Today’s Queen’s speech will set out the Tories’ public service reform plans. Are spending cuts and service reductions the only story, or will they also unveil measures to improve efficiency, by maintaining quality of services while cutting their cost?
Maybe the chancellor, George Osborne (it’s him we look to for any kind of strategic conception), has a magic formula that he wasn’t able to conjure during the past five years. Maybe his acolyte, Cabinet Office minister Matt Hancock, will turn out to be more than just an axeman with a dogmatic belief that all you need to do is tender more government business to Serco and Capita and all will be well.
Calculating efficiency in the public sector involves dividing the costs of a service by output. But to do that, you need a baseline and consistent measures over time.
Ingenious Oxford academics have noted that over the past three decades, Whitehall has run an experiment in how well we do government. Tory and Labour ministers promised “transformation”; they touted the benefits of “new public management”. The mantra goes: copy private business and the public sector will get more efficient. The state should “steer, not row”, said the Tories before 1997. Blair’s mantra was “delivery”. Under the coalition, we heard about “armchair auditors”, the power of data and (again) bringing in businessmen.
Now here is a study comparing the running cost of government over 35 years with – a crude but significant measure – satisfaction with public services. If new public management worked, then costs must surely have fallen while satisfaction rose. Amazingly, you can’t do the sum, at least not reliably. That’s because governments kept chopping and changing and sometimes not even bothering to collect the relevant figures. Even the basic data needed to assess performance is lacking. Take what civil servants are paid: Whitehall’s salary bill isn’t calculated in a form that allows comparison from one year to the next.
Painstakingly, by quizzing civil servants and popping in FoI requests, Chris Hood and his colleague Ruth Dixon have joined disparate data series, recalculating backwards and filling in the gaps with guesstimates. They show that over the past 30 years, the running costs of central government have risen, and as far as we know they have for councils too. Civil service pay increased in real terms from about £15bn in the early 1980s to £16bn in 2012, despite a 200,000 reduction in numbers. Running costs (excluding defence) rose in real terms from £15bn to £30bn in same period.
But greater costs have not led to higher satisfaction. Again, data is sketchy. Ipsos Mori asks about satisfaction, and the answers go up and down; there is no long-run trend either way, with today’s satisfaction levels (55%, the same as the 80s) and dissatisfaction (30%) about the same. Other long-run studies such as British Social Attitudes point to “mostly worse or unchanged”. Add to that proxy evidence for the consistency and fairness of government in the shape of complaints to ombudsmen or court cases: both seem to have increased. Between 1990 and 2012 complaints to the parliamentary ombudsman alone doubled to 2,000.
The study suggests that contracting out and the huge expansion of consultancy may help explain the rising costs; a £1.8bn, 10-year Inland Revenue IT outsourcing project involving EDS, begun in the 1990s, shows no detectable effect on efficiency, the report concludes. There are bright spots. Collecting taxes has got dearer but costs have decreased relative to receipts of VAT and income tax. Yet in HMRC as elsewhere, there is virtually no evidence that big spending on IT has had any effect on efficiency.
So today the Tories should make two heavyweight commitments, if they do want to improve and not just cut. One is about transparency and open government: ensure key data series, about pay and output and complaints, are not tampered with so 2020’s figures are compatible with 2015’s. The other is to stop all the big talk about transforming services whether through IT or hackneyed models imported from private business.
