Local authorities were required to submit an annual efficiency statement (AES) electronically to the Department for Communities & Local Government (CLG) for the financial years 2005/06 to 2007/08. This requirement incorporated the recommendations of the Efficiency Review – ‘Releasing resources for the frontline’. This set an efficiency target of £6.45 billion in efficiency gains for local government over three years to 2007/08, 2.5 per cent year-on-year.

Efficiency gains identified in the AES could be reinvested as resources in the frontline or used to hold down council tax. At least half of the 2.5 per cent annual efficiency gains had to be cashable. Savings resulting from cuts, either by the withdrawal of a service or by lowering standards, did not count.

The AES consisted of two main elements:
  • the forward look submitted annually in April – an action plan to include strategy, key actions and expected efficiency gains
  • the backward look submitted annually in June – a report on efficiency gains achieved in the year

In addition, a mid-year update had to be submitted in November each year by single tier and county councils and, although an exception, excellent and district councils were also encouraged to do so.

With effect from 2008-09 the detailed reporting required in Annual Efficiency Statements was abolished. Instead, local authorities must report a single total for cash-releasing efficiencies achieved since April 2008. This figure forms part of the national performance indicator set for local government (NI179). Forecast achievements for 2008-09 must be reported on 2009-10 council tax bills (other than for police authorities). The intention is that council tax bills in 2010-11 will show the level of cash-releasing efficiencies actually achieved in 2008-09.