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Billed with efficiency

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From next year savings will be included on council tax bills for residents to judge for themselves.

Councils have an image problem. And one of the most enduring caricatures is local government as a spendthrift, squandering public money on junkets, bureaucracy and far-fetched schemes, while council tax bills creep inexorably upwards.

While services rise, public satisfaction levels decrease. In the wake of the Iceland banking crash with budgets tightening across the public sector, a perception of inefficient or poor services is particularly damaging.

The reality is that over the last four years, local government has built up a stellar track record on efficiency, outstripping other parts of the public sector. Councils met their Gershon target for efficiency gains a year ahead of schedule.

The total value of cash-releasing gains is expected to reach£3.3bn this year, representing more than 8% of councils’ baseline expenditure in 2004-05.

Getting the message across to taxpayers is a preoccupation not just for councils, but for the government. Local government minister John Healey told Parliament in February that from next year, information on efficiency savings would be sent out with council tax bills so people can judge their own local authorities on its merits.

“I want to equip local residents to challenge their council on whether it is running more efficiently, as they have a right to expect,” he said.

Since then, government has been consulting on how best to include efficiency information on council tax bills. Which measure of efficiency is most meaningful forecast or savings to date? Should it be included on the bill itself for impact, or in an accompanying leaflet, to allow space for context? Do we need a footnote explaining the relationship, or lack of it, between efficiency gains and council tax bills, and if so how should that be worded?

The resulting debate in local government, however, has been more fundamental whether it’s a good idea, or a misjudged, and potentially misleading, gimmick.

Nathan Elvery, executive director for resources and customer services and deputy chief executive at Croydon LBC , believes the principle is sound. “Local government has been very successful in leading the way on efficiencies within the whole of the public sector and we should be proud to shout about it,” he says. “The inclusion of an efficiency statement will at least demonstrate the effectiveness of the council in delivering value for money, keeping council tax down and ensuring residents understand how far their council tax contribution is going in terms of service provision.”

However, the challenge will be to ensure the information is “meaningful, clear and readily understandable”. “If not, it will be a pointless exercise and undoubtedly councils will be accused of spending more money on issuing the bills,” Mr Elvery says.

If the idea is to go ahead, he adds, the information must be presented in such a way that the efficiencies, and their significance, are clearly understood. He suggests including comparisons with the national average and neighbouring councils to give context. And Mr Elvery would like to see four years’ worth of data the track record for the past two years as well as plans for the next two so the full picture is presented.

Others, though, are less convinced of the merits of the scheme. “It’s a waste of time nobody will read it,” says David Wood, former secretary of the Society of District Council Treasurers . “The average person on the street bins everything they get with bills without looking at it.”

There is also a problem of definition. “When is a budget cut an efficiency saving?” Mr Wood says. “No matter how hard you try to define efficiency gains, or whether it’s cashable or non-cashable, politicians and [members of the public] can’t be bothered with all that. What they want to know is, are we going to save money and if so what are we going to do with it. They are much more interested in what we’ve spent and how we’re going to get their council tax down.”

But if the plan is to go ahead, Mr Wood says the design must be road tested with members of the public. Rather than waiting for the next full round of annual bills, he suggests using the bills sent by councils throughout the year when people move or register a change in circumstances.

Paul Woods, city treasurer at Newcastle City Council , also has doubts about the interpretation of ‘efficiency savings’, and warns that the figures printed on bills could be misleading. “Councils are coming from different starting points,” he says. “Some have achieved substantial savings in the past and are extremely efficient they wouldn’t be declaring the same level of efficiency savings in the current year as other councils which have not been down the transformation process.”

The value for money provided by councils is already measured as part of their use of resources assessment, says Mr Woods. If that information were to be included on bills, at least it would be independent and provide a genuine basis for comparison between councils.

“Otherwise, there are so many different ways of looking at efficiency savings there wouldn’t be comparability,” he says. “Also, value for money is not just about efficiency savings, it is about the quality of services you are getting for the money.”

Jon Pittam, county treasurer at Hampshire CC , agrees the comprehensive performance assessment, and in time the comprehensive area assessment, would give a more accurate picture of what councils are achieving in their areas.

“Budget decisions are complex, so to just come out with something on efficiency savings isn’t particularly helpful,” he says. “I support publicity for good value for money and efficiency savings, but this is not the right way to do it.”

The decision on how best to publicise that information, for example in an accompanying leaflet, should be left to councils instead of being taken centrally, says Mr Pittam.

The government may find that giving council tax payers an accurate picture of efficiency savings is more complex than it thought. But perhaps the real issue is whether the efficiency savings reported by local government every year are a robust and meaningful indicator of what councils have achieved.

If not, the question is less whether they should appear on council tax bills than whether they are worth the paper they are written on at all.

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