20 February 2004
Battle lines are being drawn across the public services after the interim conclusions of the Treasury's wide-ranging efficiency review, calling for swingeing civil service job cuts and annual savings of £15bn by 2007, became public this week.
The recommendations, leaked on the day that shadow chancellor Oliver Letwin set out his own strategy for slashing spending and improving efficiency, divided the public sector.
Top mandarin Sir Peter Gershon, who was asked by Chancellor Gordon Brown to comb Whitehall departments' budgets to identify savings, has called for a cull of 80,000 civil service staff.
He also wants to see the creation of 'world-class' procurement agencies, covering transport, defence, construction and back-office functions such as IT and human resources. That approach would also be applied to local government and the NHS.
But one senior union figure was scathing in his response to Gershon's findings. Speaking to Public Finance, he said: 'It is obvious that this is a cut-and-paste job. It simply recycles old ideas, such as merging local authority back office functions and procurement. The review will be used to build in assumptions in the Spending Review of departmental savings of 2% to 3%, which is a back-to-the-future policy.'
FDA general secretary Jonathan Baume, whose union represents senior Whitehall mandarins, called on his colleagues to 'embrace the principles of these reforms'.
But Mark Serwotka, general secretary of the Public and Commercial Services union, which represents rank-and-file civil servants, condemned them as unacceptable.
Beyond Whitehall, public service figures reacted cautiously to the Gershon recommendations.
Nigel Edwards, the NHS Confederation's policy director, said his organisation supported the efficiency drive but urged the government to be realistic. 'It is very easy to sit at the centre and make bold decisions, but there are cultural and technical issues that lead people to resist change, and those will have to be addressed.'
Meanwhile, Letwin's proposals, which will underpin the Tories' public service policies going into the next election, drew immediate criticism. They aim to save £35bn annually by 2011.
In his speech to the Bow Group on February 16, Letwin said a Conservative government would maintain investment in education, pensions and the health service. But spending on all other services would be frozen in the first two years and thereafter increase by 2% annually, which would mean no real-terms increase. There would also be a civil service recruitment freeze.
This would allow the Tories to reduce spending as a proportion of national income from 42% to 40% over the next seven years.
Unison general secretary Dave Prentis dismissed the proposals. He said: 'His figures just don't add up. There is a yawning credibility gap between what he claims and the reality of delivering world-class services.'
PFfeb2004
