A new culture of thrift

21 May 2009

Publication: Municipal Journal

So, thrift is fast becoming the buzz word of 2009.  In his speech at the Conservative Spring Party Conference David Cameron told his shadow cabinet that: "If ministers want to impress the boss, they'll have to make their budgets smaller, not bigger.  On my watch it will be simple: if you do more for less you get promoted; if you do less for more, you get sacked…Got it?"

With the Institute for Fiscal Studies predicting a £37 billion black hole in public finances, Cameron is right to talk of thrift and cuts.  The situation facing the public sector is not one that can be solved through efficiency drives alone.

Big chunks of spending are going to have to be removed, rather than trying to spread the pain evenly.  Mergers and downsizing should form a part of this.  We may well see the inspection and regulation elements of the sector being slimmed down, with some elements closing.

Similarly, can we now justify the large number of quasi-autonomous government bodies in their current form?  Why can't the Learning and Skills Council, merge with the Higher Education Funding Council?  Along with this, back-office costs need to be cut and services aggregated to save money, across the board.

As badly as a culture of thrift is needed, it does not go far enough.  Cutting budgets and services alone presumes that while money is tight, the model is sound, and budgets will increase when the economy recovers.

Yet this is not the case, the current financial crisis is exacerbating the problems within the public sector and will force action.  It needs to be attacked by a wave of innovation on all levels.

'Better services at a lower cost' is the new mantra according to Sir Michael Bichard who leads on the local empowerment and innovation strand of the Operational Efficiency programme.

A key part of his work will focus on service design, to develop services which the public actually want, rather than provision driven by budget and past demands.  It is now even more imperative that all decisions made have the service user at the fore.

As Mr Cameron may find out in time, to achieve this change is a massive journey for many in senior positions who may not have the skills to achieve it.

This also requires an open culture and not one of protecting budgets as exists at present.

A culture where individuals and departments are incentivised to think this way as is the case in the private sector. Where partnership working is embraced rather than merely seen as a need to reduce costs.

It will be interesting to see if in adversity a new approach emerges. One thing is for sure, in the current culture more Ministers are likely to be sacked by Mr Cameron than promoted!