Francis Maude boasts of £10bn savings but …

By Tony Collins 

This morning Cabinet Office minister Francis Maude held a press conference with his senior officials to announce that civil servants have radically changed the way they work to save £10bn in 2012/13.

The savings are nearly £2bn higher than originally planned and, according to the Cabinet Office, have been “reviewed and verified” by independent auditors.

With a little journalistic licence Maude says: “…we are on the way to managing our finances like the best-run FTSE100 businesses.”

The breakdown of the £10bn savings:

Procurement   £3.8bn
Centralisation of procurement for common goods and services  £1.0bn
Centrally renegotiating large government contracts  £0.8bn
Limiting expenditure on marketing and advertising, consultants and temporary agency staff   £1.9bn
Transformation savings   £1.1bn
IT spend controls and moving government services and transactions onto digital platforms  £0.5bn
Optimising the government’s property portfolio  £0.6bn
Project savings   £1.7bn
Reviewing performance of major government projects  £1.2bn
Taking waste out of the construction process  £0.4bn
Workforce savings   £3.4bn
Reducing the size of the Civil Service   £2.2bn
Increasing contributions to public sector pensions   £1.1bn

Comment

It’s good news and the figures don’t seem plucked out of thin air which sometimes happens when central government announces savings.

The big question is whether the savings are sustainable. Maude has inspired the Cabinet Office’s Efficiency and Reform Group to be motivated and hard-working. But bringing about long-term change in Whitehall – as opposed to restricting consultancy contracts and cutting annual costs of supplier contracts by reducing what’s delivered – is like peddling uphill. How long can you do it without losing motivation and energy? It’s not just parts of the civil service that are resistant to the savings agenda – it is also some IT suppliers, according to Government Computing.

It’s likely that only profound changes in central government operations and working practices will outlast the next general election. At the moment the civil service is like a rubber band that has been stretched a little. It wants to return to its standard shape, which the next government may allow it to do.

The National Audit Office said in its report in April 2012 on the Efficiency and Reform Group in 2011/12:

“Savings to date have differing degrees of sustainability.”

The NAO also said this:

“It is not fully clear how ERG intends to make the reforms necessary to secure enough savings over the rest of the spending review. ERG has yet to translate its ambition for saving £20 billion by 2014-15 into more detailed plans.

“ERG has made progress in developing strategies across its wide range of responsibilities, and is focusing on core activities likely to produce savings. However, until recently ERG’s focus has mainly been on the savings themselves, with less emphasis on delivery of the longer-term changes and improvement in efficiency necessary to make them sustainable.”

And this:

“Departments have still tended to lack a clear strategic vision of what they are to do, what they are not, and the most cost-effective way of delivering it. Much of departments’ 2014-15 savings are likely to come from further reductions in staff. Sustainability of these savings will depend on developing skills and working in new ways while maintaining staff motivation and engagement.”

But the NAO was generally positive about the ERG’s contribution to savings.

“ERG’s actions to date, particularly its spending controls, have helped departments deliver substantial spending reductions.”

We hope the Cabinet Office’s diligent efforts continue  – sustainably.

Efficiency and Reform 2012/13 savings. Summary report.

Some suppliers still resistant to change? – Government Computing.

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