Published: April 28th 2009 - at 7:48 am

How Darling plans his ‘efficiency savings’


by René Lavanchy    

It’s a targeted programme of efficiency savings that will free up cash for investment in frontline services. Or it’s a devastating round of cuts that will damage public services and prolong the recession.

Take your pick, but don’t be surprised.

With immediate effect, the state must now change the way it works. Back office functions will be benchmarked. Procurement will be collaborative. Commercial potential will be harnessed. All adding up, we are told, to £15 billion. What will it mean?

The seeds of the £15 billion savings in public sector bills announced in Alistair Darling’s 2009 Budget were sown in last year’s Budget, which launched the Operational Efficiency Programme.

The OEP’s authors spent a year walking – literally, I’m told – round government departments looking for cost savings, before writing their report. They must have shown Darling an advance copy, because on Budget Day – one day after the OEP report came out – Darling announced he agreed with everything it said.

One civil service manager had little doubt recently. Noting that there were two people in his office whose sole function seemed to be refilling the laser printer, he suggested that in the circumstances, maybe they should go. Printer replenishment operatives aside, the OEP is the talk of Whitehall, even if it isn’t making civil servants quake in their boots just yet.

But it’s hard to see how a big chunk of the savings won’t come from a reduction in the head count. One saving the OEP report talks up is ‘shared services’, such as government departments using the same back office software. But assuming Alistair Darling isn’t going to be up all night BitTorrenting pirate copies of Sage, that will mean buying new software, or at least new licences. Some harmonisation has already been done: the Cabinet Office and Department for Work and Pensions, for instance, use the same payroll system. And of course, merging back offices means fewer staff: the OEP report approvingly cites the case study of a private firm that lost 70 per cent of its finance and HR staff.

So there must be job losses. There must also be privatisation – the Royal Mint, Land Registry and the Defence Storage and Distribution Agency (you learn something new every day) will be fully or partly sold off. Some of the jobless will go onto Jobseekers’ Allowance. At current rates, before any such redundancies, enough extra people will join JSA rolls in the next three months to staff every department, quango and executive agency in Whitehall.

Anyone who disagrees violently with the above will not perhaps be overwhelmed by the opposition. The only united campaign comes from the Trade Union Co-ordinating Group, a team of left-wing unions set up last year to provide an alternative forum for political action to the TUC and the Labour-affiliated unions. It includes the Public and Commercial Services Union, representing some 300,000 workers mostly in central government.

Contrary to a report in last week’s Guardian, the TUCG is not meeting MPs this week to discuss how to fight the Budget. It’s having a routine business meeting, which will cover the same issue, amongst others.

Even if the unions were lobbying MPs, they’d be up against massive odds. Because when Darling rubber-stamped the OEP report, he also endorsed the complex machinery of cost-cutting it will set up.

The Treasury will establish a “value for money review group”; each department will have a minister responsible for “championing value for money”; there will be operational reviews, systems reviews and six-monthly asset management and sales reviews.

In short, unless the Finance Bill that passes the Budget into law is stopped in its tracks in Parliament – which it won’t – the wheels of efficiency savings will be grinding away before anything can be done about it. It looks like the argument will now shift to what gets the chop, and when.


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About the author
This is a guest article. René has been the staff reporter of Tribune magazine since June 2007, writing news stories about politics and the labour movement. He blogs here.
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Story Filed Under: Blog ,Economy ,Labour party ,Westminster


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Reader comments


1. Letters From A Tory

‘Efficiency savings’ in the private sector have always meant job losses, and they mean exactly the same now in the public sector – Darling just hasn’t got the guts to admit it.

Making government more efficient and cost effective is a good thing, why on Earth would anyone oppose it? Obviously, the people whose jobs are at risk would be against it, but that’s no more than naked self-interest on their part – turkeys voting against Christmas.

Cheaper to have a few thousand more people on JSA than being paid more to change the copy toner. And less government debt will mean a faster recovery and more real jobs in the future.

“Making government more efficient and cost effective is a good thing, why on Earth would anyone oppose it?”

You forget that, for certain people, the idea of the government doing more with less money is almost as terrifying as the idea of it doing more with more money. Or, in other words, ‘efficient’ is a euphemism for ‘smaller’.

5. Mike Killingworth

Just a reminder that the scale of the savings (which are to be made across the public sector, not just in the Civil Service) equate to 600,000 job losses or 10% of the public sector payroll.

I suspect the only people that will believe people are being paid solely to change the copy toner will be the people who already believed it anyway.

I don’t have any objection to genuine efficiency savings. The problem is the phrase tends to mean cuts to services that leave remaining staff unable to do their jobs properly because of increased workload.

Remind me of the results of under-staffing in social services, or in Staffordshire Hospital again, someone.

The Treasury will establish a “value for money review group”; each department will have a minister responsible for “championing value for money”; there will be operational reviews, systems reviews and six-monthly asset management and sales reviews.

Christ, that sounds expensive……..

Printers – sounds stupid doesn’t it? (especially, perhaps if you work in a small organisation).

We had a system where we did it ourselves team by team, but now we have two people who do the lot. That’s two people servicing 80 printers – which is more efficient than untrained/incompetent people a) wasting time trying to service them or b) breaking them and incurring a call out charge…

Nick:

Cheaper to have a few thousand more people on JSA than being paid more to change the copy toner. And less government debt will mean a faster recovery and more real jobs in the future.

Hmmm…reminds me of what happened in the 1980s: better to have three million people the Tories could scapegoat as dole cheats (or could make disappear by fiddling the figures), than pursue full employment.

It looks like the argument will now shift to what gets the chop, and when

Here’s a suggestion.

As a small businessman I am bombarded with help, support and advice from various Government agencies. It is all a complete waste of time, money and energy.

The point about people who start small businesses is that they are generally fairly independent and resourceful individuals who, if they need help, are capable of finding the best person to give that information or advice.

Further. they recognise that, in most cases, the public servants clogging up the DTI, the Regional Development Authorities and the Local Authority Business Development Departments have either no experience in the private sector or are working in the public sector because they, themselves, have failed to be successful in business.

So how valuable is their support likely to be?

Chop the lot. Now.

Nobody would notice.

“better to have three million people the Tories could scapegoat as dole cheats (or could make disappear by fiddling the figures), than pursue full employment.”

Pursue full employment by all means, just not in the public sector. Non-jobs paid for by making everyone else poorer are a problem not a solution.

12. Chris Powell

tim f #6

Correct. I once worked for a (now defunct) large American computer company. In their large open plan offices, they had very whizzy high-speed printers that could print both sides, collate etc.etc.

They had a couple of guys whose sole job was to keep these printers going, filling them with ink, paper, unjamming, fixing printer communication and so on.

It was fairly obvious, even whilst I worked there, that the company was going down the tubes. So, as a cost saving effort, the company got rid of the printer guys. Now we had to refill the printer paper ourselves. As it was a bit of a walk to the printer, it rarely got filled with paper anymore, especially as there would be a dozen jobs queued ahead of yours and you’d have to wait 20-30 minutes for your printout to appear. You were filling the printer up for those other ‘lazy bastards’ who couldn’t be bothered.

So, requests for local printers began to be made. These were smaller and cheaper. They could not print both sides of the paper. More paper began to be used, the ink was more expensive too as it was in smaller containers. The system guys had more work to do because there were more printers to attach, more print queues to maintain, more calls to take when the printer failed. All in all, it ended up costing more…

I doubt whether this initiative will save much despite what ministers will say. I’ve seen how horrendously inefficient our government departments are having worked for the DWP and suffered immigration depts for my (then non-EU) partner to be able to live and work here.

Compared to the continent (Germany, Switzerland and Holland in my visa/id card experience), our departments are positively mediaeval – and it’s not the fault of the front line staff. From an efficiency point of view, the government could do worse than get in an experienced German or Swiss manager to run the show…

13. Tim Worstall

Of course there are efficiency savings possible. That’s how productivity goes up, that we become over time more efficient in our use of labour to perform tasks.

However, anyone who is actually serious about cutting the cost of government would have to go rather further than that. They’d need to to cut the things that government does.

Say, the unelected regional assemblies, the dept for Business, some of the siller quangoes and so on. Take a few tens of billions off the top, pour encourager les autres, if nothing else.

It isn’t as if we get anything useful from these arms of government, is it?

It’s a crass generalisation to say “that’s how productivity goes up”. Sometimes it’s how productivity goes up. Sometimes productivity goes up through technological advancement or through exploiting workforces to a greater extent (including those overseas). Of course, you can characterise any of these things as efficiency savings, but that’s not the sense in which the term is used politically by any mainstream party.

Oh yes, I remember at an office I was working at, we were fending off calls from “Train to Gain” or something that were bordering on being nuisance or harrasment (I was told I would be in trouble with my manager later if I didn’t put them through to them). The callers must have had a weird target or something as they sounded pretty agitated to tell my bosses how they should be training their staff. So I’d say cut that right out.

In general, agreed. We want less unemployment, but we need it in productive gainful work, rather than make-work projects. One condition of achieving that is not going bankrupt.

16. Tim Worstall

“It’s a crass generalisation to say “that’s how productivity goes up”.”

Umm,. no, it ain’t.

“That’s how productivity goes up, that we become over time more efficient in our use of labour to perform tasks.”

With the proviso that we’re talking about labour productivity (which is the important thing that determines living standards and is thus the thing we are concerned about) that’s actually the definition, not a crass generalisation.


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