Cost cutting and efficiency.

In his column for this Sunday’s edition of The Observer, Simon Caulkin takes a pop at the government for thinking that that the efficiency targets that the government has set itself in this last budget can be achieved through cost-cutting programmes that will force everybody to be more efficient

Consider the operational efficiency programme accompanying the budget last week. It identified a further £15bn of public-sector savings on top of £26.5bn already claimed, £7bn to be made through obliging public-sector bodies to share back-office services such as finance and HR and buying better IT.

It’s not that there aren’t savings to be made – of course there are. Done properly, they would boost public-sector capacity beyond the wildest imaginings of the five expert advisers to the Treasury who wrote the report. The insanity is that savings can’t be got at by the cost-cutting methods they put forward, which on the contrary are guaranteed to drive overall costs higher. Not only that: by specifying the methods to be used, the government locks in far greater systemic inefficiencies at the same time as it places the assumptions behind them off-limits to examination.

Caulkin has enough imagination to see clearly that that putting the responsibility achieving its targets on the shoulders of those who are locked into single mindsets can only be self-defeating.

Part of the self-referencing madness is seeking assurance from experts who are so attached to current assumptions that they can’t see beyond them. As with recruiting Lord Laming, whose recommendations shaped the dysfunctional childcare system, to report on Baby P, getting the former chief executive of an IT services firm to advise on office efficiency is like asking McDonald’s to devise an obesity policy. Guess what, the answer is fast food! More standardised procedures, more streamlining of back offices, more shared services … in sum, more work for IT services companies.

The paradox of efficiency is that it can’t be addressed head on. It is a by-product that can only be defined in terms of its purpose. Without purpose, efficiency is meaningless. Cutting costs (the government’s purpose) only raises them for the citizen – but because the assumptions are out of bounds, the government can’t see it.

Caulkin’s article has to be read in full – and more than once – to be fully appreciated. It has be read by the right people to make a difference, but that’s another story.


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