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LGC FINANCE SUPPLEMENT - DRUMMING IT IN...

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The Audit Commission continues to beat the efficiency drum, and nothing makes the headlines quite like money wastin...
The Audit Commission continues to beat the efficiency drum, and nothing makes the headlines quite like money wasting, says Kerry Lorimer

One day local government was winning plaudits for being ahead of the game on efficiency savings. The next it was being pilloried by the Audit Commission for squandering public cash.

The attack followed comprehensive performance assessment scores at the end of the year which revealed almost half of authorities had failed to reach minimum standards on value for money.

The fact councils did even worse on at least two other components - financial reporting and internal control - than they did on value for money has been largely ignored. Efficiency is the drum that the government - and the Audit Commission - is interested in beating. And nothing is better for securing a quick council-bashing headline than evidence of public money being wasted.

It is the first time the commission has delivered an explicit assessment of the value for money councils provide, and it has proved the most contentious element of use of resources, not least because it contains a significant element of judgment.

Just three councils, East Riding of Yorkshire Council, Wandsworth LBC and Worcestershire CC, scored the maximum four for value for money. Seven, including Northumberland CC, Sandwell MBC and Swindon BC, have to cope with the public relations nightmare of a one score.

Overall, counties fared best, with over 70% scoring threes or fours, while unitaries did much worse, with the majority of councils scoring ones and twos.

That dichotomy is one that has caught the eye of the commission, which has promised to look into possible explanations.

Mike Taylor, executive director for performance and resources at Surrey CC, says the assessment captured the fact counties are generally well run organisations which have had a solid grasp of efficiency for some time.

'Monitoring it is just part of the day job,' he says.

Mr Taylor welcomes the weight put on the value for money offered by councils, saying it is a key part of assessing their financial performance. 'Financial stuff isn't just about managing and reporting, it's about generating something for the council,' he says. '[Efficiency] has got to be part of the corporate management of the authority.'

So how can it be that local government, whose efficiency savings to date appear impressive, fails to satisfy the Audit Commission on value?

The commission itself says that making the savings is not in itself sufficient - the councils must be able to tell a story about how its decisions on efficiency tie in with service priorities.

It could of course be that the efficiency targets themselves are too easy, and meeting them is not an indication of genuine value for money.

Although councils tend to describe the targets as challenging, many officers privately admit they are not particularly tough given the administrative flab they encounter on a day-to-day basis. 'You could meet [the targets] by nine inthe morning with one hand tied behind your back,' is how one finance director puts it. Others say they made their efficiency statements deliberately vague in case the document became a stick with which the council could be beaten under the recent finance settlement.

A third possibility is that use of resources assessment does not accurately reflect where councils are on value for money and other key indicators.

There are for example concerns among London treasurers about the allocation of scores across the capital and the level of discretion given to individual auditor.

'It's a real case of power without responsibility,' says one. 'Different auditors have applied the criteria in different ways and people could lose their jobs as a consequence.'

Nathan Elvery, director of finance and resources at Croydon LBC, says he was aware of 'inconsistencies' in scoring across London. 'Clearly these issues resulted from the short timescales the auditors had for training,' he said.

'My main quibble with the whole process is what it means to local residents, firstly do they care and secondly try explaining why the authority's score has decreased when improvements are being made year-on-year. Blaming the rules just doesn't fly.'

Top tier councils have less than a year until they are inspected again, says Mr Elvery. 'Let's hope we can work with the commission to iron out the lessons learnt from this years hurried exercise and ensure that the outcome can add value for our residents,' he says.

So what does the future hold for value for money? There is no doubt it will continue to be a high profile part of the annual assessment.

In response to widespread opposition from councils, the commission backed down on its plan of giving value for money greater weight within the use of resources judgment. In effect, any council scoring less than three on value for money would not have been able to achieve three for use of resources overall. Had the rule been introduced this year, 13 councils would have been demoted to a lower use of resources score. Two of them - Durham CC and Redcar & Cleveland BC - would have lost their four star council status as a result.

If the commission goes ahead with its plans to increase the weighting for value for money next year, expect a greater degree of controversy - and perhaps an increased number of appeals.

When the flak started flying about wasting public funds, three authorities had bullet-proof protection: a score of four for value for money. So how did they do it?

Worcestershire CC

The only county to achieve the holy grail for value for money, Worcestershire, says it sees efficiency as a means of improving services, rather than a reason to cut them.

'We are a low-funded authority, so we have to make money go a long way,' says chief executive Rob Sykes.

One of the council's initiatives is replacing the 23 offices once used by its social services department with a smaller number of better equipped premises which require less maintenance in the long term. Social workers are also encouraged to work more flexibly, either by working from home or using 'touch points' in, for example, doctors' surgeries.

'The idea is that if social workers are supported properly by better buildings and IT, bureaucracy is reduced and we get better outcomes,' says Mr Sykes.

Worcestershire, which also scored top marks for financial reporting, is working with the police and six districts in their area to provide shared front office services. Each district now has a 'Worcestershire hub' one-stop shop from which residents can access county, district and, in some cases, police services.

Wandsworth LBC

As well as achieving four for value for money, Wandsworth secured top marks for financial management and financial standing, enough to earn it an overall score of four for use of resources.

Director of finance Simon Heywood says no new practices or procedures were introduced to secure top marks for value for money. 'And we certainly didn't allow ourselves to be diverted by the story-telling nonsense of the Gershon exercise,' he says.

Instead Wandsworth submitted a self-assessment form which described what the council had been doing for many years to ensure an organisational ethos of value for money.

That includes expecting directors to manage within their budgets, regardless of new pressures and problems, maintaining a regular annual cycle of detailed budget reviews and rigorously reviewing any proposals for budget increases.

Chief executive Gerald Jones says the value assessment had been rigorous enough to reveal a lack of discipline in many councils when it came to genuine efficiency savings, regardless of what may have appeared on annual efficiency statements.

'There was suspicion a lot of the alleged savings weren't very substantial when it came to it,' he says. 'A lot of people made optimistic estimates of their savings but the commission wasn't convinced.'

East Riding of Yorkshire Council

Value for money was just one of four successes for East Riding of Yorkshire under use of resources - the council also scored top marks for financial reporting, financial standing and internal control.

According to head of finance Steve Button, it hasn't been easy. 'The East Riding has been prepared to take tough decisions on services including reprovision through partners where this can add value or reduce costs,' he said. 'The council's core funding from government is very poor, so we have always had to seek value for money, drive continuous improvement and carefully target external funding.'

In 2004/05, the council integrated its financial planning services and appointed 'critical friends' in all its service areas to focus on performance management and improvement.

New technology in the council's revenues service has allowed staff to work from home and for benefits assessments to be carried out in clients' homes. East Riding has also reaped the benefits of a public private partnership for payroll, ICT and customer services.

Hot to...

Improve your council tax collection rate

1 Offer people the widest possible choice over how to pay their council tax

You have to provide people with a range of payment channels that are quick and convenient - travelling to their town hall isn't one of them. Over the past few years cash payment using a swipecard has become a popular method as it allows council tax to be paid in a range of local shops, garages and post offices. Other convenient methods include the telephone, internet and Direct Debit.

2 Give residents maximum flexibility over when they pay their money

Don't tie people down to specific dates or times, for example during weekday office hours. Allow them to pay, within reason, at their convenience. Electronic payments via the internet are particularly useful.

3 Be proactive in promoting payment

Regular reminder letters are useful, outlining the benefits of prompt payment and the consequences for not doing so. Councils with a large ethnic population should publish letters in as many languages as possible. The council should also be prepared to offer financial advice. Debt issues are one of the main reasons for not paying, so an authority that listens and offers help is far more likely make people more responsive.

4 Offer incentives for prompt payment or for using your preferred payment methods

Reward schemes are a popular way to ensure people pay promptly. Everyone likes to feel they are getting 'added value' and voucher/discount schemes work wonders. These can even be tied into council services such as cut-price leisure centre membership.

Offering money off for switching to direct debit has proved successful.

5 Promote the reasons why council tax is so important to the services

Don't beat about the bush - tell people what their council tax is paying for. There is a good reason why people have to pay and councils should not hesitate to point out the many valuable services they provide.

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