By Richard Johnstone | 4 April 2014
Public sector productivity will need to improve to maintain services amid continuing government cuts, the head of the government finance profession has said.
Richard Douglas said that finance professionals across Whitehall had managed to help deliver the government’s reductions to date mainly due to tight spending controls, which had led to a focus on cutting waste and minimising input prices.
However, there were two other factors – getting more productive and reallocating resource so that funding is spent where it is most effective – where more would need to be done in the future.
‘It’s the same pattern of success that people have had: pretty good on getting rid of waste, pretty good in holding down input prices, variable in productivity – some improvements but nothing that’s seen a massive step change – and probably not quite so good at all on the last bit, on the allocation of resources,’ Douglas said.
Focus must now go to these latter two other areas as spending restraints continue in the next parliament, he told CIPFA’s World Class Performance Symposium yesterday.
‘We can’t achieve everything we need just by focusing on input cost reduction, just by focusing on eliminating more waste,’ he said.
‘While those have made significant savings, you can’t keep repeating them and expect to keep delivering exactly the same thing.’
Finance professions had to help departments in achieving a ‘step change’ in productivity and ensuring spending achieved the ‘biggest bang for our buck’, he said.
‘Its those areas now where we as a profession have most to do in supporting our ministers, supporting our boards and supporting senior officials in helping them give policy and strategy a true financial focus.’
Implementation of the government's financial management review, which he undertook with second permanent secretary to the Treasury Sharon White, was key to this. The creation of the new post of director general for spending and finance ensuring finance professionals had a key role in advising Treasury ministers on spending decisions, he said.
‘To get a real improvement in productivity and resource allocation, you have to be in at the start as a finance profession – not adding, as I’m afraid we often do, a financial overlay late in the day.
‘You have got be there at the policy design stage, and identifying the focus and impact of the policy. And looking across Whitehall at the moment, that’s pretty patchy.
‘Too often we don’t have the tools, the information, and we’re not sufficiently involved at the start. That’s why I believe the financial management review is so important.’
