What does efficiency mean?

What do we mean by efficiency? It seems like a straightforward question, but as we found at a recent Localis and Capita Symonds roundtable discussion, the answer is not as obvious as one might think.

The term, it seems, can mean different things to different people or even political parties. The discussion, which included council leaders and chief executives from across the country, highlighted several factors underpinning the apparent complexity.

Firstly, as was made clear in the discussion, the different approaches to efficiency broadly shifted in line with changes in Government over time.

The Compulsory Competitive Tendering era of the 1980s and early 1990s led to a predominant focus on cost, often to the detriment of wider social or environmental considerations.

The ‘Best Value’ regime, brought in by Labour, moved the debate away from cost alone. However, it was arguably too ambiguous, and left councils vulnerable to central Government’s interpretation and implementation of ‘value’.

Secondly, as the Government looks to hand more power to councils and communities, there was debate is about the extent to which ‘economies of scale’ actually deliver efficiency savings.

While some people extolled the possibilities of shared services to deliver better and cheaper services (particularly in two-tier areas), others pointed to examples of standardised shared services that have generated additional cost and waste due to their inability to tackle the root causes of problems.

Thirdly, there was a debate about the timescale of efficiency savings. Whilst there are immediate pressures on council’s budgets, opportunities may be missed to invest in longer-term reductions in demand on services through early intervention initiatives.

Finding additional public funding for such initiatives is unlikely in the short term, but there may be ways to shift the capital investment and risk to private investors, such as through the newly emerging Social Impact Bonds.

It was clear from the conversation that these debates will continue to play an important part in shaping our emerging understanding of efficiency.

If central government is as influential in shaping this understanding as history tells us it is, then localism is the order of the day.

Exactly how this plays out is as yet not clear. However, what is clear is that all sectors will be required to adapt to this new reality, to ensure that public services are smarter, leaner and are delivered from the bottom-up in the future.

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