Cabinet Office minister Francis Maude has set up “a strong but streamlined group to drive efficiency across government”. The team, known as the Efficiency and Reform Group, is to be based in the Cabinet Office and will include Peter Gershon, author of the Gershon Efficiency Review, and Martin Read, who led the review of public sector IT and back-office functions as part of the Operational Efficiency Programme.
The group has already taken control of the government’s major purchasing organisations the Office of Government Commerce and Buying Solutions. Both these organisations were part of the Treasury.
Until now, the Operational Efficiency Programme has been run from the Treasury too but the appointment of Martin Read to the Efficiency and Reform Group may indicate that the Cabinet Office plans to take control of the OEP too.
I wondered on a number of occasions over the past year or so whether the scale of efficiency savings demanded by the last government could be delivered by a voluntarist and piecemeal approach. The creation of the Efficiency and Reform Group seems to imply that this government plans to be more directive and hands-on than its predecessor.
With Martin Read on the team there will almost certainly be increased pressure on public sector organisations to increase efficiencies in IT and back office functions. Computer Weekly’s Karl Flinders reckons this could be a prelude to the creation of a single back office function for central government. In theory, it should be relatively straightforward to set up shared service functions for central government, local government and the NHS. Organisations in each of these sectors share similar administrative processes and conditions of employment. So far, though, apart from a few local initiatives, progress has been slow. A year ago, Dr Reed expressed his frustration over the lack of action. From his new commanding position, it is unlikely that he will tolerate such procrastination for much longer.
There will also be renewed emphasis on the targets that have already been set for cost reductions in back-office services. For example, Civil Service HR functions are expected to reduce their ratios of ratio HR staff to total staff from a current average of 1:44 to a target of 1:77. Similar targets have been set for other support functions. Word on the civil service street is that the Coalition will toughen up these targets and extend them to other public sector organisations.
This presents HR functions with a significant challenge. Only last week, Sir Peter Gershon told public sector HR professionals to prepare for a storm, warning that the scale of cost reduction and change will require highly skilled HR people to manage it.
For successful change we need HR skills. Such skills come increasingly at a premium when the public sector is under the pressure of reduced budgets. It’s those people who are dealing with difficulties such as maintaining morale, making difficult downsizing decisions or potentially outsourcing – these all require HR skills and a high level of professionalism.
And it’s going to get harder. The £6.2 billion of cuts announced so far are only the start, he said:
That was a starter for 10. It was the amuse-bouche; it wasn’t even the hors d’oeuvre. It is to help prepare the public sector for more fiscal constraint after the spending review. For some parts of central government, the priorities of the Efficiency and Reform Group will be a shock wave.
So public sector HR functions will have to manage this shock wave while also trying to put their own houses in order by shifting transactional activities into shared service functions and reducing their ratios of HR staff to employees. Oh and while they’re at it, there will be the small matter of industrial action to deal with too.
This would all be hard enough for a highly skilled and well resourced HR function. While some public sector HR professionals have the skills and experience to meet these challenges, many do not. Earlier this year, Dean Shoesmith, president of the Public Sector People Managers’ Association, warned that good HR skills are patchy across the public sector. With a recruitment freeze, cuts to training budgets and a ban on bringing in consultants, it is difficult to know how this skills gap will be bridged.
One thing we can be certain of, though, is that pressure on all public sector back office functions is going to increase over the next couple of years. Peter Gershon’s talk of storms and shock waves is an indication of what is to come. Hold tight folks – it’s going to be a rough ride.