Monday, April 27, 2009

Cutting Public Spending by £90 billion!

If UK PLC popped along to see its bank manager, around about now, and asked to extend its overdraft by £606 billion over 5 years plus no date for the start of repayments he would say No! In fact, were it not for the bank of England printing money to buy gilts back, there is quite a high likelihood of a gilt strike. That is where the normal gilt buyers refuse to buy, leaving the government high and dry.

The bank manager would be looking for cuts in expenditure of at least £50 billion. The problem is that would be drastic. With that in mind I read the following email from A Ferrand Stobart & Associates:

Could someone please recognise that to economise in any service, public or private,one does not cut the service, one cuts out the current waste in providing that service which often actually improves the service

£15bn of economies are proposed in the Budget in the Public Services, about 2% of total expenditure, Reform says £30bn is possible 4%,. The Taxpayers Alliance has quoted £80bn, 10.5%, In 20 years of work in the field of operational improvements leading to cost reductions I have never found less that 12% and often up to 15% of benefits [cost reductions] achievable in the 12-18 months after revised system installations, £90 - £112bn. per annum in the Public Services possibly !! The Government/Chancellor are setting a very low target for economies which are quite certainly there to be had.

I have personally examined several Public Services in my time, and worked in a few of them. The most interesting reaction to what was called "analysis", establishing whether there was potential for improvement before offering to deal with it, was from a large department in constant touch with the public. [I shall not name names and it was some time back]. The problems, waste and frustrations at "shop floor" level were the same as at any other clerical operation that I had looked at. Plenty of opportunity for improvement, and I had an enthusiastic talk with a union shop steward on the possibilities !

But when I presented my findings to the top civil servant in charge, he was not pleased. He had wanted a report that his department was working well !! I do not think that he went "out on the floor " much.

If a way could be devised that the staff in a Public Service were rewarded by part of the cost of the waste they stopped, one might get somewhere. This has now been suggested by Conservatives ?

As Lord Digby Jones said recently "the work could be done by half the people", as the Book of Common Prayer says "There never was any thing by the wit of man so well devised or so sure established which hath not in the continuance of time become corrupted", and as Cicero said "Men do not realise that a great revenue may be had from economy"

Now, that is quite some savings, particularly from a relatively simple change. That said they could also scrap the stupid accounting rule that all budgets must be spent by year end or else you lose the balance and have it removed from your next years budget. With that sort of threat of punishment is it any surprise that budgets are pretty much always spent in full whether what it is spent on is worth while?

1 comment:

Timothy (likes zebras) said...

This was interesting to read - thanks Benedict.

I'd like to note that the frontline Union officials come across well - doesn't accord with some of the unreconstructed Tory propaganda. Not so confident about the higher reaches of the Union bureaucracy though.