The dilemma of achieving top performance while simultaneously taking billions of pounds of cost out of the civil service and local government is at the heart of Deloitte’s new report: New shapes and sizes: reshaping public sector organisations for an age of austerity. Its conclusion, essentially, is that the public sector’s reactive cost cutting is already affecting public service delivery at the frontline and will stifle staff motivation and prove harmful in the long run, pushing public bodies into a spiral of decline for years to come.
Our argument is simple: to develop government that is fit for purpose in an age of austerity there also needs to be a focus on redesigning the shape of the public sector as much as reducing its size. In our experience, all too often when faced with declining revenues organisations focus on reducing their size, assuming that if staff numbers are cut, everything else will take care of itself. A more proactive approach acknowledges that shape is equally important. Without changing the public sector’s organisational shape, budget reductions risk either staff being asked to do more, or simply less being delivered.
So instead, our report urges government to review each area of public policy and reshape and resize public sector structures and organisations accordingly. The result will be the removal of duplication and layers of management superfluous to frontline delivery and also the merging of numerous public bodies. Such a process may well involve headcount reduction but it could also involve the public sector bringing on board new skills and talent to cover expanding functions such as service commissioning.
To continue with yesterday's debate - the cuts that are looming on the horizon - is futile because the fact is that they are already happening and there really is no time to lose. And that is reflected by a sense of frustration in the senior civil service as they already have to cut back. They can see the NHS and other frontline services are suffering. But the rhetoric coming down from on high does not reflect this reality.
Simply not filling vacancies and halting recruitment, which is the easier way to cut a budget, harms services. So the will to make more radical change needs to be found. And that responsibility, I believe, lies with public sector leadership as there is, in reality, very little difference between the two main political parties. So it's up to senior civil servants to show leadership over the coming months by preparing plans to present to ministers in advance of the next general election.
There is also an apparent lack of recognition of the urgency with which the public sector needs to be restructured to respond effectively to conditions that are arguably the worst since the Second World War. Our report includes three examples of central government department reorganisation and one local government merger that show how major government organisation redesign can work and achieve its aims.
Keith Leslie is a public sector partner in Deloitte’s consulting practice and lead author of the new Deloitte report New shapes and sizes: reshaping public sector organisations for an age of austerity
