The public sector is facing a problem.  Central government has set out an ambitious and exciting agenda for public service reform: a greater emphasis on personalisation and prevention and asking local authorities to become strategic “place shapers” who focus on achieving positive, sustainable, outcomes for their communities.  It has the potential to transform public service delivery.  At the same time, the purse is being squeezed. Running alongside public service reform is an equally ambitious efficiency drive, in operation since 2005. The government’s latest efficiency drive requires savings of £30bn over the next three years. Local authorities alone are expected to deliver £3bn cashable savings year on year for the next 3 years on the cost of running their organisations and delivering services.

In the current economic climate, both local and central government are seeking new ways to secure efficiencies. Already, however, there are concerns about how far this is being achieved.  Typical approaches to efficiency tend to lead to reducing unit costs and cheaper commissioning. Ultimately, even if a local authority secured a reduction in the unit cost of their block commissioning – and in so doing securing a cash efficiency – there are clear limits to how far this can continue to save. In the long-run this approach would miss out on far more sustainable, and potentially larger, efficiencies.

This research takes a fresh look at efficiency, through types of reform that can transform public services: personalisation, prevention, and collaboration.  These new ways of delivering services have the potential to make them better, and ultimately cheaper.  For that to happen, a case needs to be made for a sustainable approach to local government service efficiency which focuses on transforming the way public services are delivered, rather than just making the same old thing a little better and a bit cheaper. 

At the core of this research is an attempt to re-define, rather than discard, efficiency in a way that can help us identify and capture new cost savings that these reforms can make.

The report considers how certain services and service delivery models can deliver genuine and concrete cash savings to the public purse, by taking a cross-departmental and long-term view to efficiency. 

The focus throughout is primarily on local authorities and the local commissioning of services.

This project is supported by the Social Enterprise Coalition.