Spending cuts + reorganisation = train crash

I’ve been banging on for a while now about the scale of the spending cuts facing the public sector and how very few organisations in any sector have made savings this quickly over four years. Stephen Dorrell, chairman of the Commons Health Select Committee, has noticed too:

There is no precedent for efficiency gains on this scale in the history of the NHS, nor has any precedent yet been found of any healthcare system anywhere in the world doing anything similar.

There are few people with the expertise to make the necessary efficiency savings in the NHS and, it seems, there are none in any other health services around the world either.

The same could be said of local government. In general, managers in local government have more experience of making savings than elsewhere in the public sector because they have been doing it for longer but there are still very few who know how to do it on such a large scale, year after year. The first tranche of the 26% funding cut has been announced by Eric Pickles, who still claims that much of the hit can be taken by back-office services. Councils now have to work out how the hell they are going to implement these cuts without either their services or their finances collapsing. Some of them might not succeed.    

So we have local authorities and NHS trusts required to make savings on a scale rare even in the private sector, staffed by managers who have, with few exceptions, never done anything like this in their working lives. What else could we do to make sure that this whole exercise turns into a complete catastrophe? Ah, I know, let’s introduce major organisational change!

While the NHS is supposed to be cutting its spending, it will also have to set up completely new organisations to commission healthcare. Local government is to see much of its budgets devolved to new urban parish councils.

What does a GP commissioning consortium or an Urban Parish Council look like? Nobody knows! The government has just invented them. They will be full of people who are finding their way and trying to learn as they go along.

In any big re-organisation, in any sector, there is always a drop in performance. This is inevitable as people jockey for position, build new relationships and find their way round the new power structures. Research by the right-wing think-tank Civitas showed that even Labour’s relatively modest reorganisation of primary care trusts led to three-year performance dips

But the government isn’t just planning a few mergers. It intends to move people and funds into completely new types of organisation. These new bodies will have enough trouble just working out what they are supposed to be doing. Much of the organisational memory and expertise from NHS trusts and local authorities may be lost. If existing organisations are struggling to make efficiency savings, what hope do the GP consortiums and urban parish councils have?

Last week, the Chief Executive of Ealing Primary Care Trust, Robert Creighton, who has just taken over the running of neighbouring Hounslow and Hillingdon too, warned that the focus on reorganisation puts the efficiency savings at risk:

This could be a bloody awful train crash. It could collapse. All of us are looking inwards.

I’ve got to completely clean out the team and make a whole series of new appointments. I spent 13 hours yesterday interviewing yesterday, I’m spending another six hours today, eight hours tomorrow. In all that time, I am not spending a moment thinking about patient care or money. It will be very difficult to keep everybody focused in the task in hand.

Local government will face a similar problem. Just as they are trying to make savings, local authorities will be obliged to introduce elected mayors and devolve budgets to parish councils and community groups, most of whom won’t have a clue what they are doing.

The spending cuts are difficult enough as it is. Few public sector managers have experience of managing a downsizing on this scale so the risk of failure was always going to be high. Combining these cuts with the most drastic reorganisations of local government and the NHS for decades is just asking for trouble. The public sector may see a number of ‘bloody awful train crashes’ over the next few years.

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8 Responses to Spending cuts + reorganisation = train crash

  1. …. and that’s all before we even get to the issue of what will happen to the national economy (= jobs…) with fewer people earning money to keep things ticking over.

    If a workable, thoguht-through mechanism for making it all (reorganisations, localism, voluntarism and what have you) stack up exists, I haven’t spotted it yet.

    I guess one of the really critical questions here is, how many of the small handful of people deciding to impose these cuts have ever had to worry, really worry, longterm, about paying their own bills?

    And if most of them haven’t, do they truly collectively understand what they are now doing to everyone else (and the UK, to boot)?

  2. Pingback: Spending cuts + reorganisation = train crash - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  3. willy says:

    You’re basically saying that the current government is living in a fantasy world. They’ve got the vision, given the orders, and now are expecting it to just happen.

  4. Stephen says:

    … ‘bloody awful train crashes’ might be nearly right .

    Can’t find them online , but I remember reading studies in the late 80’s and early 90’s done by Charles Woolfson from Glasgow University into accidents in post privatisation workplaces (BT if memory serves). After privatisation serious accident rates rocketed – from almost zero. Not because of cost cutting / lower standards in private sector or anything you might expect . What it was put down to was the level of reorganisation, which disrupted management / procedures / protocols and just attention to detail generally.

  5. I’ve recently been reading the Tory health policy documents from the last 5 years. Contrary to what our compliant and rather dim press (and, to be honest, the Labour party too) have been saying, the white paper re-organisation plans were well known for years before the nasty rag was published in July. However, there is one significant part that did not appear until the beginning of the year, and did not crystalise until the white paper: the sacking of half of the managers. Most of the white paper is outlined in the 2007 Tory “NHS Autonomy and Accountability” paper, yet that paper specifically says:

    “As part of our commitment to avoid organisational upheaval, we will retain England’s ten SHAs”

    The paper also talks about GP commissioning, but it says:

    “PCTs will also remain, as now, the areas to which NHS resources are allocated, although almost all of these resources will be cascaded down by the PCT to its primary care commissioners.”

    I should also point out the piece of paper filled with optional policies, called the Coalition Agreement, that states:

    “We will ensure that there is a stronger voice for patients locally through directly elected individuals on the boards of their local primary care trust (PCT).”

    So where does the plan to sack half of managers come from? I think it is a pure and simple sop to the Daily Mail and their ilk. CCHQ identified the Daily Mail’s sloppy idea that “there are too many managers in the NHS” and, without any backing from research, pushed it as a totemic policy. For example, here is an anecdote that describes it. A few weeks ago I was waiting in a clinic, as a patient, to see a consultant and started chatting to the guy next to me.

    Him: there’s too much admin in the NHS
    Me: like what? the woman at the reception desk, the people who make sure you got your appointment today, the people who make sure that your blood tests are done and are in your notes, the people who make sure your notes are here now?
    Him: no, they are needed, it is the ones “up top”, there are too many of them
    Me: really? can you give me their names? you see I am a governor of this FT hospital and if there is any waste at the top I will make sure the chief exec knows it at the next council of governors. Identify who these people are and I will make sure that something is done about them.
    Him: ::silence::
    and then, on time, he gets to see the consultant he was booked to see

    I cannot blame the guy, he was simply voicing the relentless narrative that we have been fed over the last year or so. But now it comes down to applying the policy, it is clear that the very people that Lansley says are too many off, are the people who will apply his cuts, and that we are entering some odd metaphysical world where the cutters have to cut the cutters like the snake eating its tail.

  6. Athena_K says:

    Really good accountof what’s going on at the moment. John Lanchester reckons the government knows the public sector will fail to meet its targets for cost cutting. The scale of cuts they haves asked for is their attempt to change a ‘culture’ in the UK, and to also encourage people who keep their jobs to be grateful for them. I agree that this is as good a motive as any for the Government’s completey unreasonable targets. Bizarre strategy. And they wonder why inflation is going up too.

  7. vince lammas says:

    In a time of plenty, like Labour’s significant public services investment cycle, many organisations invest resources in activities that, in harder times, might be seen as non-essential. When those frugal periods arrive, most will take steps to reduce spending and slim down structures. Anyone familiar with public sector organisations would be able to identify areas where some slimming down is possible.

    However, Ministers’ suggestions that efficiencies in management and back office costs alone will deliver savings on the scale indicated by the targets is clearly fanciful …. seemingly a useful “mantra” that can help deflect attention from the realities.

    Changes to front-line services are needed to deliver the level of savings required ….. but it would be wrong to assume change that saves money has to mean poorer service. I have worked with teams in public sector organisations to identify changes which can deliver significant savings without reducing service quality.

    Whatever scale of savings are delivered in practice, the government will, at some point during the electoral cycle, use a mix of policies to raise funds and balance the books – while claiming success for ites austerity measures. Success depends not on cuts but on economic growth in the private sector.

    Overall, I suspect the financial targets are less important for the Coalition than the political and cultural shift referred to by Athena K – decentralisation has been a major policy issue for Liberal Democrats for years, and the aim of a smaller state sector is precious for Conservatives. The messages of local variation, action at neighbourhood level and less central prescription is attractive for both groups.

  8. Ralph says:

    I can but agree with you, Rick. The train crash might come though between the 3rd and the 5th year !

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