The current Government has set out a hugely ambitious target to reduce public spending: in some areas, cuts will amount to 30% since 2010 once they are fully implemented. There are already signs of strain in some areas, such as the NHS. But at the moment, we are not even halfway through the total cuts that are planned , which stretch well beyond the 2015 election. So does this mean services have to be cut, or can we do more with less?
The SMF hosted Professor Patrick Dunleavy, Public Policy Chair at the LSE to speak about his recent research on Government productivity: what works, what doesn’t, and what’s useless. The answer to the question of whether we can do more with less, is yes. There is scope to improve productivity. But we need to get much better at working out how to do it. Despite talk every few years of “efficiency savings”, our record on improving productivity in the public sector is patchy at best.
Professor Dunleavy outlined some success stories: following investment in IT in the late 1990s, UK customs have managed to cope with much larger volumes at little extra cost. The merger of HMRC and Inland Revenue, as well as the shift to online tax assessment has pushed up productivity there too. So examples show that it is possible. But there are some areas where productivity had barely moved for 20 years: social security administration has had to cope with underinvestment in IT and substantial reorganisations.
So what works, and what doesn’t? Broadly summarised, the” to-do list” includes:
- Measure: we need to collect productivity statistics at the organisation level, not the public sector-wide level. Otherwise, we won’t know where we are doing well, where we are not, and what works.
- Use new technology: fully exploit the advantages of “going digital”
- Think again about what services to provide: there are some areas of public services that no longer work well or are needed. And there are other areas where higher productivity entails the citizen doing more: an analogy in the private sector is the replacement of the small grocery shops of decades ago where staff would go off in search of items, by supermarkets where consumers choose their own items off the shelf.
- Finally, do the hard work. Sometimes this won’t be about big new revolutionary ideas; sometimes it will be about incremental improvements. Management need to focus on continuously improving services; and public sector workers need to be encouraged to find and suggest ways of doing thing better.
In addition, there are some things that should go on the “not-to-do-list”. These include:
- Spending on consultants does not increase productivity, according to the data
- Outsourcing. It is hard to come up with contracts that genuinely incentivise improvements; and it is also hard to make public sector markets work
- Constant reorganisations, which focuses management attention on the reorganisation as opposed to productivity improvements, and risks increasing complexity.
Some of these will no doubt resonate a lot with those working in the public sector. In some ways, striking items off the to-do list is the easy bit. Working out how to implement the to-do list itself is the hard part.