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October 22, 2010

Biggest cuts for 40 years could foster overdue govt process re-engineering

Now is the time not for the bonfire of the quangos but the bonfire of the gold-plated process, says Gary Flood as he looks at the government's Comprehensive Spending Review

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15% efficiency savings to be achieved in HMRC through technology. That’s just one of the immediate headline shockers out of this week’s Coalition government’s Comprehensive Spending Review (CSR), which in the end ‘only’ turned out to be the biggest cuts to the welfare state since the 1970s, not 1945.

(In fact, the government did some very good politics with this whole thing – exaggerating the scale of the budget reductions so the reality looks better, matching one nasty cut with a slight amelioration, and apart the comic ministerial open briefing book pix, security was water-tight on this one.)

To achieve 15% reductions of overhead in one jump would not be an inconsiderable target for a commercial organisation – for a major Whitehall Ministry, this is unprecedented. Clearly, there are simple things that could be done and actually should be done. Sir Philip Green’s look into ‘waste and inefficiency’ in central government purchasing this month showed that, among other idiocies, the range of prices civil servants pay for PCs across different parts of central government vary by hundreds of pounds; as so printer cartridge, printing, mobile phone contract and other tariffs.

By not acting as one purchaser, UKHMG ends up in multiple, bitty contracts for ICT consumables and services that mitigate against economy of scale and sensible, customer-protecting contract arrangements. Let’s not even go there on how it draws up contracts with the big systems integrators – that’s been a national scandal (and gravy train for such firms) for decades.

But 15%? Commenting on the implications of the CSR this week, Deloitte UK public sector partner John Fortheringham observed: "Our experience of helping both public and private sector businesses reduce administration costs suggests that cutting by 10% is painful but achievable, cutting by 20% is extremely hard, and cutting by over 25% is exceedingly difficult."

The only way for the taxman to make this state between painful and extremely hard work has to be not just tinkering – looking for easy wins like rationalising procurement is a first step. To be frank, it’s not even likely to be by that much of a move away from software licensing as an overhead via virtualisation/the cloud or more open source (how times have changed when a UK Chancellor mentions a software movement in a landmark speech to the House, by the way!) or even the much-vaunted G-Cloud for the UK public sector.

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What’s going to be more effective? Outsourcing or offshoring isn’t really going to be the panacea either, to be honest, though the idea of our private tax and benefit affairs being shipped off to India will bring howls of protest, do doubt. As we have so often learned in the private sector, outsourcing a problem is just having the problem done cheaper (and often even less proficiently).

No – now is the time not for the bonfire of the quangos but the bonfire of the gold-plated process. We have to a root and branch review of why and how we do things in the public sector at the back and I think the ‘middle’ end, too. We need more bottom up, data-driven procedures, not central, monolithic ideas, no matter how great on paper (I offer you in silence the example of the National Programme for IT. Yes.).

The next four years will be hard and painful for many of us, though I suspect not as hard as we thought it would be for us all, and harder for some than others. But it could be a truly once in a generation opportunity to look at why and how and who for. It’s a cliché that hard times foster creative responses… but that doesn’t make the truth of the observation any less true.

Bonfire image courtesy of Dominic’s pics on Flickr.

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