AFTER its narrow squeaks over foundation hospitals and university tuition fees, the government is understandably keen to show there will be no slackening in the pace of public-sector reform. A report by Sir Peter Gershon, the head of the government’s efficiency review, conveniently leaked this week to the Financial Times, should help convince some of the sceptics.
Although still in draft form—the report is not due to be published until April—Sir Peter’s findings, if fully implemented, would mean a dramatic shake-up for the way the government goes about its business. He estimates that up to £14.5 billion ($28 billion) a year could be found by 2007 through cutting the bureaucracy and streamlining “back office” functions, while a further £5 billion is achievable from productivity savings in education, health and policing. Sir Peter, a former chief operations officer of BAe, a big defence contractor, reckons that 16% can be taken from central government running costs and—to the horror of the biggest civil service union—that 80,000 jobs could go.
Sir Peter is proposing a number of sensible, but nonetheless pretty radical, measures. They include: a revolution in the handling of the government’s £120 billion a year procurement bill through the creation of a handful of expert buying agencies; shared services, such as human resources and IT, centralised within clusters of departments; less regulation and monitoring of both public-sector providers and businesses; a one-stop-shop retail network to handle a wide range of government-to-citizen transactions from tax and benefits to grants for free school meals; a single means test covering all entitlement programmes; the use of insurance companies and banks as collecting agencies for taxes and fines; a carrot-and-stick approach to force households with computers to interact with government online.
By chance (hardly), the leaking of the report also coincided with a speech by the shadow chancellor, Oliver Letwin, outlining a future Tory government’s spending plans. It is a crucial element of Mr Letwin’s argument that the huge increases in spending of recent years have yet to be reflected in the kind of improvements to key public services voters were led to expect. Sir Peter’s work, and the government’s apparent determination to push ahead with his main recommendations, takes some of the sting out of Conservative charges that Labour has gone soft on reform. But, as Mr Letwin was quick to point out, it also greatly strengthens the Tory case that there is plenty of waste just waiting to be attacked.
This is as far as consensus goes. The government says it wants to use the resources liberated by the efficiency review to be ploughed into “front-line” services. The Tories, on the other hand, would like any savings not needed to reduce borrowing to be used to fund tax cuts. That will be a worthwhile and interesting debate. But the danger is that they may both be tempted to count chickens too soon. Identifying what should and could be done is one thing; actually doing it, quite another.
Sweeping business process change of the kind envisaged by Sir Peter requires both good leadership and consistency of commitment. It is quite a tall order even for a well-run firm with a clear chain of command, strongly incentivised senior managers and employees who are at best co-operative and at worst easy to fire. Trying to do the same thing, but on a much larger scale with transient ministers, risk-averse civil servants and stroppy public-sector unions will be a good deal harder
