Efficiency savings
11. The Gershon Review of Efficiency was a major
component of the 2004 Spending Review.[19]
As a result of the review, Defra aims to achieve £610m in
annual efficiencies and 2,400 staff savings by 2007-08.[20]
£299m of the £610m target will be achieved by local
government, "mostly though efficiency gains on waste services".[21]
In its written evidence, Defra said non-delivery of these efficiencies
would "add a further pressure… given that the Department
has a tight budget over the spending period". It
acknowledged, however, that it had "no power" to enforce
action from local government.[22]
12. In oral evidence, we pursued this matter further.
We asked the Permanent Secretary and accompanying Defra officials
how the Department expected to meet the efficiency savings if
it had no power to enforce action from local authorities. Defra's
Director-General, Environment acknowledged this was "challenging",
but told us the Department had established various initiatives
to assist local authorities in reaching their targets.[23]
For example, as a result of work on Defra's Waste Strategy, a
Waste Implementation Programme team had already been set up, including
people "from outside Government, from the private sector
and from local authorities", to "engage directly with
local authorities, particularly those which are performing less
well" in meeting their efficiency saving targets.[24]
Similarly, a "programme of direct consultancy aid" had
been established by the Department to help local authorities improve
their efficiency performance.[25]
Defra's Director-General, Environment added that the Department
looked "well on track" to meet the efficiency saving
figure of £299 million by 2007-08.[26]
13. We recognise the difficulties Defra faces
in meeting its efficiency saving targets, as set out in the Gershon
Review, given that achievement of almost half the £610 million
target relies on the actions of local authorities in relation
to waste management. We therefore welcome Defra's recent
initiatives, such as the Waste Implementation Programme, to assist
local authorities in achieving their individual targets.
14. Nevertheless, Defra still has no power to
oblige local authorities to make savings. We therefore remain
to be convinced that this third party approach towards achieving
the Department's efficiency saving target will actually work.
We recommend that the Department publish a report on how it is
progressing towards meeting its efficiency targets.
15. We asked about the timetable for achieving the
£299 million figure in waste services efficiencies by 2007-08.
The cumulative targets for each year are set out in Table 1.
Table 1: Defra's annual targets for waste
services efficiencies (cumulative figures)
| | 2004-05
| 2005-06 | 2006-07
| 2007-08 |
| Efficiency saving target (£m) | 52
| 135 | 217
| 299 |
Defra's Chief Operating Officer said the Department had met its
£52 million target for 2004-05.[27]
Nevertheless, he agreed with the Chairman's comment that Defra
would have to "run harder and harder as the years go by"
in order to meet its other targets.[28]
The Department was therefore introducing "interventions…
around things like [Private Finance Initiative], pilot projects,
targeting poor performers, best practice guidance, and so on".[29]
He was confident that "all of those things would deliver"
savings in waste services of £299 million by 2007-08.[30]
Defra's Efficiency Technical Note provides more information on
how the Department aims to meet this target.[31]
In written evidence, the Department said it had made clear to
local authorities that "savings should not be achieved at
the cost of front line services".[32]
We congratulate Defra for meeting its first year target of
£52 million in waste services efficiencies. However, the
targets for the next three years are more challenging. We recommend
the Department strive to maintain, and expand, its various initiatives
to assist local authorities—particularly those authorities
performing less well—to ensure it meets its total waste
services efficiency target of £299 million by 2007-08.
16. We have noted that the £610 million efficiency
savings target includes reductions of 800 staff from the core
department and 1,600 from the Rural Payments Agency. We cover
the impact of these staff reductions in paragraphs 28-30 below.
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