24 September 2004
One of the biggest criticisms levied at Sir Peter Gershon's Whitehall efficiency review is that any sincere attempt to quantify public sector waste has been lost in the resulting 'machismo' exhibited by the main political parties.
Even the senior civil servants who must deliver the savings fear that the agenda shaped by the former chief executive of the Office of Government Commerce has become distorted by political one-upmanship, with politicians desperate to prove they could slash the most off Whitehall's bill.
When Chancellor Gordon Brown published Gershon's report alongside the 2004 Spending Review, he identified £21.5bn that must be shed from national and local government costs annually by 2008. Whitehall insiders have long whispered that his final targets were Gershon's figures plus an undefined element calculated by the Treasury.
The Conservatives have since attempted to trump those figures while the Liberal Democrats have suggested abolishing entire departments to reduce costs.
For its part, local government must find savings totalling £6.45bn annually by 2008. Only the health sector, with a target of £6.47bn per year, carries a higher figure.
Yet, unlike much of Whitehall's civil service, county council executives are sanguine about their challenge. Mike Parsons, director of resources at Cambridgeshire County Council, says the £6.45bn target is 'by no means ridiculous'.
But before the initiative is passed to local government, he believes Whitehall must 'unleash genuine joined-up government'.
He cites the new powers to transfer older people's services to primary care trusts as a policy switch that has 'unlocked productivity gains'. Now he wants similar flexibilities across education and elsewhere. Parsons believes the biggest threat to Brown's initiative is not the detailed targets that will shortly be set out by the Office of the Deputy Prime Minister, but the method of application.
'Many councils have already made large efficiency savings and reformed back-office functions. They are not as likely to identify high-level savings as those slightly behind the curve. So when the ODPM puts forward its final proposals, it's important that good progress before now is recognised,' he says. It is a view shared by many councils.
Parsons views procurement as a key area for potential improvement. He backs plans for councils to join together on a local or regional level – although he points out that 'not all attempts to get councils to work together have worked in the past'.
Another area he sees as ripe for improvement is e-procurement. Cambridgeshire has established a national reputation in this field. As a result, it uses fewer suppliers, buys in bulk at discount rates and cuts bureaucracy by, for example, not duplicating invoices.
One major project carried promised council savings of £200,000 per year, but has actually reduced costs by £800,000 annually. 'There's scope for similar savings across local government, so streamlining and standardising processes should be at the heart of the Gershon agenda,' Parsons says.
Tim Byles, chief executive of Norfolk County Council, concurs. A national procurement 'champion' at the ODPM, Byles has advised the government on the potential for construction savings. 'In construction, we feel the targets are achievable. But efficiencies must be delivered on the back of firm evidence about the potential for improvements, and not just catch-all targets,' he says.
Byles warns that the ODPM must continue financing local government effectively. IT investment, for example, requires cash upfront to fund later efficiency gains. 'The “invest to save” initiative is important. So are the new powers under the Prudential Code to borrow for capital projects,' he says.
Perhaps the biggest critic PF spoke to was Mike Pitt, chief executive of Kent County Council, who was party to Gershon's pre-report consultation. Although 'broadly supportive' of the agenda, he claims the final targets identified are 'open to question'.
He is concerned that ministers are trying to squeeze efficiencies out of a sector that has long been compelled to identify savings. 'We've identified efficiencies of 2% per year since the late 1990s, so finding more will be tough,' he says.
For example, there is a paradox in education, Pitt says. Many schools could achieve savings only by linking services or purchasing to achieve economies of scale. Yet Whitehall has granted schools more independence.
However, he is positive about efficiency gains elsewhere. Kent recently upgraded its IT support structures, investing £14.6m in new technology that will glean far higher savings.
However, Pitt argues there was 'a bit of a gap between the Gershon methodology and what appeared in the final report.'
It seems that it is not only Whitehall officials who subscribe to that theory.
PFsep2004
