Efficiency - things you need to know
What is efficiency?
The efficiency agenda is about working more effectively to deliver better public services for all communities.
Local authorities are, of course, crucial for this delivery of day-to-day services that people depend on. Self-evidently, where more resources can be made available to support these activities, there will be significant benefits for everyone.
An efficiency gain is an improvement in the productivity of resources used to deliver services. It includes obtaining:
“More for the same”
“Much more for a little more”
“More for less”
“The same for less”
A service cut is NOT an efficiency gain – the efficiency agenda is not about cuts in budget, quality or services
The efficiency agenda is also part of the broad value for money (VFM) agenda, and sits alongside transformational government. VFM has long been defined as the relationship between economy, efficiency and effectiveness. VFM is high when there is an optimum balance between successful outcomes, high productivity and relatively low costs.
Where did the current efficiency agenda come from?
In August 2003, the Prime Minister and Chancellor of the Exchequer asked Sir Peter Gershon to undertake a review of public sector efficiency. It focused on the Government's key objective to '”release resources to fund the frontline services that meet the public's highest priorities by improving the efficiency of service delivery.” Sir Peter Gershon and his team worked closely with departments and other stakeholders, and published his report in July 2004.
The report identified the opportunity to make £21.5 billion of sustainable efficiency gains across the public sector in 2007/08. Of this total, at least £6.45 billion would be achieved by local government in England - equivalent to 7.5 per cent of its 2004/05 baseline expenditure. This figure has been adopted as the official target for local government and it will be met by activities undertaken by:
Councils (comprising nearly half the £6.45 billion target)
Schools (comprising nearly 40 per cent of the target)
Police and Fire authorities (comprising about 15 per cent of the target)
Gershon Review of Public Sector Efficiency (PDF, 369KB)
This document sets out the conclusions of the Gershon review. In particular, it sets out the scope for further efficiencies that have been identified within the public sector's back office, procurement, transaction service and policy-making functions. It also identifies opportunities for increasing the productive time of professionals working in schools, hospitals and other frontline public services, and makes a series of cross-cutting recommendations to further embed efficiency across the public sector.
The current efficiency agenda is part of the Government's agenda to release resources to fund the frontline services, and improve the efficiency of service delivery. The Gershon Review is central to the efficiency agenda, which introduced a number of efficiency programmes during the Spending Review 2004 (SR04). Spending Review 2004 sets out how the Government has responded to the recommendations of Sir Peter's review, including setting efficiency targets of at least 2.5 per cent a year for every department. Read more about this on the HMT website.
DCLG Local Government Transformation & Efficiency Division has lead policy responsibility for the local services efficiency agenda and established the Regional Centres of Excellence as the lead change agent for local government efficiency.