13 August 2012

Last week the British Government announced public sector efficiency savings. The Cabinet Office minister spoke of £5.5 billion over the last year, which he said had been saved without harming front line services.  Savings of £20 billion were to be achieved over the coming year. The Minister acknowledged that such a four fold increase will not be easy, and that the policy has met with significant resistance in Whitehall. But he was infuriated “…that for years governments frittered away billions of taxpayers’ pounds on wasteful consultancy, superfluous advertising, disastrous IT projects, and on renting property even when there was state-owned freehold space vacant nearby.”

The Guardian’s perspective reflects the Whitehall resistance referred to by the Minister.  Its report was that  “…the government’s leading axeman and his team at the efficiency and reform group continue to maintain that cuts to back-office service don’t harm frontline services.”

The use of the term efficiency is interesting. The language that accompanied the new public management movement was of economical, efficient and effective services. That is the language of the State Sector Act. The Crown Entities and Public Finance Acts refer to efficiency and effectiveness (although the State Owned Enterprises Act includes none of the terms.)  The Better Public Services Cabinet Papers indicate that the statement of chief executives’ responsibilities in the State Sector Act is to be restated in amending legislation to include “the efficient, effective and economical management of the activities of the department”.

In public management jargon, being economical relates to inputs, efficiency relates to outputs, and effectiveness relates to outcomes. In these terms the focus of the British Government on efficiency could be viewed as a reduction of outputs- rather than a drive to get results. That is what its critics say is happening. Spending has been cut back, with the result that less is being done.  

The Whitehall Watch blog notes that

 “…to be fair to Government, sometimes it is necessary to cut spending (inputs) whatever the affect on outputs. And sometimes areas of Government spending can be cut altogether because they are not priorities or they are not working. But what is wrong is to claim these as “efficiency savings” because they are not…”

“NOT ONE of the ‘savings’ listed by Government today is an efficiency saving on the information we have – they are all just cuts to inputs. Many of them have the potential to not only damage immediate outputs but to cause longer-term problems that will cost Government dearly..”.

“Independent Audit – government claims their figures have been “independently audited” and when I first called the Cabinet Office they first claimed this was “by the NAO”. When I queried this the position started to shift and it appears they have been “independently audited” by some internal audit process and whilst they “welcome” audit by the NAO this has not yet happened…”

“NB – just in case anyone thinks this critique is “political” – I said exactly the same things about the “efficiency” claims of the last Government…”

The Better Public Services Report aspiration that in New Zealand the State sector  does more with less, is framed in appropriately effectiveness focused terms.