Surrey endures a high cost of living and a changing demographic profile which has put immense pressure on our budget.

Three years ago, we knew we were staring a potential funding gap of £50m in the face. 

We had the second-lowest government grant in the country and more than 80% of expenditure was from council tax. Something had to change.

Our council-led efficiency drive, called our Business delivery review netted £30m of savings in the first year. We started by setting three objectives – to make financial savings, to ensure no impact on frontline service provision, and to transform the council into a fit-for-purpose organisation.

The first big financial saving came by shaving 560 posts off the establishment, saving more than £12m from the annual wage bill. We'd previously had a nine-month recruitment freeze on posts which fell vacant in non-frontline roles.

Next, we set about changing the way we managed our procurement and contract-management activities. By consolidating procurement expertise in a single corporate team, the review aimed to bring a sharper focus to bear. This generated in the region of £18m in the first year.

One of the first actions for the new procurement team was to reduce the council's suppliers of goods and services from more than 30,000 to less than half that amount. This has had the effect of driving better value for money as well as reducing transaction costs.

The council has an unambiguous strategy to be an outstanding council. It was unacceptable to cut public services to achieve savings. The council set itself a demanding task of saving £50m in cash, while protecting or enhancing its most important services.

To do this, the council enlisted the external challenge of consultancy firm Robson Rhodes and it worked alongside staff form Surrey CC to drive and implement change.

Efficiency became the organisation's number one priority and it was made clear that nothing was off limits. The review team was not only challenged to achieve savings without compromising key services, but the timescale was also demanding. It lasted nine months.

In driving through change, the council stuck to three key principles. First, service excellence. Second, transparency. Third, one council. This is the cultural change programme for the organisation. It needed a redefined framework to enable effective devolution. To achieve this, the council moved away from silo-based working in separate business units to seeing itself as one organisation, sharing the same goal of making Surrey a better place for our residents. This involved:

We also brought in a centralised approach to budget management and zero-based budgeting and monitoring across the organisation, yielding immediate benefits in scrutinising spending within services.

We also transferred all of our transactional support functions from our services to our shared service centre – HR, finance, payroll and procurement – to ensure transparency, control and efficiency. And we strengthened the role of our corporate procurement team and introduced common disciplines for all purchasing. In headline terms, we achieved what we set out to achieve – gross savings of £28m in the first part year of implementation (2006/07), and we are on track for full-year savings of £48.5m in 2007/08). 

These economies have released funds for investment, and we have been able to put significant extra sums into key services. The changes were not without pain. The uncertainty for staff and the introduction of new ways of working clearly hit morale for several months. And for the best part of a year, the review was, without doubt, the main focus for the council.

However, I am heartened by Sir Peter Gershon's assessment. He provided valuable advice throughout the year on the importance of ensuring united and determined leadership; capacity to carry through the review; rigour in the approach and methodology; the sustainability over time of the new arrangements; and the identification and management of risks.

He has recently written to endorse our review ‘in terms of its rigour, robustness and comprehensiveness, and the way it has led to the adoption of new ways of working.

It has stimulated innovation and pushed the boundaries of organisational change in local government to achieve major improvements in cost-effectiveness in a short timescale.'

Richard Shaw is chief executive of Surrey CC