11 February 2005
The government's £40bn public service efficiency programme is risky. It conflicts with another of Labour's key election policies – extending choice – and involves compulsory redundancies. It could even affect Britain's ability to deliver public services.
We've all seen the stories (some of us have even written them). But what is different about these conclusions is that they come from the very man charged by the Treasury with identifying efficiencies and savings across Whitehall, Sir Peter Gershon.
Appearing before the House of Commons' bellicose public administration select committee on February 3, Gershon, who published Releasing resources to the front line last July, was candid in his assessment of the impact of his study. He was also scathing of the Conservative Party's attempt to trump his '£40bn by 2008' savings target.
The former chief executive of the Office of Government Commerce cast doubt on City troubleshooter David James's claim that the Tories could save an extra £14bn annually.
Gershon said James's rival study was 'totally silent' on how the cuts and savings identified could be delivered, and it was therefore 'impossible to comment' on the Tory proposals. Partisan interpretations of the plausibility of each party's savings plan will be a feature of the run-up to the expected general election in May.
But while Gershon wrestles with external rivals to his efficiency agenda, the government must overcome a policy paradox: the potential for efficiency to disrupt the extension of choice.
The government wants, for example, to allow patients to choose where to receive hospital treatment and to offer taxpayers options for filing Inland Revenue self-assessment forms. To do that, capacity must be built so that people can choose one option instead of another.
But as PASC chair Dr Tony Wright pointed out, a simultaneous drive to find efficiencies in public bodies is targeting 'slack' – or unnecessary capacity – in the system and aiming to eradicate it.
In the case of tax forms, Gershon said that large savings could be made by allowing people to pay their bills on-line or by telephone, decreasing Whitehall administration. But Wright countered that choice could be upheld only by retaining the labour-intensive postal submissions.
'This is the big ideological difference at the heart of the government. My choice is to send my cheque to the Inland Revenue. You want to deprive me of that choice because you say it is inefficient from the provider's point of view,' Wright claimed.
Gershon said he 'would restrict choice' in service provision. 'If you look at the investment that is going on in e-government, there is no point in doing it if all you do is create a new channel and you still have to leave all the costs of the old channels in place.'
Wright later told Public Finance: 'The [government's] rhetoric is that it wants to increase choice and save money through efficiency. It's not impossible, but you have to be transparent about this. If you want capacity, it comes at a cost. You can't… comfortably have both.'
An inherent part of the argument over capacity is the number of staff needed across Whitehall once the government has completed Gershon's 'downsizing' programme.
Last July, Gershon identified 84,000 civil service posts that could be scrapped. Whitehall unions said compulsory redundancies would follow, but ministers continued to claim that as few people as possible would be forced out of their jobs. Gershon was clear that there would be no gain without at least some pain.
This week, asked whether he was 'advocating' redundancies, Gershon said: 'Certainly, some [departments] have recognised that it may unfortunately be necessary… to have compulsory redundancy programmes.'
Seizing the opportunity to ask the 'golden question', committee members asked whether the job cuts could affect the ability to deliver key public services.
Gershon replied: 'It cannot be denied that there is always that risk and it depends on how well that situation is managed, but it also depends to some extent on the speed with which job reduction actions are implemented.'
Not exactly the line his ministerial peers have put forward.
Crucial to the successful management of the project, Gershon said, was the Treasury's plan to place Whitehall finance directors on the board of each department. This 'cadre' of financial experts 'could inherently turn attention as much to efficiency as effectiveness'.
But as Wright told PF, such experts have their work cut out ensuring that Gershon's plan 'does not go the way of other past Whitehall efficiency drives'.
PFfeb2005
