Contact: Paul Carey-Kent, (01962) 847525; [email protected]

1 Introduction

1.1 This report sets out the 2006/07 forward look efficiency plan statement for approval by the Cabinet.

1.2 The indicative cumulative efficiency target previously reported to Cabinet has been revised to 5% of 2004/05 actual outturn, £29.1m by 2006/07 and £43.7m by 2007/08. This is marginally higher than the previous three year target of £42.6m based on the 2004/05 estimated outturn.

1.3 As part of its 2006/07 Annual Efficiency Statement, the County Council is required to report to the Office of the Deputy Prime Minister (ODPM) its proposals for how the 2006/07 target will be met in a forward-look efficiency plan by 18 April 2006. The Leader approved the submission as it was based upon the 2006/07 budget decisions, subject to formal ratification at this meeting.

2 2006/07 Annual Efficiency Statement

2.1 The ODPM has provided an electronic template for completion, and this has been used to present the return for the County Council as shown in the appendix to this report. A paper copy of the plan was signed as required by the Leader of the Council, Chief Executive and County Treasurer.

2.2 In the forward-look the County Council is required to outline its strategy for securing efficiency gains and key actions to be taken during the year to make sure the savings are achieved. In addition the ODPM require councils to quantify total eligible efficiencies and the cashable gains expected for each service area as defined by the template. Where the efficiency gains are considered to be cross-cutting the template invites councils to categorise them in `workstreams' as follows: corporate services; procurement; productive time and transactions.

2.3 The budgeted efficiency gains eligible for the Annual Efficiency Statement, as reported to Cabinet on 10 February 2006 have been used, updated as appropriate. Key actions have been added to clarify the expectations of each service.

2.4 In summary, £11.7m of efficiencies were achieved in 2004/05 and these count towards the three year target. A further £15.0m gains have been identified in 2005/06 and these will be reported in more detail for the backward look submission in June. From the attached forward look statement, it can be seen that £15.5m efficiencies have been planned for 2006/07. This gives an estimated cumulative total of £42.2m by the end of 2006/07, above the target set by the ODPM. This is appropriate, both to allow for any possible underachievement and because the highest Comprehensive Performance Assessment (CPA) rating requires that the 2.5% target is exceeded.

2.5 Further ODPM guidance on reporting and measuring efficiency gains became available in February which clarifies some issues that were previously unclear, including: "Where there is an initial cost in undertaking a project to deliver efficiency gains, that cost should be apportioned on a straight-line basis in line with standard accounting practice on amortization. All costs should be included, regardless of the source of funds to pay them. The efficiency gain is reported as the difference between costs (comprising annualised start up costs and operating costs) and annual improvement for the chosen period. This principle stands even if costs are deferred to a time period beyond 2007/08."

2.6 The effect of that is to reverse the previous position whereby efficiency gains could apparently be counted even if it took a disproportionately high up front capital investment to achieve them. Clearly this is relevant to, for example, the Council's contact centre proposals.

2.7 Cabinet will recall that definitions of efficiency savings which are "cashable" and "non-cashable" differ between savings made in the budget and eligible for the annual efficiency savings. The real cash efficiency savings in the budget were £5.1m. Other efficiency improvements in 2006/07 are identified which do count towards the annual efficiency statement. They do not reduce the budget in cash terms (although they may be counted as "cashable" in the annual efficiency statement) but they are costs which are avoided or would otherwise have been incurred if no action had been taken to improve efficiency.

2.8 The total efficiency improvements recorded in the 2006/07 budget summary were £10.6m (£5.1m cash savings included in the budget plus £5.5m other efficiency savings identified at that time). The total now shown is £15.5m. The main differences are additional efficiency improvements eligible for the statement from the safety camera initiatives (£2.9m), corporate procurement (£1m) and landfill tax and recycling efficiencies (£1m). Cabinet will also note that the template is not directly aligned with the Council's budget in service terms.

3 Recommendations

3.1 The recommendations are contained in the summary decision sheet.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

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