proportionally more outputs or improved quality from an increase in resources. Re-labelling activities (such as transfers from revenue to capital); cuts that reduce services; and increased income from higher prices in fees and charges to the public are not accepted as efficiency gains.

3. The baseline for the initial three years (2005/06 to 2007/08) of the Government's proposals for delivering efficiency in local services is 2004/05. The Cabinet has considered a number of reports on the framework and process for the AES, the first step of which was the submission of a forward plan of efficiency targets for 2005/06 by 15 April 2005. The next step is a `backward look' at the achievement of savings for 2004/05, the submission deadline for which is 15 June 2005.

4. A proposed initial return for the `forward look' was considered by a meeting of the informal Cabinet on 6 April 2005. Since then, the County Treasurer has made successful representations to the Office of the Deputy Prime Minister (ODPM) in respect of the treatment of capital spend and the inclusion of magistrates' courts in the baseline and this has resulted in a lower baseline figure, and consequently a £0.5m lower efficiency target. The final version of the response identifies £2.4m cash savings (releases resources for allocation elsewhere) with £4.7m cash savings still to be confirmed and £7.1m of non-cashable savings (achieved from improved quality or additional outputs for the same level of resource), which have not been specified but at this early stage are thought to be achievable. The final response was submitted to the ODPM in the prescribed format to meet the 15 April deadline. The Cabinet endorsed the submission at its meeting on 25 April 2005 and furthermore commended the report for providing a framework and a constructive approach for the achievement of efficiency savings. The decision ensures that all the aims of the Corporate Strategy are met, but in particular Aim 5 (Improving services).

5. A copy of the substantive response is available in the Members' Rooms and additional copies can be obtained on request from Democratic Services in the Chief Executive's department.