Features: May 27th, 2009

Never waste a crisis, but make sure that benefit comes from all the pain and suffering. The Treasury’s Operational Efficiency Programme does just that. The recession, and particularly the government debt, has focused minds on change and created a willingness to see things differently. Public service history shows that without minds that have been opened by events it is very difficult to make change happen.

The Operational Effectiveness Programme sets out radical proposals for change involving all but the smallest public service organisations. It is probably the biggest shake-up of public services since 1854 when the Northcote and Trevelyan review found that the 16,000 strong civil service was staffed mainly by people who were unable to stand the competition of their contemporaries in other professions because of indolence, lack of ambition or incapacity. That crisis opened minds and brought radical service wide reform to the world of the 19th century.

The Programme is about sweating the assets of public bodies, including people and property and getting them to collaborate with each other. The total efficiency savings for all the measures is put at £15b with a further potential saving of £20 from property sales in the next ten years. The main strands of the Programme are Shared Services, Collaborative Procurement, Property Asset Management
and Total Place. .

Shared services, which include all back office operations, can deliver £4bn pounds of efficiency savings a year and a further £3.2 b of efficiency savings a year on IT spending. This can be achieved through sharing back office services, better management information, benchmarking and review of costs and better governance of IT-enabled change programmes.

Collaborative procurement proposals will result in a shake-up of procurement across all UK public sector organizations. It is estimated that efficiency savings £7.7 billion will be produced by 2013-14. The 44,000 UK public sector buyers include some 20,000 schools, 355 English local authorities, 43 police forces, around 500 NHS trusts, plus central government departments, agencies and non-departmental public bodies.

The Property Asset management strand will produce potential efficiency savings over the next 10-years of around £20 billion in receipts from property disposals, excluding council housing, and savings in running costs of up to £5 billion a year by the end of the period. In contrast, savings from the other strands of the Programme will amount to some £13b. The efficiency savings will come by getting top managers involved in property asset management and by adopting private sector practices, such as reducing the space to people ratio.

Sweating the people assets is not about creating town hall or departmental sweat shops, but making use of the talents of people to innovate and do things differently. The people assets are in place, but the culture does not encourage them to be inventive nor to think outside the box. On the contrary, the organisational frameworks in which they work, such as professional boundaries, budgets ring-fenced to specified uses and targets related to defined functions, severely limit the scope for innovation. The Total Place strand is about bringing together elements of central government and local agencies within a place
to promote innovation and to reduce bureaucratic burdens on the frontline.