It's a long road to genuine cost cuts

Some Conservative and Labour politicians talk about cutting waste as if central government's excesses were stacked up like tins...

Some Conservative and Labour politicians talk about cutting waste as if central government's excesses were stacked up like tins on a wall, waiting to be shot down. The reality is that the tins are fixed to the wall and the guns fire blanks - although they make a lot of noise.

The Gershon Review, instigated by Labour, says that government departments can cut £20bn from their administration costs by 2008. The James report, instigated by the Conservatives, projects savings of at least £34bn.

The savings identified in both reports are largely dependent on technology. A merging of departments, for example, will only save enormous sums if there is a uniform way of doing things, supported by modified or replacement technology which, ideally, has been standardised. That is one reason why Tony Blair, in an address to government CIOs, said technology is central to the reforms arising from the Gershon Review.

But between the genuine wishes of politicians to cut the administration costs of central government and reality there lies a chasm many miles wide.

The merging of Inland Revenue and Customs & Excise seems a straightforward way to cut costs - both departments collect taxes and enforce the payment of them. But the Revenue and Customs have not yet, after six months of discussion, reached agreement about standardising their main IT contracts, let alone bringing together tax and customs duty collection software, or introducing standardised business processes.

No doubt there will be a single contract eventually, largely because of the diligent and gifted efforts of Steve Lamey, CIO at HM Revenue and Customs. But that is only a first step towards reform.

Just as Lamey gets to grips with more profound changes such as creating uniform and simplified business processes, which will yield the biggest savings, his plans will probably be consigned to history by ministerial announcements.

If private companies were run like governments, there would probably be no mergers.

There must be cost cutting in central departments. The potential savings are enormous. But it would be better to advance only the basis of learning the lessons from trials in smaller departments which adopt standardised, simplified systems and processes. This has already worked successfully at the Crown Prosecution Service, for example.

The successful reforms are likely to be those that ministers crow about after they are achieved - not before.

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