Remember Alistair Darling’s plans to cut public sector back-office costs by 30 per cent? Well it seems it’s not happening quickly enough. Mr Darling’s sidekick, Yvette Cooper, has written to other ministers demanding cuts in finance, HR and IT functions. According to the Times:
The Chancellor is said to have been exasperated by the failure of Whitehall departments to pull their weight in cutting costs and has called for urgent action.
Perhaps they are but, from the little I know about this, ‘resistance’ seems like too active a verb. They’re not really resisting; they’re just not doing much about it.
Since the treasury report came out last autumn, I have spoken to a number of people in central government, local authorities and the NHS. For many of them, the government’s stated intention to cut HR, IT, procurement and finance costs is background noise. It doesn’t feature anywhere on their lists of priorities. It’s certainly not something they are being given incentives to do. Other people are shouting louder so other things are more important.
As I said when I last wrote about this, setting up shared services functions in one organisation is difficult enough. Just ask the people at the Department for Transport. Doing so across different organisations adds extra layers of complexity. Sure, there is scope for government departments, quangos, NHS trusts and local authorities to pool HR, finance and IT support but someone needs to take the lead if that is to happen. At the moment, the government seems to be expecting these organisations to get together and organise this themselves.
I could be wrong about this. It may be that there is a team co-ordinating these shared-service projects but, if there is, a lot of my public sector contacts don’t know about it.
The CEOs of local authorities and NHS trusts most probably know intellectually that savings could be made by sharing these back office services but none of them have the authority to lead such a project.
Like many government initiatives, this back-office cost savings initiative seems to suffer from that yawning chasm between elegant strategy and practical implementation. If the government really wants these savings to be made, it needs to appoint people with the authority to grab hold of Whitehall departments, NHS trusts and local councils, and say, “You will combine your HR, Payroll, IT and Finance functions with these other organisations.” Until that level of direction is given, the Treasury’s call for savings will just be more background noise.