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.