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Efficiency is a matter for the corporate management team, not just departments or the beleaguered finance director, says Jim Brooks The main political parties seem keen to outdo each other in expressing the need for cuts in public services to counter-balance the £200bn cost of quantitatively easing our way out of recession. The current approach is to extend the pressure for ‘efficiencies'. The previous clarity on value for money (VFM) has blurred somewhat. It used to be defined as economy, efficiency and effectiveness – doing things cheaply, doing the right things and doing things rightly, as one senior Audit Commission apologist once explained it. I can't distinguish between VFM and efficiency anymore – it is horribly confused – even on the CLG web page. My general view accords with many others, in that: l the economy is what all public servants do so well. The ‘equal misery' of salami-slicing an equal amount off every budget head and of ‘making do' l efficiency is the tough managerial skill of building capacity and delivering the same or better services for less. It requires innovative thinking, the use of technology, rationalisation of back-office functions and a willingness to set aside territorial considerations in pursuit of the best results for local residents l effectiveness is getting the job done. It means emptying the bins and teaching young people. Generally, local government is good at economy, We can all stay within a budget. Efficiency is the hardest to judge, and the most difficult to demonstrate. And local government excels at effectiveness. It is what we are judged by and what we value most. Lack of effectiveness is what puts public servants under pressure and into trouble most rapidly. Even in a government regime which relies so heavily on external inspection and which advocates the overview and scrutiny role for members, efficiency is notoriously difficult to assess and rank. I don't see a clear or shared consensus on which are the top 10 councils in terms of efficiency. Rather, there is a recognition that different councils face different challenges and problems, and that the great majority are working hard to resolve them and do the best for their local community. So, how does a local authority seek budget reductions of more than 5% in one year and, much worse, the prospect of reducing the cost envelope by 10% – or even 15% – over two to three years? I have never been an advocate of protecting statutory services and making cuts from discretionary ones. In the first place, there are many ways of delivering a statutory service at many cost levels, and these need local knowledge and experience. Second, discretionary services are often no less important to local people. So, the first thing to say is that the search for efficiencies on this scale is beyond the sole responsibility of the director of finance. This is chief executive territory. It requires corporacy, joint working and common purpose among the management team. It needs agreement and understanding of local politicians. Securing reductions on this scale, where portfolio holders and the chief officers are working together to defend their departmental budget and turf against all comers, makes for a very tough budget compilation process and difficult negotiations. It is unreasonable to expect the director of finance to deliver budget reductions on this scale on behalf of the organisation. Efficiency is about working across traditional barriers and looking for new ways of working. My experience is that this is more difficult working with traditional silos. Many local authorities have seen this, and restructured towards more corporate management philosophies. But it isn't really about the wiring diagrams of structure. Some organisations have a wholly-departmentalised approach, but a culture of co-operation, common purpose and joint responsibility. And there are some who have changed the structure but not the culture. Judgments about efficiency are difficult, and shouldn't be left to one officer. This is a corporate responsibility which the management team needs to face up to, collectively. The things most needed to find efficiencies are external challenge and support. Generally, the cost of externalising the search for efficiencies is so high that the value for money of this approach has to be in question. But local government is not well-experienced in delivering cuts on this scale. So, it seems sensible to use internal skills and resources with an external overlay, bringing with it the experience and knowledge from elsewhere but without the costly internal supplemental consultant workforce. One or two very experienced consultants working closely with an internal team should provide all the experience, challenge, knowledge and skills needed from outside but at a fraction of the cost. And the result is tailored to the organisation. Jim Brooks is executive director with Sector

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WHITEHALL

The right approach to savings

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