In the glory days of New Labour, anything seemed possible – even, dare we say it, introducing higher taxes to pay for better public services.
Those days are well and truly gone. As Peter Riddell points out on pages 12–13, the 10p tax debacle and Labour’s trouncing in the local elections have transformed the political landscape. All the main parties are now seeking to cut taxes.
But there’s no slack. Public expenditure growth has already been curtailed and further borrowing will threaten the prime minister’s cherished fiscal rules.
It’s at times like these that efficiency programmes come into their own. Of course, the public sector is no stranger to being Gershonised, while a new Public Value Programme will continue to fight the financial flab post-2011.
One area where greater progress could be made, though, is through shared services. According to the Cabinet Office, there are annual savings of up to £1.4bn to be made if public bodies agree to share corporate services such as finance, HR and IT.
However, despite a lot of talk there has been little action. Public bodies have been criticised for being too risk-averse and for protecting their own empires.
But a report this week from the Public Accounts Committee shows that there is little reliable data available to make decisions on whether to share services.
Cabinet Office mandarins were slated for coming up with the £1.4bn savings estimate ‘in the Dog & Duck and written up on a beer mat’. The department offered no timeline for achieving the savings and its shared services team could not explain how it had spent its own budget.
There is a place for shared services but they are not without risk. Personal contact is lost, staff morale can fall and the growth in offshoring creates obvious conflicts for public sector bodies such as local authorities.
Shared services could provide efficiency gains. But they’re no panacea for the Exchequer’s shortfall. Decisions should be based on long-term improvement to public services and not on a short-term fiscal fix.
