Published: 14 October 2008
Back Office Savings
A new Audit Commission report on the efficiency of English councils' back office activities finds that they face an uphill struggle to contribute to a further £4.9bn of savings before 2010.
The report, Back to Front, focuses on savings from back office council operations, such as finance, human resources, IT, procurement, legal services, facilities management, marketing and communications.
These areas were originally highlighted in Sir Peter Gershon's 2004 review, and the government claims that they have contributed £1.2bn (over a quarter) of the £4.3bn efficiency savings made by English councils in the last three years (equivalent to £240 a year off the average Band D Council Tax bill). (One notices that our bills don’t seem to have gone down by that amount!)
Despite this ‘successful’ efficiency drive, the Audit Commission warns councils against complacency.
Making more savings behind the scenes will need a strategic and long term 'transformational' back to front approach, delivered in a tighter economic climate.
The report also says there is no 'one size fits all' formula for achieving further savings, though examples include reviewing ICT, improving delivery processes and addressing compartmentalised 'silo' working.
Audit Commission Chairman Michael O'Higgins said:
“Back office efficiencies aren't exactly headline-grabbing, but they are essential if councils are going to deliver quality services in a climate of cut-backs.
Councils must take a long hard look at what they are doing. £4.9 billion is a lot of money, but it has to be saved, and services mustn't suffer.
Despite their undoubted achievements so far, the harsh reality is that there will have to be further belt-tightening over the next three years.
Councils must become more and more creative at trimming their back office costs, while maintaining and improving front line services”.
Among the case studies in the report is Northumberland County Council, which, following consultation with councillors and heads of service, chose a large private company to provide internal management and finance systems to the authority.
The new system created £4m of efficiencies for the council over the last three years and a reduction of fifty full time posts in the finance department, with staff being redeployed into positions in front line services.
Back to Front offers councils a checklist of questions in each chapter to help identify where they are on the road towards sustainable back office efficiencies and there is a toolkit of other practical assistance.
There will also be a special summary version of the report to help elected members challenge their own council's performance.
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