Recently the Welsh Government commissioned KPMG to do a report into the administrative spending of local authorities in Wales.
It does not make for exciting holiday reading.
Many of the recommendations produced are points that council leaders and chief executives should have thought of themselves. It should not require a bunch of fancy-pants consultants to be paid a fortune to propose the obvious.
For example there is benchmarking of staffing numbers:
“A number of functions analysed displayed significant variances in expenditure and headcount between comparable authorities. Of particular note, Strategy and Policy and Legal Services demonstrated large variances in headcount; data collated identified Policy teams ranging in size from 1 to 28 FTEs, Communications from 2 to 35 FTEs and Legal Services from 7 to 81 FTEs.”
“For authorities falling in the upper range of headcount across these services, an urgent review of activity and productivity should be undertaken. Except where justified by demand particular to an authority, or where demand on the service has increased due to income generating activities, rationalisation of teams should be endorsed.”
And benchmarking on IT spending:
“Analysis of ICT expenditure across Welsh Local Authorities demonstrates significant variance between authorities of comparable size. For example, authorities with 2013/14 Gross Revenue Expenditure of approximately £360m have ICT functions that incur expenditure between £1.7m to £5.7m. Authorities are spending between £4 to £16 per £1,000 GRE on ICT.”
There is the suggestion that market testing would be a good idea. Also that sharing services could be a route to lower back office costs.
I suspect that the real problem will not have been ignorance of potential savings. It is bureaucratic inertia and lack of political will to make the changes required.
English local authorities are also very inefficient. There remains terrible overmanning and great scope for further savings. Yet this report shows that Welsh councils are far more bloated even than English ones.
“As of 2013/14, Welsh Local Authorities spend 5.89% of Gross Revenue Expenditure on administrative activities. The opportunity in scope from Phase I initiatives suggests a potential for authorities to reallocate 0.42% of GRE to non-administrative activities. Phase II initiatives propose a further opportunity relating to 0.56% of GRE. Whilst noted to not be directly comparable, but to provide a leading practice example, unitary authorities in England achieve a benchmark spend of total GRE allocated to administrative activities of 3%–4%. Utilising the ambition of achieving the lower end of performance within this benchmark, were Welsh Local Authorities allocating 4% GRE to administrative activities this would suggest an opportunity in scope of a further £73m on top of the existing Phase II.”
So another bit of the Labour-led Welsh public sector that is providing poor value for money.
While Council Tax has been held down in England we have seen it pushed up in Wales. This report shows that these tax rises are quite indefensible.