The Coalitions plans are a triumph of hope over experience

Oh dear!  It’s becoming increasingly apparent that the Coalition government has no idea how to go about its central task of cost cutting.  They are resorting to the one thing we know for certain doesn’t work – recruiting a top businessman to head a review of government spending – in this case Sir Philip Green the retail magnate who owns the Arcadia Group as announced at the end of last week.

This really is a triumph of hope over experience – it’s been tried again and again without delivering.  As Prof Colin Talbot put it on Radio 4’s Today programme:

We’ve had loads of these efficiency reviews. Derek Raynor was brought in 1979 by Margaret Thatcher. He only managed to deliver about half of what they identified as savings…   Identifying savings in public organisations isn’t the difficult bit.  It’s actually making the changes to achieve them.

He’s not even going to be based in Whitehall in the way in which Derek Rayner was. He’s simply going to be conducting an external review…  Derek Rayner had the problem even when he was within the system of trying to get things implemented.”

In the same slot Gerry Robinson, a businessman whose shrewdness and insight I greatly respect, concurred, saying:

It’s actually rather easy [to identify savings].  What shocks you isn’t how difficult it is to see that there are opportunities [to make savings] … they are all over the place … but getting them put into practice….  Big savings are about reorganising the way things are done.

That there are savings “all over the place” is, of course, the experience of pretty well anyone who deals with government –  it’s certainly mine.  It is also the view of public sector staff themselves who have made two-thirds of the 100,000 or so suggestions for savings on the government’s Spending Challenge website.   So the problem is not so much identifying savings as to get the Civil Service to implement them.   The Civil Service – and in this context that means its senior members who set the tone for their staff – are evidently tone-deaf to potential savings.  It’s just not something that rocks their boat or, more precisely, is important to their career.

But why not?  I suggest it’s because whatever it is that motivates senior civil servants, gets them promoted and thus governs the way they work day-to-day has little to do with efficiency and too much to do with a culture that does not reward cost-saving initiatives.  The result is that they are often penny-wise but pound-foolish.   To be fair this is not entirely down to civil servants.   Successive governments have too often left the civil service to get on with things and have neglected to ask whether the civil service is up to the task and, if not, what needs to change.   Instead they have focussed on doing things to get a tabloid headline with a splashy announcement of £x million ‘invested’  or whatever while efficient delivery is of only secondary importance.  Compounded again and again, year on year, the result is a truly epic amount of malinvestment.   Eliminate this and the deficit will melt away. 

So what can be done to eliminate the waste and malinvestment?

For starters forget top-down reviews.  The view from Whitehall (never mind Monaco or Arcadia HQ) is just not good enough.   Even if it were, I suspect Sir Philip, for all his undoubted retail skills, is the not the right person to consult.  Government departments are not retail stores and his reported comments about the opportunity for finding buying efficiencies as if they were is a false analogy that would be the royal road to ruin.   No doubt there is scope for buying better in places, but public sector procurement is the lifeblood of many firms large and small around the country.  Just how good would it be for the economy outside London if yet more decision-making was concentrated in the capital?  Do we really want to see public procurement dominated by friends of (and donors to) the government? 

The answer must be to change the culture of the public sector so that staff at all levels from the top to the bottom constantly search out opportunities for savings making a clear distinction between services on the one hand (which should not be cut except where there is a clear political case to do so) and operating costs on the other hand which are well out of control.   Staff at all levels should be appropriately rewarded and promoted when they find savings in their department while those who don’t and those who can’t distinguish fat from bone and cut the wrong things should be asked to leave.  We, the tax-paying public, cannot afford them any longer. 

The Coalition needs to ask why this doesn’t happens already and what must change to make it happen?  If it fails to ask these questions government will remain fundamentally dysfunctional and it will fail in its central task.  It’s as simple as that.

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