My savings are greater than yours

29 April 2010

Publication: Municipal Journal

My savings are greater than yours... The clash of the two 'efficiency czars' in the press has made for fascinating reading over the past weeks.

First, Sir Peter Gershon, who has provided the blueprint of the Conservative's efficiency plans, claimed he could cut the public payroll by £2bn within 12 months of the general election, and disclosed how £12bn of proposed savings might be achieved.

This was immediately challenged by Gerry Grimstone, supporting Labour's arguments that it was 'just not credible' that the efficiency savings the Government already planned this year could almost be doubled.

The fact is that this is new territory for all concerned and will require a massive rethink at the heart of Whitehall, if cuts, even at the lower end of this range, are to be achieved.

We should remember that in 2004, Sir Peter published a very well researched report identifying significant inefficiencies and duplication of back-office service provision across central government.

However, disappointingly, he left the civil service before the report's findings could be fully implemented by his permanent secretary colleagues – and the savings effected. One can only presume now that by his intervention, he believes an incoming Conservative Government will be more determined to drive through the changes.

Mr Grimstone, on the other hand, is masterminding – with Cabinet approval – the creation of two or three multimillion-pound business service companies, consolidating functions from within government departments and agencies. He believes these businesses will be able to bid for other government work, thereby driving down costs and competing against the major outsourcing suppliers. He is quoted as saying that these businesses could even be floated on the public markets.

One thing is clear, without such direct intervention of grouping services together, the concept of shared services will never happen.

Similarly, Total Place is being promoted as a significant new way to make government services more effective. However, despite focus on Number 10 and the prime minister, central government itself is hugely decentralised. It is not like a conventional group/subsidiary structure of a plc, where strategy from the centre is implemented by subsidiary MDs' incentivised to deliver targets.

In government, Number 10, the Cabinet Office and the Treasury, can indicate a desire for things to happen, but much still rests with the individual departments to decide whether or not to implement such directives, and no incentives exist to do so.

As many have found, a person can have all the power, but when they pull the lever, nothing happens. For the savings being proposed to be realised, it requires a significant cultural shift away from this silo-mentality.

This feels counter-cultural, but it is surprising what can be achieved when needs must.