Local authorities in Wales falling in the upper range of headcount for legal services should conduct an urgent review of activity and productivity, a Welsh-government commissioned report into councils’ administrative costs has said.
The report – conducted by KPMG and CIPFA and covering a range of activities in addition to legal services – revealed that:
- Local authorities spent £33.9m on legal services in 2013/14;
- There were 597 FTEs (full-time equivalents);
- Legal services at 14 local authorities brought in £1.6m in income;
- Planned savings initiatives were worth £1.1m in 2014/15 and £1.2m in 2015/16;
- Charged legal hours came to 394,000 in 2013/14;
- There were significant variances in expenditure and headcount between comparable authorities, with legal services teams ranging from 7 to 81 FTEs.
On the variances, the report said: "Even those of a similar size on a GRE [Gross Revenue Expenditure] basis have very different sized functions....Authorities with GRE of between £370m to £400m have legal service functions that range from 15 FTEs to 61 FTEs.”
The report said the variances drove the significant differences in the relative cost of legal services, with authorities spending between £2.3 and £7.4 per £1,000 GRE on legal services activity.
Calling for a review, the KPMG/CIPFA report said: “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.”
It added that average employee costs across legal services and other functions such as strategy and policy tended to be “reasonably high” at £41,000 in 2013/14. This meant that “a reduction in variability between authorities has the potential to have a significant impact”.
However, the report admitted that “no analysis of the quality or effectiveness of these functions has been undertaken, which should be considered in any subsequent review”.
The report authors also recognised that services such as legal services and strategy and policy provided integral services to support the effective operation of authorities.
“[However] larger teams need to be reviewed and an understanding of activity developed,” the report said. “Included within this any additional capacity needs to be analysed for revenue generating potential, building on established examples of services that generate income within these functions.
“Where capacity is not being utilised and metrics suggest that authorities are operating with larger teams than comparators, then consideration should be made toward the potential for reducing team sizes. Collaboration should be sought between authorities to share details of operating models and organisational structures across these functions to support such initiatives.”
The report added that opportunities existed to build on existing examples of collaboration, such as the shared service model for legal services in South West Wales.
“Collaborations of this nature have the potential to drive further efficiencies and can also look to establish a centre of excellence aimed at enhanced service quality alongside the promotion of further revenue generating activities,” it said.
A copy of the report, Welsh Local Authorities – Administrative Cost Review, can be viewed here.
Overall the report claimed that administrative efficiencies could save local government £151m a year. It recommended that councils should standardise their approach across Wales and seek to match equivalent spending levels with their peers in England.
Public Services Minister Leighton Andrews said: “When I commissioned this review in November last year, I made it clear I expected all local authorities in Wales to focus the limited resources available to them on delivering front line services to citizens, and to reduce spending on administration and backroom services.
“The report emphasises the value of authorities benchmarking these services against their peers within Wales and best practice internationally. Many of these savings can be delivered now without the need to await wider structural reform to Local Government in Wales.”
Andrews said the Welsh Government would now consider the recommendations in the report.