Big savings are possible - with a change in provider, and change in attitude

As each week passes, more and more local authorities are re-letting their contracts with providers of highways maintenance, highways design and transport consultancy.
Dissatisfied with the savings that have been made under the arrangements with their current contractors, many are re-tendering rather than re-negotiating the deals they have. Others are poised to do the same over the next few weeks.
This has born fruit, in Surrey County Council's case, with a full 22% in efficiency savings on current costs to be made following procurement.
Surrey is to replaced arrangements that it found unsatisfactory on performance as well as cost with three levels of contract. A core deal, for day-to-day maintenance; specialist deals for drainage grass-cutting; and two regional deals for major highways schemes.
However, it is important to note that the savings are not being delivered solely by the market.
The re-tendering and competitive dialogue with bidders has resulted in Surrey questioning its own practices, and to a stark admission: the authority acknowledged its "failure to transform the council's internal highways structures and culture".
Its exertion of control over its contractors had "created unnecessary interference and conflict with the supply chain and prevented the council from delivering its strategic management role".
The challenge for councils is to craft slimmer contracts with fewer performance indicators and less duplication, contracts that entail a degree of trust. If the prize is cutting waste by 22%, that has to be what highways managers are aiming for.

Transformation needed to halt service salami slicing

Efficiency savings are there for the taking, with every pound saved meaning one pound more for frontline highways and transport services.

As Hertfordshire County Council reports, while efficiencies have been delivered for a number of years, a review has found a further £4.1m in savings in highways services alone, or 10% of the authority's revenue budget for highways. Operational improvements, management reductions and increases in income have all contributed to this impressive saving.

However, despite these efforts, the county's leadership wants more savings to be found. With the highways service set to be re-procured, cabinet member Cllr Stuart Pile wants all possible ways of securing better delivery to be considered.

This political imperative comes as councillors are given stark choices on frontline service cuts. Despite the efficiencies that will be made, the county faces a corporate budget blackhole of at least £42m, and possibly £92m. This could mean that the county council re-trenches to core provision, providing the minimum necessary to allowing safe passage of its roads. The doom-laden scenario would see an acceleration of the deterioration of its roads and switching off street lights outside pedestrian areas.

Should the politicians decide they want a better-than-minimum highways service, "above bronze" in the officers' report, there would be more funding for cyclical maintenance: clearing gullies, maintaining signs and lines: items important for ensuring safe use of the roads. But that would mean bigger cuts elsewhere.

The bus subsidy budget could be trimmed by nearly £2.4m with little impact on rural services, cutting those that are nice-to-haves rather than life-lines, the evening and Sunday services. Further cuts would mean a watering down of what the council defines as transport "need" in rural areas.

So where can still more savings be found to stop the dreaded salami-slicing of services? Hertfordshire is going through a re-procurement, so can fundamentally challenge the way services are currently delivered.  Further outsourcing, including of highways development control services, is on the table. It'll be interesting to see if they can pull off a transformation that'll mean the cuts are not as bad as first spelt out.

Back to the bad old days of screwing down prices?

Lee Baker
Are we set to return to the 'bad old days' of outsourcing, 80s style, before genuine public-private partnerships? The days when externalisation of services was focused more on obtaining the lowest possible prices than on service improvement and efficiencies.
The saga of outsourcing firm Serco asking its suppliers to provide a 2.5% 'cash rebate' in order to meet the Whitehall demand for multimillion-pound savings on procurement contracts was highlighted at this week's Association of Directors of Environment, economy, Planning and Transport conference.
ADEPT president George Batten told the group's annual meeting in Warwikcshire that while the solution to the need to maximise savings in order to protect frontline services from cuts was likely to involve greater partnership with the private sector, this partnership would be undermined by the public sector merely screwing down prices.
After the Cabinet Office asked Serco to explain itself, Serco issued a statement that its offer of savings to the Government "will not result in any of the Government's cost saving programme being passed on to our suppliers".
Batten commented, rightly, that playing the game of 'passing on the pain to others' is not in the spirit of partnership. His vice president, Matthew Lugg, agreed that the seeking of savings authorities should not take "an adversarial approach that just demands a lower price".
But despite this, Cllr Clyde Loakes, representing the Local Government Association, admitted that his authority, Waltham Forest, has been calling its suppliers in and asking them to reduce costs, saying: "we can't continue to pay as if authorities are not facing these cuts".
Cllr Loakes is right that no authority can carry on paying what they are now. But re-thinking local highways and transport and other services must involve considering how delivery models can be changed to secure savings, rather than simply saying 'give us it cheaper'.
The problem, of course, is that local government only has until April until a 7% cut bites, and the clock is ticking.