LWARB efficiencies programme
Conscious of the fact that waste management represents the third highest spend area for most boroughs, LWARB introduced an efficiencies programme in 2013 to help London waste authorities realise savings whilst maintaining high service standards. The programme came to a close in March 2015 and has already identified savings in excess of £11 million per annum over 5 years for London’s local authorities, thereby helping them to maintain their high service standards in a period of significant budgetary constraints.
The Efficiency Review Fund has made the most significant contribution to these savings. To date £8,827,000 annual savings have been identified over a five year period, as well as £1,143,600 one-off capital savings, through conducting efficiency reviews. With a number of reviews still under way, these figures are expected to increase.
Working in partnership
LWARB has worked in partnership with WRAP and Local Partnerships, maximising our mutual interests by helping waste authorities to achieve improvements in their re-use, recycling and waste services, thereby diverting more materials from disposal.
The success of this programme in identifying and driving efficiencies lies in its innovative approach to the review of local authorities’ waste services. It has taken a holistic and tailored approach: the programme has been able to achieve such positive results only by offering comprehensive reviews of waste management services, supported by free training for local authority staff, communication support and assistance in mediating potential joint contracts and procurements.
LWARB also adopted an innovative approach to funding the efficiency reviews. Using a ‘no win, no fee’ model, it covered the up-front costs of the review using a repayable grant (up to a cap of £30,000). The waste authority under review only has to pay back the grant once it has achieved the identified savings, which has the double dividend of allowing the waste authority to commit to the review with no financial risk while making the most of LWARB’s service review budget. The recouped grants have been reinvested into LWARB’s 2015/16 local authority support activities.
The programme has been closely monitored through Key Performance Indicators (KPIs). The main KPI used was efficiencies achieved. This represents the identified savings to local authorities thanks to LWARB’s intervention. The second KPI – Public money saved / LWARB £ invested – enables the evaluation of the overall economic merit of LWARB activities. (Please note that funding provided by LWARB to local authorities has not been considered as saving.)
Savings identified across London waste authorities are in excess of £11million per annum over five years starting from 2015/16. This is an exceptional return on the programme budget of £3.47m.
Even a conservative estimate based on the benefits accrued over just one year would show that LWARB had delivered £3.20 in savings for each £1 spent (BCR – Benefit Cost Ratio 3.17).
Each project in each work stream is accounted for, with the exception of work stream 5 (Good Practice Tools) and projects associated with the research fund in work stream 7. This is because their output is not possible to quantify and therefore LWARB preferred to opt for a more conservative approach. Predictions do not go beyond 2019/20 as some projects might need a cash injection to cover the costs of new assets after 5 years and therefore in order to maintain a conservative approach, our forecast does not stretch beyond this period.