Efficiency savings by councils can boost quality of services

Published on Wednesday 18 November 2009 18:08

HOW do local authorities manage their money? Poorly, according to council taxpayers.

While respondents to household surveys generally rate their local services highly, fiscal prudence is not an attribute they readily associate with their council.

Instead, the common perception is one of budgetary abandon, with millions being wasted through haphazard management and lax decision-making. If this were true, councils would arguably be unable to deliver the services so prized by citizens.

But the negative reputation persists, and is particularly damaging at a time when local government is facing its most difficult financial circumstances for years. Budget allocations are expected to flatline and, allowing for inflation, this effectively means less money for vital services. So the choice is between cuts to these services or maintaining and improving services with less money.

This is a huge challenge, but one that City of Edinburgh Council is already tackling through its procurement activity. An important shift in the way we buy care and support services for adults is the biggest exercise of its kind in Scotland so far.

The aim is to deliver quality services while achieving best value for the public pound.

As people live longer and expectations continue to rise, the challenge for all councils is not just to keep up support services to adults who need care, but to increase capacity for less money in the future.

Until now, care and support services contracts have traditionally been negotiated privately with individual providers as a need has arisen.

This has led to a disparate patchwork of more than 170 contracts currently costing more than 26 million over a three-year period.

Costs vary considerably; some contracts have not been tested or renegotiated for more than ten years.

The new procurement approach will reduce the number of providers to eight, with all contracts renewable after three years. This will save 5.5m over the next three years, equating to an efficiency saving of more than 20 per cent on the current spend.

As well as ensuring a more consistent quality of service, it allows us to help more people in the years ahead that we couldn't afford to help before, because we are buying more effectively.

This is critical, because we know there are growing numbers of young people in our schools and communities today with learning, mental health or physical disabilities who will need support in the future.

Using a single contracting process for external providers will also ease the administration of these services, allowing streamlined management and monitoring arrangements to be established, and personal care and housing support rates to be harmonised.

Competitive tendering is nothing new across many areas of the public and private sector. But it has particularly emotive connotations in social care, where service users may have been supported by the same voluntary sector provider for years.

Reflecting this, we applied a 70 per cent rating to quality criteria in the contract tender and spent many months assessing the experience, stability and suitability of each bidder, including site visits and financial due diligence.

A 12-week implementation phase is also designed to ensure continuity of service to all service users during the transition period.

There will always be losers in this kind of contract race and nobody wants to upset their political allies.

But driving more services from a shrinking public purse is a fiscal imperative that no local authority can ignore.

North Lanarkshire and East Ayrshire councils have already made similar policy moves.

Earlier this year, the City of Edinburgh Council also successfully introduced competitive tendering to its homelessness services provision, resulting in significant cost savings and quality improvements.

These changes are in line with European Union procurement rules for non-discrimination, equal treatment and transparency, and a drive across the European, Westminster and Holyrood parliaments to harmonise procurement practices.

If councils across Scotland followed suit, the combined savings could run into hundreds of millions of pounds, paying essential dividends to citizens, service users and local government alike.

&#149 Councillor Phil Wheeler is convener of the City of Edinburgh Council's finance and resources committee