Public service savings - no pain, no gain


Fresh on the heels of Tessa Jowell’s welcome call for politicians to be more open and honest about hard choices (see yesterday’s post), we have the Government and Opposition implying that it is only if we elect the other lot next year that we will face public spending cuts. Perhaps Tessa should send a copy of her speech to Andrew Lansley and Liam Byrne.

We need significant public sector reform so that services are more effective and responsive, and particularly (as 2020 Public Services Trust Director, Ben Lucas, said at a Number Ten seminar this morning) to embed the idea that most public service outcomes result not from ‘delivery’ but from the combined efforts of the state, communities and individuals. But this kind of change will be gradual, and although it will ultimately create better services, it will not reap savings in the short term.

In as much as politicians, officials and advisors are facing up to the coming spending crunch it is possible to distinguish an important difference in emphasis between Labour and Conservative.

There are some specific cuts to which the Conservatives are pledged, for example scrapping Regional Development Agencies. But, as Philip Hammond, Shadow Chief Secretary to the Treasury, emphasised here at the RSA last month, the Conservatvies put great store by better  management. They genuinely believe it is possible to find major savings (of the order of ten percent) through improvements to the way Government works. In essence, this involves an updating of the Thatcher strategy of Next Steps agencies and contracting out to create a leaner, meaner government machine.

The Conservatives are unapologetically technocratic saying that the ways to make a step change in productivity are clear but that Labour has failed to pursue them due to vested producer interests and the inability of ministers to control the growth of targets and initiatives.  There may be much to this, but the kind of savings the Conservatives are aiming for still won't be achieved without resistance from both workers and the public.

Labour also thinks it may be possible to save a lot of money without damaging public service entitlements (indeed the Government’s soon to be unveiled public service reform plan is likely to propose putting key entitlements on a statutory footing). But Brown’s advisors are also stressing the potential of decentralisation.

Following on from a report compiled by Sir Michael Bichard, a former Permanent Secretary and now Director of the Institute for Government, a series of pilot studies has been established looking comprehensively at the public money spent in specific local authority areas. I understand that early indications suggest a huge amount of waste, over-complication, duplication, and, more profoundly, a failure to get funding directly to the problems it is supposed to be addressing. The main cause of this lies in the overload of targets, funding streams, guidance and accountability mechanisms spewing forth from Whitehall. Labour’s plan is therefore to embed key public service improvements from the last ten years (and there have been many) while devolving to local government as much as possible beyond these core entitlements.

Labour’s plan is bold and makes sense as policy and politics. But – and this is a huge but – it will only be credible if Number Ten is willing to tackle the dysfunctionality of the political management of central Government.  Problems like these need to be dealt with: there are far too many ministers, all of whom think it is their job to generate initiatives; ideas are allowed to be developed and launched without any reference to those at the front line; change management and the time it takes is not treated seriously; there is complete lack of realism about how far the centre’s intended messages actually reach; civil servants fail to see or warn (or be allowed to warn) their masters that every new target or piece of guidance had an adverse impact on all these existing targets and instructions (not to mention local morale).

However well intentioned Brown’s advisors are, they will not achieve real change unless they do something about this. The process of Whitehall capability reviews started when I was in Number Ten but, despite my best efforts, the political management of departments was largely excluded (even though everyone knew this was the biggest single problem).

Labour’s reform plan won’t be taken seriously, nor will it deserve to be, unless it involves a profound shift in the way policy is made at the centre. And if you want me to make this more concrete I will: I would find it impossible to believe in any plan to decentralise power from the centre that did not commit to a substantial reduction in the number of Government ministers

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