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Further Information

Contact: Deputy Head of Strategic Finance
Telephone: 0116 305 6199
E-mail: finance@leics.gov.uk

Delivering Value For Money In Local Services

Background

As part of the 2007 Comprehensive Spending Review (CSR07), councils (and the rest of the public sector) are expected to achieve at least 3% per annum net cash-releasing VfM gains and this target is multiplicative (3%, 6.1% and 9.3%). As announced in the 2009 Budget, an additional 1% VfM gains will now be required in 2010/11, taking the final target to 10.3% of the 2007/08 baseline expenditure.
Although individual councils have not been set mandatory local targets for VfM gains, Communities and Local Government has published baseline expenditure figures to allow councils to calculate their own internal targets. Using this information, VfM targets for Leicestershire County Council have been calculated as follows:
Year
Annual Target (£m)
2008/09
8.9
2009/10
8.9
2010/11
10.1*
Total
27.9
* Incorporating the additional 1% required by the 2009 Budget would give the Council a target of £13.1m for 2010/11.
Council’s are permitted to carry forward into CSR07 the value of any ongoing cashable efficiencies achieved in SR04 (as reported in their 2007/08 Backward Look Annual Efficiency Statement) that were over and above 7.5% of their 2004/05 baseline expenditure. For the County Council this figure was £2.8m (inflated to 08/09 prices).

VfM Gains In 2008/09

National Indicator 179 (NI179) measures performance against the Council’s VfM targets. The formal definition of NI179 is “the total net value of ongoing cash-releasing value for money gains that have impacted since the start of the 2008/09 financial year”.
In 2008/09, the County Council achieved VfM gains of £12.0m. This figure for NI179 was reported to CLG in July 2009. The Council’s 08/09 target of £8.9m was therefore exceeded by £3.1m.

VfM Gains in 2009/2010

In July 2010, the County Council reported its cumulative VfM gains for 2008/09 and 2009/10 to CLG. Total VfM gains up to the end of 2009/10 is as follows.
VfM Gains Brought Forward From 2008/09
12,008,129
2008/09 Gains Inflated to 2009/10 Prices *
12,248,292
Total VfM Gains in 2009/10
8,547,348
Total Cumulative VfM Gains (08/09 & 09/10)
20,795,640
*GDP = 2.0% (using GDP deflator 22/06/10)
The Council's 08/09 and 09/10 cumalative target of £17.8m was therefore exceeded by £3.0m.
The calculation of NI179 was reviewed and agreed by Internal Audit prior to submission. The Leader, Chief Executive and Director of Corporate Resources then certified  the NI179 figure.

Savings Achieved In Previous Years

The Gershon Report, published in July 2004, led to each council being given an efficiency target by the ODPM (now CLG) based on 2.5% of their 2004/05 expenditure. These targets were annual figures but councils also had to meet a cumulative three-year target figure. At least half of the target efficiency gains had to be cashable; that is they had to provide money that could be spent elsewhere or be used to reduce Council Tax.
Our cumulative efficiency gains for the first two years of the Gershon efficiency period were £23.6m (including gains achieved in 2004/05). This means that we met our overall three-year cumulative target of £22.024m one year early. We over achieved the three year target by £10.3m with savings of £32.3m achieved by the end of 2007/08.
The split between cashable and non-cashable efficiency gains up to the end of 2007/08 was as follows.
Year
Cashable Efficiency Gains
£m
Non-Cashable Efficiency Gains
£m
Total Savings
£m
2004/05
3.492
0.634
4.126
2005/06
8.619
3.025
11.644
2006/07
5.933
1.960
7.893
2007/08
7.069
1.617
8.686
TOTAL
25.113
7.236
32.349
Contact: Chris Tambini, Head of Strategic Finance
Telephone: 0116 3056199
E-mail: finance@leics.gov.uk

Page Last Updated: 27 September 2010