Efficiency savings

May 2, 2010

Some fourteen months ago, in a piece entitled “Get real Read“, I was critical of the government efficiency saving proposed by Dr Martin Read It turns out that I find agreement from a respected economist in the form of Professor David Blanchflower. The Professor writes a weekly column for the New Statesman and in the edition of 19th April he attacks the proposals by Peter Gershon and Martin Read for the wooly thinking they are:

“First, a new government should stop any major new spending on IT projects and cancel existing projects which are not worth completing.

Hard to see how contracts that have been signed can be stopped. Penalty clauses might well be invoked, which would increase spending, not reduce it.

Second, a new government should be negotiating significant reductions from its major suppliers.

Gershon says that the government needs to go to its suppliers and say, “I can’t afford this contract any more – I need to spend less.”

Great idea. I plan to go to my mortgage lenders and tell them times are tough, so I would like them to halve the interest on my mortgage.

Third, a new government should outsource its back-office processing functions without any delay to realise substantial savings.

Most of this outsourcing has apparently already been achieved. Few if any savings here.

Fourth, a new government now needs to take the same tough approach to costs that has led to substantial savings in the private sector.

The private sector over the past year has reduced employment by more than half a million. To save £6bn, you can fire 200,000 public-sector workers who are paid, say, £30,000 a year on average. A really bad idea.

Fifth and finally . . . stop trying to micromanage delivery and allow all providers . . . to innovate against some broadly defined outcomes.

Hard to see how this can generate any savings quickly, or what it means for teachers, nurses, civil servants or policemen. Hopeless.”

I’ve attacked these proposals before, particularly the third, since outsourcing the back office is just giving money away to suppliers – we need to rationalise the back office to make savings, which can never provide quick wins for central government, since it may require changes to legislation and will definitely require improved processes.

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April Fool

April 1, 2010

When I first read the news on Kable that Sir Peter Gershon, ex-head of the OGC and former government adviser, was now advising the Conservative Party to outsource all back office functions, I thought it was an early April Fool!

The Financial Times also seemed a bit surprised by his transfer of allegiance to the Conservative Party and their ideology, reprinting some of his old quotes, when still a “mandarin”.

Perhaps what annoys me is that he is still pushing the adage that outsourcing the back office will save money. Who is he working for now? EDS, IBM, Capita? All that happens when you transfer the back office outside local control is that the government continues to pay though the nose for the existing service and the citizen gets a raw deal as the private sector tries to make bigger profits.

OK, the services are taking time to change. The answer is not to outsource a process heavy system but to pick prime applications that are ready for improvement and look at them end-to-end, particularly from the view of the citizen, then change them to be better for the citizen, whilst reducing the density of process and resultant cost overhead. The saving can then go into the public purse not the shareholder pocket!

We’ve been kicking this one around for over ten years now. Transformational government is not about delivering electronic services, it’s about improving the whole process, the fact that web front-ends or call centres appear should only happen when the process is examined for defect or variation.

Go on Peter, pull the other one!


Service quality and efficiency

August 5, 2009

In the House of Commons Treasury Committee report Evaluating the Efficiency Programme, Thirteenth Report of Session 2008–09 printed 21 July 2009 there are some recollections to a National Audit Office report of 2007 and its requests when implementing the Gershon programme of efficiency savings. They’re focusing on HMRC but the conclusions are applicable in any application of Peter Gershon’s ‘amazing’ ideas.

In their own words on page 26 of the latest report it is proposed that:

” 75. We welcome the Government’s assurances about maintaining service quality in light of the drive for efficiency savings. However we are concerned that reported measures of service quality are inconsistent with some of the evidence we have received.

We acknowledge that creating new measures may incur costs, but ensuring that service quality is not adversely affected by efficiency savings should be a priority. The fact that departments can select their own measures of service quality may lead to a biased selection of measures that do not give a representative picture of service quality.

Departments should work with the NAO to define adequate service quality measures preferably using data drawn from users.”

Further along on page 28, the committee asks that:

11. To ensure that only true efficiencies are captured and reported, it is important that they are measured appropriately and accurately. We expect Government departments to have implemented the NAO’s recommendations concerning measurement. We expect the Treasury to monitor the progress of departments’ improvement in measuring efficiency. ”

I wonder what’s happened the next time they look? How can service quality be measured without analysing feedback from the customers?

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