Examination of Witnesses (Questions 20
- 39)
WEDNESDAY 16 NOVEMBER 2005
MS HELEN
GHOSH, MR
BILL STOW
AND MR
ANDREW BURCHELL
Q20 Chairman: You cannot have a saving
unless money goes from the centre to local government, is that
right?
Mr Burchell: The saving is judged
against what would have happened if they had not introduced efficiency
measures. There is a background growth in expenditure as a result
of waste arisings growing by, I think, something around the rate
of two to three% per annum. Therefore, in the absence of any intervention
and efficiency, expenditure would be growing by about that rate.
The way in which the savings are measured is against that counterfactual,
in terms of what would have happened in the absence of those interventions.
Q21 Chairman: You are slowing down
the rate?
Mr Burchell: The rate of growth
of spend against what you would have had, and in that sense it
is a saving.
Q22 Chairman: It is a saving on where
you would have been?
Mr Burchell: Yes, and the savings
which effectively do accrue are recycled back within the local
authorities.
Q23 Chairman: What is the timeline
breakdown of this £300 million then?
Mr Burchell: It is £52 million
in 2004-05, £135 million in 2005-06, £217 million in
2006-07 and £299 million in 2007-08. Those are cumulative
figures. The £299 million is a cumulative figure after that
four-year period.
Q24 Chairman: Do you reckon you are
on track for year one?
Mr Burchell: Yes.
Q25 Chairman: You have got your £52
million and on that reckoning you have got about another £80
million to do next year, so they are going to have to be 50% more
efficient in the second year. Is that feasible?
Mr Burchell: I am not sure whether
that is the right calculation in terms of the 50% being 50% more
efficient than the year before. They need to generate savings.
Q26 Chairman: If you have done £52
million in the first year, to get to £135 million you have
got to do another 80. By my maths, that is another 50% up in efficiency?
Mr Burchell: That is a further
50% increase in the savings. That is against an expenditure level,
I think, from memory, of about £2.2 billion across England.[15]
Q27 Chairman: I do not want to hog the
questioning on this but, okay, however much it is as a proportion,
the amount you have got to save, if you like, the global total
is roughly of the same order, it still means they are going to
have to run harder and harder as the years go by. Is that feasible?
Mr Burchell: Yes. If you look
at the profile, and certainly at the time of the Spending Review,
and looking at the projections based on our waste model, the interventions
which we would be introducing around things like PFI, pilot projects,
targeting poor performers, best practice guidance, and so on,
the things that Bill referred to, all of those things would deliver
that level of saving. The £299 million cumulative is roughly
about a five% saving over that period.
Chairman: Perhaps you will keep us posted
with progress.[16]
Peter, do you want to carry on?
Sir Peter Soulsby: Yes. I am still struggling
somewhat to understand quite how this works.
Chairman: Ask him why you are still struggling
then.
Sir Peter Soulsby: It does strike me
that Defra is being set, or has set itself, the target of reducing
local government expenditure in an area that Defra does not control
and which it can measure only with some difficulty, and perhaps
not very precisely at that, and it does seem a rather strange
way of doing business.
Q28 Chairman: How did you decide
that £300 million was the right number?
Mr Burchell: The time we are spending
was based on forecast of spend and an analytical model looking
at the impact of different forms of intervention.
Q29 Chairman: What does that mean,
an analytical model of different forms of intervention? That does
not immediately communicate what it means.
Mr Burchell: Let me try again.
It is a model devised by our economists which looked basically
at the impact of different types of policies on the level of spend
by local authorities in relation to waste management.
Ms Ghosh: In other words, if they
did the things that Bill described, against the rising profile,
what would be the outcome over that period.
Mr Stow: When we put together
this Waste Implementation Programme, where there are quite a number
of different elements in it, using new technology, best practice
programmes, and so on, when we started out we tried to model what
we expected each of those to deliver, as you would hope and expect.
Now we are monitoring which of those seem to be working best and
which are working less well and so we are able to adjust the model
to see, as I said earlier, both how well it is delivering in terms
of meeting our landfill targets but also now the efficiency savings.
Chairman: Now, Peter, does that sound
any clearer to you?
Q30 Sir Peter Soulsby: Not a lot.
I think I would welcome, as has been suggested, some of the background
explanation of this. That is probably as far as I can take it
today.
Ms Ghosh: We will let you have
a more detailed reasoning.[17]
Chairman: Mr Hall, would you like to
help us shed some light on this?
Q31 Patrick Hall: I would like to
try to understand it a bit more. This target of saving, the £300
million part of the £610 million, is not that actually departmental
budget expenditure?
Mr Burchell: It is not part of
the departmental expenditure, no.
Q32 Patrick Hall: This is public
sector expenditure. This is expenditure, in this case, by local
authorities, which if saved would be knocked off their Revenue
Support Grant?
Mr Burchell: No. The savings are
retained by local authorities to meet pressures essentially within
the waste sector.
Q33 Chairman: If I have understood
this correctly, you have had a former rate of increase of funding.
You have found a way now of decreasing the rate at which that
funding is increasing and that happens to come to £300 million?
Mr Burchell: That is correct.
Q34 Patrick Hall: That money is redeployed
to develop recycling, etc., more effectively, which is desperately
needed in this country. Is that really the rationale?
Mr Burchell: Implicitly, yes.
Q35 Patrick Hall: It can be demonstrated
genuinely to be a saving, but also not just a saving, a redeployment
to do the job better. Is not that the way it should be presented
then?
Mr Burchell: We believe that the
measurement tool, which we will let the Committee have a note
on, is a way of demonstrating that the saving has arisen. Clearly,
it is up to local authorities how they redeploy those savings.
Q36 Patrick Hall: What is the view
of local authorities, what is the view of the Local Government
Association on this?
Mr Stow: They work very closely
with us both on developing the model and on the whole of the Waste
Implementation Programme. As I said earlier, in fact they have
said to us that they see us as something of a model amongst government
departments in the way that we have engaged with local authorities
to help them deliver these efficiency savings.
Q37 Patrick Hall: It is not a cut,
actually it is redeployment?
Mr Stow: No. The background, as
Andrew said, is one where waste arisings continue to increase,
so local authorities are having to deal with a rising trend of
waste being generated without their budgets rising at the same
level.
Q38 Chairman: The bad performers
are going to have to work goodness knows how much harder and the
good boys will be alright; roughly speaking, is that how it is
working?
Mr Stow: It depends what you are
measuring here, whether you are measuring performance against
recycling targets or performance against efficiency targets.
Q39 Chairman: The inefficient local
authorities, faced with a slower rise in their budgets, are going
to have to work very hard to deliver, whereas the more efficient
authorities will cope within your changed financial ceiling?
Mr Stow: That should be correct,
yes.
Chairman: That should be correct; good.
Again, it would be very interesting to be kept posted of progress
on this gargantuan task.
15 Note by witness: The second year figure
is a cumulative one. Back
16
Ev 48 Back
17
Ev 48 Back
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