Headlines: July 14th, 2004

The first ever review to look across the totality of public services is set to put efficiency at the top of the agenda of all public sector managers. ‘Releasing Resources to the Front Line – Independent Review of Public Sector Efficiency’ produced by Sir Peter Gershon, former Head of the Office for Government Commerce, aims to embed an efficiency agenda in the fabric of the public sector. The report pulls together efficiency measures already in progress, provides maps for securing efficiencies in functions common to all public bodies, provides a framework for monitoring delivery of efficiency plans and lays the groundwork for an on-going search for efficiency.The report, which has been accepted by the Government, has identified measures which by 2008 will produce annual savings of some 21b pounds. Central government will contribute 8m pounds to the total and local government and the health service will each contribute some 6.4m pounds.

The Gershon review team found that despite an investment of 6b pounds in Public service IT since 2000 there had been a failure to restructure processes to reduce paper handling. Where this had been done, for example in the Department for Work and Pensions, the cost of a payment had been reduced from 1 pound to 2p. This failure to restructure processes was compounded by limited effort to encourage customers to use the new services. The team also found that public bodies preferred a policy of self sufficiency in which they provided all their own services, such as back office systems, which were replicated across many organizations. Customer power was found to be lacking, so that there was little user influence and there were also inadequate incentives to adopt best practices.

The report identifies target areas for efficiency gains. Generic areas of activity across all parts of the public sector, such as back office functions- human resources, finance, IT – and transactional services can be simplified and standardised. Procurement can be sharpened up by adopting a professional approach and ending multiple buying by many purchasers from a single supplier. Public service policy, funding and regulation can be streamlined to end situations where an organization has to seek funding from 40 different streams while it is regulated by 30 inspections. The productive time of teachers doctors and police officers can be increased by reducing bureaucracy and providing assistance, such as street wardens who will relieve pressure on the police.

The report recommends that public bodies simplify and streamline their generic functions before they seek to share services with others, or to outsource.

Responsibility for delivering the efficiencies will rest with central departments who will cascade down their commitments to health trusts, local councils, police and other public bodies. This will create a public service efficiency delivery chain. Change agents will ‘advise’ departments on efficiency plans and implementation. Agents will include outside experts. John Oughton, Head of the Office for Government Commerce, will lead an Efficiency Team and report progress to the Prime Minister. The Team will work with the change agents. Monitoring progress in delivering efficiencies will start in the Autumn. John Oughton will also take the lead in identifying the scope for further embedding efficiency within the public sector during the 2004 Spending Review period and beyond.

The Gershon report is available at: http://www.hm-treasury.gov.uk/media//879E2/efficiency_review120704.pdf