Scottish Government

INTRODUCTION

1.1 The Scottish Executive Spending Proposals 2005-2008 ¹ were published in September 2004. Integral to those proposals was the commitment to manage public sector resources more effectively, contributing to a growing economy, and to modernise and improve Scotland's public services. In the Spending Proposals, Target 1 for the Finance and Public Services portfolio was to make government in Scotland more efficient and release £500 million of recurring cash releasing efficiency savings for investment in frontline services by March 2008. A technical note for this Spending Review target was published in December 2004 ² and this set out the criteria for cash and time releasing efficiencies.

1.2 In November 2004, a plan ³ to attack waste, bureaucracy and duplication was published. The Efficient Government Plan built upon work from the previous five years and set efficiency targets for the three years to 2007-08. The total cash releasing saving for 2007-08 was set at £745m with the aspiration to achieve £900m, and the total time releasing saving for 2007-08 was set at £300m with the aspiration to achieve £600m.

1.3 In March 2005 the first set of Technical Notes was published. They were all cash releasing projects. This was followed in September 2005 by the second set of Technical Notes which included the first set of time releasing technical notes, new cash releasing technical notes and all previous cash releasing technical notes, including amendments where appropriate. This third document is the newly revised complete set of technical notes as at March 2006. These notes will continue to be subject to update periodically in the course of the three-year programme as more information becomes available, as project planning evolves and as circumstances change. The template has also been amended to take account of recommendations made by the Finance Committee in its report on the 2006-07 draft Budget. One technical note template now exists for both time and cash releasing technical notes, which clearly sets out the inputs and outputs that will be measured along with the baseline for measuring changes in inputs and outputs. The Technical Notes record the basis and direction for all the underlying efficiency projects which together make up the savings contained within the Efficient Government Plan and it will be against those intentions that progress will be monitored and assessed.

1.4 The summary of the identified savings in each portfolio is as follows:

1.5 The planned cash releasing and time releasing savings do not yet meet the aspiration of £1,500m by 2007-08. We will move towards a stronger expectation of equitable contributions from portfolios. Activity continues throughout the Scottish public sector to identify areas for further efficiency and as projects are embedded in one sector, examples of best practice will be disseminated to other sectors. We aim to publish Technical Notes for further planned gains in September/October 2006.

Guidance on definitions

1.6 The following is a summary of key points from the Technical Note for Target 1 of the Finance and Public Service Reform portfolio SR2004 targets.

Baseline: The 2004-05 budget data is the preferred baseline against which savings are to be made. Where data is not available for this year, any efficiencies measured must be against a derived figure for 2004-05. The savings accrue from 1 April 2005 for a period of three years.

Efficiency improvements: An 'efficiency improvement' is any activity which improves the ratio of outputs to resource inputs. Such improvements may therefore arise in two ways:

i by producing the same outputs with fewer inputs. For the purposes of the Efficient Government Plan these are termed cash releasing savings,
ii by producing more or better outputs for the same inputs. For the purposes of the Efficient Government Plan these are termed time releasing savings.

1.7 For the saving to be included in the Efficient Government Plan it must be recurrent. The distinction between cash and time is proving less helpful as we go on. Now that we have identified £900 million, we propose to place less emphasis on the distinction in future.

Savings may be claimed gross.

1.8 Consideration has been given to whether development costs ought to be netted off the forecast efficiency savings. Where, due to the nature of the project, it has been possible to isolate those development costs which give rise to the efficiency, those costs have been netted off. However, in the majority of cases, development costs have arisen to meet a number of business objectives, including service improvements, and not solely to generate an efficiency saving, in which case the development costs have not been offset against the forecast saving.

The role of external audit

1.9 Audit Scotland were commissioned to independently review the time releasing technical notes. They reported their findings to the Head of Efficient Government Delivery Group on 10 August 2005 and those findings were taken into account prior to publication of the second set of technical notes. External audit have stated that they recognise that the technical notes are evolving documents and can only reflect the stage an efficiency project has reached. Audit Scotland have indicated that it is their intention to cover their assessment of the annual efficiency gains by means of a 'long' report similar to that published by the NAO on 17 February. We have agreed with Audit Scotland that as part of that process we will provide them with the end-year Efficiency Statements and supporting evidence. Audit Scotland propose to start work on the report after we have reported to Parliament at the end of June / beginning of July 2006 and will aim to deliver their report in September / October. Audit Scotland's report will be in the public domain.

The Technical Notes

1.10 For all efficiency projects with a forecast saving in 2007-08 in excess of £500,000, both cash and time releasing, the technical note is included in this document. For those projects with a forecast saving in 2007-08 of less than £500,000, the associated technical note has not been included in this document. Efficiency projects worth less than £500,000 have been listed in a table on p186 since it was considered important to count these savings and to keep these projects in sight, as they may provide examples of sound efficiency projects for further dissemination. However, it was considered to be disproportionate to subject them to the same level of scrutiny requirements as those projects worth more than £500,000.

1.11 The efficiency technical notes record:

• a description of the project;
• the nature of the efficiencies to be realised and the resource to be released and/or the enhanced output;
• whether the financial impact has been included in the 2004 Spending Review;
• the names of those accountable for the saving and those who manage the project;
• the actions to be undertaken and the dependencies that have to be factored in; and
• clarification on how the efficiency will be measured, monitored and reported.

1.12 It should be noted that the technical note is a working document. Many efficiency projects are at different stages of development and some projects have more detailed technical notes than others. The technical notes will be updated periodically to reflect the latest information on the projects.

Efficient Government Programme

Efficiency Technical Note Template

Notes on Completion

• We are committed to using 2004-05 Budget data as a baseline against which savings are made. Where data is not available for this year, any efficiencies measured must be against a derived figure for 2004-05. An explicit note must explain how the derived figure has been calculated.
• Cash Releasing Saving - defined as an efficiency measure that generates an actual resource saving because the organisation or function delivers the same service with less money.
• Time Releasing Saving - defined as an efficiency measure which does not release cash but allows frontline services to deliver more or better services with the same money (for example, through workforce reform or better support).
• While it is not essential for completion of the Technical Note you should have a Delivery Plan that includes milestones toward delivery targets and a risk analysis.
• Savings in Question 3 should be completed by adding any additional saving for 2006-07 to the saving for 2005-06. Similarly any additional saving for 2007-08 should be added to the combined saving for 2006-07 (see example below). The resulting combined saving is the recurring saving against the 2004-05 baseline.