09 June 2006
As the Gershon enforcer, John Oughton is the man charged with ensuring £21.5bn in efficiency savings roll in. So how is the public sector doing on its great mission, asks Joseph McHugh
The man in charge of the government's most ambitious efficiency programme to date is in a relaxed mood. John Oughton, the chief executive of the Office of Government Commerce, is responsible for overseeing implementation of the £21.5bn efficiency savings programme drawn up by his predecessor, Sir Peter Gershon – and says progress is substantial.
He lauds the strides being made in local government, where the latest set of annual efficiency statements produced by authorities show they are ahead of schedule to meet their overall £6.45bn savings target.
He also claims central government is doing better than generally credited, despite the embarrassing failure of Whitehall One, a shared services project to join up some back-office functions across the Treasury, the Cabinet Office and what was the Office of the Deputy Prime Minister.
It was scrapped after the OGC intervened to say it would not deliver the economies of scale required. Whitehall Two, involving ten Whitehall ministries, is at the drawing board stage. But Oughton is not letting this setback cloud his sunny outlook.
'Many public sector organisations are already on this journey,' he says. 'You only have to look at the improvements in local authorities that have come through the Comprehensive Performance Assessment to see that the journey is under way. I think there is good progress in central government, too; I wouldn't say it's back of the pack at all.
'My message, to the organisations that are doing good things, is: “That's great.” To the ones who are only just getting under way on the journey, the message is: “It's a well-trodden path, there's a good understanding of what constitutes good practice and you should be grabbing those opportunities and introducing them into your organisations.” '
Oughton occasionally gives a hint that it is not all good news on the efficiency front, however. He emphasises several times that the status quo is not an option and that all bodies in the wider public sector are expected to embrace the efficiency agenda, implying a reluctance among those on the ground to play ball.
But he denies that there is a lack of will in the public sector to make it happen. 'I wouldn't say there's conscious resistance. I think it's much more that individual organisations don't always spot the opportunities available to them. Managers say: “I think we're doing fine, we're meeting our targets, we're living within our budgets.” But the next Spending Review is going to be a very challenging one; we want to continue to have real-terms growth in spending on key public service areas and so we have to be more ambitious about what we can deliver on efficiency.'
Gershon cynics have suggested that so far the savings generated by the programme, the central purpose of which is to shift resources from back-office functions to frontline services, exist more on paper than in reality. But Oughton rejects this, saying the OGC now has plenty of evidence of good practice by public bodies, which demonstrates how costs are being controlled and services improved for the public.
Nevertheless, a report from public spending watchdog the National Audit Office on the Gershon targets, published in February, found serious shortcomings in the evidence base. Its report acknowledged that progress was being made, but went on to catalogue a host of problems with how that progress is measured, highlighting the failure to establish reliable measurement baselines.
It concluded that inadequate data and management information systems, combined with flawed methodologies for calculating efficiency gains, mean in some cases that the resulting figures are not robust.
Consequently, the NAO said, the £4.7bn in savings reported by Chancellor Gordon Brown in his 2005
Pre-Budget Report must be regarded as provisional rather than final.
Oughton accepts the watchdog's conclusions but adds that a lot of work has since been done to address the problems highlighted. 'The NAO said that, of the top 300 efficiency projects, 180 didn't, at the time the NAO did their work, have any proper established baseline, making it very difficult to measure any efficiency improvements.
'We're working with the departments on establishing baselines for those initiatives and we're about halfway through. I've encouraged the NAO to come back and look again at the efficiency programme in another year, and I would very much welcome them passing comment on the progress we have made.
'The NAO also acknowledged that in some areas of the programme we might be under-reporting the progress being made. So, yes, the numbers are provisional, they've not been audited, but they're probably also partial and may be missing some significant elements of achievement.'
The NAO said the biggest risk associated with the Gershon programme is that efficiency gains could be achieved at the expense of service quality. The government has always insisted that the efficiency drive will not compromise service standards.
Oughton says Public Service Agreements, signed by each Whitehall department with the Treasury in return for funding, provide the safeguards because they 'set out very clearly' the improvements in services expected to take place.
His staff at the OGC also work closely with the Treasury's spending teams and officials at the Prime Minister's Delivery Unit, he says, so they have an overview of efficiency and its impact on performance and delivery. 'I'm not going to say to you, though, that in every single case, across every part of the wider public sector, this efficiency programme is being implemented in a totally perfect fashion. That would be a foolish assertion for me to make,' Oughton adds.
'But where bodies struggle with the programme, where there's a temptation for the efficiency programme to become a cuts programme, my response would be, first, you shouldn't be doing that; secondly, there is no need for you to do that. There are a large number of techniques to improve efficiency that aren't simply cuts in budgets.'
Ultimately the success of the efficiency agenda lies with the public sector managers who are having to implement it. That is why Oughton has agreed to speak at CIPFA's conference this week. He sees it as an opportunity to get his key message across to the people he is relying on to make the targets a reality. So what is that message?
'I want efficiency to be part of the core agenda. It's not an add-on that you think about once you've decided how you're going to run your business. It's an integral part of delivering business effectively.
It should be part of the DNA of delivering public services.'
John Oughton will be addressing the CIPFA conference on 'The efficiency challenge' on Wednesday, June 14
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