Lyons warns on limits of efficiency drive

14 Apr 05
The drive to slash public sector waste will not save enough to fund spending increases in the long term, the architect of the one of the government's major efficiency programmes has warned.

15 April 2005

The drive to slash public sector waste will not save enough to fund spending increases in the long term, the architect of the one of the government's major efficiency programmes has warned.

Sir Michael Lyons, whose 2004 report recommended that 20,000 civil service posts be moved out of London and the Southeast, told Public Finance that a serious debate about how taxpayers' money is spent was badly needed.

'We mustn't delude ourselves that we can have good-quality public services for less than it costs,' he said. 'There's a danger that if you think you can fund all new investment from efficiency gains you're going to be disappointed. We need a mature debate about what a pound of tax will buy.'

His comments came in a week where Labour, Conservatives and the Liberal Democrats all traded blows over the minutiae of their respective tax, spending and efficiency proposals.

Addressing a conference on public sector relocation on April 13, Lyons said the level of detail contained in the arguments marked this election out as different from previous ones and indicated that a grown-up exchange of ideas on tax and spending was beginning to emerge.

'We've had 20 years of governments promising to do more but not debating how it is going to be paid for. We need a debate about what the state should do and stop doing,' he said.

Lyons was also critical of the government guidance produced to help Whitehall departments implement his relocation recommendations, describing it as 'rather more prescriptive than I might have personally preferred'.

He said the guidance document, Choosing locations for government business, drafted by the Office of the Deputy Prime Minister and published in January, was an important and useful one.

'It's quite appropriate for government to say, "These are areas we want to favour," and I warmly welcome that.' But he added: 'I am a bit surprised by the length of the document and the degree to which it has sought to describe the process of considering different locations. They have made it feel rather laborious.'

Lyons told PF that departments should look to the example set by the Met Office and Patent Office, which had both undergone successful relocations and were now 'reaping the rewards'.

He said the wider relocation agenda was proceeding well. By the end of 2004/05, almost 4,500 posts had been moved out of the Southeast, mainly from the Department for Work and Pensions. A further 10,000 will have been moved by 2008 and another 10,000 by 2010.

'Relocation has to be done with care. I'm not at all distressed [by the timescale] but am delighted by the progress that has been made so far,' he said.

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