Many departments can cut by more than 10% without damaging services

There was a good cartoon in the Telegraph yesterday – the main party leaders not wishing to pull the Excalibur of spending cuts out of the stone.

Public budgets are well defended by lobby groups, BBC journalists, underemployed senior public sector executives and even by many MPs who seem to think it their job to recommend record spending levels rather than striving to do more for less like the rest of the economy.As a result in the public debate you are only thought to be serious about reducing spending if you identify important public servcies you would cut or damage. The irony is that the public sector has so much more scope to do much more for less, because it has not been any good at raising productivity or finding “efficiency savings” over the last decade. It has been the lost ten years for productivity gains and for cost control.

Let me defend the government on one thing. They have at last decided they need to reduce the rate of sickness absence in the NHS. They must have the figures and should be able to analyse them to know where the sickness is genuine and where, if at all, it is a reflection of poor morale and sloppy practise. Their figures imply they think there is a big problem in the NHS. I have been probing and recommending that they take on this challenge in the wider public sector for years, and have asked questions in the past about relative levels of absence in different areas.

I did have to encourage the sickness rate down at a private sector company I helped turn round years ago. You can do it, if the high sickness rate reflects poor morale and a culture of offering sick notes or just ringing in to say you feel ill when others would get on with the job. If the sickness peaks around Fridays and Monday, if it is higher near to public holidays, or if staff are heard talking about when they might fit their sick leave in, an employer should know he has to do something. Usually it is sufficient to make it clear you want it to go down, and then to have words with the most glaring offenders. Other employees can then be heard to say “About time too, we have been carrying him or her for years”. So my challenge to the government is not over their new intent, but to ask why haven’t they done anything about it over the last 13 years. Why should we believe this close to an election that they have suddenly discovered how to do it, and now have the will to take on the task?

Let me bring it down to an intelligible level. I have just completed a two year improvement in what I deliver for how much I cost the state as an MP. Starting from 17th cheapest MP in 2007-8, I decided to cut my office costs, staff, travel and expenses budgets by an overall 10% in each of the two years 2008-9 and 2009-2010. I began this programme before expenses became a lively topic of media debate. I have managed to do that, whilst still providing the same level of service. The only “cut” was to replace a printed regular report to constituents with an electronic one, which provides more information more regularly. None of this required redundancies.

Over the next two months if re-elected I have an opportunity to use natural wastage to make a further reduction in costs. The Head of my Parliamentary office has decided to move on to a new opportunity in the private sector, and my part time case worker and organiser in Wokingham is retiring. I currently run my combined Parliamentary office with two full time equivalents, or three people. I am naturally asking myself if we can streamline and improve more. That will require thought and discussion with those involved.

Every part of the public sector should use every retitrement and every departure for other reasons to question how they can run things better and cheaper. Parts of the pbulic sector would work better with fewer people. In some places the bureaucracy is stifling.

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34 Comments

  1. Posted March 28, 2010 at 10:02 am | Permalink

    Good work with your economy drive. I have to say that some government departments, quangos and council services could be cut by 100% and nobody would notice.

  2. Simon D
    Posted March 28, 2010 at 10:17 am | Permalink

    I don't think the public and sections of the media and political class have quite grasped the revolution that has been going on in the public sector. There has been massive inflation in both numbers and remuneration. It is also much better to work in the public sector because of the stunning pension entitlement and the greater job security. Here are figures for Higher Education:

    Vice Chancellors (average salary) 190,000
    Russell Group VCs (average) 250,000
    VC UCL 404,000
    VC Nottingham 333,000
    VC Oxford 327,000
    VC Birmingham 332,000

    A recent advert for a secretary to an NHS Trust – basically a job shuffling board papers around and taking minutes – came in at £85,000. These gross excesses should make the public sector the area of choice for young people – except for the very brightest who still want to chance their luck in scaling the heights of the City, law, accountancy or the top jobs in industry.

    A brief study of the BA cabin crew strike demonstrates that once you pay the unionised workforce ridiculous salaries you are stuck with them. Its called 'employment law', stupid. Even the luckless Mr. Walsh is not suggesting that Cabin Services Directors sitting in an aeroplane galley for a few hours filling in forms and earning more than MPs should take a pay cut.

    Once you create useless posts (like paper-shufflers in the NHS) if you try to get rid of them you will be reviled for making 'cuts' or 'Tory Cuts' or 'cuts on the level made by Mrs. Thatcher'. The process is bedevilled by adverse spin and is nothing like reducing head count in the private sector.

    You will need dynamite to get rid of the public sector monster that New Labour has created and, as each stick is detonated, the usual suspects (including the unions) will be out on the streets violently demonstrating about what it going on. It will be a reprise of the poll tax riots and will be covered at length by the BBC in an 'even handed' way on a world-wide basis.

    The only people that the politicians and the media will not be able to fool will be the bond markets, who will be carefully monitoring the party in the public sector and the inability of politicians to sort it out. They will make their move at the appropriate time.

    If you are thinking about buying gold, buy it now before the hung parliament is elected.

  3. Posted March 28, 2010 at 10:25 am | Permalink

    I don't think we can underestimate the power of the BBC in distorting this debate.

    The same BBC whose executives pay themselves astronomical sums and justify it with spurious private sector comparisons.

    The same BBC who tighten their belts 'politically' by axing intelligent, popular digital radio stations rather than the mindless c**p of their downmarket digital channel.

    The same BBC who distort private sector internet and publishing markets by flashing around their vast wealth.

    The same BBC would never, ever give you a fair hearing.

    And, of course, the same BBC who want to put me in prison if I don't buy their services.

    They really are a cancer in Britain's body politic.

  4. Antisthenes
    Posted March 28, 2010 at 10:41 am | Permalink

    Mr Redwood you are an exception to the rule, you had no profit motive to prompt you to look for cost savings and improving efficiencies but you did it anyway. You probably did it because you have high ideals and a moral compass. Your proposal which is basically that government must force public servants to act in like manner is flawed and I suspect you know it is flawed. You know as well as I do that governments make bad employers and as long as they are the owners of the means of provision of the NHS substantial amounts of efficiency savings will never be made, there is no incentive for managers to do so. I sympathize with your dilemma in that you cannot express a view that the provision side of the NHS should be privatised, which would wipe billions off it's costs because it would cause "shock horror" amongst the electorate. I may be wrong and you do not share my view of how to cut costs without cutting NHS services in which case I aplogise for saying you do. However I would commend to you that you support such a move and support it openly.

  5. Brian Tomkinson
    Posted March 28, 2010 at 10:42 am | Permalink

    Your experiences in the real world need to be applied to the public sector. Unlike you, it seems to have decision makers who are more interested in expanding their empires and see spending more as some form of virility symbol – after all its only our money they are spending not their own.

  6. Ian Jones
    Posted March 28, 2010 at 10:53 am | Permalink

    Easiest way to bring down sick leave is to make the first 2 days of sick leave unpaid. Other countries use different methods:

    In Japan you must have a medical certificate even for one day off. In Italy you cannot be paid for sick leave on a monday or a Friday.

    Problem is the unions will never agree so the first job is to break the public sector unions so the workplace changes can be made.

  7. Kevin Peat
    Posted March 28, 2010 at 10:56 am | Permalink

    NHS sickness levels: Would we prefer staff turning up on hospital wards with sniffles, or flu ?

    Sick pay entitlement does cause a bit of shirking but in the NHS the alternative is unthinkable.

    • David Price
      Posted March 28, 2010 at 2:23 pm | Permalink

      I heard on the radio last week, probably R4, that a hospital had significantly reduced sickness leave by referring staff for physiotherapy immediately if it was appropriate. It seems that a major cuase in the NHS is not bugs but pulled muscles so this makes a lot of sense. This policy didn't reduce the incidents but did reduce the amount of time off work.

    • DrB
      Posted March 28, 2010 at 3:32 pm | Permalink

      Not necessarily turning up on a ward, just turning up would be good, having a cold doesn't preclude doing paperwork or much else. It's interesting that you think turning up for work with a mild viral illness is unthinkable. Nurses often see days off sick as part of their leave entitlement which explains the enormous discrepancy between junior doctors(who generally don't think that way) and most of their clinical colleagues in taking sick leave.

      • The college tutor
        Posted March 28, 2010 at 10:18 pm | Permalink

        Sadly DrB you are not correct, rates of sickness amongst junior and even senior Dr's are now approaching nurses levels. When I was a junior doing 90 hour weeks I had 12 days off with appendicitis, but no other sick leave in a decade. That work ethic is now gone, MTAS and loss of comradeship, the EWTD and poor morale has done for it.

        In all walks of life, public sector and private, we need to restore the work ethic. Reward workers not shirkers. No sick pay for the first 2 days of absence is an excellent idea. I would also restrict awards for unfair dismissal to one months pay for each year of service. No need to legislate removing employment laws if the rewards for legal cases shrink, workforce flexibility in a trice

      • Kevin Peat
        Posted March 29, 2010 at 12:56 am | Permalink

        DrB,

        No sick pay would mean staff (already poorly paid) turning up for work with quite severe infections rather than lose money.

        I should also imagine that NHS staff are more susceptible to infection than most because of their exposure to the sick.

  8. backofanenvelope
    Posted March 28, 2010 at 11:03 am | Permalink

    This is all very well, but you will not reduce the public sector without abolishing things. Scrapping them. I see it reported that the SNP government in Edinburgh is reducing the number of quangos from 199 to 161, falling to 120 by next year and representing a savings of some £127 million over the five years from 2008-13 and annual savings of £40m thereafter.

    Which ones are the Tories going to scrap?

    Reply: Yes, of course, the abolition of quangos is a necessary part of the task. There could be mane – starting with the unelected regional quangos in England an d the FSA.

    • backofanenvelope
      Posted March 28, 2010 at 1:14 pm | Permalink

      OK, spell them out. Or get your party to.

  9. Kevin Peat
    Posted March 28, 2010 at 11:05 am | Permalink

    What of the local councils' part in the Icelandic banks fiasco ?

    "Lessons have been learned." is the response being spouted by officials up and down the land. No they haven't. People haven't been sacked over this issue so how can lessons have been learned ?

    This needless loss of money – by over rated and manifestly over paid executives – will cost us all dearly and will be paid for with important frontline jobs and services; couldn't we have got people in to wreck our country at a fraction of the price that we paid them to do it ? It doesn't take brains or talent to make fish soup out of an aquarium.

  10. Matt
    Posted March 28, 2010 at 11:31 am | Permalink

    You indicated, several postings ago, a major problem in that public spending is perceived, almost universally, to be a good thing. It’s unquestioned; it’s like the law of gravity.

    It follows that cuts are looked upon as a bad thing.
    We only talk of limiting public spending during recessions

    This view needs recalibrating. that wealth doesn’t appear like manna, or sunshine to be collected by the state and distributed to the grateful population.

    Maybe politicians should get the message over that public spending is only half of an equation, the other half…picture the taxpayer working from January to July for the state.

    In my view the Conservatives should put it to the electorate that you can only have the money once, either you spend it on what you want or give it to the state and they will, after substantial administration costs, spend it on your behalf. It’s a sad reflection that such a huge part of the populace depends on the state for handouts.

    This view of public spending distorts everything, how else can the government announce to wide acclaim that they introduced a car scappage scheme? So taxpayers are lumbered with buying (Many imported) cars.

    Instead the Conservatives keep pledging to match Labour spending on the NHS and foreign aid so the voter thinks there is little to choose between them.

    Why not at least pledge to reform the social security budget, on the lines that Frank Field was looking at years ago.

  11. Stuart Fairney
    Posted March 28, 2010 at 12:01 pm | Permalink

    FOI information showed last year that my local council had higher levels of absenteeism due to stress than the army was suffering from in Helmand.

    So yes, certainly scope for cuts

  12. eddyh
    Posted March 28, 2010 at 12:19 pm | Permalink

    Saving money in the NHS is simple. Sack 90+% of the management and let it revert to the system of years ago when hospitals were run by a Hospital Secretary, Matron and a small committee of Consultants. Unfortunately the cuts are likely to be organized by the Managers and the people most likely to be dispensed with are the clinical staff.

  13. Steve Cox
    Posted March 28, 2010 at 12:53 pm | Permalink

    There was a report in the papers this morning that GB is insisting that military chiefs should use second class rail travel to save money. I don't see why he is picking on the services, apart from his visceral dislike of the armed forces, but if this principle was applied widely to all central and local government employees (including MPs!) then there would be huge savings. Almost all of these folk travel on open tickets which are enormously expensive. Any views on this economy measure, John? I had to give up any form of air or rail travel other than using economy class years ago, and it didn't hurt me at all.

    reply: I would manage the total travel budget, leaving some discretion about individual journeys, but reducing the overall costs.

    • StevenL
      Posted March 28, 2010 at 10:47 pm | Permalink

      Central procurement of train tickets is a joke. Even if I book weeks in advance we (you) get charged over the full price you pay at the station.

      I've offered to pop down to the station and buy cheap tickets before, but it's not allowed. All sorts of companies quote councils high, knowing 90% of the time they just pay no question.

      Years ago, one of the first things I ever had to do in local government was to procure getting some electrical goods testing. First quote was over £1k, but I phoned around and haggled and got it down to about £400.

      My boss wasn't happy as he had budgeted more for it and was left with money he couldn't spend.

  14. Duyfken
    Posted March 28, 2010 at 12:59 pm | Permalink

    A little sycophancy from me. It really impresses me how you manage to provide such informative and persuasive articles, not just that but also providing these every day of the week (and usually before breakfast). The result must surely be a growing, approving readership which I trust includes the Conservative front-bench. One of the best signs Cameron could give to the electorate to improve his election chances, would be to bring you in from the cold – if Brown can confirm Darling as his darling, then Cameron can surely anoint you as part of his team.

  15. Brigham
    Posted March 28, 2010 at 1:55 pm | Permalink

    I've been a member of a couple of golf clubs, and at each one I've noticed that as soon as the committee or board members got into their positions, they started to spend money. All sorts of peculiar things have appeared which the members didn't want or need. This labour government seems to be the ultimate golf club, spending like there is no tomorrow. We just need to keep up the pressure on the incoming lot not to do the same. Some hope!

  16. Matthew Reynolds
    Posted March 28, 2010 at 3:19 pm | Permalink

    Public spending should be cut over five or six years to save £120 billion as advised by the CBI. Two-thirds of this should fund wiping out the structural fiscal deficit of £90 billion.The rest can fund £30 billion in reducing taxes.

    That would send the economy towards recovery by paying down debts that threaten stability and ending the tax barriers to competitiveness and prosperity.It would protect future generations from unfair and vast debt interest bills in future.

  17. Norman
    Posted March 28, 2010 at 4:06 pm | Permalink

    In the email I received from CCHQ today there was the alarming statement that the Conservatives are pledging to increase spending on the NHS.

    Surely this can't be right? How does this fit in with the philosophy of doing more for less? If there is any government department that is surely ripe with low lying fruit it has to be the NHS.

    I think we should be making the argument that we'll cut out unnecessary bureaucracy in the NHS and spend the money more wisely rather than follow the Labour policy of throwing huge amounts of money at the NHS and hoping for the best. If there is one thing the NHS isn't lacking it's budget.

    I despair of this deficit ever being cut if this is the attitude of the leadership.

  18. Posted March 28, 2010 at 4:43 pm | Permalink

    Having a word with the most glaring offenders ultimately requires that the employer be willing/able to fire them. This is one of the problems with public "services" – that "servants" are almost unsackable. Former labour Minister Digby Jones said that productivity in the civil service would not be reduced by halving staff numbers, though much of this is probably not laziness but the amount of useless work in paper shuffling. I have previously suggested a hiring ban & pay freeze but that risks the only people staying being the useless ones. Firing some of the useless would concentrate minds even more than a talking to.

  19. A G
    Posted March 28, 2010 at 5:04 pm | Permalink

    In the NHS,
    Voice recognition systems instead of secretaries.
    Video conferencing (cuts travel expenses).
    Case load reviews and proper job-plan management (gets staff to do what they are paid to do and protects staff from being overworked covering for sick leave or absenteeism).
    Promotion for quality of work not just for qualifications.
    Research into clinical practise efficacy along the lines of NICE for everything.
    Protection and reward for those that will step up to the mark and innovate to save money and also for the bad practise whistleblowers.
    That should get you started.

    • backofanenvelope
      Posted March 29, 2010 at 10:36 am | Permalink

      In the NHS,
      Voice recognition systems instead of secretaries.

      This shows three sorts of delusion.

      My wife was a medical secretary – she did a lot more for "her" consultant than typing up his letters.

      The idea that technology is the answer – have you used VR? I was in MOD when the typing pools vanished. Highly paid officers got computers – and had to type their own letters.

      We have a problem in that we have too much labour and labour is too expensive.

      • A G
        Posted March 29, 2010 at 7:32 pm | Permalink

        I put this post out as a simple list to open up the discussion. As usual things are always more complicated. My husband is an NHS consultant and I was drawing on his experience. His reports and letters used to be typed by a pool of secretaries who were mostly young and inexperienced but there were also two older ones. They were all appointed by management and he had no say over who typed out his work. He spent so much time correcting the inexperienced typists work that he gave up and bought a voice recognition system out of his own money. He used to say that the older secretaries did ten times as much work as the younger ones. He does share a secretarial P.A. who is fantastic for organising meetings and training etc. She is also on the wrong side of fifty! If he had been in charge of his department (a poison chalice which no sane person would do in today's NHS), he would have higher paid better performing secretaries and less of them. The youngsters would have then been free to improve in the private sector and aquire the skills or not as the case may be. I also worry about the loss of jobs but the public sector is using taxpayers money and we can't be sentimental about it.

  20. Y Rhyfelwr Dewr
    Posted March 28, 2010 at 9:23 pm | Permalink

    … and not a few could probably be cut by 100 percent, and nobody would even notice.

  21. Ex Liverpool rioter
    Posted March 28, 2010 at 10:08 pm | Permalink

    John
    Read this:- http://www.guardian.co.uk/commentisfree/henryport

    Is there anyway you can delay/stop it happening????
    Mike

  22. NickW
    Posted March 28, 2010 at 10:31 pm | Permalink

    When I worked in the civil service our office was at its most efficient when the boss was absent.

    The boss's absence also made the office a far more pleasant place to work.

    Most workers are self motivating and do not need micromanagement or compulsion to make them work. Workers are also far better at innovating and streamlining the processes which they are responsible for on a daily basis, than are the remote and bullying managers who hand down imperious and totally impractical dictats from on high.

    Overmanagement in the NHS is the cause of the stress which produces the absenteeism. Sack the managers and let people get on with their jobs.

  23. StevenL
    Posted March 28, 2010 at 10:36 pm | Permalink

    It's only a little one, but last week the Environment Agency wrote me a letter to remind me that my rod licence will run out at the end of March.

    I know it does, it has an expiry date printed on it. When I buy a licence they never make any effort to sell me a second one so I can fish up to 4 rods either.

  24. Jim
    Posted March 28, 2010 at 10:48 pm | Permalink

    There is no way any govt dept will use the cutting of its budget to become more efficient, to cut out the real waste without cutting frontline services. Because that involves cutting the very middle managers and bureaucrats who are responsible for administering the budget in the first place. Turkeys don't vote for Christmas.

    They will cut the most obvious people/services, so the public are affected the most, because that is the best way to impose pressure on the politicians to reverse the cuts.

    The only solution I can see is to harness the power of self interest. Offer all dept heads a % of the money saved for them personally, if they manage to cut the budget without affecting services. That might focus their minds a bit.

    Some quangos etc need culling completely of course, not just a budget reduction. Give me a list and a pen & I'll have it done inside a week.

  25. Lindsay McDougall
    Posted March 29, 2010 at 1:49 pm | Permalink

    A good example but you can't always argue from the particular to the general. The BBC interviewed Ed Milliband and Philip Hammond this morning and it showed up the difficulty that we are under. Mr Milliband used what is going to be the Labour tactic from now to polling day – to generate more heat than light. He said that he (Milliband) has come up with detailed efficiency savings for his own Department. How would Mr Hammond save more? That's a hopelessy unfair question because Mr Hammond does not organise the Department of Energy and does not have access to the books.

    However, given that Labour has circulated details of their (probably bogus) proposed efficiency savings, it is reasonable to expect us to say in general terms what additional savings we could make. We may not be able to put a precise number on it but we ought to able to identify new types of savings. Stripping out unnecessary tiers of government is one, some international, some related to John Prescott's regions. For example, are Strategic Health Authorities necessary? The north east SHA has 9 board members and nearly 300 staff. There are something like 10 SHAs. All they do is set targets and interfere with the management of hospitals.

    There is a good quote from Anthony Eden "Everybody is always in favour of general economy and particular expenditure."

    Let us get a bit populist about this and list unpopular public expenditure that can be cut. Debt interest, set to rise to equal the total expenditure on defence and transport; contributions to the IMF; EU expenditure on the permanent President and Foreign Affairs minister; social protection payments to the unworthy; the Bloody Sunday public inquiry etc.

  26. Posted April 22, 2010 at 4:24 am | Permalink

    Optimizing and streamlining many processes within an organization can and will make for big savings and even a better service in some cases.

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  1. […] John Redwood says it’s feasible to cut 10 per cent from many departments without damaging services […]

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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