MPs from the three main parties have cast doubt on
government claims to have saved £26.5bn through IT and other
efficiency savings.
Gordon Brown has
told Parliament on several occasions about the achievement of
efficiency savings of £26.5bn - and he has referred to the savings
without any caveats.
But MPs on the Treasury committee are not convinced the figure
is accurate or supported by any independent evaluation.
In a report published today [28 July 2009] the committee's MPs
also draw attention to weaknesses in the way efficiency savings are
measured.
The committee was told by
Jennifer Law,
principal lecturer at the University of Glamorgan, that
"efficiency results could be manipulated by choosing a low baseline
from which to compare progress".
The committee's report goes on to question new efficiency
savings promised by the government as part of the
Budget 2009, a follow-on to
the Gershon savings (so called after Peter Gershon, who was
commissioned in 2003 by the government to assess
how the public sector could make efficiency savings and
subsequently published a report). The committee calls for a "more
business-led approach to cost-cutting in the public sector than
setting an arbitrary target and requiring the civil service to meet
it".
In May 2009, the government released a report, the
Operational Efficiency Programme, in which
Martin Read, former chief executive of Logica, said
annual savings of £4bn in back-office operations and £3.2bn in
IT were possible - but only with major changes in ways of
working .
Jon Sibson government and public sector leader at
PricewaterhouseCoopers, confirmed that change was vital if savings
were to be achieved. Sibson told the Treasury committee that,
although new savings were realistic, they required a different
approach, as the usual series of tactical efficiency savings would
not yield the required results.
He said that simplified and standardised processes were needed,
as well as improved co-operation between organisations in
government.
But the committee said:
"
We have yet to see evidence that the necessary structures are in
place to facilitate such co-operation."
The National Audit office has
twice
reviewed the government's claims to have already saved £26.5bn
under the Gershon Efficiency Review. But the NAO was unable to
confirm that the full savings had been achieved.
The Treasury committee said: "We are concerned that the NAO did
not audit the final Gershon efficiency savings. This has led to a
lack of confidence on the part of some organisations in the
reported savings we believe it is important to check that
efficiencies have actually been achieved".
But Read also told the committee that he was struck by some
instances of good management in the public sector. "One of the
things that I was taken with in doing this review is that I did see
some really excellent examples of what I would consider
best-in-class practice, and I do not believe they could have been
achieved without real leadership.
"So there is nothing that tells me that this is something you
cannot do in the public sector and only the private sector can do
that."
The committee said that the quality of services to the public
must not suffer because of cost cutting. It expressed concern that
departments can devise their own measures of service quality.
"The fact that departments can select their own measures of
quality of service may lead to a biased selection of measures that
do not give a representative picture of service quality," said the
committee's report.
On 31 March 2009 Brown
told the House of Commons: "Having achieved 86,700 workforce
reductions and £26.5 billion of efficiency savings as part of the
Gershon efficiency programme, the government are going further to
ensure that resources are focused on improving key front line
public services."
He added: "As well as delivering £35 billion of Value for Money
gains by 2010-11, the government will bear down on the cost of
running government, with 5% reductions in real terms in the cost of
running government in each of the next three years."