Tuesday, 13 April 2010

Winning the Efficiency Debate

Today's disappointing news is that the polls have narrowed - one shows the Conservatives with only a 3% lead. Hopefully today's Conservative manifesto launch will play positively and push things in the right direction...

One of the widespread concerns about any future government is how they will deal with the deficit (the annual overspend). Everyone knows that whoever is in government, reductions in spending will be neccesary.

Over many years the Labour party have consistently characterised the Conservative party as being hard and heartless. The constantly repeated mantra's such as 'unemployment is price worth paying' (a Norman Lamont quote) have fairly firmly positioned the Conservatives in this way.

This creates a fear that in government, the Conservatives would cut spending and in so doing would create misery and mass unemployment, and the Labour party are not missing any opportunity to drive this point home. Again today, Gordon Brown rammed this home in his reaction to the Conservative manifesto. It works. It creates fear of recession, unemployment and misery.

So how should the Conservatives deal with this?

Should they ignor (like Labour are) the 'elephant in the room'. Should they try and get thro this entire campaign without really talking about reducing spending or should they address the issue?

My argument is that they should address it because unless they do, and address the pre-conceptions that Labour have positioned they will not be able to overcome the electorate's reservations.

But how should they do this?

Well here's my attempt to change the basis of the debate:

The first thing to really properly challenge is the idea that a reduction in spending means a reduction in public services.

Eh? But how could you possibly make an argument that you can reduce spending without cutting services? Surely if you cut spending you cut services exactly as when you increase spending you improve services?

Herein lies the key.

Let's look at the last 13 years. Bear with me on this...

In 1997 we had a booming economy. The dilapidated buildings, shabby streets and poor public services of the late 1970's and the early 1980's (the legacy of Labour's Winter of Discontent) had been finally eradicated after some turbulent and difficult years. By every major economic indicator the UK had been turned around from being 'the sick man of Europe' to a stable, highly competitive economy. Government spending in 1997 was £318 Billion.

From 1999, after Labour came to power in 1997 and abandoned the balanced approach to Government spending established by the Conservatives, spending shot up. Not just a bit, but massively.

If government spending had simply kept pace with inflation since 1997 by 2009 it would have stood at around  £430 Billion. But in fact by 2009 government spending stood at a staggering £638 Billion. So, even allowing for inflation, government spending increased by around 50%!

And so, presumably having increased spending by 50%, public services have improved by 50%? Because in exactly the same way as when you reduce spending services are cut, when you increase it the quality of services increases?

Ahh. This is where the preconception falls apart. Because we all know that a staggering increase in spending has not resulted in a staggering increase in public services. In fact, in many instances the opposite is true. Education standards have fallen, violent crime has risen, measures to improve social mobility have failed and gone backwards, and people are still dying in hospitals, not from disease but because the hospitals STILL are not clean despite huge increases in public spending.

So where did the money go?

Well, rather than the quality of public services being driven up by demands to increase efficiency and outcomes by striving for the development of increasingly better ways of doing things - the Labour government niaively threw money at them.

So how did this help people deliver better outcomes?

It didn't - obviously. Labour belatedly tried to impose a lot of crude top-down targets but the reality was that with more money to spend, public services didn't improve in quality. No-one was motivated to continue to drive efficiencies or plan improvements - they just didn't need to..

It's simple stuff really. If you want people to do more, you don't just give them more money and hope they will deliver. You explain what you want, you ask them to create a plan for acheiving the goals and then having stress tested the plan, you supply the resources needed to achieve the plan.. you don't just give them the cash and hope and then try and measure how much they are failing to achieve the results established in a plan that never existed!

So. Are our public services bloated and inefficient? Yes. But this doesn't mean that people working as public servants are lazy. Far from it. Many work incredibly hard but spend a massive amount of time dealing with imposed procedures, time-wasting process, box ticking, reporting and analysis rather than just delivering the required outcomes.

But surely it can't be true. Surely we can't just save money by changing the way things are done in the public sector?

Yes absolutely.

Public sector spending has increased by 50% in a little over 10 years in real terms but without any appreciable increase in output - so 'relative waste' must exist.

If you can increase spending and get no change in output then why can't you, following this, reduce spending without substantially changing the outputs?

If the last 13 years had been highly efficient years in which every penny had been pinched and every efficiency had been driven, every wasteful cost cut then it would be very difficult... but the last 13 years have been ones in which the oppositive has been true.

But does it represent a challenge?

Yes. Of course. It will not be easy but clearly, with the right team, it is acheivable.

We need a government with some pedigree and capability to drive this change. We need a government made up of a broad range of high acheiving (and well educated) people with a good mix of public sector and private sector experience. People who have acheived organisational success before...

Not people who know how to throw money at problems but people who have the vision and understanding to do things better. People who are not constrained by the beleif that if you simply throw money at things they will improve.

And with that team, and that approach, people can migrate from the public sector to the private sector and fuel the next period of growth. There's no need to be fearful of unemployment. The last thing a Conservative government wants to do is create costly unemployment - currently there is a shortage of people in the private sector. We need to get people from the public into the private sector to fuel the growth and prosperity we need.

Nuff sed.


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