25 March 2005
When Chancellor Gordon Brown delivered his Budget statement on March 16, he trumpeted the success of his cost-cutting drive.
He declared with relish that progress towards meeting the £21.5bn annual efficiency savings target laid down by Sir Peter Gershon was ahead of schedule.
Brown told MPs that 7,800 civil service posts had been earmarked for relocation outside the Southeast and £14bn out of £30bn-worth of government assets to be sold had been identified.
'I can report, ahead of target, the first £2bn of value-for-money Gershon savings, on top of £2bn savings in procurement announced in December,' he added. 'And I can also report, on target, the reduction of the first 12,500 civil service posts.'
But in crowing about these apparent successes Brown has provoked fresh doubts about the credibility of the Gershon agenda.
It is a long-running argument centred on the government's refusal to allow an independent body, such as the National Audit Office, to scrutinise savings that departments claim to achieve.
The NAO has given unpublished advice to ministries on their efficiency technical notes (ETNs), which set out the methodologies for quantifying savings. But, crucially, the figures produced will not subsequently be audited.
As a result, questions have been raised about how the savings are calculated and whether claims of success can be accepted.
Business lobby group the CBI firmly backs the Gershon objectives but has expressed fears that the savings will be paper rather than real ones and owe more to political expediency than greater efficiency.
Margaret Murray, the CBI's head of public services policy, told Public Finance why.
'The key thing is transparency and we'd like the government to commit to independent scrutiny of all claimed efficiency gains, for instance by the NAO or the Audit Commission, and to making available all measurement information,' she said.
'Efficiency matters to all taxpayers and public service users, not just business. The plans to deliver the Gershon objectives require far more rigour than we have seen to date.'
Following Brown's statement the CBI set about trying to verify his claims. A briefing paper seen by PF outlines a breakdown of the £2bn apparently achieved, compiled by CBI policy officers by scrutinising the Budget Red Book, requesting information from Whitehall departments and trawling through ETNs.
Ahead of the pack is the Home Office, which has saved £600m so far; the Department of Health is next, with £370m; the Ministry of Defence has saved £347m; and the Office of Government Commerce £290m. Other departments have made savings ranging from £107m to £4.7m.
But the CBI says it is not convinced by these claims of success, citing the lack of supporting information to explain how the figures have been calculated. The briefing cites the Home Office: its £600m total includes £240m savings on police costs.
'There is a lack of detail surrounding the police savings, making it impossible to scrutinise effectively whether the figures claimed are reasonable,' the document says.
It highlights a different problem in relation to the OGC. The body, which has oversight of the Gershon programme, says its £290m savings have come from its Buying Solutions Framework Contracts, called S-Cat, L-Cat and G-Cat.
The CBI briefing concludes: 'All of these frameworks predate the Gershon Review. G-Cat was established in 1996, S-Cat in 1997 and L-Cat in 2003. Therefore these should not be included as new gains.'
Colin Talbot, professor of public policy at Nottingham University, is equally wary. 'I can't find anything in background information that tells us this is the case,' he said. 'I think it's extraordinary that Brown has made this statement without the wherewithal to back it up.'
Gershon, with its emphasis on external procurement and use of private contractors, stands to benefit CBI members handsomely, so the strengths of its doubts should concern ministers.
The concerns about the £2bn are surely a precursor of the wider scepticism that will greet claims of success once the Gershon programme gets into full swing from April. Unless, of course, Brown demonstrates faith in his own efficiency drive by subjecting it to independent scrutiny.
PFmar2005
