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County councils eye £10m+ savings through contract renegotiation

Hampshire County Council has said it aims to save “in the region of £10m” by renegotiating contracts as part of its attempts to meet a £55m funding gap for 2011/12.

Other elements of its “unprecedented” change programme include:

  • Cutting communications, support and IT costs by around £1m each
  • Cutting senior management cost by 25%, saving £7m
  • Reducing its workforce by around 1,200 FTE posts (around 8% of the council’s staff), including some compulsory redundancies
  • Implementing a recruitment freeze and restructuring the authority, which will deliver around £4m in savings
  • Asking each service to identify how they will reduce their costs by 8%
  • Reducing subsidies to commercial bus operators for less used services
  • Prioritising grants to external organisations “to focus on priority areas and provide better value for money”
  • Developing “innovative and cost effective” forms of adult social care support. However, the current eligibility criteria for adult social care clients will be protected.

Hampshire revealed that in 2011/12 it would see a £30.9m (14.3%) reduction in government grant and further cuts in area based and specific grants of £14.8m. Additional grant cuts are expected in years to follow.

It also faces additional budget pressures of £25.2m to cope with growing numbers of older people, adults with learning disabilities and families needing support.

Cllr Ken Thornber, Leader of Hampshire County Council, said: "There can be no debate over whether or not we make cuts, the withdrawal of government funding to meet the national debt leaves us without that choice; the issue is how we face up to these financial challenges, while laying strong foundations for the difficult years beyond.

"What's been uppermost in our minds is the enormous responsibilities we have to vulnerable children and adults in our care and our desire to protect those most in need as far as possible. The budget for 2011/12 is about priorities. There will be reductions, changes to the way services are delivered and reorganisation but there will also be many things that we retain and which stay the same."

Hampshire’s announcement about contract renegotiations comes just days after its neighbour, Surrey County Council, said it would seek to save a similar sum over an 18-month timeframe by asking major suppliers to “share the pain” of the economic downturn.

Surrey has targeted better deals with around 30 main suppliers, which account for about £250m of the authority’s £680m annual budget. This covers a range of services, including social care, telecommunications, computer software, transport and property maintenance.

Surrey County Council deputy leader David Hodge said: “It is vital that all public bodies truly get value for money for taxpayers and in the current economic climate we are asking suppliers to play their part in sharing the pain.

“This programme covers every service we provide and will ensure we get the best deal from contracts we sign or hold in terms of our bottom line and the benefit to our residents. We are looking to work with our suppliers to find ways of providing goods and services more efficiently and do not expect to pay inflationary increases on contracts over the coming year. By doing this we should save local taxpayers more than £10m.”

“We will continue to leave no stone unturned to ensure that this continues to be the case in years to come and will carry on making sure the council’s own services also provide maximum value for money through our programme of Public Value Reviews.”

See also: In search of savings

Philip Hoult