Experts cast doubt on Darling’s public sector cost savings

The day after the budget I expressed some doubts about Alistair Darling’s plan for public sector cost savings. It appears that I’m not the only sceptic. One of the Operational Efficiency Programme’s authors, former Logica CEO Martin Read is not convinced either. He questioned ministers’ commitment to backing the necessary changes in a meeting of the House of Commons Treasury sub-committee:

To achieve the kind of radical savings that’s talked about in the OEP you need to simplify and standardise processes. Certainly in locally delivered services, you will need the collaboration between different organisations within a particular area across organisational boundaries and that I think requires huge political will.

I’m not really sure that this has ever been a matter of very evident, collective ministerial will right at the top of the agenda. And I think for the next tranche of savings to come out of the OEP process, one of the preconditions for that will be sustained, very visible, ministerial political commitment.

In other words, if civil servants procrastinate and, in a desire to retain control of their silos, thwart all attempts to cut costs by sharing services, then someone will have to go and knock their heads together. And Mr Read doesn’t think anyone in government has the balls to do that.

LSE’s local government expert Tony Travers doesn’t buy it either:

[I]t should be possible to manoeuvre through the difficult years ahead without compromising the level of service provided. By using resources more productively, additional provision could be bought with the same or less money. Magically, the books would balance and the public would receive the services they need.

But it is never that easy. Between the silkily convincing words in official reports and the provision of lower-cost services, huge changes in performance will be needed. This is a Stakhanovite approach; one that imagines productivity improvements cascading down from Whitehall to town halls, hospitals and police stations, with eager officials over-fulfilling their targets. Inevitably, the policy-makers who churn out proposals for more efficient government will hardly ever be the managers who must implement the restructuring, contracting out and collaboration necessary to cut costs. It is in this gap between Whitehall initiative and local delivery that optimism fades.

His conclusions are not that far way from those of Martin Read. At the root of the problem is the unwillingness of government departments and their agencies to collaborate across organisational boundaries and the inability of ministers to do anything about it:

Despite good intentions within the Department for Communities and Local Government, Hazel Blears has very little influence when it comes to getting service departments, notably the Home Office and the Department of Health, to do anything they do not want to do. Faced with a hostile media demanding action about, say, child protection or knife crime, central departments will always resist pooling their resources within local initiatives.

He also warns that, if the savings in the OEP report are not realised, then the blunt instrument of across-the-board cuts will be the last resort of a government with no other options left:

There will either have to be a radical change in the way services are provided, as suggested in the OEP report, or something else will have to happen.

‘Something else’ could include the abandonment of some public provision altogether, means tested benefits and/or charging for many more parts of the state. None of these options would be easy. Real efficiency savings might now be forced upon government. If such savings are to be real and ‘cashable’, it will mean privatisations, contracting out and the shedding of public sector staff. There will be a political cost in making such radical changes. But, even if these are successful, improved productivity will not be sufficient. Other, even more difficult, steps will be required. Efficiency alone will not save the public services.

So here we have a former businessman and a left-ish academic both saying pretty much the same thing. The public sector has one last chance to make real efficiency savings but those savings will only be achieved if ministers force empire-building mandarins to make the necessary changes in the way they work. If this opportunity is missed, which both seem to fear it will be, the alternative will be savage cuts to the front-line services most of us take for granted.

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1 Response to Experts cast doubt on Darling’s public sector cost savings

  1. jameshigham says:

    In other words, if civil servants procrastinate and, in a desire to retain control of their silos, thwart all attempts to cut costs by sharing services, then someone will have to go and knock their heads together.

    And failing that?

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