Whitehall officials have banned councils using six accounting tricks to inflate efficiency gains under the Government's £30bn savings programme.
New guidance on measuring and reporting value-for-money gains across councils was published by Communities and Local Government on 9 October.
Councils will use the advice in reporting progress against their £4.9bn efficiency target for the current Spending Review period, which forms part of the Government's target to save £30bn across all public bodies by 2011.
The document outlines the accounting activities which will count against national indicator (NI) 179 – dealing with ‘value-for-money gains' following the 2007 Comprehensive Spending Review.
It follows concerns from Parliament's public accounts committee that some public bodies used accounting tricks to meet the tough £21.5bn annual efficiency requirements following the 2004 Gershon review. Ministers warned public bodies that the current £30bn efficiency target must involve ‘cashable' savings – those that could be reinvested into frontline services.
Under the CLG's reformed NI 179 regime, councils will not be able to report:
A senior Whitehall source said: ‘Some of these methods were employed by public bodies to inflate past efficiency savings, although they are practices which count against other national indicators. What we are saying to councils is that they cannot be used to report against NI 179.'
