1 Whether the Programme is achieving
genuine efficiency improvements
1. The Efficiency Programme aims to improve radically
the value for money of the public sector. It affects all public
services, from health to education, and all public bodies, from
local authorities to Whitehall departments. At the same time as
delivering savings, departments must demonstrate that the quality
of public service delivery is not at risk. Following Sir Peter
Gershon's 2004 Report on public sector efficiency,[3]
departments were set targets to secure £21.5 billion of annual
efficiency gains, make 70,600 headcount reductions and 13,500
headcount reallocations,[4]
and embed efficiency for the long term.
2. Figure 1 shows that halfway through the
Programme the Government reported that it had achieved £13.3
billion of the targeted efficiency gains, 45,551 of the targeted
headcount reductions, and 9,412 of the targeted reallocations
of posts to the 'front line'.[5]
However, as Figure 2 demonstrates, of the £13.3 billion
efficiency gains now reported: £3.5 billion fairly represent
efficiencies made; £6.7 billion represent efficiency but
carry some measurement issues and uncertainties; and £3.1
billion may represent efficiency, but the measures used either
do not yet demonstrate it or the reported gains may be substantially
incorrect.[6]
3. There is a real possibility that some of the reported
figures did not represent genuine efficiency improvements. One
reason is that attempts to improve the efficiency of some activities
may have led to unintended falls in service quality. Demonstrating
that service quality has not been adversely affected is essential
if the Programme can be regarded as a success, and yet it has
proved difficult for several departments. For example while customer
service measures within Jobcentre Plus[7]
show that overall satisfaction among benefit recipients has been
maintained, the average time taken to process Jobseeker's Allowance
claims rose from 11 days in March 2004 to 16 days in March 2006.[8]
Similarly, the Department of Health is reporting over £1
billion of efficiency gains as a result of reducing the average
length of time patients stay in hospital, yet the proportion of
patients who are readmitted as emergencies within 28 days of discharge
has been rising consistently.[9]
The Department was unable to demonstrate that this rise was unrelated
to the initiative to reduce patients' length of hospital stay.[10]
Figure 1: Departments have reported considerable progress towards their efficiency targets.
Source: C&AG's Report, para 3.1
Figure 2: Only a quarter of reported efficiency gains are reliable.
Green: The reported figures fairly represent efficiencies made
Grey: The reported figures represent efficiencies, but carry some
measurement Issues and uncertainties
Black: There may be efficiencies taking place, but measures
used either do not yet demonstrate efficiencies, or the
reported gains may be substantially incorrect.
Source: C&AG's Report, figure 8
4. The second concern around the authenticity of
efficiencies is that some reported gains are one-off cost reductions
rather than lasting improvements in efficiency. The Department
for Communities and Local Government is upgrading fire brigades'
wide-area communication equipment to a system called Firelink
by 2010. Until the new system is implemented, the Department is
centralising the procurement for existing systems as a means of
reducing the costs. Because this is a one-off opportunity, it
will not deliver financial savings beyond 2010 and is therefore
not sustainable.[11]
Similarly, the Ministry of Defence is decommissioning some of
its fast jets ahead of their original decommissioning date of
2009. Driven by the introduction of the Typhoon multi-role fighter,
this is another one-off opportunity and not a lasting change to
the overall efficiency of the Department.[12]
5. The final concern is that unlike headcount reductions,
which are relatively well defined, the nature of headcount reallocations
varies across departments. Two departments, the Department for
Work and Pensions and HM Revenue and Customs, have reported re-allocating
more than 9,000 civil service posts to the 'front line' of public
services. While the Department for Work and Pensions only counts
positions that are customer-facing as being on the 'front line',
HM Revenue and Customs includes managers, administrative support
and IT staff that are employed in any of its business units which
it classifies as being 'front line'.[13]
To convey what is meant by reallocations, departments need to
use a consistent definition of 'front line'.
3 Releasing resources to the front line, Sir
Peter Gershon, July 2004 Back
4
Headcount reallocations are new posts that have been established
to fulfil 'front-line' roles. Back
5
C&AG's Report, Summary, para 2. Subsequent to this the Budget
reported that £15.6 billion had been achieved, along with
50,900 headcount reductions and 9,700 reallocations (Budget
Report 2007, paras 6.18-6.20). Back
6
Ibid, Summary, para 5 Back
7
Qq 8, 26 Back
8
C&AG's Report, para 3.19 Back
9
Q 7 Back
10
C&AG's Report, para 2.34 Back
11
Ibid, para 2.31 Back
12
Ibid, para 2.30 Back
13
Ibid, para 3.14, 3.15 Back
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