Aiming for an efficient outcome

28 November 2011

While this is undoubtedly a challenging time for the public sector, many see it as a real opportunity to do things differently – and better. Colin Cram, who will chair Public Service Events' Efficiency and Reform conference, looks at some of the challenges

Amid dire warnings about the state of the global economy, meeting the public service expectations of the electorate will become increasingly difficult. The argument in favour of reducing the deficit quickly is to avoid a risk of credit downgrading and to avoid higher interest rates. Put simply, the more interest we pay on the national debt, the less there is available to spend on public services.

The government is focusing on trying to maintain public services through increasing the efficiency with which they are delivered. There is plenty of evidence to support the assertion that significant efficiencies can be achieved. However, knowing how much and where is not so clear.

The NHS has often been quoted as an example where investment increased rapidly, but where productivity did not increase proportionately. Pre-1997 there was an outcry about the low salaries of doctors and nurses and a serious difficulty in recruiting them. Consequently waiting lists were very long. So the increase in investment in the early years of the Labour government was to rectify that, not to increase efficiency. Also when vacancies are filled, costs go up. But increased staffing should mean earlier and better treatment. Putting a value against that can be very difficult, but it is part of the efficiency equation.

The evidence that significant efficiencies can be delivered comes both from successes and failures. Too many IT projects have overrun in time and cost. This is most likely to happen when there is a political imperative and normal project controls are ignored. Political over-enthusiasm – some may call it irresponsibility – can be a cause.

Sometimes the ideas may be ahead of the technology, or legacy systems may get in the way. Learning from the past, the government published its ICT strategy earlier this year and a key aim is to deliver better services at less cost through re-using and sharing ICT.

Another indication of inefficiency is the disjointedness of the public sector. There have been plenty of reports, including that of the National Audit Office, Sir Phillip Green and the Institute of Directors that have demonstrated that best practice procurement is, overall, impossible, with the inability of most organisations to afford the specialist expertise needed and lack of leverage.

The disjointedness, however, also allows for innovation and piloting of ideas. There is little doubt that the funding cuts to public sector organisations have galvanised many organisations and people to approach things in a new way. Local authorities are increasingly adopting shared service models. The outstanding example of this is the councils of Westminster, Hammersmith and Fulham, and Kensington and Chelsea combining many of their front and back-office services. There is every indication that this will be successful and, if so, there will be a huge boost to shared services in local government and other parts of the public sector including the NHS.

Shared services are one way of dealing with the structural issues in the public sector that make joined-up working so difficult. Another is to tackle the structures. Much of the public sector still operates in silos. Community budgets will enable an all-round service to be delivered to citizens, and 16 areas will be piloting this approach.

It is easy to ignore more traditional approaches to delivering efficiencies. They may sound less exciting, but can often deliver savings quickly. Both local government and the NHS have their efficiency programmes. The years before the last election were characterised by a Whitehall-driven top-down approach to efficiency. There is debate about how much progress local government made, though an industry grew up in efficiency measurement. Local government claimed it could do better without interference and the present government called its bluff – making huge funding reductions to emphasise its point.

The Local Government Group has risen to the challenge and created the local productivity programme. Engagement with the programme is increasing, but it will need to be much greater if Whitehall is to be kept at arm's length.

The NHS QIPP programme, introduced by the previous government, remains intact and will be key to delivering a good chunk of the £20bn efficiencies the NHS is required to deliver.

All these topics and more will be covered at Efficiency and Reform 2011 by a line-up of presenters including Lord Bichard, Colin Barrow leader of Westminster Council, Siobhan Coughlan, of the Local Government Group, Bill McCluggage, HM Government deputy chief information officer, Amyas Morse, Comptroller and Auditor General at the National Audit Office, and Steve Fairman, director of improvement and efficiency NHS South Central.

Colin M Cram is managing director of Marc1 Ltd

(The conference runs on 29 November, get the full details here).